aerni consulting services

1Aerni consulting_services_en_20100616.ppt-Copyright c 2010 Alain Aerni all rights reserved

Aerni consulting services Cost reduction/Cost estimating

Zürich/Maur, 2010


Process- and 3D-object oriented cost models2

Experience and current situation1

Content

3 Possible services and results

4 Comos prototype for piping estimate (enclosure)


Aerni consulting was founded in 2001, its focus isconsulting in the system- and plant business

Our Goal is helping companies to become morecompetitive

Support of companies and teams with provenmethods, innovations and ideas. But also with apragmatic approach and a cross functional view ofthe company

Or with project-/program management of definedimprovement projects/programs

1Experience - Support


Aerni consulting has developed proprietary methods and tools in thefollowing 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)

1Experience – Methods and tools


The thorough implementation of optimized/modularized/standardizedplants/reused engineered solutions will allow to achieve significant morevalue for all stakeholders

Customer

Plants,services,

technologiesWorkflows

Capabilities

Tools and methods (PLM, CAEs, 6 Sigma, DFx, etc)

Performance, cost consistency,quality and cost

Customer needs

Best-in-class people

Optimization/modularization/standardization

6 Sigma

Experience – Life Cycle Cost (LCC) reduction in the plant building industry

Improvement of 10-20% in Net Present

Value forsystem/plant

Reduction of engineeringhours and cycle time up to

50% and cost of poor

quality by 25%

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

Life Cycle Cost (LCC) reduction in the plant building industry 1


Our experience – R&D and cost reduction

Our experience is in the implementation of cost reduction and/orperformance improvement of new products

Modularisation/Standardisation of wet cooling towersThe team (England, France, Germany, Belgium) developped a new familyof wet cooling towers within 4 months with a cost reduction of17%

Modularisation/Standardisation of waste heat recovery boilers forcombined cycle power plants.The team achieved a cost reduction of 25% within 8 months

Support in the development of a new pump family (conjoint Analysis, FMEA andmodularisation)

Voice of the customer for combined cycle power plants

Development of a cost reduction methodology for the plant business anddevelopment of new cost estimating workflow for piping and civil including newstructures, unit rates and calculation of norm hours for erection services

Project management for the modularisation/standardisation of steam reformersImprovement of plant NPV by approx.15 % in 4 months

1


The various structures coexist for the necessity of order execution, therelationship are not made explicit in a common data model and consistencyis difficult

Functional process structure 3D structure Cost structure

Feed treatmentP10

Reforming & WHRP11

Etc.

H2 plant

Design area PR

Design area 1

H2 plant

Vessels

reactors

mechanical equipment

pump P80P1

rot equipment

HV

MCC P80P1M1

MV

LV

Electrical

Piping

Bulk

H2 plant

Experience – a sample of current essential plant structures Illustrative

Relationships

Relationships

Relationships

1


Equipmentspecifications

Supplier drawings

Location view

Product view

During plant development or bid/project execution, different documents areproduced which show different views, abstraction levels and data redundancy

PFD

P&ID 1

Single line 1

3D Plant Model

3D Product ModelMechanicaldata sheet

Concept

Basic

Detail -Procurement -Production

Construction -Commissioning

Engineering-Phases

Plot Plan 1

P&ID n

3D piping Steel structure

Isometricdrawings

Piping BOM

Current situation

Functional View


Various tools and structures characterize often the cost estimating and costcontrol landscape

• One tool to consolidate the cost from various disciplines and to calculate final priceto 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 summarydata into the above consolidation tool.

• Division of work is ensured by project management and discipline in a separatedocument 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 thatengineers would like to know the cost to optimize their plants but have seldom theinformation at their fingertips

• Purchase order positions in the ERPs often have a different granularity than theunit rates negotiated with the supplier

Experience – Current situation typical EPC company 1


Economies of scope and scale, cost transparency and reduction ofcomplexity 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 pastprojects (BOQs and unit rates)

• Data consistency between disciplines and project phases (tendering, basicengineering, detailed eng, etc) can best be achieved by using the least amount ofdatabases and structures/data models which ensure consistency between disciplineand 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 complexityto achieve quick results

Experience – Key findings from past projects for EPC companies 1


Cost tools required by an EPC company

• The process and 3D configuration of the plant shall automatically produce the necessarycost objects to ensure consistency of scope and cost (Reuse information from ongoing orclosed 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 forestimates and as built projects

• Control BOQs and unit rates from tendering to as built (status as ordered, as engineered, asprocured and as built)

• Support for the optimization of technical solution( Allocation of cost to the structures of thetechnical solutions (Process catalog and 3D catalog)) by allowing engineers to see the costof 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

Requirement to cost structure and estimating tool

1




Content




Based on process and 3 D structure (for Budget and firm price proposal )

Process EqV1V1

Process ValveV1Q1

etc

Feed treatmentV1--V1

etc.

ReformingG1--V1

etc

Gas coolingE1--V1

Etc.

Radiation Zone CGB1B1--V1

WHR CGB1B2--V1

Comb air blowerB1B3--V1

Reformer & WHR MEUVB1--T1

HEX steel structure EUVB2B4--V1

Desulfurization EUVB2B2--V1

etc

HEX steel structureMEUV B2--V1

PlantZürich

Process structure Additional functionsfrom 3D-structure

Selectedprocess unit

variants

SelectedMEU

variants

Selected EUvariants

2Process- and 3D-object oriented cost models and estimating Illustrative


View level 5 is a quantification of Bill Of Quantity (BOQ) linked to unit pricesper BOQ-type and elements

Process Equipment

Basic

Ext. basic

Detail

Engineering

Valve material

Valve erection

ValveV1Q1-Q1

Pipe material

Pipe erection

Piping

Insulationmaterial

Insulationerection

Insulation

Process valveV1Q1

Purchasing

Process valves Process pipes Engineering

Purchasing

Primary element

TransmitterSwitches

Instrument

Hook upmaterial

Hook uperection

Weather protec.Material

Weather protec.erection

Hook up

Pipe material

Pipe erection

Piping

Process instrumentV1T1

Basic

Ext. basic

Detail

Engineering

Process Instruments

process unit variantV1--T1

Example of a process oriented cost model 2Illustrative


The structure of the cost model allows an evaluation of BOM and costaccording to different views

cost structure

Cost model

Previous ProjectManagement Structure

Discipline Structure

Procurement structure

3D Structure

Process- and 3D-object oriented cost models and estimating 2


The estimate is configurated by the choice of process and 3D structureelements with additional scope of work and delivery

Scope of Work

Work categoryProject management

Conceptual engineering

Basic engineering

Extended basic

Detail engineering

Procurement

Material supply

Transport

Erection supervision

Erection

Commissioning

Cost ModelScope of delivery

FunctionalScope

Scope of Work

detail

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

Functional view

Gaseous Feed Handling x x

Feed Compression x x

Feed Purification x x

H2 Recycle x x

Liquid Feed Handling etc.

MEA Washing

Reformer

Steam System

Fuel System

Prereformer

Etc.

Delivery

Columns x

Adsorbers x

Reactors x

Vessels x

Tube type heat exchangers x

Tanks x

Oil separators x

Etc.

Interaction between engineering, project management and cost estimating 2


Valves, pipes etc

For reuse to happen from functional solution decision to layout decision, thedata must flow accross functional borders and across executed projects

Process Unit

Process unitvariant

ProcessEquipment

Main Erection Unit Variant(MEUV)

Erection Unit Variant(EUV) and size class

Plot Plan withmost equivalent

MEUVs/EUVs

Selection of solution -Decision> Topology

Design -Decision

> Dimensioning

Layout -Decision

> Positioning

Process selection 3D catalog

Allocationof processEquipment

Workflow

Workflow from process selection to plot plan 2


For reuse to happen, the plant needs to be structured into process units,process units variants and execution options for Equipments

Dif

fere

nt

level

of

reu

se

Structured selection of process solution

ProcessValves

Process unit

Process unitvariant

ProcessEquipment

Feedwater treatment

2 pressures with 2*100%, 2*100%

ProcessPipes selected PFD-Template

Execution options

V1W2

W3 Q2

Q1

W8

W1

W5

W7

Q3

W4

L1

W6

W9

G1PD1 G2PD2

W10

P1

Illustrative 2


Selection of Plot Plan template having the most equivalent MEUVs and EUVsas starting point for the design of the plot plan

Structured selection of 3D solution Illustrative

Main Erection Unit +B2

Main ErectionUnit +B3

Main ErectionUnit +B1

100 m

80

m

Main Erection Unit +B4Variant: +B4—V1

2


Source: Eli Lilly

2Modularization/standardization


2

Source: Eli Lilly

Modularization/standardization


508 Modules


Source: Eli Lilly



Source: Technip PELC 2005


SimulatorComos

PFDComosP&ID

I....

Engineering tools

Templates Templates Templates

System and process map

ERP (SAP)

Tendering EngineeringProcurement

& LogisticsConstruction

Comos

Info fromas built

BOQ/cost

BOQ BOQ cost BOQ asbuilt

3D-CAD

Templates

2

Electr....

Templates


Exchange of data between engineering tools and cost estimating is notnecessary anymore as the cost objects are attached to the engineeringobjects

Comos asEngineeringDatabase

Objectstorage

PFD

3D Model

P&ID

Logical Diagrams

Loop Diagrams

PFD IsometricsHook Ups

Units/subunits

Elements /Subelements

EstimateDetails/Rate Codes

Design optimization and bidding

Unit rates

2




Content




The deliverables are optimized for quick results by selecting first a reducedscope (discipline and product line) and a meaningful work split

Deliverables of Aerni consulting:

• Project Management or consulting of Client projectmanager

• 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, Aerniconsulting and Comos),

• Formatting, assembling and loading of necessaryhistorical data

• Installation and module testing

• Training of workflow with lead users

Results:

Short term

• New estimating workflow fora discipline in one productline

• Process catalog with BOQsand cost in Comos toestimate cost and prices forone discipline and productline

Medium term

• New estimating workflow

• Process catalog with BOQsand cost in Comos toestimate cost and prices

Possible Aerni consulting services and results 3




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