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Reducing Total Installed Cost on Future MegaprojectsCapturing lessons learned from the recent wave of megaprojects on the US Gulf Coast
The Next 50 Years: Capturing Transformational Possibilities
Sept. 5-82018 JW Marriott Hill CountrySan Antonio, TX
Introducing our speakers
Reducing Total Installed Cost on Future Megaprojects
Moderator Panelists
Kurt Schoeffler Steve Wardle Matt KeyEngagement Manager & ECC Future Leader
Executive Project Director
Vice President ofConstruction Operations
Recent US Gulf Coast megaprojects have failed to meet cost and schedule objectives
Reducing Total Installed Cost on Future Megaprojects
Overruns observed on recent USGC projects1
Median range observed
Cost2
Schedule3
10-30+%
0-15+%
Source: Westney Consulting Group1 20 USGC petrochemical projects >$250 million in capex. Results hold for projects >$1 billion in the dataset.
2 Percent increase over budget at sanction.
3 Percent increase over original duration for EPC phase.
Current projections show that elevated levels of major project activity are likely to continue
Reducing Total Installed Cost on Future Megaprojects
Source: Westney Consulting Group, Construction Insider® database
Historical level of skilled labor available for major capital projects on the US Gulf Coast
Confirmed and likely projects
Potential future projects
Which areas provide the greatest opportunity for reducing Total Installed Cost (TIC)?
Reducing Total Installed Cost on Future Megaprojects
Contracting Strategy1
Project Culture 2
Design & Layout3
Modularization4
CraftProductivity5
Contracting Strategy
Reducing Total Installed Cost on Future Megaprojects
1
Key considerations
§ Understanding how risk is being appropriated and why
§ Most contract types can work
Project Culture
Reducing Total Installed Cost on Future Megaprojects
2
Key considerations
§ Transparency and trust
§ Win-win approach – is it real?
§ Importance of “one team”
Design & Layout
Reducing Total Installed Cost on Future Megaprojects
3
Key considerations
§ Owners pursuing “capital efficiency”
§ Plant arrangement / layout
§ Constructability
§ Owner specifications / requirements
Modularization
Reducing Total Installed Cost on Future Megaprojects
4
Key considerations
§ Levels and drivers of modularization
§ Yard location and availability
§ Risks and trade-offs
§ Cost vs. stick built
Direct construction work-hoursMillions
9.0
3.2
Structural Steel
Standard Ethane Cracker
0.3
Pipe
1.50.9
1.12.1
Equipment
Modularized Ethane Cracker
1.1Sitework, U/G,
and Concrete
Electrical and Instrumentation
Other
18.0
3.1
5.2
2.7
2.5
3.4Work-hours removed from site
ILLUSTRATIVE
Craft Productivity
Reducing Total Installed Cost on Future Megaprojects
5
Key considerations
§ Construction-driven planning
§ Developing competency of front-line leadership
§ Strong completion practices and tools
§ Logistics
§ Engineering delivery
Q & A
Reducing Total Installed Cost on Future Megaprojects
Reducing Total Installed Cost on Future Megaprojects
Thank You
