Aerni consulting services Cost reduction/ Cost estimating Zürich/Maur, 2010 1
Content 1 Experience and current situation 2 Process- and 3D-object oriented cost models 3 Possible services and results 4 Comos prototype for piping estimate (enclosure) 2
Experience - Support 1 Aerni consulting was founded in 2001, its focus is consulting in the system- and plant business Our Goal is helping companies to become more competitive Support of companies and teams with proven methods, innovations and ideas. But also with a pragmatic approach and a cross functional view of the company Or with project-/program management of defined improvement projects/programs 3
Experience Methods and tools 1 Aerni consulting has developed proprietary methods and tools in the following areas: Plant optimization/development and cost reduction Knowledge management and reuse in the engineering process, including more accurate cost estimating Prototype for cost estimation in Comos (piping mat, pref and erection) Process reengineering adapted to the plant business (6 Sigma) IT application benchmarks on Net Present Value basis Innovation (business, products and processes) 4
Experience Life Cycle Cost (LCC) reduction in the plant building industry 1 The thorough implementation of optimized/modularized/standardized plants/reused engineered solutions will allow to achieve significant more value for all stakeholders Improvement of 10-20% in Net Present Value for system/plant Customer Customer needs Reduction of engineering hours and cycle time up to 50% and cost of poor quality by 25% Performance, cost consistency,quality and cost Optimization/ modularization/ standardization Plants, services, technologies Workflows 6 Sigma Capabilities Tools and methods (PLM, CAEs, 6 Sigma, DFx, etc) Best-in-class people 5
Life Cycle Cost (LCC) reduction in the plant building industry 1 Only smart cost estimating and control models allow to support the LCC / cost reduction potential in the plant business industry Major elements of a LCC optimization/ cost reduction program 1: Get cost transparency Plant / equipment / bulk cost structure Baseline setting 2: Set targets and Priority setting 3: Optimize process and reduce costs (LCC reduction) Process optimization Key package units/equipment / commodity strategy Low cost country sourcing (LCS) Redesign to cost and standardization 4: Measure and follow-up: Initiative monitoring and metrics 5: Apply to projects: compliance mechanisms 6
Our experience R&D and cost reduction 1 Our experience is in the implementation of cost reduction and/or performance improvement of new products Project management for the modularisation/standardisation of steam reformers Improvement of plant NPV by approx.15 % in 4 months Modularisation/Standardisation of wet cooling towers The team (England, France, Germany, Belgium) developped a new family of wet cooling towers within 4 months with a cost reduction of 17% Modularisation/Standardisation of waste heat recovery boilers for combined cycle power plants. The team achieved a cost reduction of 25% within 8 months Development of a cost reduction methodology for the plant business and development of new cost estimating workflow for piping and civil including new structures, unit rates and calculation of norm hours for erection services Support in the development of a new pump family (conjoint Analysis, FMEA and modularisation) Voice of the customer for combined cycle power plants 7
Experience a sample of current essential plant structures Illustrative 1 The various structures coexist for the necessity of order execution, the relationship are not made explicit in a common data model and consistency is difficult Functional process structure 3D structure Cost structure H2 plant H2 plant Feed treatment P10 H2 plant Reforming & WHR P11 Etc. Design area PR mechanical equipment Vessels Electrical HV Relationships MV MCC P80P1M1 Design area 1 LV reactors Bulk Relationships rot equipment Piping pump P80P1 Relationships 8
Current situation During plant development or bid/project execution, different documents are produced which show different views, abstraction levels and data redundancy Functional View Single line 1 PFD Concept Engineering- Phases Plot Plan 1 P&ID 1 P&ID n Basic Location view 3D piping Isometric drawings 3D Plant Model 3D Product Model Equipment specifications Steel structure Mechanical data sheet Detail - Procurement - Production Piping BOM Supplier drawings Construction - Commissioning Product view 9
Experience Current situation typical EPC company 1 Various tools and structures characterize often the cost estimating and cost control landscape One tool to consolidate the cost from various disciplines and to calculate final price to customer (own development, SAP, MS-excel or other). Each discipline quantifies their Material Take-Offs (MTOs) or Bill Of Quantities (BOQs) with their unit rates (own developments, MS-excel) and enters the summary data into the above consolidation tool. Division of work is ensured by project management and discipline in a separate document or ev. in the cost consolidation tool. Data integrity between disciplines is more or less realized through equipment lists, PFDs and layout drawings Each main location often has its own tool/data Cost objects are not attached to engineering objects with the consequence that engineers would like to know the cost to optimize their plants but have seldom the information at their fingertips Purchase order positions in the ERPs often have a different granularity than the unit rates negotiated with the supplier 10
Experience Key findings from past projects for EPC companies 1 Economies of scope and scale, cost transparency and reduction of complexity are also in the plant business important cost reduction drivers Plant optimization/cost reduction is not feasible without cost information Accuracy of cost estimation is better if a company can rely on data from past projects (BOQs and unit rates) Data consistency between disciplines and project phases (tendering, basic engineering, detailed eng, etc) can best be achieved by using the least amount of databases and structures/data models which ensure consistency between discipline and project phases Avoid if possible data duplication and ensure that data are only entered once Start IT projects with the big picture in mind but with a limited scope and complexity to achieve quick results 11
Cost tools required by an EPC company 1 Requirement to cost structure and estimating tool The process and 3D configuration of the plant shall automatically produce the necessary cost objects to ensure consistency of scope and cost (Reuse information from ongoing or closed projects in tendering and execution) Tool to achieve target cost in proposal and order execution Confidence in estimate (Goal +/- X% between as sold und as built) Allow management to compare BOQs and unit rates between the different projects for estimates and as built projects Control BOQs and unit rates from tendering to as built (status as ordered, as engineered, as procured and as built) Support for the optimization of technical solution( Allocation of cost to the structures of the technical solutions (Process catalog and 3D catalog)) by allowing engineers to see the cost of what they have engineered Show quickly and quantify precisely the effects of changes to the supply- and work-split Flexibility with regard to price changes (project in a different country or with other suppliers Allowing Bids from key suppliers with slender resources and BOQs of most expensive items Allocation of cost to disciplines Seamless transition from old cost structure to new structure 12
Content 1 Experience and current situation 2 Process- and 3D-object oriented cost models 3 Possible services and results 4 Comos prototype for piping estimate (enclosure) 13
Process- and 3D-object oriented cost models and estimating Illustrative 2 Based on process and 3 D structure (for Budget and firm price proposal ) Selected process unit variants Process structure Feed treatment V1--V1 Process Eq V1V1 Reforming G1--V1 etc. Plant Zürich Gas cooling E1--V1 etc Etc. Additional functions from 3D-structure Reformer & WHR MEUV B1--T1 Radiation Zone CG B1B1--V1 Selected MEU variants Selected EU variants Process Valve V1Q1 WHR CG B1B2--V1 etc Comb air blower B1B3--V1 HEX steel structure MEUV B2--V1 HEX steel structure EUV B2B4--V1 Desulfurization EUV B2B2--V1 etc 14
Example of a process oriented cost model Illustrative 2 View level 5 is a quantification of Bill Of Quantity (BOQ) linked to unit prices per BOQ-type and elements process unit variant V1--T1 Process valves Process pipes Engineering Process Instruments Process Equipment Engineering Process valve V1Q1 Purchasing Purchasing Process instrument V1T1 Engineering Basic Valve V1Q1-Q1 Piping Insulation Instrument Hook up Piping Basic Ext. basic Detail Valve material Valve erection Pipe material Pipe erection Insulation material Insulation erection Primary element Transmitter Switches Hook up material Hook up erection Weather protec. Material Pipe material Pipe erection Ext. basic Detail Weather protec. erection 15
Process- and 3D-object oriented cost models and estimating 2 The structure of the cost model allows an evaluation of BOM and cost according to different views Cost model Previous Project Management Structure 3D Structure cost structure Discipline Structure Procurement structure 16
Interaction between engineering, project management and cost estimating 2 The estimate is configurated by the choice of process and 3D structure elements with additional scope of work and delivery Functional Scope Scope of Work Scope of Work detail Functional view Gaseous Feed Handling x x Feed Compression x x Feed Purification x x H2 Recycle x x Liquid Feed Handling MEA Washing Reformer Steam System Fuel System Prereformer Etc. etc. Work category Project management Conceptual engineering Basic engineering Extended basic Detail engineering Procurement Material supply Transport Erection supervision Erection Commissioning Functional scope Gaseous Feed Handling L L L L L L L L L C L Feed Compression L L L L L L C C C C L Feed Purification L L L L L L L L L C L H2 Recycle L L L L L L C C C C L Liquid Feed Handling etc. MEA Washing Reformer Steam System Fuel System Prereformer Etc. L: Linde C: Customer Scope of delivery Cost Model Delivery Columns x Adsorbers x Reactors x Vessels Tube type heat exchangers Tanks Oil separators x Etc. x x x 17
Workflow from process selection to plot plan 2 For reuse to happen from functional solution decision to layout decision, the data must flow accross functional borders and across executed projects Selection of solution - Decision > Topology Design - Decision > Dimensioning Layout - Decision > Positioning Process Unit Process selection Workflow 3D catalog Plot Plan with most equivalent MEUVs/EUVs Process unit variant Process Equipment Valves, pipes etc Allocation of process Equipment Erection Unit Variant (EUV) and size class Main Erection Unit Variant (MEUV) 18
Structured selection of process solution Illustrative 2 For reuse to happen, the plant needs to be structured into process units, process units variants and execution options for Equipments Process unit Feedwater treatment Different level of reuse Process unit variant Process Equipment Execution options Process Valves Process Pipes 2 pressures with 2*100%, 2*100% W2 Q1 W3 Q2 PD1 P1 V1 Q3 W4 W5 W1 G1 L1 W8 W7 W6 PD2 G2 W9 W10 selected PFD-Template 19
Structured selection of 3D solution Illustrative 2 Selection of Plot Plan template having the most equivalent MEUVs and EUVs as starting point for the design of the plot plan 100 m Main Erection Unit +B1 Main Erection Unit +B2 80 m Main Erection Unit +B3 Main Erection Unit +B4 Variant: +B4 V1 20
Modularization/standardization 2 Source: Eli Lilly 21
Modularization/standardization 2 Source: Eli Lilly 22
Modularization/standardization 2 508 Modules Source: Eli Lilly 23
2 Modularization/standardization Source: Technip PELC 2005 Copyright c 2010 Alain Aerni all rights reserved 24
2 System and process map Comos Info from as built BOQ /cost Tendering Simulator BOQ BOQ Templates Comos 3D-CAD P&ID BOQ as built Procurement & Logistics Engineering Comos PFD cost Construction I... Electr... Templates Templates Templates Templates Engineering tools ERP (SAP) Copyright c 2010 Alain Aerni all rights reserved 25
2 Design optimization and bidding Exchange of data between engineering tools and cost estimating is not necessary anymore as the cost objects are attached to the engineering objects Logical Diagrams 3D Model Object storage Units/ subunits Comos asengineering Loop Diagrams Database P&ID Elements / Subelements PFD Unit rates Hook Ups PFD Isometrics Details/Rate Codes Estimate Copyright c 2010 Alain Aerni all rights reserved 26
Content Copyright c 2010 Alain Aerni 1 Experience and current situation 2 Process- and 3D-object oriented cost models 3 Possible services and results 4 Comos prototype for piping estimate (enclosure) all rights reserved 27
3 Possible Aerni consulting services and results The deliverables are optimized for quick results by selecting first a reduced scope (discipline and product line) and a meaningful work split Deliverables of Aerni consulting: Project Management or consulting of Client project manager Design of a new integrated estimating workflow Defining unit rates and and rate codes User requirement specification, System specification, design specification, implementation (ev worksplit between Client, Aerni consulting and Comos), Formatting, assembling and loading of necessary historical data Installation and module testing Training of workflow with lead users Copyright c 2010 Alain Aerni all rights reserved Results: Short term New estimating workflow for a discipline in one product line Process catalog with BOQs and cost in Comos to estimate cost and prices for one discipline and product line Medium term New estimating workflow Process catalog with BOQs and cost in Comos to estimate cost and prices 28
Content Copyright c 2010 Alain Aerni 1 Experience and current situation 2 Process- and 3D-object oriented cost models 3 Possible services and results 4 Comos prototype for piping estimate (enclosure) all rights reserved 29