Kuwait National Petroleum Company Clean Fuels Project 2020 Cost & Budgeting of a Mega Project, Oct. 2018 Presenter: Eng. Wael Al-Jasem Former Team Leader Project Management KNPC Now Team Leader Mega Projects PIC 1
Agenda: 1. Value Moment 2. Project Background 3. Cost & Budgeting Best Practice 2
Agenda: 1. Value Moment 2. Project Background 3. Cost & Budgeting Best Practice 3
Value Moment 4 4
Value Moment REMEMBER.. 5 5
Value Moment Principle of Crocodile 6 6
Value Moment Principle of Crocodile Evaluate the risk 7 7
Value Moment Principle of Crocodile Eliminate the risk 8 8
Value Moment Principle of Crocodile Substitute the risk 9 9
Value Moment Principle of Crocodile Isolate the risk 10 10
Value Moment Principle of Crocodile Use Personal Protective Equipment 11 11
Agenda: 1. Value Moment 2. Project Background 3. Cost & Budgeting Best Practice 12
COMPANY OVERVIEW KNPC - Kuwait National Petroleum Company Local refining arm of Kuwait Petroleum Corporation (KPC) Operates a three refineries complex Over 900,000 BPD capacity 5,500 employees 13
CFP Main Objectives Meet international and local market demand & specifications. Enhance the environmental & safety performance of KNPC refineries. Major upgrade of MAA and MAB refineries to convert high sulfur fuel oil to higher value products. Provide new employment opportunities for Kuwaitis in the refining sector. Support the country of Kuwait economic growth. 14
Status & Economics FEED commenced 2006, completed 2008, updates 2009 PMC awarded Jan 2013 Appropriation granted March 2014 EPC Awards April 2014 IRR ~ 11% PB ~ 7 years Project Progress: ~ 96.4% Man-Hours: ~ 361 Million Man Power: ~ 41 K Expenditure: ~ 3.85 Billion KWD ~ 31.4% Locally Budgeted: ~ 4.7 Billion KWD 15
Contract Program Strategy KNPC PMC SECURITY EPC HV EPC PWC EPC FCC EPC MAA EPC MAB-1 EPC MAB-2 TPI SUPPLIERS & CONTRACTORS Fixed price EPC Contracts Major EPCs all 3 party consortia Reimbursable PMC Contract + Security & Third Party Inspection subcontracts 16
MAA EPC Package Awarded to JV of : M/s. JGC Corporation, Japan GS E & C, S. Korea SK E & C, S. Korea Contract Price KD. 1,361,608,000/- Contract commencement 13-Apr-14 Contract completion - Mechanical Completion 12-Jan-18 - Commissioning / Start-up 12-Apr-18 17
MAB-1 EPC Package Awarded to JV of : Petrofac Intl. Ltd., U.K Samsung Engg. Co., Korea CB&I, Netherlands Contract Price KD. 1,071,457,844/- Contract commencement 13-Apr-14 Contract completion - Mechanical Completion 12-Jan-18 - Commissioning / Start-up 12-Apr-18 18
Awarded to JV of : Fluor Ltd., U.K MAB-2 EPC Package Daewoo E & C, S. Korea Hyundai Heavy Ind., S. Korea Contract Price KD. 962,020,536/- Contract commencement 13-Apr-14 Contract completion - Mechanical Completion 12-Jan-18 - Commissioning / Start-up 12-Apr-18 19
CFP Locations 20
CFP Scope Key Metrics Some interesting facts regarding total quantities : 482,000 m3 of concrete the equivalent of 200 Olympic sized swimming pools (50m x 25m) full of concrete. 124,000 Tonnes of steel Equivalent to 17 Eiffel Towers 3 Million linear meters of pipe put end to end would take you from Kuwait to Hungary. 11,500 KM of cable will be used - put end to end would take you from Kuwait to the Bahamas (or to Thailand and back!) 21
CFP Scope MAA MAB - 1 MAB - 2 Total Process Equipment Compressors 37 15 33 85 Turbines 21 19 16 56 Other rotating 490 286 281 1057 Tanks 48 15 35 98 Columns/Reactors 61 66 42 169 Exchangers 338 201 206 745 Vessels/Drums 205 191 156 552 Totals 1200 793 769 2762 All Equipment (approx) 4,000 + FCC, + PWC, + HV I/O Count (approx) 25,000 50,000* 75,000 *includes revamp/re-instrument scope 22
Main Project Locations 23
Agenda: 1. Value Moment 2. Project Background 3. Cost & Budgeting Best Practice 24
Project Budget - Budget estimate accuracy is related to the level of engineering definition - Class 5 estimate or ROM at feasibility / early stage of FEED - Class 3 estimate during FEED - Class 2 estimate at FEED closing 25
Project Budget Main Budget Elements 1. Engineering based on man-hours and number of drawings / documents 2. Procurement based on major equipment and bill of material 3. Execution & Construction based on labor man hour + labor rates + BOM 4. Owner Cost: PMT / PMC / Licensors / Fees / Insurance / Land / Agencies / etc 5. Management Reserve 6. Contingency 26
Cost Management Budget Element: Updated for EPC execution phase 1. Major Contract 2. Licensors 3. Consultancies 4. PMT 5. Insurance 6. Land Rental 7. Government Fees 8. Management Reserve & Contingency Reporting: Monthly Capex reporting Quarterly Overall reporting Annual Carry Over Budget with Forecast (Plan, Actual, Forecast) 27
Cost Management Sample Cost Report: 28
EPC Invoice Processing Invoicing Process 1. Contractor submits a Progress Measurement Report (PMR) 2. PMC & PMT review and approve 3. Contractor submits invoice based on approved PMR 4. PMC & PMT verify invoice based on PMR 5. Then invoice is processed * Supporting documentation must be attached based on contract 29
Cash Flow Forecasting Weekly & Monthly Rolling Forecast: 12 Month Forecast rolling on monthly basis - Basis: Engineering, Material delivery, site progress - Target 90% accuracy for first two months 6 Week Forecast rolling on weekly basis - Basis: Invoice submittals by EPC / consultants / service provided - Target 95% accuracy or higher for first 4 weeks * Develop a project guide and workflow process 30
Cash Flow Forecasting Sample Cash Flow Report: 31
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EPC Progress Aug 2018 MAA Site Photos Unit 129 STEAM SYSTEM Unit 141 ARDS Unit Unit 176 Water System Unit 162 Flare Stack 33
EPC Progress Aug 2018 MAA Site Photos Unit 136 DCU Unit 152 SRU Unit 283 Heavy Oil Cooling Unit 148 Hydrogen Production 34
EPC Progress Aug 2018 MAB1 - Site Photos UNIT - 111 UNIT - 114 UNIT - 117 UNIT - 216 35
EPC Progress Aug 2018 MAB1 - Site Photos U-148 Pre-commissioning Work Line Flushing & Blowing Equipment Insulation Works Piping Pressure Test 36
EPC Progress Aug 2018 MAB2 - Site Photos Lighting Status at U-125-02 Unit 137/154 Tankage Area Unit 118 Hydrogen Production Unit 123 Lights On 37
EPC Progress Aug 2018 MAB2 Site Photos Flare ignition in Unit 149 on 23-Aug-18 U 123 T3 Central Control Room 38
Project Integration Management : the processes and activities needed to identify, define, combine, unify, and coordinate the various processes and project management activities within the project management process groups. Project Scope management : the processes required to ensure that the project includes all the work required, and only the work required, to complete the project successfully. Project Time Management : the processes required to manage the timely completion of the project. Project Cost Management : the processes involved in planning, estimating, budgeting, financing, funding, managing, and controlling costs so that the project can be completed within the approved budget. Project Quality Management : the processes and activities of the performing organization that determine quality policies, objectives, and responsibilities so that the project will satisfy the needs for which it was undertaken. Project Human Resource Management : the processes that organize, manage, and lead the project team. Project Communications Management : the processes that are required to ensure timely and appropriate planning, collection, creation, distribution, storage, retrieval, management, control, monitoring, and the ultimate disposition of project information. Project Risk Management : the processes of conducting risk management planning, identification, analysis, response planning, and controlling risk on a project. Project Procurement Management : the processes necessary to purchase or acquire products, services, or results needed from outside the project team. Processes in this area include Procurement Planning, Solicitation Planning, Solicitation, Source Selection, Contract Administration, and Contract Closeout. Project Stakeholder Management : the processes required to identify all people or organizations impacted by the project, analyzing stakeholder expectations and impact on the project, and developing appropriate management strategies for effectively engaging stakeholders in project decisions and execution. 39
Presentation Outline: KNPC & Background Project Economics Project Magnatude Project Budget main elements Cost Management Reporting EPC Invoice processing Cash flow forecasting system 40