With recent capital works investment in the mining, oil & gas industries leaning heavily towards brownfield works by way of asset life extension, de-bottlenecking and plant reliability focus, asset owners can easily waste engineering capital in deciding which projects to advance and which to park.
Although the AACE Estimate Classification criteria is helpful to assess the depth of engineering required to accurately estimate the cost of a potential greenfield project opportunities, when dealing with brownfield scope I believe there is no substitution for a guided pre-evaluation study process as a pre-cursor to provide a low cost ‘budget value’ for the range of potential solutions.
Throughout my career I have led many of these informal stage gate type development evaluations and have found some mandatory elements to ensure success. There may well be more than those outlined below which add further value, but these are the ones which have repeatedly held as being the must do’s:
A – Always identify and articulate the ‘core drivers’ (why we should do this) and remember there is often more than one, but in all cases they will fall into one of the three classes below:
- Commercial – offering higher output same production cost, reducing maintenance or other operating support costs, reducing maintenance or other plant down-time, etc. Generally lowering the overall long term cost per unit sold.
- Risk – to eliminate, reduce or better mitigate risks including: environmental, commercial, market, reputation, health & safety, statutory compliance, etc.
- Strategic – market positioning, workforce sensitive initiatives, competitor blocking, development of market alternatives, plant or product diversification.
B - Brainstorm the idea(s) with a complete team who collectively fully understand all perspectives of the asset by way of operations, maintenance and, can facilitate a high level engineering assessment of the proposed physical scope plus high level assessment of the capital and operating cost of the proposed work.
C – Always develop a basic high level project risk and benefits analysis aligned to the above drivers, circulate to the workshop delegates, refine and develop an action plan.
D – Use ONLY estimators familiar with your industry, the process and equipment to work internally with your team. Use only multi-discipline estimators who are capable of forming a comprehensive mind map of the proposed solution(s) without reams of paperwork and, be able to articulate them via a well structured WBS and detailed cost estimate. This document along with a headline schedule will serve as the central core document used to build and articulate a basic map of the potential process and asset solutions. After all, there are only five business elements we are truly interested in before we proceed to the next phase:
1 – Capital Cost
2 – Operating Cost
3 – Potential Risks Created
4 – Benefits Returned
5 – Time to production.
E – Once the estimate structure is completed identify the high commercial risk variables and reconvene the workshop to determine the limits of these variables defining the capital cost ‘span’ or precision.
Using the above approach it is possible to pre-assess process plant options with a high level of internal buy-in and to eliminate outlying solutions in favor of focusing the effort and the time on those most likely to achieve the goal. Another benefit of this approach is the innovation which emerges and is effectively assessed and appropriately dealt with as the various stages of the development workshops progress. The only true risk is the cost of the final engineered solution turns out to be more expensive than the above estimate… however, having not spent the money on ‘blind alley’ engineering solutions, this risk is well worth the more likely potential of lower overall cost and shorter time to production.