Principles and Practices of Cost Engineering in the Petroleum Industry

Introduction:

Cost Engineering has been identified as one of the critical aspects when dealing with the costs of a project, which is mostly evident in the petroleum sector as far as project CAPEX is concerned. It is a specialized area that combines engineering design with construction, in which the author insists that there is a need for architectural design of the expenditures.

It is imperative that the cost engineering principles and management practices are properly adhered to in the execution of engineering projects because of the large capital outlays involved in the projects. The aim of this course on cost engineering in oil and gas is to enable participants to produce realistic cost estimates by learning cost analysis, costing, project planning, risk management, and design-for-cost techniques in a practical approach.

In particular, the participants will study some of the most key principles, including Total Cost Management (TCM), which is necessary to manage a number of assets and projects in the oil industry. Participants will also be conversant with Cost Analysis, Cost Estimation, and Control methods that will help avoid unnecessary costs when managing expenses among the projects that will be executed.

This Principles and Practices of Cost Engineering in the Petroleum Industry Program is meant for engineers, economists, planners, and accountants who indulge themselves in cost verification and benchmarking, project management, and budgetary control. Lasting for five days, the course comprises classroom training, case studies, group work, as well as knowledge on the frameworks, guidelines, and standards adopted by AACE International and ACostE of the UK.

Objectives:

At the end of this Principles and Practices of Cost Engineering in the Petroleum Industry course, participants will be able to:

• Implement cost control in the execution of oil and gas projects.
• Identify cost-cutting possibilities.
• Apply effective cost control techniques.
• Utilize cost budgets, plans, and forecasts.
• Understand complexities of project evaluation.
• Manage costs during the course of the projects.

Training Methodology:

• Academic lectures
• Case studies
• Group discussions
• Industry project simulations
• Best practices in the industry
• Simulations
• Case analysis
• Evaluation and debriefing

Course Outline:

Unit 1: Cost Engineering Principles & Fundamentals:

• Essential concepts and tools of cost engineering for oil and gas industry businesses.
• Overview of cost engineering activities and their application.

Unit 2: Engineering Materials:

• Technological requirements for processes.
• Facility design.
• General cost factors for oil and gas industry, including material costs.

Unit 3: Cost Estimation:

• Methods and procedures for cost estimation in capital projects and services (Basis of Estimate – BOE).
• Further cost estimation, cost and risk assessment of facility acquisition.
• Overview of stochastic and deterministic cost estimation techniques.
• Comparison of definitive and order of magnitude estimates.
• Types of cost estimates.
• Best practices in cost estimation, such as cost modeling and managing labor, project time, inflation, technology, and uncertainties.

Unit 4: Engineering Economics:

• Analyze economic rates and ratios.
• Time value of money.
• Discounted Cash Flow (DCF) and Internal Rate of Return (IRR).
• Discuss opportunity cost in relation to engineering projects and project ranking.
• Consider non-economic factors (corporate image, aesthetics, style, etc.).
• Availability of funds for development.

Unit 5: Strategic Asset Management/Portfolio & Management:

• Project monitoring and performance measurement.
• Perform cost comparison between work performed and budgeted costs.

Unit 6: Project Cost Management:

• Strategies for managing costs.
• Control cost escalation.
• Influence of project planning and scheduling on cost management.
• Basics of planning and scheduling (Work Breakdown Structure, resources, cost and time scheduling techniques like Critical Path Method relevant to cost engineering).

Conclusion:

Incorporating these aspects in the cost engineering in oil and gas course content enables learners to receive thorough training while enhancing their skillset by integrating industry-related features.