This document appears to be a cost estimate and risk analysis for an EPC contract for the Weddell Unit 3 power and water project in Australia. It includes a breakdown of direct and indirect costs, contingencies, and allowances for items like escalation, wet weather, and miscellaneous costs. The traditional approach to estimating, scheduling, and risk assessment is discussed, with a note that an integrated system using tools like WBS, estimating, time, cost, and risk management could help improve confidence in project outcomes.

1. Project Management: Mining, Oil & Gas
10-12 July 2012, Stamford Plaza Brisbane
Pedram Danesh-Mand, Head of Planning & Risk – UGL

2. Assessing EPC Contract Risk by using integrated systems
Pedram Danesh-Mand, Head of Planning & Risk – UGL
pedram.daneshmand@ugllimited.com

3. Important Notice
The presenter does NOT speak on behalf of UGL, or act as representative of UGL. The views
expressed on this presentation and any oral presentation accompanying it, are the
speaker’s own personal and perspective opinions and are not those of UGL.
3

4. Agenda
• Brief introduction
• Industry performance worldwide
• Currently industry trends
• Success factors in Major Projects
• Project Cost Management (PCM)
• “Risk Driver” Methodology vs Traditional Approach
• Improving Confidence Level by using integrated systems
– Estimating
– Work Breakdown Structure (WBS)
– Time
– Cost
– Risk
• Case Studies
4

5. About UGL
• UGL Limited is a global leader in engineering, property services and asset
management and maintenance services through three business units:
– Engineering
– Operations & Maintenance
– Property
• UGL provides services to its Clients across the power, water, rail, resources,
property, transport, infrastructure and defence sectors.
• Headquartered in Sydney, Australia, UGL operates worldwide across 45 countries
employing approximately 55,000 people.
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6. Project Delivery – Myths
• We have a good project management system in place, don’t worry!
• Trust our very experienced team. Everything’s fine!
• No problem, everything is under control!
• No worries, we have used these databases for years of experience!
• Please, we don’t need anything new!
• Another new system, another tool, again!
o.k., FINE!
But let’s have a look in the
performance of some major projects
worldwide, shall we?
6

7. Project Delivery – Facts
Engineering Projects Oil and Gas Projects
42% behind schedule 81% behind schedule
Ref: Managing the Risk of Delayed Completion in the 21st Century, Survey by Chartered Institute of Building (CIOB), 2007 7

8. Project Delivery – Facts
High-rise Buildings Power Generation Projects
67% behind schedule 66% behind schedule
Ref: Managing the Risk of Delayed Completion in the 21st Century, Survey by Chartered Institute of Building (CIOB), 2007 8

9. !!!!!!!!!
9

10. Current Industry Trends
• Increasing demand for efficient and technologically complex solutions in shorter
timescales and within tighter financial constraints;
• High demand for an accurate completion date, as required by many commercial
and public benefit projects;
• A growing trend for employers to require the contractor to take more of the risk that
is traditionally taken by the employer;
• A growth in the use of Design & Build (D&B), Guaranteed Maximum Price (GMP)
and Engineer Procure and Construct Contracts (EPC); and
• Potentially devastating consequences of the failure to manage time in construction
projects.
O.K.
To identify the success factors, we
need to understand why projects fail!
Ref: Managing the Risk of Delayed Completion in the 21st Century, Survey by Chartered Institute of Building (CIOB), 2007 10

11. Top 5 causes of failure
• REQUIREMENTS: Unclear, lack of agreement, lack of priority, contradictory,
ambiguous, imprecise
• RESOURCES: Lack of resources, resource conflicts, turnover of key resources,
poor planning
• SCHEDULES: Too tight, unrealistic, overly optimistic
• PLANNING: Based on insufficient data, missing items, insufficient details, poor
estimate
• RISKS & OPPORTUNITIES: Unidentified or assumed, not managed
Ref: Strategies for Project Recovery,
A PM Solutions Research Report,
pmsolutions survey, 2011
11

12. Traditional Approach
EPC Contract
Estimating Scheduling R&O’s
PROJECT INFORM AT ION M on day, 16 Jan uary 2012 % o f C os t % o f Sell V A LUE RE O
C VERY
TENDER NO: T C-3218 Tot al m an Hou rs Man Hours
PROJE T T
C ITLE: Wed de ll Uni t 3 C il
iv 3,364
CONSULT A N /C E
T LI NT: Pow er & W ater C orp or ati on , NT M ec h 11, 854
POST TENDER NEGOT A T ON D T :
I I A E 16-Jan -12 Elec t 6,164
CONSTRUCT ON PR
I OGRAMME DURATI N (Weeks)
O 34 8 Months Mann ing A verage Peak
CONSTRUCT ON SI E D
I T UR T
A ION (Weeks) 34 8 Months C il
iv 10 16
DEF CT
E S LIABI TY PE
LI RI D (Weeks )
O 104 24 Months Mec h 28 45
REVISI N A N
O D ISSUE RE A0-1
V Elec t 17 28
Value R co ver y
e
(1-4) T O AL DIR
T ECT JOB COST S ( ite m s 1- 4) T O AL COST DJC (it em s 1-5)
T 51. 17% 44. 85% $6,338,802.81
( 1) PROJECT E E
L MENTS, DIRECT C OSTS To tal for s ect ion (1) 40. 79% 35. 75% $5,053,352.81
1.1 Civil Works Input f rom File 07-Jun-11 9. 13% 8. 00% $1,131,041.30
1.2 Mec hanic al Input f rom File 30- May-11 18. 16% 15. 92% $2,249,906.72
1.3 Elec tric al Input f rom File 01-Jun-11 12. 79% 11. 21% $1,584,404.79
1.4 Rec ruit ment
1.4 Final Negotiation f igure generally f or w et w eat her increase 0. 71% 0. 62% $88,000.00
1.5 File
( 2) ENGINEERING (Ref er SHT- 2) To tal for s ect ion (2) 8. 12% 7. 12% $1,005,350.00
2.1 UGL Engineering Engineering 09- May-11 7. 62% 6. 68% $943,522.00
2.2 Geotec hnical Report & O&M Manuals 09- May-11 0. 50% 0. 44% $61,828.00
( 3) Gen er al Spe ci ficatio n R qui rem e nts
e ( R fer SHT- 3)
e To tal for s ect ion (3) 0. 81% 0. 71% $100,100.00
3.1 Preliminar y Cost s UG Li Prelims File 0. 81% 0. 71% $100,100.00
3.2 Preliminar y Cost s other File
( 4) COM M ISSIONING (R fe r SH -4)
e T To tal for s ect ion (4) 1. 45% 1. 27% $180,000.00
4.1 Comm sioning c os ts U
is GLi A dmin Inc luded in A dmin below
4.2 Comm sioning Mat erials
is Comiss ioning F ile 1. 45% 1. 27% $180,000.00
4.3 Comm sioning c os ts other
is F ile
(5-9) T O AL IND
T IRE T JOB C O
C STS (it em s 5-9) T O AL COST IND R C TS (i tem s 5- 9)
T I E 42. 79% 37. 49% $5,302,192.18
( 5) ADM INIST R TI O
A N (Ref er SHT-5) To tal for s ect ion (6) 28. 90% 25. 33% $3,580,535.30
5.1 Site Adm in and Site Supervision Cost s A dmin 10. 92% 9. 57% $1,352,868.94
5.2 Site Engineer ing and Site Support Staf f A dmin 7. 44% 6. 52% $921,581.16
5.3 Site Com miss ioning labour Cost s A dmin 7. 71% 6. 76% $955,220.13
5.4 Head Of f ice Support A dmin 2. 44% 2. 14% $302,654.86
5.5 Other admin cos ts Rec rui tment Cos ts 0. 39% 0. 34% $48,210.20
( 6) M OBIL ISA TI ON Plan t & B ild ing s (R fe r SH -6)
u e T To tal for s ect ion (7) 12. 75% 11. 16% $1,579,350.00
6.1 ( 7a) MO BI SATI
LI ON & D EMOBILSA TION Mob & Demob 8. 04% 7. 05% $996,060.00
6.2 ( 7bi) SI E BUI
T LDINGS 0. 69% 0. 60% $85,010.00
6.3 ( 7bii) SI E CO
T NN CT
E IONS 1. 00% 0. 87% $123,550.00
6.4 ( 7biii) PLA N T AN D T OO LS 2. 09% 1. 83% $258,880.00
6.5 ( 7biv) VEH CLES
I 0. 23% 0. 20% $28,900.00
6.6 ( 7bv ) SI TE RU NN NG C
I OST S 0. 44% 0. 38% $54,150.00
6.6 Other - P inc ipal's Site O f ic e + U
r f tility Pow er & Water Connec tions ( PWC Mtg Darw in A ddition) 0. 26% 0. 23% $32,800.00
( 7) COMMUNITY & ENVI RONMENT ( R fer SHT- 7)
e Comm & Env To tal for s ect ion (8) 0. 09% 0. 08% $11,700.00
( 8) HE LT H & SAFE Y EQ
A T UIPM ENT (R fe r SH -8)
e T Health & Saf ety To tal for s ect ion (9) 1. 05% 0. 92% $130,606.88
H ed gi n g No t
( 9) HEDGING (re fe r to SH -9)
T BG & Hedge To tal for s ect ion (10)
C on s der ed
i
(10-13) T O AL A LL O
T WANCES (ite m s 10-13) T O AL COST A LL O
T WANC ES (ite m s 10-13) 4. 33% 3. 79% $535,918.23
(10) ESC AL AT ION ( ref er to SHT-10) Escalat ion To tal for s ect ion (11) $93,861.25
0. 76% 0. 66%
10.1 Esc allation f or Project Management and Super vis ion 0. 57% 0. 50% $70,900.00
10.2 Esc allation f or Engineering 0. 19% 0. 16% $22,961.25
10.3 Esc allation f or Labour (Not r eq' d - Mid Point calc)
10.4 Esc allation f or Materials ( Not req'd)
(11) C on tin ge ncy R&O To tal for s ect ion (12) 3. 07% 2. 69% $379,643.29
(12) We t Weathe r A llo w ance (R fer to SHT- 12)
e Wet Weather To tal for s ect ion (13) 0. 50% 0. 44% $62,413.69
12.1 CIVIL WET WE T
A HER ALLOWANCE 0. 20% 0. 18% $25,358.59
12.2 ELEC RI
T CAL WET WEATH R A LLOWANC
E E 0. 08% 0. 07% $10,323.82
12.3 MECH N CAL WE
A I T WEATHER A LLOWA NCE 0. 15% 0. 13% $18,006.91
12.4 SUPERVISI N WE
O T WE T ER ALLO
A H WA NCE 0. 07% 0. 06% $8,724.38
12.5 OTHER WE T WEATHER A LLOWANCE
(13) PROVI SION L SUMS
A To tal for s ect ion (14)
(14) M ISC C OST S ( LSL , BONDS, INSUR N E
A C S E C)
T T O AL COST M ISC I TE
T M ( 14) 1. 69% 1. 49% $209,427.60
Liability Char ges "U" unc apped Liability ( 1% ), "A" Cont rac t sum Liabilit y (. 5% ) "B 5 of
".
14.1 c ontrac t s um liabilit y ( .25%) A 0. 57% 0. 50% $70,160.00
14.2
14.3 Long Serv ice Levy (LSL) .35 % on c ontract v alue ( inc GST) 0.50% 0. 62% 0. 55% $77,176.00
14.4 Sec urit ies Bonds Insert Final Total Selling Price $14, 032,000 0. 22% 0. 19% $27,011.60
14.5 War ranty Provis ion .25 % on c ontract v alue ( inc GST) 0.25% 0. 28% 0. 25% $35,080.00
Insurances exc luding const ruc tion ris k / const ruc tion w orks "A " .45% of C , Including c onstr uct ion ris k /
V
14.6 c onstruct ion w orks "B .9% of CV ( W
" orn by Bus iness )
14.7 Other c os ts
T O AL C O
T ST ( ite m s 1- 14) PROJE T TOTA L C OST ITEM S 1 TO 14
C 100% 87. 62% $12,386,340.82
(15) OVER H
- EADS & M arg in (it em 15) 12.00% T O AL O H and M arg in IT E
T - M (15) 12. 35% $1,745,046.48
15.1 UGLi Overheads 54.17% 6.50% o f Sell ing Mark up 7. 39% 6. 47% $914,900.17 $914, 900.17
15.2 UGLi Prof it 45.83% 5.50% o f Sell ing Mark up 6. 25% 5. 48% $774,146.30 $774, 146.30
15.3 A dditional Recover y FX Rate 0. 45% 0. 40% $56,000.00 $56, 000.00
15.4 Mark up
15.5 Part ner 3 Prof it & O/H Mark up
(16) T O AL SE
T LL ING ( ite m s 1-15) (16) TOTA L SE LI N
L G PRIC E EXC LUDING GST 100% $14,131,387.30 $1,745, 046.48
GST Valu e $1,413,138.73
PRI E APP
C ROVED BY : DATE : 16-Jan- 12 RECOVERY TO COST : 14.09%
Tender No : TC-3218 Estimator :GRG / RS RECOVERY TO SELLING : 12.35%
12

13. Risk Driven Approach
R&O’s
Safety &
Quality
Time &
Cost
Scope
13

14. Risk Driver Approach
CONTRACT SCOPE – WBS
R&O’s – RBS / WBS
Estimate – CBS / WBS
Schedule – WBS
R&O
T&C
Impact
Mitigation
14

15. Project Cost Management (PCM)
COST
15

16. PCM – Process
• Cost Estimating – developing an approximation of the costs of the resources
needed to complete project activities.
• Cost Budgeting – aggregating the estimated costs of individual activities or work
packages to establish a cost baseline.
• Cost Control – influencing the factors that create cost variances and controlling
changes to the project budget.
16

17. PCM – Inputs
• The INPUTS into the Cost Estimating are:
– Available organisational process assets
– Available quantities, resources and productivity rates
– Available work/scope statements
– Work Breakdown Structure (WBS), and
– Other assumptions/documents e.g. PMP, etc.
All these assumptions add
UNCERTAINTIES which reduce the
cost confidence level.
What about other R&O’s and events?
17

18. PCM – Outputs
• The OUTPUTS of the Cost Estimating process are:
– (Deterministic) Activity Cost Estimate
– (Deterministic) Total Project Cost
– (Deterministic) Cost Model Data
– (Deterministic) Cost Baseline
– (Deterministic) Resource Requirements
How CONFIDENT are you in such a
deterministic cost estimate?
18

19. Scope, Cost, Time, & Risk
COST
TIME
RISK
Schedule Cost Risk Integration
19

20. Schedule/Cost/Risk Integration Overview
• Available data gathering and validation
• Schedule and Cost Estimate Development
• Risks & Opportunities Workshop/s (team approach)
• S/C/R Integration
– R&O Register incl. both Uncertainties and Events
– Schedule Cost Risk Model
– Simulation
• Results and Discussions
• Re-Modelling
• Monitoring & Controls
20

21. S/C/R Integration Validation
How to review the deterministic Schedule & Cost?
• Validation of
– Quantities (most likely)
– Productivity Rates (most likely)
– Durations (most likely)
– Resource Cost Rates (most likely)
• Constraints (Contractual or Management)
• Logic network and Work Statements, and
• Reasonable Critical Path
21

22. S/C/R Integration – R&O Register
• The elements of the R&O Register:
– The identified risks & opportunities
– Likelihood of the identified risks and opportunities
– Impacted activities and/or cost elements
– Schedule and/or Cost Impact/s
– Schedule and/or Cost Variations
– Correlation of risks and opportunities to one another
– Notes, etc.
22

23. S/C/R Integration – Simulation
• The S/C/R Model should be simulated with multiple scenarios of the project using
random samplings of the relevant risks and opportunities considering their
probability and impact.
• Two popular methods:
– Monte Carlo Simulation (MCS) – faster method but has a larger
possibility of sampling error
– Latin Hypercube Sampling (LHS) – slower method but less
sampling errors
23

24. Case Study 1 – Tender Estimate
• Project: Harbour Deepening & Berth Works
• Multi-million Joint Venture Contract
• Scope:
– Demolish existing wharf
– Cutting up concrete
– Removing deck
– 231 sheet Piles
– 230 piles
– New structure
– Rails, fenders, …
24

25. Case Study 1
25

26. Case Study 1
26

27. Case Study 1
27

28. Case Study 1 – Cost Confidence Levels
Original estimated Direct Construction Cost: $18,285,626
Recommended Direct Const Cost (50% likelihood) = $20,530,588
28

29. Case Study 1 – Probability Density
Confidential
29

30. Case Study 1 – Sensitivity Analysis
Confidential
30

31. Case Study 1 – Summary Report
31

32. Case Study 2 - Contingency
32

33. Case Study 3 – Contingency
CONFIDENTIAL
33

34. What is NEXT?
PLAN, ACT, REVIEW AND PRACTICE THE RISK DRIVEN APPROACH IN YOUR PROJECTS.
AND ALWAYS REMEMBER
IF WE FAIL TO PLAN, WE ARE PLANNING TO FAIL!!!
Good Luck.
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35. Important Notice
This presentation and any oral presentation accompanying it:
• is not an offer, invitation, inducement or recommendation to purchase or subscribe for any securities in UGL Limited (“UGL”) or to retain any securities currently
held;
• is for information purposes only, is in summary form and does not purport to be complete;
• is not intended to be relied upon as advice to investors or potential investors and does not take into account the investment objectives, financial situation or
needs of any particular investor, potential investor or any other person. Such persons should consider seeking independent financial advice depending on their
specific investment objectives, financial situation or needs when deciding if an investment is appropriate or varying any investment;
• may contain forward looking statements. Any forward looking statements are not guarantees of future performance. Any forward looking statements have been
prepared on the basis of a number of assumptions which may prove to be incorrect or involve known and unknown risks, uncertainties and other factors, many
of which are beyond the control of UGL, which may cause actual results, performance or achievements to differ materially from those expressed or implied in
such statements. There can be no assurance that actual outcomes will not differ materially from these statements. Any forward looking statement reflects views
held only as of the date of this presentation. Subject to any continuing obligations under applicable law or any relevant stock exchange listing rules, UGL does not
undertake any obligation to publicly update or revise any of the forward looking statements or any change in events, conditions or circumstances on which any
such statement is based.
• No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness or correctness of the information, opinions and conclusions
contained in this presentation and any oral presentation accompanying it. To the maximum extent permitted by law, UGL and its related bodies corporate, and
their respective directors, officers, employees, agents and advisers, disclaim and exclude all liability (including, without limitation, any liability arising from fault or
negligence) for any loss, damage, claim, demand, cost and expense of whatever nature arising in any way out of or in connection with this presentation and any
oral presentation accompanying it, including any error or omission therefrom, or otherwise arising in connection with any reliance by any person on any part of
this presentation and any oral presentation accompanying it.
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