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Basis of FEL II Estimate

CONTENTS
1. Abbreviations and definitions
2. Objective
3. Scope of facilities
4. Scope of services
5. Documents
6. Project execution strategy
7. Schedule basis
8. Estimate organization
9. Estimate methodology
10. Below line costs
11. Currency rates, escalation, and contingency
12. Stated estimate accuracy
13. Estimate exclusions
14. Assumptions and qualifications
15. Post Estimate Changes

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1. Abbreviations and Definitions


a.

Abbreviation (List all used)


CCTV
EPC
DCS
IT
LAN
MTO
QA/QC
PFD
P&ID

b.
known)

Close Circuit Television


Engineering, Procurement and Construction
Distributed Control System
Information Technology
Local Area Network
Material Take Of
Quality Assurance/Quality Control
Process Flow Diagram
Piping and Instrument Diagram

Definitions (List all terms than may not be universally


Inside Battery Limit: All process unit sections as indicated on
the plot plans.
Outside Battery Limit: Outside battery limit are all facilities
not included in the process units, above, including utilities,
infrastructure, environmental facilities, product movement, and
storage.

2. Objective
The objective of this estimate is to approximate and calculate
the probable cost of the defined facility.
This Basis of Estimate presents the basis, guidelines,
assumptions, expected time schedule, and briefly describe the
methods and techniques used to develop this capital cost
estimate for the facility.
The estimate includes engineering, procurement and
construction with an expected overall accuracy of +[__]%/-[__]%.
The estimate has been developed and structured based on the
assumption that a [cost reimbursable, lump sum, or variant
of these] contract will be awarded to a single prime contractor
at the conclusion of this FEL II. This contract will include FEL III,
detail engineering, procurement and construction through
mechanical completion. All costs beyond mechanical completion
are assumed to be a part of client costs.

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3. Scope of Facilities
The scope of the facilities, equipment, material, and labor
include:

General Description (Provide overall description)


Detail Scope of Facilities (Provide description of each)
o Process Unit 1
o Process Unit 2
o Process Unit 3
o Process Unit 4
o Utility Systems
o Ofsites
Existing Facilities to be Provided (Enumerate as
appropriate)
Impact on Provided Existing Facilities (Provide
description)

4. Scope of Services
The scope of services to be provided and included in this
estimate are as follows:

Office (Provide description of each as appropriate)


Engineering
Procurement and Contracts

Site (Provide description of each as appropriate)
Construction Management
Field engineering support
Contract Management
Warehouse and management
Field purchasing

5. Documents
The following documentation has been used as the basis for the
preparation of this estimate (Note: these may not be the latest
revisions; costs for changes subsequent to these drawings are
included in Section 15. Post Estimate Changes, below):
o FEL II Overall Plot Plan - Drawing No.____ Rev ___ dated
____
o PFDs Drawing No. ____ Rev ___ dated ____

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o P&IDs Drawing No. ____ Rev ___ dated ____


o Plot Plan(s) Drawing No. ____ Rev ___ dated ____
o Electrical One Line Diagram(s) Drawing No. ____ Rev
___ dated ____
o Electrical Area Classification(s) Drawing No. ____ Rev
___ dated ____
o Control Philosophy Narrative (or Diagram) Drawing No.
____ Rev ___ dated ____
o Mechanical Equipment List - Rev ___ dated ____
o Etc.
6. Project Execution Strategy
This cost estimate is based on the project execution plan
outlined below:
Plan Overview and Summary (Provide overall
description)
Critical Issues Identified Risks, Uncertainties (Provide
overall description)
Project Philosophy (Provide overall description)
Expandability (Provide overall description)
Flexibility (Provide overall description)
Reliability (Provide overall description)
Maintainability(Provide overall description)
Operability(Provide overall description)
7. Schedule Basis
As part of the FEL II development of the facility, a Base Case
schedule with a mechanical completion on ____ has been
developed.
The key milestone dates are as follows:
o
o
o
o
o
o
o

FEL II engineering completion: ____


FEL III engineering starts: ____
FEL III engineering completion: ____
Start of efective construction: ____
Construction mechanical completion: ____
Etc.
Etc.

8. Estimate Organization
a.

Work Breakdown Structure

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The Work Breakdown Structure corresponds to the physical


plant breakdown which has been used to segregate the
costs of the project The estimate is made for the following
units:
o
o
o
o
o
o
b.

100
Process Unit 1
200
Process Unit 2
300
Process Unit 3
400
Process Unit 4
700/800 Ofsites Systems
900
Utility Systems

Code of Accounts
The cost code of accounts is the basis for identifying cost for
each unit at a detailed level. The accounts including costs
of labor, subcontracts and materials are as follows:
o Direct Field Cost
Site Preparation, Excavation, and Civil
Concrete
Structural Steel
Buildings
Machinery & Equipment
Piping
Electrical
Instruments
Paint & Insulation
o Indirect Field Cost
Temporary Construction Facilities
Construction Services and Supplies
Field Staf Labor, Payroll Burdens, and Expense
Craft Labor and Payroll Burdens
Equipment Rental
Small Tools
Engineering Office Labor, Payroll Burdens, and
Expense
o Other Cost
Profit Fee
Sales Tax
Escalation
Contingency
o Total Installed Cost

9. Estimate Methodology

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a.

Direct Field Costs (Process Units)


Material quantities and labor units for the Process Units
have been developed by _____. Included within the battery
limit is the direct labor and material cost for installing the
equipment and its associated foundation, piping, electrical,
field instruments, structural, insulation painting. Drawings
and sketches utilized to take-of material and labor units are
listed in Estimate Process Units Drawings and Sketches, at
the end of this section.

b.

Direct Field Costs (Ofsites)


The Ofsites material quantities and labor units are based on
____. The direct labor and material cost for installing the
equipment and its associated foundation, piping, electrical,
field instruments, structural, insulation painting are
included. Drawings and sketches utilized to take-of
material and labor units are listed in Estimate Ofsites and
Utilities Drawings and Sketches, at the end of this section.

c.

Direct Field Costs


The following is a list of Process Units and Offistes items
that were included as to quantities and pricing indicated:
Excavation and Civil - Site preparation, excavation,
and civil work quantities and pricing are based on
____, and include cut/fill, roads, paving, fencing and
railroads, except as specifically excluded below.
Concrete - Concrete quantities and prices are based
on ____.
Structural Steel - Structural steel quantities and
prices are based on ____.
Buildings - Building costs are based on ____,
quantity and sizes are based on ____. Building
foundations are based on ____. Buildings included in
the estimate:
-

____ Substations
____ Control Buildings
____ Warehouses

Mechanical Equipment - Equipment costs have


been priced from equipment data sheets based
on ____. Equipment costs are based on job site
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delivered cost. Startup spare parts for compressors,


pumps and other rotating miscellaneous process
equipment [are/are not] included in the equipment
cost. Heavy lift contract and heavy construction
equipment over 25 tons have been included as a line
item in the Direct Field Cost. Costs for equipment
under 25 tons have been included ____.
Piping - Process Unit Piping quantities have been
determined by ____. Ofsites quantities were
developed ____. Underground piping quantities
have been estimated based ____.
Electrical - Engineered equipment and systems are
identified from a preliminary electrical equipment
list, single-line diagrams and other preliminary
information developed by ____. Electrical tracing
quantities have been estimated by manual takeof
based on preliminary PFD's and arrangement
drawings for interconnecting piping. Major electrical
equipment requirements were estimated by ____.
Pricing is based on ____.
Instrumentation - DCS, analyzers, analyzer
shelters and fiber optic cable were estimated based
____. Quantities for switches, receptacles, lighting,
are estimated based ____. For the of-sites,
quantities are based ____. Ofsites cable lengths are
based ____. Included in the estimate are cost for
configuration, programming and checkout by a DCS
site engineer. Control/relief valve and instruments
are based on ____. Process Unit instrument bulk
materials quantities are based on ____; for Ofsites,
the estimate is based on ____.
Paint and Insulation - Quantities were developed
from ____. Painting requirements are based on ____.
d.

Labor Cost Pricing Basis


Direct field labor cost was developed using _____.
The labor rate includes payroll burdens and benefits,
____.

e.

Bulk Material Pricing


Current pricing information based on _____ have
been used.

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f.

Allowances
Design Allowances Mechanical Equipment
The initial estimated cost of a piece of
equipment by precise material takeofs is
seldom the final installed cost. Continuing
engineering and design development after the
budget price is received or the purchase order
is placed normally requires modifications to
engineered equipment, thereby increasing the
cost. Following are the mechanical equipment
design growth allowances used in the
estimate:
Field Fabricated Tanks
Shop Fabricated Tanks & Vessels
Compressors and Blowers
Heat Exchangers
Fired Equipment
Pumps
Material Handling Equipment
Miscellaneous Equipment

___%
___%
___%
___%
___%

___%
___%

___%

Material Take-Of (MTO) Allowances


As described above for equipment, the initial
estimated cost of material by precise material
takeofs is seldom the final installed cost. The
firmness of the plot plan, layout, and design
criteria such as line sizes are the primary
variables in assessing the magnitude of the
MTO allowance required to approximate final
installed cost. An MTO allowance is applied to
the forced portion of the estimate and covers
the following:

Variations in quantities due to layout and


routing changes between the preliminary
estimate phase and the final detailed
design phase.
Permanent material and accessories too
small for a detailed takeof and
individual pricing, or materials of a
miscellaneous nature.
Minor errors and omissions at the time of
estimate preparations.

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Following are the MTO allowances used in the


estimate:
Excavation and Civil
Concrete
Structural Steel
Buildings
Piping
Electrical (bulks)
Electrical Equipment
Instruments
Paint and Insulation
g.

___%
___%
___%
___%
___%
___%

___%
___%
___%

Construction Management
Construction management costs have been
estimated at ___% of total installed costs, based on
historical information for similar type projects. The
scope covered by construction management include
the following:

h.

Temporary Construction Facilities - Includes


labor and material costs for temporary
construction facilities such as office trailers,
construction warehouse, laydown areas etc.
Includes temporary utilities such as heat,
electric, water, etc.
Construction Management Field Staf and
Expenses - Includes labor and expenses for the
lumpsum contractor support for construction
(site construction manager, discipline
superintendents), site engineering, safety,
turnover, HSE, QA/QC, materials and project
controls.
Construction Services, Supplies and Expense Includes labor and material costs for
construction services such as medical and first
aid, third party inspection testing,
communications/postage/repro., etc.

Detail Engineering
Detail engineering costs have been estimated at __%
of total installed costs based on historical
information for similar type projects. This cost
includes the following:

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Contractor engineering, design, procurement,


shop inspection and construction support.
Contractor engineering expenses such as
computers, 3D model, reproduction,
communications, travel, etc.
Contractor payroll burdens/benefits, indirects
and overhead.

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i.

Other Costs

10.

Packing and Freight - The equipment cost includes


export packing, handling at the port of export,
ocean freight, handling at the port of entry,
customs clearance costs and delivery to the
jobsite are included in the equipment and
material prices.
Vendor Reps - Costs for vendor representation
during construction for critical equipment and
systems is estimated as a percentage of the
equipment/system cost.
Scafolding - Scafolding costs are estimated and
are based on historical percentage of direct labor
hours.
Cost of Cash - A cost neutral Payment Schedule
has been assumed for this estimate between
client and the contractor.

Below Line Costs


FEL II Engineering - Includes the current forecast for labor and
expenses for the FEL II phase of the project from ____ through
____.
Front End Engineering (FEL III) - FEL III, Front end engineering
costs have been estimated at ___% of total project costs
(excluding client costs) based on historical information for
similar type projects. The scope covered by front end
engineering includes the next phase of engineering (FEL III, to
approximately 15% to 25% engineering completion).

11.

Currency Rates, Escalation and Contingency


a. Currency rates - The following currency exchange rates have
been established for the estimate and are considered fixed for
purposes of this estimate: ______________.
b. Escalation - Escalation percentages applied in the estimate
have been selected for equipment, material and construction
cost. Escalation has been calculated for each year on a midpoint
basis starting _____ and ending ___.

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Annual Escalation
Percent
Mechanical
Equipment
Bulk Material
Labor
Subcontracts
Engineering
Client Costs
c.

Contingency

Contingency includes considerations for errors, omissions, and


unknowns which are fully expected to occur, but which cannot
be specifically identified at the time of the estimate, and, if not
considered, underestimate the final installed cost and result in
an overrun. Contingency is not meant to cover functional scope
changes (change in capacity, feed mix, product mix, contracting
strategy, schedule; these must be estimated separate from
Contingency), acts of God, unusual economic situations, or gross
estimate inaccuracies.
Broad factors afecting Contingency:

Project Definition completeness

Technological Innovation

Contracting Strategy

Project Type

Location
Examples of other, more specific unknown factors include:

Manpower availability

Productivity versus estimated

Labor Density

Wage Rates versus estimated

Turnover

Absenteeism

Material Prices versus estimated

Material availability

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An analysis of risk has been performed which considers these


risk factors on quantities, material costs, labor efficiencies, labor
rates and interrelationships of components.
As result of this risk assessment, the recommended contingency
of ___% has been included in the estimate to cover the
unforeseen cost elements. This allowance is valid based on an
intended 50/50 chance of overrun/underrun. If a lower risk of
overrun is intended, then a higher contingency would be
required. Conversely, if a higher risk of overrun is intended,
then a lower contingency is appropriate.
The contingency does not cover project scope growth.
12.

Stated Estimate Accuracy


This estimate is issued with a stated estimate accuracy of +___%
and
-___%. Estimate Accuracy is a statement of probability
of the final job cost based solely on the estimating technique,
scope definition, and engineering completion. The custom
within the industry has been to state the estimate accuracy in a
balanced probability range of overrun/underrun, as an example:
30%. In recent years, some operating companies have begun
recognizing the reality of underun being lower and overrun being
higher, and have adjusted the stated estimate accuracy
appropriately, such as +35%, -25%.

13.

Estimate Exclusions
Following is a list of items that are excluded from this estimate:
Any cost prior to start of FEL II engineering
Capital equipment spares
Commissioning and start up assistance
Geotechnical/environmental consultants
Insurance (builders risk, general liability, etc.)
Permits/preparation of permit documents
Building furnishings/lab equipment
Any new equipment for plant operations (i.e., forklifts,
trucks, etc.)
Land cost
Catalyst and chemicals
Import taxes
VAT (Value Added Tax)
Hazardous soil removal or disposal
Plant Security
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Third party inspections


Currency fluctuations
Operator training

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14.

Assumptions and Qualifications


a.

General

b.

Civil/Structural/Sitework

c.

Architectural

d.

Mechanical Equipment

e.

Piping

f.

Electrical

g.

Instrumentation

h.

Paint and Insulation

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Work Breakdown Structure

100
200
300
400

PROCESS UNITS
Process Unit 1
Process Unit 2
Process Unit 3
Process Unit 4

700
750
760
770
780
790
800
805

OFFSITES SYSTEMS
Tank Farm - Miscellaneous Tankage
Vent Collection System, Thermal Oxidizer
Emergency Flare
Bio-Treatment System
Storm Water Sumps
Deluge And Foam Protection Systems And Fire
Truck And Rail Loading
Dock Loading

810
820
830
840

INTERCONNECTING / COMMON FACILITIES


Interconnecting Pipe And Rack
Infrastructure
Buildings
Electrical

900
901
902
903
904
905
906
907
910
920
930
940
960
970
980
985
990

UTILITY AND OFFSITES


Utility Distribution
Nitrogen
Instrument Air
Plant Air
Fuel Gas
Service Water
Potable Water
Cooling Water
Steam And Condensate
Chilled Water System
Storm Water Sumps
Waste Water System
Caustic System
Process Water Sumps
Vent System
Demineralized Water
Fuels System

Water

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Table Estimate Process Units Drawing and Sketches List


The below listed PFDs, Plot Plans, and other drawings is the listing of PFDs,
Plot Plans, and other drawings available at the time of the estimate.

DRAWING
NUMBER

DRAWING DESCRIPTION

REVISIO
N
NUMBER

PROCESS UNITS
PROCESS UNIT 1
PROCESS UNIT 2
PROCESS UNIT 3
PROCESS UNIT 4

OVERALL PROCESS UNIT


Steam Balance Sheet
Chilled Water System
Storm Water Sewer System
Process Waste
Waste Water
Caustic System
Process Drain System
Vent Collection System
Demin Water System
Fuel System

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Table Estimate Offsites and Utilities Drawing and Sketches List


The below listed PFDs, Plot Plans, and other drawings is the listing of PFDs,
Plot Plans, and other drawings available at the time of the estimate.

DRAWING
NUMBER

DRAWING DESCRIPTION

REVISIO
N
NUMBER

OFFSITES AND UTILITIES


Overall Plot Plan
Tankage And Storage
Vent Collection System
Thermal Oxidizer And Flare
Flare Header
Flare KO Drum, Seal And Stack
Contaminated Storm Water
Bio -Treatment System
Storm Water Sewer System
Truck Loading/Unloading
Rail Loading/Unloading
Ship Loading

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15.

Post Estimate Changes


Subsequent to the issue of the Estimate Scope Definition
Package, several scope items have been added, deleted, or
changed. Some of these have been incorporated into this
FEL II Process and Project Design Basis documents, others
have only been identified.
The following is a summary of these items:

Documents

A. Identified changes, not incorporated in FEL II

B. Added, Deleted, Changed

UNIT

TAG
NO.

TITLE

ESTIMATE BASIS

FINAL BASIS

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