Estimate Preparation Guidelines - ARAMCO - SAEP-25
Short Description
Estimate Preparation Guidelines...
Description
Engineering Procedure SAEP-25
15 August 2006
Estimate Preparation Guidelines Document Responsibility: Project Support & Controls Dept.
Saudi Aramco DeskTop Standards Table of Contents
1 2 3 4 5
Scope............................................................ 2 Applicable Reference Documents................. 7 Instructions.................................................... 7 Responsibilities........................................... 32 Exhibits....................................................... 35
Exhibit I – Study Estimate Package Checklist.. Exhibit II – Budget Estimate Package Checklist. Exhibit III – ER Estimate Package Checklist…... Exhibit IV – Company Estimate Package Checklist…....................................... Exhibit V – Sample of 56D Form………………... Exhibit VI – Benchmarking Data Sheet………....
37 39 41 43 44 45
Previous Issue: New Next Planned Update: 15 August 2011 Page 1 of 48 For additional information, contact Branton, Minh Anh on 966-3-8739526 Copyright©Saudi Aramco 2005. All rights reserved.
Document Responsibility: Project Support & Controls Dept. Issue Date: 15 August 2006 Next Planned Update: 15 August 2011
1
SAEP-25 Estimate Preparation Guidelines
Scope 1.1
Purpose This Engineering Procedure provides a consistent and uniform approach for Estimate Preparation applicable to Saudi Aramco capital projects. It is intended to be used by all personnel connected with the development and/or review of estimates.
1.2
Definition An “estimate” is a key ingredient leading to development of an approved plan, which can be used for comparison with the progress of the project. Following are the four (4) types of estimates presented in these preparation guidelines that are critical to project development and management: 1.2.1
Study Estimate Study Estimate, sometimes referred to as “Conceptual” or “Order of Magnitude Estimate”, is primarily developed during the very early stage of project life cycle. It is often based on limited project data such as facility type, site location and list of equipment which form the basis for preliminary feasibility, partial cases, process selection alternatives, site location and layout studies of planned new projects or expansion of existing ones. Engineering work is at the initial stage which usually ranges from 0 to 1%. It is typically used for studying alternatives aimed at providing options in establishing the most viable and cost effective solution to project development and execution necessary for making decisions on possible future projects.
1.2.2
Budget Estimate Budget Estimate, also known as “Preliminary Estimate”, is prepared after major engineering decisions have been made. It is intended to define the cost of the baseline scope of work for a given project that is included in the capital plan. The Engineering work at this stage is about 5% complete. Budget estimate is based on the approved Design Basis Scoping Paper (DBSP) prepared by the Facilities Planning Department (FPD). (Refer to SAEP-1350)
1.2.3
Expenditure Request (ER) Estimate This is a detailed estimate supporting the Expenditure Appropriation Page 2 of 48
Document Responsibility: Project Support & Controls Dept. Issue Date: 15 August 2006 Next Planned Update: 15 August 2011
SAEP-25 Estimate Preparation Guidelines
Request (ER) for the approval of fund allocations for a particular Budget Item (BI) and used as the basis for project cost control. It establishes a detailed baseline for the monitoring and control of the later phases of the project. It is used for variance reporting, productivity analysis, cost trend analysis, and control of construction. The ER estimate forms the basis from which the 56D form is developed. Engineering work at this stage in the project cycle ranges from 25% to 30%. The ER estimate is based on the approved Project Proposal. (Refer to SAEP-14) 1.2.4
Company Estimate Company Estimate is a definitive estimate which is developed for the purpose of testing the reasonableness of bidders’ proposals for contracts, amendments and change orders (“contract action”). This estimate should reflect the price for which a given contract action would be awarded under competitive conditions in the current market environment. An effective company estimate has the following key elements: • • • •
1.3
a well-defined scope of work a complete set of final drawings and related specifications a complete list of materials and special equipment requirements firm start-up and tentative completion date.
Estimate Accuracy Accuracy is the measure of the quality and reliability of the estimate. Different types of estimate have varying levels of accuracy depending on the definition of scope and quality of information available. Following are the different types of estimates with their corresponding anticipated accuracies: Type of Estimate Study Estimate Budget Estimate Expenditure Request (ER) Estimate Company Estimate
1.4
Design Engineering % Complete 0 to 1% 5% 25% to 30% 30% to 100%
Estimate Accuracy ± 50% - 100% ± 40% ± 10% ± 10%
Request for Estimate 1.4.1
General Requirements Requests for estimates are processed online through the SAP Estimation Page 3 of 48
Document Responsibility: Project Support & Controls Dept. Issue Date: 15 August 2006 Next Planned Update: 15 August 2011
SAEP-25 Estimate Preparation Guidelines
and Project Management Information System (PMIS). This enables the users from Saudi Aramco Project Management Team (SAPMT), Facilities Planning Department (FPD) or any other Saudi Aramco organizations to initiate an estimate request directly online to Project Support & Control Department (PS&CD) through the SAP System. Various Estimating SAP Roles need to be granted prior to any initiation of estimate request and subsequent approval thereof by proper authorities. These are: •
Requestor Role This role will allow the user to create or initiate an estimate request and submit it for approval within his organization. This role should be assigned to Saudi Aramco Supervisor level personnel or as delegated by Supervisors.
•
Request Approver Role This role will allow the user to make changes to an estimate request and authorize approval prior to submission to PS&CD. This role is only granted to Supervisors, Division Heads or Project Managers.
Access authorization to the above-mentioned SAP Roles is contingent upon the following: •
Eligibility of the requestor for the requested role
•
Completion of the SAP R/3 Access Request form
•
Approval of the SAP R/3 Access Request form by the requestor’s Department Manager.
As soon as the SAP R/3 Access Request forms have been signed by the user’s Department Manager and PS&CD Manager, the Computer Security Liaison (CSL) of SAP system grants access on the requested roles. The application form for SAP Roles Access can be downloaded at the following Saudi Aramco Local Intranet Page address: http://sapcc.aramco.com.sa/samd/documents/forms/SAP%20R3%20Acce ss%20Request%20Form.doc Refer to PS&CD Guidelines in Granting Access to SAP Estimation Roles or visit http://sapcc.aramco.com.sa/sapestimation/ for more details.
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Document Responsibility: Project Support & Controls Dept. Issue Date: 15 August 2006 Next Planned Update: 15 August 2011
1.4.2
SAEP-25 Estimate Preparation Guidelines
Checklists of Required Documents In order to determine if a submitted estimate package contains all of the elements and criteria required for processing and acceptance by the Estimator, checklists are hereto attached for necessary reference as follows: • • • •
1.5
Exhibit I, “Study Estimate Package Checklist” Exhibit II, “Budget Estimate Package Checklist” Exhibit III, “Expenditure Request (ER) Estimate Package Checklist” Exhibit IV, “Company Estimate Package Checklist”.
Application and Timing 1.5.1
Study Estimate During the study phase, analysis of the preliminary scope definition and economics of the proposed project shall be thoroughly performed in order to: •
decide whether to advance to the DBSP and Budgetary Project Scope Definition Phase
•
determine which of the viable alternatives to further develop during the DBSP and Budgetary Definition Phase
The Proponent (normally a Saudi Aramco operating department sponsoring the project; owner and/or user of the facility to be constructed) promotes the development of a project and works with FPD. Together they first develop a basic project description (facility type, capacity and probable site location) which PS&CD uses as the basis for the Conceptual or Study estimate based on the planning brief. This is done at the very early stage of project development. 1.5.2
Budget Estimate After a thorough feasibility analysis and alternatives have been considered and developed, the Proponent and FPD shall continue to expand the scope of work to develop the Design Basis Scoping Paper (DBSP) based on more information and available resources. When the project is adequately defined, it is submitted as a proposed Budget Item (BI) under the Capital Budget and Programs and presented to the Board of Directors for approval. The appropriate Saudi Aramco Project Management Team (SAPMT) is then assigned the responsibility for the execution of the project. The assigned SAPMT submits a request Page 5 of 48
Document Responsibility: Project Support & Controls Dept. Issue Date: 15 August 2006 Next Planned Update: 15 August 2011
SAEP-25 Estimate Preparation Guidelines
for Preliminary Engineering funds required for the development of the Project Proposal. Budget estimates are based on the approved DBSP and updated whenever the scope of work or Expenditure Request Approval (ERA)/ Onstream dates change. 1.5.3
Expenditure Request (ER) Estimate With the exception of Master Appropriation projects, Saudi Aramco requires an ER estimate for all Capital, Non-Capital and Expense Projects valued more than $2 million under the control of Engineering and Operations Services (E&OS). A complete ER estimate based on the approved Project Proposal (PP) from SAPMT, FPD and Proponent organization signatory must be submitted to PS&CD at least four (4) weeks prior to submittal of the 56D Estimate to FPD Budget Director for Board, EXCOM and local approvals, as per Capital Program ER Processing Schedules. Full project funding is obtained upon approval of the ER estimate.
1.5.4
Company Estimate Contract actions with financial impact require the preparation of a formal company estimate using standard estimating methods outlined in this engineering procedure. Company Estimate is NOT required if: •
there are at least three (3) technically qualified bids received in a competitively bid contract. If fewer than three (3) technically qualified bids are received, commercial proposals will not be opened until a Company Estimate is prepared. The Contract Signatory may, notwithstanding the above, direct that a Company Estimate be prepared.
•
a waiver of estimate is granted in accordance with Section 3.4.3.
•
Insurance Policy renewals are in effect.
•
the alternative method as described in Procedure 10, Paragraph G of the Contracting Manual is utilized.
•
it involves uncustomized software licenses priced in accordance with published price lists, including any applicable or contractor-offered discounts
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Document Responsibility: Project Support & Controls Dept. Issue Date: 15 August 2006 Next Planned Update: 15 August 2011
1.6
SAEP-25 Estimate Preparation Guidelines
Estimating Tool Aspentech KBase software is the preferred estimating tool in the preparation of the estimates involving oil & gas type facilities. Another estimating tool such as the Timberline may be used provided that it contains all databases with recent cost information. Utilization of any other estimating software other than KBase and Timberline must be discussed with and approved by PS&CD. Effective January 2008, Aspentech KBase shall be used as the mandatory estimating tool for any oil and gas processing projects greater than $100 million. Waiving of this requirement must be approved by the PS&CD Manager.
2
Applicable Reference Documents The latest edition of the following applicable reference documents shall be applied: Saudi Aramco Engineering Procedures SAEP-12
Project Execution Plan
SAEP-14
Project Proposal
SAEP-1350
Design Basis Scoping Paper (DBSP) Preparation & Revision Procedure
General Instructions GI-0020.500
Expenditure Control – Expenditure Request Forms
GI-0216.965
Cost Distribution Rates
GI-0710.002
Classification of Sensitive Information
Saudi Aramco Contracting Manual Saudi Aramco Materials System Specifications (SAMSSs) Guidelines in Granting Access to SAP Estimation Roles 3
Instructions All estimates shall be prepared within the established Work Breakdown Structure (WBS) for each facility type and Standard Code of Accounts (SCA) and shall be loaded to SAP PMIS for archiving purposes. Following are general guidelines for the preparation of estimates: 3.1
Study Estimate
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Document Responsibility: Project Support & Controls Dept. Issue Date: 15 August 2006 Next Planned Update: 15 August 2011
3.1.1
SAEP-25 Estimate Preparation Guidelines
Study Estimate Preparation Plan Prior to the preparation of the estimate package, the following shall be taken into consideration in the development of a Study Estimate Preparation Plan, but not be limited to:
3.1.2
•
feasibility and operability of the proposed project
•
constructability of proposed facility
•
adequacy of proposed process and related equipment as to the intended purpose
•
sufficiency of proposed utilities and electrical requirements
•
adherence of proposed size and plot plans, equipment and pipe rack spacing to existing Saudi Aramco standards
•
site investigation
•
comparison with similar facilities of previous projects (research of typical drawings and historical data collection)
•
estimate model(s) and Work Breakdown Structure (WBS) if standard model does not exist
•
cost estimating tool to be utilized, if other than KBase for oil & gas facilities and Timberline for electrical and instrumentation
•
possible alternatives.
Study Estimate Package Contents The Study estimate package shall contain the following, but not be limited to: • •
•
Table of Contents, Approval Sheet and Revision Control Project Summary Project Scope Design Basis Project Location and Conditions Related Projects Alternatives Basis of Estimate Preliminary Scope of Work Estimate Methodology General Assumptions Page 8 of 48
Document Responsibility: Project Support & Controls Dept. Issue Date: 15 August 2006 Next Planned Update: 15 August 2011
• •
SAEP-25 Estimate Preparation Guidelines
Contracting/Procurement Philosophy Project Schedule & Activities Construction Labor Man-hour & Rate Labor Productivity / Adjustment Factors Equipment Rates Indirect Costs Shipping & Handling Cost Factors Applied to Engineering, Materials & Construction Allowances Contingency
Material & Equipment Quotation & Pricing Cost Estimate Following are Major Cost Elements of the estimate:
Demolition Civil/Architectural Works o Clearing & Earthwork o Roads, Area Surfacing & Paving o Landscaping & Irrigation o Fencing o Foundations o Buildings
Structural/Steel Works Process & Utility Equipment Piping Electrical Power, Lighting & Grounding Communication Instrumentation Insulation & Fireproofing Painting/Specialty Coating Commissioning & Start-up Spare Parts Catalyst & Chemicals Custom Duties Bonds & Insurances Licensing Fees SAPMT & Support Costs Page 9 of 48
Document Responsibility: Project Support & Controls Dept. Issue Date: 15 August 2006 Next Planned Update: 15 August 2011
• 3.2
SAEP-25 Estimate Preparation Guidelines
Cash Flow & Expenditure Forecast Exclusions
Benchmarking
Budget Estimate 3.2.1
Budget Estimate Preparation Plan The following shall be considered in the development of Budget Estimate Preparation Plan, but not be limited to: •
Project scope of work
•
Site development plan and investigation
•
Specific plan and methodology for performing the market outlook and project risk assessment, if required
•
Methodologies for developing estimate basis, Material Take-off (MTO), pricing of material and equipment, unit rate for engineering and construction based on current market conditions and project risk assessment
•
Equipment List with minimum specifications
•
Identification of estimating software to be used for preparation of Budget estimate, if other than KBase for oil & gas facilities and Timberline for electrical and instrumentation
•
Work Breakdown Structures (WBS) and Standard Code of Accounts (SCA) to be used for the project
•
Plan and methodology for developing internal and external Benchmarking data
•
Approved Design Basis Scoping Paper (DBSP) or up-to-date DBSP, if routing for approval, containing:
3.2.2
Infrastructure requirements Electrical and non-electrical utilities requirements Site conditions analysis Signed Land Use Permit (LUP).
Budget Estimate Package Contents •
The Budget estimate package shall contain the following, but not be limited to:
•
Table of Contents, Approval Sheet and Revision Control Page 10 of 48
Document Responsibility: Project Support & Controls Dept. Issue Date: 15 August 2006 Next Planned Update: 15 August 2011
SAEP-25 Estimate Preparation Guidelines
Project Summary Project Scope Design Basis Project Location and Conditions Land Use Permit (LUP) Requirements Related Projects
•
Basis of Estimate Scope of Work Estimate Methodology General Assumptions Contracting/Procurement Philosophy Project Schedule & Activities Construction Labor Man-hour & Rate Labor Productivity / Adjustment Factors Construction Equipment Rates Indirect Costs Shipping & Handling Cost Factors Applied to Engineering, Materials & Construction Allowances Contingency
• •
Material & Equipment Quotation & Pricing Cost Estimate Following are Major Cost Elements of the estimate:
Demolition Civil/Architectural Works o o o o o o
Clearing & Earthwork Roads, Area Surfacing & Paving Landscaping & Irrigation Fencing Foundations Buildings
Structural/Steel Works Process & Utility Equipment Piping Page 11 of 48
Document Responsibility: Project Support & Controls Dept. Issue Date: 15 August 2006 Next Planned Update: 15 August 2011
• 3.3
SAEP-25 Estimate Preparation Guidelines
Electrical Power, Lighting & Grounding Communication Instrumentation Insulation & Fireproofing Painting/Specialty Coating Commissioning & Start-up Spare Parts Catalyst & Chemicals Custom Duties Bonds & Insurances Licensing Fees SAPMT & Support Costs Cash Flow & Expenditure Forecast Exclusions
Benchmarking.
Expenditure Request (ER) Estimate 3.3.1
ER Estimate Review Meetings During the course of Project Proposal phase, a number of review and coordination meetings, depending on the complexity of the project, will be held by members of SAPMT, Engineering Contractor, and PS&CD in order to: •
delineate responsibilities of all parties involved in preparation of the ER estimate
•
establish a clear communication channel among members
•
ensure that all team members are fulfilling their responsibilities and complying with all the requirements as set forth in this engineering procedure.
SAPMT shall have the overall responsibility of organizing the meetings, providing the required documents to PS&CD prior to review meetings and inviting all concerned parties to participate in the ER estimate and Scope Compliance Review meetings. Initial Kick-off Meeting 3.3.1.1
The initial kick-off meeting will be conducted before the 30% completion of Project Proposal. An ER Estimate Plan, as described in Section 3.3.2, shall be prepared and completed Page 12 of 48
Document Responsibility: Project Support & Controls Dept. Issue Date: 15 August 2006 Next Planned Update: 15 August 2011
SAEP-25 Estimate Preparation Guidelines
prior to the Kick-off Meeting. PS&CD will take an active role in defining Saudi Aramco ER estimate preparation requirements and providing basic information to the SAPMT and Contractor. 3.3.1.2
Interim ER Estimate Review Meetings The purpose of the interim meeting is to review the progress of the ER estimate preparation activities. The number of interim meetings should be established during the initial ER Review meeting. Minimum one (1) week prior to the review meeting, SAPMT shall provide a complete set (hardcopy and electronic file) of the ER Estimate with support documents to PS&CD for review. The interim review meeting deliverables shall include, but not be limited to:
3.3.1.3
•
ER Estimate as developed to date, with MTOs by Area and WBS
•
ER Estimate Basis
•
ER Estimate Detailed Schedule
•
A list of all scope changes from the DBSP identified to date. The list will include itemized scope change with justification and cost/schedule impact for each deviation item
•
Multiple Discipline Drawings include PFD, P&ID, Plot Plan, One Line Diagrams, etc.
•
Major equipment quotations (as defined in Section 3.3.3.5)
•
Recent quotations for Engineering and Construction rates
•
All Discipline Material Take-offs (MTOs) by Area and WBS
•
Market Outlook Study and Project Risk Assessment, as required (Refer to Section 3.3.3.4).
Scope Compliance Review Meetings Compliance Review meetings will be conducted, as deemed Page 13 of 48
Document Responsibility: Project Support & Controls Dept. Issue Date: 15 August 2006 Next Planned Update: 15 August 2011
SAEP-25 Estimate Preparation Guidelines
necessary, by SAPMT in coordination with FPD and PS&CD to ensure that the scope of Project Proposal is in compliance with the approved DBSP. SAPMT shall prepare and provide all attendees with a complete list of accepted scope changes and relevant supported documents for the Scope Compliance Review meetings. PS&CD shall be responsible for validation of cost and schedule impacts for all scope changes. A scope change is defined as any cost or scheduled deviation from the Approved DBSP. Following are examples of typical scope changes: •
Equipment capacity and sizing changes
•
Addition or deletion of equipment from the original list provided to PS&CD in conjunction with the DBSP for preparation of the budget estimate
•
Plot Plan changes
•
Process control plan or system changes (changes in I/O counts, type of control system, etc.)
•
Other design changes as a result the following:
Environmental Impact Assessment
Preliminary Hazard Analysis (PHA) or Hazard and Operability (HAZOP) studies
Project risk assessment
Underground obstructions such as rock or utilities interferences, etc.
Building Risk Assessment or any other Loss Prevention requirements
Savings realized from Value Engineering and other Value Practices
Site investigations.
All scope changes shall be recorded in a special section in the ER Estimate Package. This section shall contain a list of all scope changes with justification, cost impact, schedule impact, initiator organization, date initiated/approved and any supported cost estimate documents.
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SAEP-25 Estimate Preparation Guidelines
SAPMT shall maintain the list of the scope changes and continuously update it from the start of Project Proposal until the ER Estimate is complete. 3.3.1.4
Final ER Estimate Review Meeting A final meeting will be conducted for the purpose of reviewing and finalizing the fully-developed ER estimate prior to endorsement of the 56D Estimate. A complete ER Estimate Package must be completed in accordance with the established ER Estimate Plan and submitted to PS&CD/PCED at least four (4) weeks prior to the 56D Estimate submittal due date to FPD Budget Director. Refer to Section 3.3.3 for ER estimate deliverables. After receipt of the ER Estimate package, PS&CD will conduct a meeting with SAPMT and Engineering Contractor to review and finalize the estimate as deemed necessary. Minimum of two (2) weeks prior to 56D Estimate submittal due date to FPD Budget Director, SAPMT shall provide PS&CD the Project Proposal sheet approved by SAPMT, FPD and Proponent and a copy of the Technical Meeting minutes with a complete list of all finalized items with detailed cost estimate of impacted items. These documents are required for finalizing the 56D Estimate for submittal to FPD Budget Director. When the ER Estimate is over or under by more than 10% of the Budget Estimate, PS&CD and SAPMT shall jointly prepare a scope reconciliation and comparison between the approved Budget and the established ER Estimate. The review shall include a list of all scope changes from DBSP which will be part of the ER Estimate package.
3.3.2
ER Estimate Plan SAPMT shall be responsible for developing an ER Estimate Plan which will be reviewed and discussed during the initial kick-off meeting. At the minimum, the ER Estimate Plan should contain: •
Project scope of work
•
Site development plan and investigation
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Document Responsibility: Project Support & Controls Dept. Issue Date: 15 August 2006 Next Planned Update: 15 August 2011
3.3.3
SAEP-25 Estimate Preparation Guidelines
•
A detailed schedule with major and interim milestones for completing the ER Estimate deliverables
•
A quality control plan for estimate preparation
•
Specific plan and methodology for performing market outlook and project risk assessment for selected projects greater than $300 million (refer to Section 3.3.3.4)
•
Methodologies for developing estimate basis, material take-offs (MTOs), pricing of material and equipment, unit rate for engineering and construction based on current market conditions and project risk assessment
•
Plan and methodology for developing internal and external benchmarking
•
Identification of estimating software to be used for preparation of ER Estimate
•
Work Breakdown Structures (WBS) and Standard Code of Accounts (SCA) to be used for the project
•
A list of ER Estimate deliverables required for interim review and final review
•
An organization chart of the estimating team
•
Roles and responsibilities of all involved parties in developing the ER Estimate and identifying point of contact from each organization.
Estimate Package Contents The ER Estimate Package shall contain the following, but not be limited to: 3.3.3.1
Table of Contents, Approval Sheet and Revision Control
3.3.3.2
Project Summary Provide a brief synopsis of the objectives, scope and current progress of the project. Following shall be incorporated into the project summary: a)
Project Scope Describe briefly what is to be accomplished by the project, such as project activities to be achieved, physical facilities to be built, demolished, or revamped, Page 16 of 48
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SAEP-25 Estimate Preparation Guidelines
etc. This information will be a summary of work described in the current Design Basis Scoping Paper (DBSP) and/or Project Proposal scope of work. b)
Design Basis Provide a synopsis of how the project is to be accomplished by summarizing the project’s basis of design.
c)
Project Location and Conditions Define the location of the project (indicate whether onshore or offshore, etc.) and site conditions.
d)
Related Projects Identify related finished or on-going projects, if any.
3.3.3.3
Basis of Estimate The Basis of Estimate defines the methodology, identifies the determination of assumptions used in estimate development and describes how these criteria affect the outcome of the estimate. The basis of estimate shall constitute in a comprehensive manner, the following: • • • • • • • • • • • • • • •
Detailed Scope of Work Estimate Methodology General Assumptions Contracting/Procurement Philosophy Detailed Basis of the ER Estimate Construction Schedule & Activities Construction Labor Man-hour and Rate Labor Productivity/Adjustment Factors Equipment Rates Indirect Costs Shipping & Handling Cost Factors Applied to Engineering, Materials & Construction Allowances Contingency Project Overhead & Profit (OH&P) Factors Page 17 of 48
Document Responsibility: Project Support & Controls Dept. Issue Date: 15 August 2006 Next Planned Update: 15 August 2011
• • 3.3.3.4
SAEP-25 Estimate Preparation Guidelines
Currencies Exceptions or deviations to these guidelines, including justification.
Market Outlook Study & Project Risk Assessment PS&CD/PCED will coordinate with SAPMT to identify projects worth $300 MM or greater that will be required to do a Market Outlook Study and Project Risk Assessment. Market trends and project risks are assessed to avert potential impacts on project development and execution. Results of these studies shall be included in the basis of estimate and contingency rates shall be recommended accordingly. These shall include, but not be limited to, the following: •
Worldwide demand for Engineering and Construction services
•
Market conditions that affect major equipment procurement pricing and delivery
•
Trends related to supply and demand of major equipment and bulk material in the Middle East that could affect schedule and costs on the project
•
Availability of Engineering Contractors to undertake LSTK contracts in Saudi Arabia
•
Assessing the financial markets and institutional support for current and future Middle Eastern projects
•
Project risks study on constructability, tie-in execution, environmental, security and other factors related to a specific project
•
Forecast of Engineering Contractors Overhead and Profit Margins
•
Any other factor that can impact the future cost of the project.
Following are some of the resources that can be used in developing a Market Outlook study: • • • •
Trade Organizations Trade Magazines Financial Institutions’ studies and surveys Government studies and surveys Page 18 of 48
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• • 3.3.3.5
SAEP-25 Estimate Preparation Guidelines
Industry studies and surveys Manufacturers and Suppliers data.
Material & Equipment Quotation & Pricing a)
Quotation Requirements The following are general guidelines for major bulk material item and equipment quotations: 1)
Three (3) technically and commercially approved quotations for items over $250,000
2)
Two (2) technically and commercially approved quotations for item with value of $50,000 to $250,000
3)
One (1) quotation or validated in-house data shall be required for items valued less than $50,000
4)
Quotations shall be provided in a Bid Tabulation format with recommended selection
5)
The SAPMT shall provide the Engineering Contractor all Saudi Aramco novated equipment and licensed purchase orders to include in the Estimate
6)
Quotations shall be valid through Expenditure Request Approval (ERA) date.
All quotations for “Engineered Items” will include a technical & commercial evaluation as a prerequisite for their use in the ER Estimate. Material and equipment pricing shall include packaging, freight, customs clearance, material handling and delivery to job site. This cost item will be clearly and separately identified in each package. Saudi Aramco Vendor’s Price/Volume Discount Purchase Agreement (VDPA), if applicable, shall be included in the quotation documentation. Quotations for major equipment shall include Vendor representative cost per day (10 hours/day) for providing assistance to Saudi Aramco during construction and pre-commissioning. The cost for vendor representatives
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SAEP-25 Estimate Preparation Guidelines
is included in SAPMT cost as described in Section 3.3.3.6.r. It is recommended that quotations shall be solicited from at least three (3) Saudi Aramco approved vendors to avoid potential delays due to lack of responses. Quotations for long-lead and major/engineered equipment items should start as early as possible due to the potential of prolonged technical clarification. The following items need to receive quotations, regardless of value: • • • b)
Cables, conduits, and cable trays Cement Lined Carbon Steel Piping Stainless Steel and Alloy Piping sizes above 8” and Carbon Steel Piping sizes above 10”
Material Take-off (MTO) All material Take-off (MTO) will be based on NEAT quantities as shown on project drawings and other documents. Any recommended or required allowances such as rounding off, cut/waste, etc. will be identified as a separate line item. Material Take-off (MTO) quantities will be in Imperial Units. It is recommended to start MTOs only when the scope is substantially complete in each area of work. Early MTO preparation could cause errors and omissions due to scope changes at a later date.
c)
Material Sources Material can be procured for Saudi Aramco projects from the following sources: • • •
Contractor Provided Material Saudi Aramco Provided Direct Charge (DC) Material Saudi Aramco Provided SAMS Material
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SAEP-25 Estimate Preparation Guidelines
The material sources are outlined in the Project Execution Plan (PEP). However, if Project Execution Plan (PEP) is not available, the SAPMT shall determine the material sources. The material sources will determine the application of overhead factors associated with each type of procurement. Pricing for material from Saudi sources will be obtained from Saudi Aramco Material Department (MD). Suggested material factors shall be highlighted and applied to the total material costs. d)
Material Overhead & Profit Overhead & Profit (OH&P) percentages for Engineering Contractor-furnished bulk material and equipment shall be identified, if applicable, and included in the ER Basis of Estimate document.
3.3.3.6
Cost Estimate – Work Breakdown Structure (WBS) Level The ER Cost Estimate shall be prepared and organized in accordance with the approved Work Breakdown Structure (WBS) and Code of Accounts (COA). As defined in the Work Breakdown Structure, a facility or work area shall include, but not be limited to, the following: a)
Demolition Quantities and cost items to be demolished and labor/equipment hours required for accomplishing the demolition work activities shall be provided.
b)
Civil/Architectural Works For both civil and architectural works, the following shall be incorporated in the ER Cost Estimate: 1)
Clearing & Earthwork Quantities and costs for site development and preparation items such as grading, ponds and/or linings, dykes, tank pads, culverts, catch basins, manholes, storm water and sewer piping and any other required earthwork shall be provided.
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2)
SAEP-25 Estimate Preparation Guidelines
Roads, Area Surfacing & Paving Quantities and costs for in-plant and offsite roads and paving shall be provided. Any additional items that may be required, such as Road Right of Way (ROW) development, cut and/or fill prior to actual paving shall be provided.
3)
Landscaping & Irrigation Quantities and cost for all specified landscaping shall be provided.
4)
Fencing Quantities and costs for fencing subdivided by classification shall be provided.
5)
Foundations For spread footing concrete foundations, quantities, dimension, type of foundation and pricing must be identified. Preliminary design checks will be required for special foundations such as large towers or large rotating equipment packages. For pile foundations, the following shall be provided: • • • •
6)
A piling take-off by foundation type Piling specification/material description Unit price quotations Preliminary designs and quantity take-offs for formed concrete pile caps.
Buildings Building quantities and pricing based on size, type and key materials of building construction shall be provided. The estimate will highlight nonstandard items included in a particular building that will have an impact on the cost of that building.
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Document Responsibility: Project Support & Controls Dept. Issue Date: 15 August 2006 Next Planned Update: 15 August 2011
c)
SAEP-25 Estimate Preparation Guidelines
Structural/Steel Works The structural/steel works estimate shall include volumetric sketches showing dimensions for the pipe racks, equipment structures and platforms that are not part of specific equipment supplied by Vendors. The quantities of structures in tonnes will be separated and grouped as Heavy (>60 kg/m), Medium (>30 and < 60 kg/m), Light (>10 and
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