Cost Estimation Methods for Oil & Gas Projects

Introduction:

Most cost estimation practices in the oil and gas industry present challenges, compelling delegates to produce cost-effective results without compromising safety and production. In this Oil and Gas Projects and Cost Estimation Methods course, participants will learn practical tools and techniques that can be easily applied within their organizations. It also introduces them to developing tools and techniques that will shape the future workforce and cost estimating practices.

Participants will understand how to achieve cost savings for their employers in a manner that does not affect any business processes. The training will encompass engaging and creative approaches developed in both public and private domains, enabling delegates to recognize and harness savings without jeopardizing performance, core competence, strategy, delivery, or safety.

Objectives:

At the end of the Oil and Gas Projects and Cost Estimation Methods course, participants will be able to:

• Minimize costs incurred in oil and gas projects.
• Determine potential areas for cost savings in oil and gas activities.
• Successfully manage and control oil and gas costs.
• Maximize efficiency in the allocation and utilization of cost budgets, plans, and forecasts.
• Understand the key concepts governing oil and gas project cost estimation.
• Utilize methods of oil and gas reserves estimation in managing costs on projects.

Training Methodology:

• Lectures
• Case studies
• Group discussions
• Software training practical sessions
• Guest industry speakers
• Simulation exercises
• Group problem-solving
• Interactive Q&A sessions
• Assessment and feedback activities

Course Outline:

Unit 1: Costs, Profits, Risks, and Cash

• Costs & Costs of Profit
  • Aims–Mission and Vision: Profitable today vs. productive in the future
  • Strategic Management of Cost Management Decisions/Models of Strategy and Cost Management
  • Cost and Value: Value-based profitability approaches
• Costs and Cash
  • Profit comparison with cash
  • Cost: Cash vs. non-cash
  • Cost Management vs. Cash Management / Cost Management vs. Revenue Management
• Costs and Risk
  • Overview of Strategic Risk
  • Costs and Strategic Risk

Unit 2: Costs and Costing in Oil & Gas

• Defining and Dealing with Costs
• Cost and Value: What’s the Difference?
• Value-Centered Cost Management Planning
• Cost Saving and Profit Maximizing Objectives Plan
• Income Statement with Fixed and Variable Costs
• Break-even and Contribution Margin Analysis
• Problematic Cost Methods: Full Absorption, Marginal Costing, ABC Costing
• Changes in Cost Management: Lean Cost Management, ABC, Data Technology
• Particular Problems Relating to Cost Estimation for the Oil and Gas Sector

Unit 3: Planning and Forecasting Costs/Risk in Oil & Gas Projects

• Relationships Between OPEX Planning and Actual OPEX Usage
• Bill of Materials Approaches for Construction and OPEX Value Engineering
• G&A Cost Planning and Valuation
• Forecasting Tools and Techniques in Oil and Gas
• Role of Machine Learning Technology in Oil and Gas Cost Estimating
• Cost Modeling and Profit and Cost of Risk
• Operational Expenditure (OPEX) Long-term Forecast
• Planning of OPEC and Operational Performance Control
• Computer Programs for OPEX Planning and Control

Unit 4: Investment Appraisal and Projects – Capital Budgeting for Oil & Gas

• Construction Cash Flow Churning Process for Oil & Gas Projects
• CAPEZ Planning System
• Parametric Factors Used in CAPEX Project Evaluations
• Annual Investment Program to Allocate Expenditure
• Time-honored Performance Metrics
• Net Present Value (NPV), Internal Rate of Return (IRR), EVA, and NPV
• Evaluation of Scenarios Using Sensitivity Estimation, Situational Analysis, and Simulation
• The Value of Flexibility and Options
• Investing in Oil and Gas: Strategies, Risk, and Uncertainty

Unit 5: Budgets and Cost Control in Oil & Gas Operations

• The Planning and Budgeting Process
• Managing Oil and Gas Costs with Budgeting
• Annual Budget in Oil and Gas Activities
• Locating and Correcting Budgeting Variances
• Current Budgeting Approaches
• Tips and Techniques in Budget Planning for Oil and Gas Ventures
• Budget Analysis
• Beyond Budgeting in Financial Management of Oil and Gas