Estimate Preparation Guidelines - Aramco - Saep-25

Engineering Procedure SAEP-25

15 August 2006

Estimate Preparation Guidelines Document Responsibility: Project Support & Controls Dept.

Saudi Aramco DeskTop Standards Table of Contents

1 2 3 4 5

Scope............................................................ 2 Applicable Reference Documents................. 7 Instructions.................................................... 7 Responsibilities........................................... 32 Exhibits....................................................... 35

Exhibit I – Study Estimate Package Checklist.. Exhibit II – Budget Estimate Package Checklist. Exhibit III – ER Estimate Package Checklist…... Exhibit IV – Company Estimate Package Checklist…....................................... Exhibit V – Sample of 56D Form………………... Exhibit VI – Benchmarking Data Sheet………....

37 39 41 43 44 45

Previous Issue: New Next Planned Update: 15 August 2011 Page 1 of 48 For additional information, contact Branton, Minh Anh on 966-3-8739526 Copyright©Saudi Aramco 2005. All rights reserved.

Document Responsibility: Project Support & Controls Dept. Issue Date: 15 August 2006 Next Planned Update: 15 August 2011

1

SAEP-25 Estimate Preparation Guidelines

Scope 1.1

Purpose This Engineering Procedure provides a consistent and uniform approach for Estimate Preparation applicable to Saudi Aramco capital projects. It is intended to be used by all personnel connected with the development and/or review of estimates.

1.2

Definition An “estimate” is a key ingredient leading to development of an approved plan, which can be used for comparison with the progress of the project. Following are the four (4) types of estimates presented in these preparation guidelines that are critical to project development and management: 1.2.1

Study Estimate Study Estimate, sometimes referred to as “Conceptual” or “Order of Magnitude Estimate”, is primarily developed during the very early stage of project life cycle. It is often based on limited project data such as facility type, site location and list of equipment which form the basis for preliminary feasibility, partial cases, process selection alternatives, site location and layout studies of planned new projects or expansion of existing ones. Engineering work is at the initial stage which usually ranges from 0 to 1%. It is typically used for studying alternatives aimed at providing options in establishing the most viable and cost effective solution to project development and execution necessary for making decisions on possible future projects.

1.2.2

Budget Estimate Budget Estimate, also known as “Preliminary Estimate”, is prepared after major engineering decisions have been made. It is intended to define the cost of the baseline scope of work for a given project that is included in the capital plan. The Engineering work at this stage is about 5% complete. Budget estimate is based on the approved Design Basis Scoping Paper (DBSP) prepared by the Facilities Planning Department (FPD). (Refer to SAEP-1350)

1.2.3

Expenditure Request (ER) Estimate This is a detailed estimate supporting the Expenditure Appropriation Page 2 of 48

Document Responsibility: Project Support & Controls Dept. Issue Date: 15 August 2006 Next Planned Update: 15 August 2011

SAEP-25 Estimate Preparation Guidelines

Request (ER) for the approval of fund allocations for a particular Budget Item (BI) and used as the basis for project cost control. It establishes a detailed baseline for the monitoring and control of the later phases of the project. It is used for variance reporting, productivity analysis, cost trend analysis, and control of construction. The ER estimate forms the basis from which the 56D form is developed. Engineering work at this stage in the project cycle ranges from 25% to 30%. The ER estimate is based on the approved Project Proposal. (Refer to SAEP-14) 1.2.4

Company Estimate Company Estimate is a definitive estimate which is developed for the purpose of testing the reasonableness of bidders’ proposals for contracts, amendments and change orders (“contract action”). This estimate should reflect the price for which a given contract action would be awarded under competitive conditions in the current market environment. An effective company estimate has the following key elements: • • • •

1.3

a well-defined scope of work a complete set of final drawings and related specifications a complete list of materials and special equipment requirements firm start-up and tentative completion date.

Estimate Accuracy Accuracy is the measure of the quality and reliability of the estimate. Different types of estimate have varying levels of accuracy depending on the definition of scope and quality of information available. Following are the different types of estimates with their corresponding anticipated accuracies: Type of Estimate Study Estimate Budget Estimate Expenditure Request (ER) Estimate Company Estimate

1.4

Design Engineering % Complete 0 to 1% 5% 25% to 30% 30% to 100%

Estimate Accuracy ± 50% - 100% ± 40% ± 10% ± 10%

Request for Estimate 1.4.1

General Requirements Requests for estimates are processed online through the SAP Estimation Page 3 of 48

Document Responsibility: Project Support & Controls Dept. Issue Date: 15 August 2006 Next Planned Update: 15 August 2011

SAEP-25 Estimate Preparation Guidelines

and Project Management Information System (PMIS). This enables the users from Saudi Aramco Project Management Team (SAPMT), Facilities Planning Department (FPD) or any other Saudi Aramco organizations to initiate an estimate request directly online to Project Support & Control Department (PS&CD) through the SAP System. Various Estimating SAP Roles need to be granted prior to any initiation of estimate request and subsequent approval thereof by proper authorities. These are: •

Requestor Role This role will allow the user to create or initiate an estimate request and submit it for approval within his organization. This role should be assigned to Saudi Aramco Supervisor level personnel or as delegated by Supervisors.

•

Request Approver Role This role will allow the user to make changes to an estimate request and authorize approval prior to submission to PS&CD. This role is only granted to Supervisors, Division Heads or Project Managers.

Access authorization to the above-mentioned SAP Roles is contingent upon the following: •

Eligibility of the requestor for the requested role

•

Completion of the SAP R/3 Access Request form

•

Approval of the SAP R/3 Access Request form by the requestor’s Department Manager.

As soon as the SAP R/3 Access Request forms have been signed by the user’s Department Manager and PS&CD Manager, the Computer Security Liaison (CSL) of SAP system grants access on the requested roles. The application form for SAP Roles Access can be downloaded at the following Saudi Aramco Local Intranet Page address: http://sapcc.aramco.com.sa/samd/documents/forms/SAP%20R3%20Acce ss%20Request%20Form.doc Refer to PS&CD Guidelines in Granting Access to SAP Estimation Roles or visit http://sapcc.aramco.com.sa/sapestimation/ for more details.

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Document Responsibility: Project Support & Controls Dept. Issue Date: 15 August 2006 Next Planned Update: 15 August 2011

1.4.2

SAEP-25 Estimate Preparation Guidelines

Checklists of Required Documents In order to determine if a submitted estimate package contains all of the elements and criteria required for processing and acceptance by the Estimator, checklists are hereto attached for necessary reference as follows: • • • •

1.5

Exhibit I, “Study Estimate Package Checklist” Exhibit II, “Budget Estimate Package Checklist” Exhibit III, “Expenditure Request (ER) Estimate Package Checklist” Exhibit IV, “Company Estimate Package Checklist”.

Application and Timing 1.5.1

Study Estimate During the study phase, analysis of the preliminary scope definition and economics of the proposed project shall be thoroughly performed in order to: •

decide whether to advance to the DBSP and Budgetary Project Scope Definition Phase

•

determine which of the viable alternatives to further develop during the DBSP and Budgetary Definition Phase

The Proponent (normally a Saudi Aramco operating department sponsoring the project; owner and/or user of the facility to be constructed) promotes the development of a project and works with FPD. Together they first develop a basic project description (facility type, capacity and probable site location) which PS&CD uses as the basis for the Conceptual or Study estimate based on the planning brief. This is done at the very early stage of project development. 1.5.2

Budget Estimate After a thorough feasibility analysis and alternatives have been considered and developed, the Proponent and FPD shall continue to expand the scope of work to develop the Design Basis Scoping Paper (DBSP) based on more information and available resources. When the project is adequately defined, it is submitted as a proposed Budget Item (BI) under the Capital Budget and Programs and presented to the Board of Directors for approval. The appropriate Saudi Aramco Project Management Team (SAPMT) is then assigned the responsibility for the execution of the project. The assigned SAPMT submits a request Page 5 of 48

Document Responsibility: Project Support & Controls Dept. Issue Date: 15 August 2006 Next Planned Update: 15 August 2011

SAEP-25 Estimate Preparation Guidelines

for Preliminary Engineering funds required for the development of the Project Proposal. Budget estimates are based on the approved DBSP and updated whenever the scope of work or Expenditure Request Approval (ERA)/ Onstream dates change. 1.5.3

Expenditure Request (ER) Estimate With the exception of Master Appropriation projects, Saudi Aramco requires an ER estimate for all Capital, Non-Capital and Expense Projects valued more than $2 million under the control of Engineering and Operations Services (E&OS). A complete ER estimate based on the approved Project Proposal (PP) from SAPMT, FPD and Proponent organization signatory must be submitted to PS&CD at least four (4) weeks prior to submittal of the 56D Estimate to FPD Budget Director for Board, EXCOM and local approvals, as per Capital Program ER Processing Schedules. Full project funding is obtained upon approval of the ER estimate.

1.5.4

Company Estimate Contract actions with financial impact require the preparation of a formal company estimate using standard estimating methods outlined in this engineering procedure. Company Estimate is NOT required if: •

there are at least three (3) technically qualified bids received in a competitively bid contract. If fewer than three (3) technically qualified bids are received, commercial proposals will not be opened until a Company Estimate is prepared. The Contract Signatory may, notwithstanding the above, direct that a Company Estimate be prepared.

•

a waiver of estimate is granted in accordance with Section 3.4.3.

•

Insurance Policy renewals are in effect.

•

the alternative method as described in Procedure 10, Paragraph G of the Contracting Manual is utilized.

•

it involves uncustomized software licenses priced in accordance with published price lists, including any applicable or contractor-offered discounts

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Document Responsibility: Project Support & Controls Dept. Issue Date: 15 August 2006 Next Planned Update: 15 August 2011

1.6

SAEP-25 Estimate Preparation Guidelines

Estimating Tool Aspentech KBase software is the preferred estimating tool in the preparation of the estimates involving oil & gas type facilities. Another estimating tool such as the Timberline may be used provided that it contains all databases with recent cost information. Utilization of any other estimating software other than KBase and Timberline must be discussed with and approved by PS&CD. Effective January 2008, Aspentech KBase shall be used as the mandatory estimating tool for any oil and gas processing projects greater than $100 million. Waiving of this requirement must be approved by the PS&CD Manager.

2

Applicable Reference Documents The latest edition of the following applicable reference documents shall be applied: Saudi Aramco Engineering Procedures SAEP-12

Project Execution Plan

SAEP-14

Project Proposal

SAEP-1350

Design Basis Scoping Paper (DBSP) Preparation & Revision Procedure

General Instructions GI-0020.500

Expenditure Control – Expenditure Request Forms

GI-0216.965

Cost Distribution Rates

GI-0710.002

Classification of Sensitive Information

Saudi Aramco Contracting Manual Saudi Aramco Materials System Specifications (SAMSSs) Guidelines in Granting Access to SAP Estimation Roles 3

Instructions All estimates shall be prepared within the established Work Breakdown Structure (WBS) for each facility type and Standard Code of Accounts (SCA) and shall be loaded to SAP PMIS for archiving purposes. Following are general guidelines for the preparation of estimates: 3.1

Study Estimate

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Document Responsibility: Project Support & Controls Dept. Issue Date: 15 August 2006 Next Planned Update: 15 August 2011

3.1.1

SAEP-25 Estimate Preparation Guidelines

Study Estimate Preparation Plan Prior to the preparation of the estimate package, the following shall be taken into consideration in the development of a Study Estimate Preparation Plan, but not be limited to:

3.1.2

•

feasibility and operability of the proposed project

•

constructability of proposed facility

•

adequacy of proposed process and related equipment as to the intended purpose

•

sufficiency of proposed utilities and electrical requirements

•

adherence of proposed size and plot plans, equipment and pipe rack spacing to existing Saudi Aramco standards

•

site investigation

•

comparison with similar facilities of previous projects (research of typical drawings and historical data collection)

•

estimate model(s) and Work Breakdown Structure (WBS) if standard model does not exist

•

cost estimating tool to be utilized, if other than KBase for oil & gas facilities and Timberline for electrical and instrumentation

•

possible alternatives.

Study Estimate Package Contents The Study estimate package shall contain the following, but not be limited to: • •

•

Table of Contents, Approval Sheet and Revision Control Project Summary ƒ Project Scope ƒ Design Basis ƒ Project Location and Conditions ƒ Related Projects ƒ Alternatives Basis of Estimate ƒ Preliminary Scope of Work ƒ Estimate Methodology ƒ General Assumptions Page 8 of 48

Document Responsibility: Project Support & Controls Dept. Issue Date: 15 August 2006 Next Planned Update: 15 August 2011

ƒ ƒ ƒ ƒ ƒ ƒ ƒ ƒ ƒ ƒ • •

SAEP-25 Estimate Preparation Guidelines

Contracting/Procurement Philosophy Project Schedule & Activities Construction Labor Man-hour & Rate Labor Productivity / Adjustment Factors Equipment Rates Indirect Costs Shipping & Handling Cost Factors Applied to Engineering, Materials & Construction Allowances Contingency

Material & Equipment Quotation & Pricing Cost Estimate Following are Major Cost Elements of the estimate: ƒ ƒ

Demolition Civil/Architectural Works o Clearing & Earthwork o Roads, Area Surfacing & Paving o Landscaping & Irrigation o Fencing o Foundations o Buildings

ƒ ƒ ƒ ƒ ƒ ƒ ƒ ƒ ƒ ƒ ƒ ƒ ƒ ƒ

Structural/Steel Works Process & Utility Equipment Piping Electrical Power, Lighting & Grounding Communication Instrumentation Insulation & Fireproofing Painting/Specialty Coating Commissioning & Start-up Spare Parts Catalyst & Chemicals Custom Duties Bonds & Insurances Licensing Fees SAPMT & Support Costs Page 9 of 48

Document Responsibility: Project Support & Controls Dept. Issue Date: 15 August 2006 Next Planned Update: 15 August 2011

ƒ ƒ • 3.2

SAEP-25 Estimate Preparation Guidelines

Cash Flow & Expenditure Forecast Exclusions

Benchmarking

Budget Estimate 3.2.1

Budget Estimate Preparation Plan The following shall be considered in the development of Budget Estimate Preparation Plan, but not be limited to: •

Project scope of work

•

Site development plan and investigation

•

Specific plan and methodology for performing the market outlook and project risk assessment, if required

•

Methodologies for developing estimate basis, Material Take-off (MTO), pricing of material and equipment, unit rate for engineering and construction based on current market conditions and project risk assessment

•

Equipment List with minimum specifications

•

Identification of estimating software to be used for preparation of Budget estimate, if other than KBase for oil & gas facilities and Timberline for electrical and instrumentation

•

Work Breakdown Structures (WBS) and Standard Code of Accounts (SCA) to be used for the project

•

Plan and methodology for developing internal and external Benchmarking data

•

Approved Design Basis Scoping Paper (DBSP) or up-to-date DBSP, if routing for approval, containing: ƒ ƒ ƒ ƒ

3.2.2

Infrastructure requirements Electrical and non-electrical utilities requirements Site conditions analysis Signed Land Use Permit (LUP).

Budget Estimate Package Contents •

The Budget estimate package shall contain the following, but not be limited to:

•

Table of Contents, Approval Sheet and Revision Control Page 10 of 48

Document Responsibility: Project Support & Controls Dept. Issue Date: 15 August 2006 Next Planned Update: 15 August 2011

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SAEP-25 Estimate Preparation Guidelines

Project Summary Project Scope Design Basis Project Location and Conditions Land Use Permit (LUP) Requirements Related Projects

•

Basis of Estimate ƒ Scope of Work ƒ Estimate Methodology ƒ General Assumptions ƒ Contracting/Procurement Philosophy ƒ Project Schedule & Activities ƒ Construction Labor Man-hour & Rate ƒ Labor Productivity / Adjustment Factors ƒ Construction Equipment Rates ƒ Indirect Costs ƒ Shipping & Handling Cost ƒ Factors Applied to Engineering, Materials & Construction ƒ Allowances ƒ Contingency

• •

Material & Equipment Quotation & Pricing Cost Estimate Following are Major Cost Elements of the estimate: ƒ ƒ

Demolition Civil/Architectural Works o o o o o o

ƒ ƒ ƒ

Clearing & Earthwork Roads, Area Surfacing & Paving Landscaping & Irrigation Fencing Foundations Buildings

Structural/Steel Works Process & Utility Equipment Piping Page 11 of 48

Document Responsibility: Project Support & Controls Dept. Issue Date: 15 August 2006 Next Planned Update: 15 August 2011

ƒ ƒ ƒ ƒ ƒ ƒ ƒ ƒ ƒ ƒ ƒ ƒ ƒ • 3.3

SAEP-25 Estimate Preparation Guidelines

Electrical Power, Lighting & Grounding Communication Instrumentation Insulation & Fireproofing Painting/Specialty Coating Commissioning & Start-up Spare Parts Catalyst & Chemicals Custom Duties Bonds & Insurances Licensing Fees SAPMT & Support Costs Cash Flow & Expenditure Forecast Exclusions

Benchmarking.

Expenditure Request (ER) Estimate 3.3.1

ER Estimate Review Meetings During the course of Project Proposal phase, a number of review and coordination meetings, depending on the complexity of the project, will be held by members of SAPMT, Engineering Contractor, and PS&CD in order to: •

delineate responsibilities of all parties involved in preparation of the ER estimate

•

establish a clear communication channel among members

•

ensure that all team members are fulfilling their responsibilities and complying with all the requirements as set forth in this engineering procedure.

SAPMT shall have the overall responsibility of organizing the meetings, providing the required documents to PS&CD prior to review meetings and inviting all concerned parties to participate in the ER estimate and Scope Compliance Review meetings. Initial Kick-off Meeting 3.3.1.1

The initial kick-off meeting will be conducted before the 30% completion of Project Proposal. An ER Estimate Plan, as described in Section 3.3.2, shall be prepared and completed Page 12 of 48

Document Responsibility: Project Support & Controls Dept. Issue Date: 15 August 2006 Next Planned Update: 15 August 2011

SAEP-25 Estimate Preparation Guidelines

prior to the Kick-off Meeting. PS&CD will take an active role in defining Saudi Aramco ER estimate preparation requirements and providing basic information to the SAPMT and Contractor. 3.3.1.2

Interim ER Estimate Review Meetings The purpose of the interim meeting is to review the progress of the ER estimate preparation activities. The number of interim meetings should be established during the initial ER Review meeting. Minimum one (1) week prior to the review meeting, SAPMT shall provide a complete set (hardcopy and electronic file) of the ER Estimate with support documents to PS&CD for review. The interim review meeting deliverables shall include, but not be limited to:

3.3.1.3

•

ER Estimate as developed to date, with MTOs by Area and WBS

•

ER Estimate Basis

•

ER Estimate Detailed Schedule

•

A list of all scope changes from the DBSP identified to date. The list will include itemized scope change with justification and cost/schedule impact for each deviation item

•

Multiple Discipline Drawings include PFD, P&ID, Plot Plan, One Line Diagrams, etc.

•

Major equipment quotations (as defined in Section 3.3.3.5)

•

Recent quotations for Engineering and Construction rates

•

All Discipline Material Take-offs (MTOs) by Area and WBS

•

Market Outlook Study and Project Risk Assessment, as required (Refer to Section 3.3.3.4).

Scope Compliance Review Meetings Compliance Review meetings will be conducted, as deemed Page 13 of 48

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SAEP-25 Estimate Preparation Guidelines

necessary, by SAPMT in coordination with FPD and PS&CD to ensure that the scope of Project Proposal is in compliance with the approved DBSP. SAPMT shall prepare and provide all attendees with a complete list of accepted scope changes and relevant supported documents for the Scope Compliance Review meetings. PS&CD shall be responsible for validation of cost and schedule impacts for all scope changes. A scope change is defined as any cost or scheduled deviation from the Approved DBSP. Following are examples of typical scope changes: •

Equipment capacity and sizing changes

•

Addition or deletion of equipment from the original list provided to PS&CD in conjunction with the DBSP for preparation of the budget estimate

•

Plot Plan changes

•

Process control plan or system changes (changes in I/O counts, type of control system, etc.)

•

Other design changes as a result the following: ƒ

Environmental Impact Assessment

ƒ

Preliminary Hazard Analysis (PHA) or Hazard and Operability (HAZOP) studies

ƒ

Project risk assessment

ƒ

Underground obstructions such as rock or utilities interferences, etc.

ƒ

Building Risk Assessment or any other Loss Prevention requirements

ƒ

Savings realized from Value Engineering and other Value Practices

ƒ

Site investigations.

All scope changes shall be recorded in a special section in the ER Estimate Package. This section shall contain a list of all scope changes with justification, cost impact, schedule impact, initiator organization, date initiated/approved and any supported cost estimate documents.

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SAEP-25 Estimate Preparation Guidelines

SAPMT shall maintain the list of the scope changes and continuously update it from the start of Project Proposal until the ER Estimate is complete. 3.3.1.4

Final ER Estimate Review Meeting A final meeting will be conducted for the purpose of reviewing and finalizing the fully-developed ER estimate prior to endorsement of the 56D Estimate. A complete ER Estimate Package must be completed in accordance with the established ER Estimate Plan and submitted to PS&CD/PCED at least four (4) weeks prior to the 56D Estimate submittal due date to FPD Budget Director. Refer to Section 3.3.3 for ER estimate deliverables. After receipt of the ER Estimate package, PS&CD will conduct a meeting with SAPMT and Engineering Contractor to review and finalize the estimate as deemed necessary. Minimum of two (2) weeks prior to 56D Estimate submittal due date to FPD Budget Director, SAPMT shall provide PS&CD the Project Proposal sheet approved by SAPMT, FPD and Proponent and a copy of the Technical Meeting minutes with a complete list of all finalized items with detailed cost estimate of impacted items. These documents are required for finalizing the 56D Estimate for submittal to FPD Budget Director. When the ER Estimate is over or under by more than 10% of the Budget Estimate, PS&CD and SAPMT shall jointly prepare a scope reconciliation and comparison between the approved Budget and the established ER Estimate. The review shall include a list of all scope changes from DBSP which will be part of the ER Estimate package.

3.3.2

ER Estimate Plan SAPMT shall be responsible for developing an ER Estimate Plan which will be reviewed and discussed during the initial kick-off meeting. At the minimum, the ER Estimate Plan should contain: •

Project scope of work

•

Site development plan and investigation

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Document Responsibility: Project Support & Controls Dept. Issue Date: 15 August 2006 Next Planned Update: 15 August 2011

3.3.3

SAEP-25 Estimate Preparation Guidelines

•

A detailed schedule with major and interim milestones for completing the ER Estimate deliverables

•

A quality control plan for estimate preparation

•

Specific plan and methodology for performing market outlook and project risk assessment for selected projects greater than $300 million (refer to Section 3.3.3.4)

•

Methodologies for developing estimate basis, material take-offs (MTOs), pricing of material and equipment, unit rate for engineering and construction based on current market conditions and project risk assessment

•

Plan and methodology for developing internal and external benchmarking

•

Identification of estimating software to be used for preparation of ER Estimate

•

Work Breakdown Structures (WBS) and Standard Code of Accounts (SCA) to be used for the project

•

A list of ER Estimate deliverables required for interim review and final review

•

An organization chart of the estimating team

•

Roles and responsibilities of all involved parties in developing the ER Estimate and identifying point of contact from each organization.

Estimate Package Contents The ER Estimate Package shall contain the following, but not be limited to: 3.3.3.1

Table of Contents, Approval Sheet and Revision Control

3.3.3.2

Project Summary Provide a brief synopsis of the objectives, scope and current progress of the project. Following shall be incorporated into the project summary: a)

Project Scope Describe briefly what is to be accomplished by the project, such as project activities to be achieved, physical facilities to be built, demolished, or revamped, Page 16 of 48

Document Responsibility: Project Support & Controls Dept. Issue Date: 15 August 2006 Next Planned Update: 15 August 2011

SAEP-25 Estimate Preparation Guidelines

etc. This information will be a summary of work described in the current Design Basis Scoping Paper (DBSP) and/or Project Proposal scope of work. b)

Design Basis Provide a synopsis of how the project is to be accomplished by summarizing the project’s basis of design.

c)

Project Location and Conditions Define the location of the project (indicate whether onshore or offshore, etc.) and site conditions.

d)

Related Projects Identify related finished or on-going projects, if any.

3.3.3.3

Basis of Estimate The Basis of Estimate defines the methodology, identifies the determination of assumptions used in estimate development and describes how these criteria affect the outcome of the estimate. The basis of estimate shall constitute in a comprehensive manner, the following: • • • • • • • • • • • • • • •

Detailed Scope of Work Estimate Methodology General Assumptions Contracting/Procurement Philosophy Detailed Basis of the ER Estimate Construction Schedule & Activities Construction Labor Man-hour and Rate Labor Productivity/Adjustment Factors Equipment Rates Indirect Costs Shipping & Handling Cost Factors Applied to Engineering, Materials & Construction Allowances Contingency Project Overhead & Profit (OH&P) Factors Page 17 of 48

Document Responsibility: Project Support & Controls Dept. Issue Date: 15 August 2006 Next Planned Update: 15 August 2011

• • 3.3.3.4

SAEP-25 Estimate Preparation Guidelines

Currencies Exceptions or deviations to these guidelines, including justification.

Market Outlook Study & Project Risk Assessment PS&CD/PCED will coordinate with SAPMT to identify projects worth $300 MM or greater that will be required to do a Market Outlook Study and Project Risk Assessment. Market trends and project risks are assessed to avert potential impacts on project development and execution. Results of these studies shall be included in the basis of estimate and contingency rates shall be recommended accordingly. These shall include, but not be limited to, the following: •

Worldwide demand for Engineering and Construction services

•

Market conditions that affect major equipment procurement pricing and delivery

•

Trends related to supply and demand of major equipment and bulk material in the Middle East that could affect schedule and costs on the project

•

Availability of Engineering Contractors to undertake LSTK contracts in Saudi Arabia

•

Assessing the financial markets and institutional support for current and future Middle Eastern projects

•

Project risks study on constructability, tie-in execution, environmental, security and other factors related to a specific project

•

Forecast of Engineering Contractors Overhead and Profit Margins

•

Any other factor that can impact the future cost of the project.

Following are some of the resources that can be used in developing a Market Outlook study: • • • •

Trade Organizations Trade Magazines Financial Institutions’ studies and surveys Government studies and surveys Page 18 of 48

Document Responsibility: Project Support & Controls Dept. Issue Date: 15 August 2006 Next Planned Update: 15 August 2011

• • 3.3.3.5

SAEP-25 Estimate Preparation Guidelines

Industry studies and surveys Manufacturers and Suppliers data.

Material & Equipment Quotation & Pricing a)

Quotation Requirements The following are general guidelines for major bulk material item and equipment quotations: 1)

Three (3) technically and commercially approved quotations for items over $250,000

2)

Two (2) technically and commercially approved quotations for item with value of $50,000 to $250,000

3)

One (1) quotation or validated in-house data shall be required for items valued less than $50,000

4)

Quotations shall be provided in a Bid Tabulation format with recommended selection

5)

The SAPMT shall provide the Engineering Contractor all Saudi Aramco novated equipment and licensed purchase orders to include in the Estimate

6)

Quotations shall be valid through Expenditure Request Approval (ERA) date.

All quotations for “Engineered Items” will include a technical & commercial evaluation as a prerequisite for their use in the ER Estimate. Material and equipment pricing shall include packaging, freight, customs clearance, material handling and delivery to job site. This cost item will be clearly and separately identified in each package. Saudi Aramco Vendor’s Price/Volume Discount Purchase Agreement (VDPA), if applicable, shall be included in the quotation documentation. Quotations for major equipment shall include Vendor representative cost per day (10 hours/day) for providing assistance to Saudi Aramco during construction and pre-commissioning. The cost for vendor representatives

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SAEP-25 Estimate Preparation Guidelines

is included in SAPMT cost as described in Section 3.3.3.6.r. It is recommended that quotations shall be solicited from at least three (3) Saudi Aramco approved vendors to avoid potential delays due to lack of responses. Quotations for long-lead and major/engineered equipment items should start as early as possible due to the potential of prolonged technical clarification. The following items need to receive quotations, regardless of value: • • • b)

Cables, conduits, and cable trays Cement Lined Carbon Steel Piping Stainless Steel and Alloy Piping sizes above 8” and Carbon Steel Piping sizes above 10”

Material Take-off (MTO) All material Take-off (MTO) will be based on NEAT quantities as shown on project drawings and other documents. Any recommended or required allowances such as rounding off, cut/waste, etc. will be identified as a separate line item. Material Take-off (MTO) quantities will be in Imperial Units. It is recommended to start MTOs only when the scope is substantially complete in each area of work. Early MTO preparation could cause errors and omissions due to scope changes at a later date.

c)

Material Sources Material can be procured for Saudi Aramco projects from the following sources: • • •

Contractor Provided Material Saudi Aramco Provided Direct Charge (DC) Material Saudi Aramco Provided SAMS Material

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SAEP-25 Estimate Preparation Guidelines

The material sources are outlined in the Project Execution Plan (PEP). However, if Project Execution Plan (PEP) is not available, the SAPMT shall determine the material sources. The material sources will determine the application of overhead factors associated with each type of procurement. Pricing for material from Saudi sources will be obtained from Saudi Aramco Material Department (MD). Suggested material factors shall be highlighted and applied to the total material costs. d)

Material Overhead & Profit Overhead & Profit (OH&P) percentages for Engineering Contractor-furnished bulk material and equipment shall be identified, if applicable, and included in the ER Basis of Estimate document.

3.3.3.6

Cost Estimate – Work Breakdown Structure (WBS) Level The ER Cost Estimate shall be prepared and organized in accordance with the approved Work Breakdown Structure (WBS) and Code of Accounts (COA). As defined in the Work Breakdown Structure, a facility or work area shall include, but not be limited to, the following: a)

Demolition Quantities and cost items to be demolished and labor/equipment hours required for accomplishing the demolition work activities shall be provided.

b)

Civil/Architectural Works For both civil and architectural works, the following shall be incorporated in the ER Cost Estimate: 1)

Clearing & Earthwork Quantities and costs for site development and preparation items such as grading, ponds and/or linings, dykes, tank pads, culverts, catch basins, manholes, storm water and sewer piping and any other required earthwork shall be provided.

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Document Responsibility: Project Support & Controls Dept. Issue Date: 15 August 2006 Next Planned Update: 15 August 2011

2)

SAEP-25 Estimate Preparation Guidelines

Roads, Area Surfacing & Paving Quantities and costs for in-plant and offsite roads and paving shall be provided. Any additional items that may be required, such as Road Right of Way (ROW) development, cut and/or fill prior to actual paving shall be provided.

3)

Landscaping & Irrigation Quantities and cost for all specified landscaping shall be provided.

4)

Fencing Quantities and costs for fencing subdivided by classification shall be provided.

5)

Foundations For spread footing concrete foundations, quantities, dimension, type of foundation and pricing must be identified. Preliminary design checks will be required for special foundations such as large towers or large rotating equipment packages. For pile foundations, the following shall be provided: • • • •

6)

A piling take-off by foundation type Piling specification/material description Unit price quotations Preliminary designs and quantity take-offs for formed concrete pile caps.

Buildings Building quantities and pricing based on size, type and key materials of building construction shall be provided. The estimate will highlight nonstandard items included in a particular building that will have an impact on the cost of that building.

Page 22 of 48

Document Responsibility: Project Support & Controls Dept. Issue Date: 15 August 2006 Next Planned Update: 15 August 2011

c)

SAEP-25 Estimate Preparation Guidelines

Structural/Steel Works The structural/steel works estimate shall include volumetric sketches showing dimensions for the pipe racks, equipment structures and platforms that are not part of specific equipment supplied by Vendors. The quantities of structures in tonnes will be separated and grouped as Heavy (>60 kg/m), Medium (>30 and < 60 kg/m), Light (>10 and<30 kg/m) and Extra Light (<10 kg/m).

d)

Process Equipment Costs for major equipment will be validated technically and commercially. Notwithstanding the quotation guidelines described in Section 3.3.3.5, three (3) quotes will be required for the equipment listed below: • •

Pumps Chemical Injection Packages ƒ ƒ ƒ

• • • • • • • e)

Hypochlorite Feed Scale Inhibitor Sodium Bicarbonate.

Diesel Engine Driven Fire Water Pumps Meter Prover Skids Nitrogen Packages Packaged Compressors Pressure Sand Filters RO Modules Spare Gears for Compressors.

Piping Pipe/Fittings/Flanges/Valves for underground and aboveground piping, pipe rack piping, battery limit valves, interconnecting piping, Fire Hydrants/Monitors, and Deluge Systems must be identified and defined. Any utilities or off-site piping size, routing and lengths will need to be explicitly defined.

Page 23 of 48

Document Responsibility: Project Support & Controls Dept. Issue Date: 15 August 2006 Next Planned Update: 15 August 2011

SAEP-25 Estimate Preparation Guidelines

Pipe fabrication shop location will be identified whether at a remote location or at the job site. f)

Electrical At a minimum, the electrical package will include the scope, quantities and costs of the following electrical work relevant to the project, but not be limited to: • • • • • • • • • • • • • • •

g)

Power & Control Cable Control Stations Lighting & Small Power Fittings/Cable/ Terminations Earthing System Cable Glands/Terminations Cathodic Protection (Impressed Current Type) Welding Outlets Distribution Boards Relay Panels/Annunciators Bus Ducting Electrical Heat Tracing Miscellaneous Electrical Systems Cable Ladder Rack/Tray/Conduit Cable Trenches & Duct Banks Major Electrical Equipment.

Communication At a minimum, the communication package will include the scope, quantities and costs of the following systems, as applicable: • • • • • • • •

Fiber Optic System Switching Transmission Premises Distribution (PDS) LAN (Data) Mobile Radio SCADA Telephone Page 24 of 48

Document Responsibility: Project Support & Controls Dept. Issue Date: 15 August 2006 Next Planned Update: 15 August 2011

• • • • • • • • h)

SAEP-25 Estimate Preparation Guidelines

Plant Paging Video Conferencing Security Systems Intrusion Detection Security Access Control TV Monitoring Systems Computer and related equipment Temporary Communications.

Instrumentation At a minimum, the instrumentation package will include the scope, quantities and costs of the following, but not be limited to: • •

Instrument Piping Instrument Electrical This includes cabling for:

• • •

ƒ

Highway, fiber-optics, hard-wired interface cables between the Process Interface Buildings (PIB), Central Control Room (CCR), and Analyzers

ƒ

Fire and gas detectors and alarms based on the relevant layout drawings

ƒ

Multi-core, serial link cables from Substations to the Process Interface Buildings (PIB) for MCC/DCS interface

ƒ

Multicore cables from equipment packages to the Process Interface Building (PIB).

Instrument Protection Fire Proofing Major instrumentation equipment that require quotations: ƒ ƒ ƒ ƒ

DCS Systems ESD Systems Compressor Control Vibration Monitoring Page 25 of 48

Document Responsibility: Project Support & Controls Dept. Issue Date: 15 August 2006 Next Planned Update: 15 August 2011

ƒ ƒ ƒ ƒ ƒ ƒ i)

SAEP-25 Estimate Preparation Guidelines

Analyzer Equipment and Housing Custody Metering Control Valves larger than 8” Surge Control Systems Training Simulators Special Process Instrumentation System.

Insulation & Fireproofing Piping insulation will be quantified by type and thickness and priced based on the P&IDs and Line List. Fireproofing for structural steel & equipment support will be quantified and priced separately. Equipment insulation not supplied by the Equipment Vendor will be quantified and priced.

j)

Painting/Specialty Coating This cost element includes field painting/special coating for material and equipment, field touch-up of shop painted materials, field lining of pipe and field erected tanks (if applicable). Equipment painting will be included in the equipment pricing. Structural Steel painting will be included in the unit price of steel.

k)

Commissioning & Start-up Spare Parts Separate price lists for Start up/Commissioning spare parts shall be provided. This cost item is to be estimated separately. Capital or long term operating spares are not included in the ER Estimate, unless the scope specifically calls for them.

l)

Catalyst & Chemicals Initial fill catalysts or chemicals for start-up of equipment shall be identified and estimated separately unless the catalysts/chemicals are specified to be included in the cost of equipment. No allowance shall be made for operating catalyst or chemicals.

Page 26 of 48

Document Responsibility: Project Support & Controls Dept. Issue Date: 15 August 2006 Next Planned Update: 15 August 2011

m)

SAEP-25 Estimate Preparation Guidelines

Custom Duties Estimate shall include custom duties for all materials imported into Saudi Arabia.

n)

Bonds & Insurances Bonds and insurances (if applicable) will be identified and estimated separately.

o)

Licensing Fees Licensing scope and fees (if applicable) will be identified and estimated separately.

p)

Project Proposal Costs Project Proposal Costs include PP Engineering Contractor, SAPMT and other costs such as travel, office, relocation, PMT supports, etc. The estimate should be separated into design IK, design OOK and field construction support with manpower requirements identified by equivalent Saudi Aramco salary grades and disciplines.

q)

Detail Design Costs This cost item includes costs for performance of Detail Design work. For LSTK contracts, procurement of material and equipment will also be part of this cost item. Following are some of components required for estimating this cost item: •

Equivalent “A-size” Drawing Analysis will include a matrix of design and drawing deliverables calculated into equivalent A-size drawings

•

Detail Design man-hours based on equivalent “ A-size” drawings and hourly rates

•

Procurement support man-hours based on the number of Purchase Requisitions

•

Project Management and Administration Man-hours

•

Engineering support costs during construction (home office & procurement)

Page 27 of 48

Document Responsibility: Project Support & Controls Dept. Issue Date: 15 August 2006 Next Planned Update: 15 August 2011

r)

SAEP-25 Estimate Preparation Guidelines

•

Other expenses, such as soil investigation, project control/support, CAD cost, special studies, etc.

•

Estimated Engineering Rates applied to the project over the project duration.

SAPMT & Support Costs This cost item includes SAPMT and support costs during detail design, construction and commissioning phases which cover: • • • • • •

• • • s)

Exclusions • • • • • •

3.3.3.7

Saudi Aramco personnel Supplementary Manpower (CTS/MTS) plus clerical support costs Project Inspection Pre-commissioning supports SAPMT travel and relocation related costs Catering & Accommodation costs for SAPMT, CTS, Contractor and clerical support in remote area construction sites Vendor representative and consultant costs Survey Services Other expenses based on project requirements.

Land Costs Financing VAT Process Development Operating Costs Client Cost.

ER Estimate 56D Form The ER estimate 56D form reflects, at summary level, the total project cost as determined through the development of the ER estimate. This document is prepared by PS&CD and co-signed by SAPMT Project Manager and PS&CD/PC&ED General Supervisor. One (1) 56D form is required for every job order phase. Sample of 56D form is shown in Exhibit V. Page 28 of 48

Document Responsibility: Project Support & Controls Dept. Issue Date: 15 August 2006 Next Planned Update: 15 August 2011

3.3.3.8

SAEP-25 Estimate Preparation Guidelines

Project Proposal Package The Project Proposal (PP) Package is a fundamental requirement in the Expenditure Request Approval (ERA) process and a prerequisite for endorsement of the 56D. It includes all drawings, specifications and other related design documents. The approved Project Proposal sheet signed by SAPMT, FPD and Proponent organization Department Managers shall be part of the Project Proposal (PP) Package.

3.3.3.9

Project Execution Plan An approved Project Execution Plan (PEP) is required for projects in excess of $50 million. It has the potential of impacting the total project costs through a variety of ways and should be a primary reference in establishing the estimate basis. For all other projects, a simplified Contracting Plan shall be established at the Kick-off Meeting with a material procurement plan, and shall form a basis for the ER estimate preparation. (Refer to SAEP-12)

3.3.3.10

Project Schedule A detailed Project Schedule shall be included in the ER package for project development status monitoring.

3.3.4

Benchmarking Benchmarking is an improvement process used to discover and incorporate project cost, schedule, front-end loading, value improvement and operability into project execution strategy. The benchmarking process will be centralized so that all benchmarking activities are managed through PS&CD/PCED. Benchmarking will be conducted at study, late stages of the DBSP, early stages of the Project Proposal as well as towards the completion of a project. Projects will be selected by PS&CD for either external or internal benchmarking. The objective of Benchmarking analysis at the early stage of Project Proposal is to identify and compare key project parameters such as project scope, quantity, cost, schedule, value practices and execution strategy, against the Company’s internal historical statistics of similar projects. The project data also are used for benchmarking against the

Page 29 of 48

Document Responsibility: Project Support & Controls Dept. Issue Date: 15 August 2006 Next Planned Update: 15 August 2011

SAEP-25 Estimate Preparation Guidelines

industry world class projects with similar scope. The result of the benchmarking analysis can be used for improving project execution plan. 3.3.4.1

Internal Benchmarking Requirements For all projects except community projects, school and homeownership, SAPMT shall provide key project data to PS&CD/PCED for internal benchmarking purposes. A sample of benchmarking data sheet is shown in Exhibit VI.

3.3.4.2

External Benchmarking Requirements PS&CD/PCED will coordinate with SAPMT to identify projects with value of $100 MM or greater to be benchmarked. Projects less than $100 MM may be benchmarked if related to core business. PS&CD/PCED will perform the leading role for the selection of the Consultant and development of benchmarking criteria, and implementation of the formal benchmarking study. The analysis starts as early as the study phase and DBSP, or at any appropriate stage of the Project Proposal development, but no later than 90% Project Proposal progress, comparing key parameters of the project with an external industry-wide database. The analysis would address key project outcomes and associated risk based on the Project Proposal effort todate. As a minimum, the following areas should be addressed and compared to industry norms, Gulf Region and Best in Class: • • • • • • • • •

Status of front-end loading (FEL), i.e., project definition, at the time the benchmark analysis is prepared Use of value improvement practices The projected total installed cost (TIC) of the project An analysis of the contingency requirement based on project scope and FEL Engineering as a percentage of TIC Time required for total project execution (ERA through Onstream) Time required for the construction phase Expected time required for start-up Long lead material deliveries comparison

Page 30 of 48

Document Responsibility: Project Support & Controls Dept. Issue Date: 15 August 2006 Next Planned Update: 15 August 2011

• • 3.4

SAEP-25 Estimate Preparation Guidelines

General or specific requirements included in the Project Proposal Scope of Work that are non- industry standards Execution strategies.

Company Estimate Company estimate shall be prepared in accordance with Saudi Aramco Estimating Standards, provisions of the Contracting Manual and applicable Terms & Conditions of the contract. It shall be presented by work area as defined in the scope of work and contain the following, but not be limited to: • • • • •

quantities for material take-offs (MTOs) pricing of labor and equipment unit rates used in the Contract Bid quotations for material and equipment prices historical in-house pricing back-ups

3.4.1

Preparation and Processing of Company Estimates $1 million or less Estimates for contract actions expected to cost $1 million or less shall also be prepared in accordance with the guidelines in Section 4.4.1, except that it is the responsibility of the Proponent/Requestor to ensure that the Estimator is adequately informed regarding the scope of work. Such estimates shall be handled by the Requestor’s organization in accordance with its own established procedure.

3.4.2

Preparation and Processing of Company Estimates more than $1 million When a contract action is anticipated to involve expenditure in excess of $1 million, the Proponent/Requestor shall prepare or may request PS&CD to prepare a Company Estimate. (Refer to Section 4.4.1) Estimates which are prepared by the Requestor and submitted to PS&CD for review and approval must be submitted sufficiently in advance of bid closing to permit an adequate review to be carried out. The time required will vary in proportion to the complexity of the estimate. Company Estimates shall be prepared in duplicate and sealed in an envelope identified with the contract number, amendment or change order number, if applicable, and title. PS&CD shall deposit the estimate in the designated Bid Box on or before the bid closing date and the Contract Representative shall be promptly notified.

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Document Responsibility: Project Support & Controls Dept. Issue Date: 15 August 2006 Next Planned Update: 15 August 2011

3.4.3

SAEP-25 Estimate Preparation Guidelines

Modification and Waiver of Company Estimate Refer to Procedure 9 of the Saudi Aramco Contracting Manual for detailed information pertaining to change orders and waiver requirements and procedures.

4

Responsibilities The Project Control & Estimating Division of the Project Support & Controls Department (PS&CD/PCED) shall be responsible for the preparation, development, review and approval of Study and Budget estimates. Conversely, SAPMT shall be responsible for the preparation of the ER estimate and PS&CD/PCED will review the final ER Package and prepare and endorse the 56D to be co-signed by PS&CD/PCED General Supervisor and the SAPMT Project Manager. 4.1

Study Estimate 4.1.1

Preparation The Study Estimate is prepared by PS&CD/PCED upon formal request of the Requestor. Refer to Section 1.4 for Request for Estimate procedures. The Requestor shall provide the necessary documents outlined in Exhibit I.

4.1.2

Review & Approval The Estimate Review Committee (ERC) within the PS&CD/PCED is tasked to review and approve the estimate. The General Supervisor approves and signs Study estimates for: • • •

Oil & Gas Estimates valued ≥ $50 million Infrastructure Unit valued ≥$10 million EI&C Unit valued ≥ $10 million.

The unit supervisors review and sign estimates that are valued less than the above-mentioned levels. 4.1.3 Distribution An Estimate Viewer Role in the SAP Estimating System is granted to authorize personnel within the Proponent/Requestor’s department to view Study estimate reports by assignment only. Refer to PS&CD Guidelines in Granting Access to SAP Estimation Roles for details. 4.2

Budget Estimate Page 32 of 48

Document Responsibility: Project Support & Controls Dept. Issue Date: 15 August 2006 Next Planned Update: 15 August 2011

4.2.1

SAEP-25 Estimate Preparation Guidelines

Preparation The Budget Estimate is prepared by PS&CD/PCED upon formal request of the Requestor. Refer to Section 1.4 for Request for Estimate procedures. The Requestor shall provide the necessary documents outlined in Exhibit II.

4.2.2

Review & Approval The Estimate Review Committee (ERC) within the PS&CD/PCED is tasked to review and approve the estimate. The General Supervisor approves and signs Budget estimates for: • • •

Oil & Gas Estimates valued ≥ $10 million Infrastructure Unit valued ≥ $5 million EI&C Unit valued ≥ $5 million.

The unit supervisors review and sign estimates that are valued less than the above-mentioned levels. 4.2.3 Distribution An Estimate Viewer Role in the SAP Estimating System is granted to authorize personnel within the Proponent/Requestor’s department to view Budget estimate reports by assignment only. Refer to PS&CD Guidelines in Granting Access to SAP Estimation Roles for details. 4.3

ER Estimate 4.3.1

Preparation PS&CD/PCED shall ensure that SAPMT and Engineering Contractor adhere to established ER estimate preparation and project development guidelines. The Saudi Aramco Project Management Team (SAPMT) shall: •

be responsible for preparation of the ER estimate and provides project documents as required to complete the ER Estimate

•

coordinate with PS&CD/PCED to identify and define Work Breakdown Structure (WBS) to be used for the Project

•

work with the Engineering Contractor to ensure the cost estimate is complete and accurate in accordance with the project scope as described in the approved Project Proposal.

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Document Responsibility: Project Support & Controls Dept. Issue Date: 15 August 2006 Next Planned Update: 15 August 2011

SAEP-25 Estimate Preparation Guidelines

The Engineering Contractor shall:

4.3.2

•

assist SAPMT in the preparation of a complete and accurate ER cost estimate

•

provide dedicated and experienced Estimators and other resources as required for the preparation of the ER Estimate

•

assign a QA/QC Estimator separate from the Estimating team to perform periodical audits to ensure compliance with the guidelines.

Review & Approval PS&CD/PCED shall review the ER estimate prepared by SAPMT and prepare and issue the final 56D. Upon review and concurrence with SAPMT, PS&CD/PCED shall endorse the 56D to the FPD Budget Director for Board, EXCOM and local approvals. The PS&CD/PC&ED General Supervisor approves and signs all ER estimates. The final 56D will be signed by PS&CD/PC&ED General Supervisor and SAPMT Project Manager or designated signatory.

4.3.3 Distribution An Estimate Viewer Role in the SAP Estimating System is granted to authorize personnel within the Proponent/Requestor’s department to view ER estimate reports and 56D form by assignment only. Refer to PS&CD Guidelines in Granting Access to SAP Estimation Roles for details. 4.4

Company Estimate 4.4.1

Preparation For an expected contract action that is valued at $1 million or less, the Requestor shall prepare the Company Estimate and submit in the Bid Box. For a contract action that is valued over $1 million, the Requestor may: •

prepare the Company Estimate and submit it to PS&CD for review and approval

•

request the PS&CD to handle the estimate preparation and submit the completed Company estimate in the Bid Box.

Page 34 of 48

Document Responsibility: Project Support & Controls Dept. Issue Date: 15 August 2006 Next Planned Update: 15 August 2011

4.4.2

SAEP-25 Estimate Preparation Guidelines

Review & Approval The General Supervisor of PS&CD/PCED approves and signs all Company estimates valued ≥ $1 million. The unit supervisors review and sign estimates below $1 million.

4.4.3 Distribution Company estimate prepared by PS&CD will be placed in the Bid Box and a summary copy shall be provided to the Requestor. 4.5

Confidentiality PS&CD manages and maintains cost and scheduling data that are very critical for Business Plan functions, Accountability Reports and Capital Program information that are being used on a regular basis by Senior and Middle Management including PMT, Finance, FPD and long-range planning in generating essential information for Saudi Aramco Executive and Board members. Cost estimates are highly confidential in nature and the information contained therein shall be restricted, managed and accessed only by authorized personnel as determined by PS&CD. Hence, distribution of such shall be strictly limited. Public disclosure of classified and sensitive information could result in significant security breach, thus, Saudi Aramco reserves the right to impose corresponding administrative actions to transgressors. Furthermore, estimates are to be classified by the SAPMT as either “Restricted” or “Confidential” and shall be marked and handled accordingly in accordance with GI-0710.002.

5

Exhibits Exhibit I

Study Estimate Package Checklist

Exhibit II

Budget Estimate Package Checklist

Exhibit III

ER Estimate Package Checklist

Exhibit IV

Company Estimate Package Checklist

Exhibit V

Sample of 56D Form

Exhibit VI

Benchmarking Data Sheet

15 August 2006

Revision Summary New Saudi Aramco Engineering Procedure.

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Document Responsibility: Project Support & Controls Dept. Issue Date: 15 August 2006 Next Planned Update: 15 August 2011

SAEP-25 Estimate Preparation Guidelines

EXHIBITS TABLE OF CONTENTS

EXHIBIT I

STUDY ESTIMATE PACKAGE CHECKLIST

EXHIBIT II

BUDGET ESTIMATE PACKAGE CHECKLIST

EXHIBIT III

ER ESTIMATE PACKAGE CHECKLIST

EXHIBIT IV

COMPANY ESTIMATE PACKAGE CHECKLIST

EXHIBIT V

SAMPLE OF 56D FORM

EXHIBIT VI

BENCHMARKING DATA SHEET

Page 36 of 48

Document Responsibility: Project Support & Controls Dept. Issue Date: 15 August 2006 Next Planned Update: 15 August 2011

SAEP-25 Estimate Preparation Guidelines

EXHIBIT I – STUDY ESTIMATE PACKAGE CHECKLIST Following are minimum documents required to accompany the Study Estimate Request to PS&CD: Description Preliminary Scope Description FPD Feasibility Study or Study by Process Engineering Planning Brief Draft DBSP OR Study Report Facility Plot Plan Equipment List and Preliminary Sizes/Capacities and Specifications List of All New Buildings Process Flow Diagrams Electrical Requirements including: SCECO, Main Substation, Unit Substation, High Voltage & Medium Voltage and UPS Preliminary Utilities Requirements Preliminary DCS & ESD I/O Count Offsites & Utility Study Reports Offsites Tankage & Flare Requirements Fire Protection & Safety Requirements Communications Requirements including SCADA

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Document Responsibility: Project Support & Controls Dept. Issue Date: 15 August 2006 Next Planned Update: 15 August 2011

SAEP-25 Estimate Preparation Guidelines

Description Pipe Segment Lengths and Thickness Scraper Launcher/Receiver Stations and associated equipments & specifications Pipe Routing Soil Description (sand, rock, rocky soil, etc.) and Terrain (flat, rolling hills, mountains, etc.). Geotechnical report or confirmation should be attached. Requirements for LUP, ROW, Major and Minor Road Crossings Pump Station and associated facilities requirements Main Isolation Valve Stations and associated equipment Requirements for MOVs and GOVs ERA and Onstream Dates

Page 38 of 48

Document Responsibility: Project Support & Controls Dept. Issue Date: 15 August 2006 Next Planned Update: 15 August 2011

SAEP-25 Estimate Preparation Guidelines

EXHIBIT II – BUDGET ESTIMATE PACKAGE CHECKLIST Following are minimum documents required to accompany the Budget Estimate Request to PS&CD: Description Approved DBSP Copy of DBSP if routing for approval On-plot and Off-plot Facilities Description & Layout Process Flow Diagrams and/or Process Engineering Study Budget Brief Process Equipment List, Sizes, Capacities & Specifications Major Mechanical/Civil/Utilities/Offsites & Electrical Scope Description Electrical Single Line Diagrams, SCECO, Main Substation, Unit Substation Requirements, UPS, High & Medium Voltage Requirements Offsites Tankage, Waste Treatment & Flare Requirements Utilities Requirements: Air, Steam, Fuel Gas & Cooling Water (H & M Balances) Scope Description for Demolition Summary of Site Visit Report Geotechnical Report Communications Requirements including SCADA Field Instrumentation including Analyzers. Transmitters, ESD Valves, etc.

Page 39 of 48

Document Responsibility: Project Support & Controls Dept. Issue Date: 15 August 2006 Next Planned Update: 15 August 2011

SAEP-25 Estimate Preparation Guidelines

Description DCS & ESD Scope including I/O Count Fire Protection & Safety Requirements Security Requirements: CCTV, IDAS, etc. Environmental Assessment (Contamination) Contracting Strategy (from PMT) Number of Studies for Project Proposal with Potential Impact Pipe Segment Lengths and Thickness Scraper Launcher/Receiver Stations and associated equipments & specifications Pipe Routing Soil Description (sand, rock, rocky soil, etc.) and Terrain (flat, rolling hills, mountains, etc.). Geotechnical report or confirmation should be attached. Requirements for LUP, ROW, Major and Minor Road Crossings Pump Station and associated facilities requirements Main Isolation Valve Stations and associated equipment Requirements for MOVs and GOVs ERA & Onstream Dates

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Document Responsibility: Project Support & Controls Dept. Issue Date: 15 August 2006 Next Planned Update: 15 August 2011

SAEP-25 Estimate Preparation Guidelines

EXHIBIT III – ER ESTIMATE PACKAGE CHECKLIST Following are minimum documents required to accompany the ER Estimate Request to PS&CD: Description Approved Project Proposal Approved Technical Review Meeting Minutes Project Scope Summary including New as well as Demolition of Existing Facilities. Internal/External Benchmarking Data Piping and Instrument Diagrams (P&IDs) Plot Plan showing Major Facilities/Buildings Proposed Piping Layout and Routing Electrical scope with One-line Diagrams, MTO Quantities for Transformers, Switchgear, etc, Field Instrument Specifications and Data Sheets Control System (DCS) Scope with I/O counts, Block Flow Diagrams and Vendor Quotations Communications System Scope including MTO and Quotations Fire Protection, Safety and Security Requirements Building/Equipment Data Sheets Material Specifications including Materials Diagram. DC Surplus, etc, Identify Start-Up Spares

Page 41 of 48

Document Responsibility: Project Support & Controls Dept. Issue Date: 15 August 2006 Next Planned Update: 15 August 2011

SAEP-25 Estimate Preparation Guidelines

Description Catalyst, Chemicals & Licensor Fee Costs. HAZOP Review Report if applicable. Site Survey and Soil Data Report List of Deviations from DBSP with Cost/Schedule Impact Copy of Approved Waivers SAPMT/PMC, Insp., CMT & Other related costs Detail Engineering Equivalent A size Drawings count and manhours Exploratory Trenching Environmental Assessment (Contamination) Approved Project Schedule Approved Project Execution Plan Contracting and Material Procurements Plans. Identify Customs Duties. Detail Design Location – i.e., (IK or OOK) Draft ER Brief and BISI (from FPD) Facility Location and Camp Requirements Identify Commissioning and As-Built Requirements Quality Material Take-Off (MTO) Process Equipment List, Sizes, Capacities & Specifications. Recent (valid for 3 months) Quotations for Major Equipment & Material

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Document Responsibility: Project Support & Controls Dept. Issue Date: 15 August 2006 Next Planned Update: 15 August 2011

SAEP-25 Estimate Preparation Guidelines

EXHIBIT IV – COMPANY ESTIMATE PACKAGE CHECKLIST Following are minimum documents required to accompany the Company Estimate Request to PS&CD: Description Detailed Scope of Work Applicable Drawings (P&IDs, Plot Plans, Detail/Isometrics/One Line Diagrams, Marked-up Drawings for Changes, etc.) Basis of Estimate Detailed Estimate, if available Contract Schedule “C” including Time Unit Rates and Work Unit Rates used Material Take-offs (MTOs) Recent Quotations for Major Equipment & Materials and Unit Requisition greater than $10,000 Approved Project Schedule

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Document Responsibility: Project Support & Controls Dept. Issue Date: 15 August 2006 Next Planned Update: 15 August 2011

SAEP-25 Estimate Preparation Guidelines

EXHIBIT V – SAMPLE OF 56D FORM

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Document Responsibility: Project Support & Controls Dept. Issue Date: 15 August 2006 Next Planned Update: 15 August 2011

SAEP-25 Estimate Preparation Guidelines

EXHIBIT VI – BENCHMARKING DATA SHEET for CRUDE PRODUCTION FACILITY (GOSP)

BUDGET ITEM (BI)

:

ERA

:

JOB ORDER (JO)

:

ERC

:

DESCRIPTION

:

AREA NAME

INLET FACILITY

PRODUCTION TRAP

PARAMETER

UOM

QUANTITY OF SCRAPER TRAPS

EACH

QUANTITY & SIZE (INCHES) OF TRAP A

EACH

QUANTITY & SIZE (INCHES) OF TRAP B

EACH

QUANTITY & SIZE (INCHES) OF TRAP C TOTAL INSTALLED COST (INLET FACILITY)

EACH

QUANTITY

UNIT COST

COST $

$

DOLLARS

$

$

UNIT CAPACITY

MBD

$

$

NUMBER OF HIGH PRESSURE TRAPS NUMBER OF INTERMEDIATE PRESSURE TRAPS

EACH

NUMBER OF LOW PRESSURE TRAPS

EACH

WATER CUT

% VOL

EACH

GAS OIL RATIO

GAS GATHERING

CRUDE TYPE (AL/AM/AXL/ASL) or ºAPI TOTAL INSTALLED COST (PRODUCTION TRAP)

DOLLARS

$

$

UNIT CAPACITY

MMSCFD

$

$

HP COMPRESSORS QUANTITY

EACH

HP COMP DRIVER TYPE (MOTOR/CGT)

EACH

IP COMPRESSORS QUANTITY

EACH

IP COMP DRIVER TYPE (MOTOR/CGT)

EACH

$

$

LP COMPRESSORS QUANTITY

EACH

LP COMP DRIVER TYPE (MOTOR/CGT)

EACH

HP COMPRESSORS TOTAL HP

HP

IP COMPRESSORS TOTAL HP

HP

LP COMPRESSORS TOTAL HP TOTAL INSTALLED COST (GAS GATHERING)

HP DOLLARS

Page 45 of 48

Document Responsibility: Project Support & Controls Dept. Issue Date: 15 August 2006 Next Planned Update: 15 August 2011

WET CRUDE HANDLING & WOSEP

CONDENSATE STABILIZATION

CRUDE STABILIZATION

WATER INJECTION FACILITY

COGENERATION FACILITY

PIPERACK & PIPING

SUPPORT INFRASTRUCTURE

SAEP-25 Estimate Preparation Guidelines

NUMBER DESALTING STAGES

EACH

UNIT CAPACITY TOTAL INSTALLED COST (WET CRUDE HANDLING & WOSEP)

MBD

$

$

DOLLARS

$

$

UNIT CAPACITY TOTAL INSTALLED COST (CONDENSATE STABILIZATION)

MBD

$

$

DOLLARS

$

$

UNIT CAPACITY

MBD

$

$

UNIT CAPACITY

MBD

$

$

QUANTITY OF PUMPS

EACH

PUMPS TOTAL HP

HP

PUMP DRIVER TYPE (MOTOR/CGT) TOTAL INSTALLED COST (WATER INJECTION FACILITY)

EACH DOLLARS

$

$

ISO RATING

MW

$

$

TONNAGE STEEL (PIPERACK)

TONS

$

$

TONNAGE PIPE

TONS

$

$

WIDTH OF PIPERACK

LM

LENGTH OF PIPERACK

LM

HEIGHT PIPERACK

LM

LEVELS OF PIPERACK

EACH

TOTAL LENGTH OF ALL PIPES

LM

TOTAL INSTALLED COST (PIPERACK)

DOLLARS

$

$

TOTAL INSTALLED COST (PIPING)

DOLLARS

$

$

SITE PREPARATION

SM

$

$

CONCRETE

CM

$

$

STRUCTURAL STEEL

TONS

$

$

FENCING

LM

$

$

CONTROL BUILDINGS (ALL BLDGS)

SM

$

$

PIBS (ALL BLDGS)

SM

$

$

OTHER TYPES OF BUILDING

SM

$

$

SUBSTATION TOTAL INSTALLED COST (SUPPORT BLDGS ONLY) TOTAL INSTALLED COST (INFRASTRUCTURE)

SM

$

$

DOLLARS

$

$

DOLLARS

$

$

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Document Responsibility: Project Support & Controls Dept. Issue Date: 15 August 2006 Next Planned Update: 15 August 2011

OFFSITES & UTILITIES

ELECTRICAL

PROCESS CONTROLS

COMMUNICATIONS

OTHERS

SAEP-25 Estimate Preparation Guidelines

BOILER QTY

EACH

$

$

BOILER CAPACITY

LBS/HR

BOILER PRESSURE

PSIG

COOLING TOWER CAPACITY

GPM

$

$

AIR COMPRESSOR QTY

EACH

$

$

AIR COMPRESSOR CAPACITY

SCFM

FLARE SIZE

SCFM

$

$

FIREWATER SYS CAPACITY

GPM

$

$

NITROGEN GEN SYS CAPACITY

SCFM

$

$

WATER TREATMENT FACILITY TOTAL INSTALLED COST (OFFSITES & UTILITIES)

GPM

$

$

DOLLARS

$

$

TRANSMISSION LINE LENGTH

KM

$

$

TRANSMISSION LINE VOLTAGE

KV

SWITCHYARD VOLTAGE

KV

$

$

MAIN SUBSTATION

EACH

$

$

MAIN SUBSTATION

KVA

$

$

UNIT SUBSTATION

EACH

$

$

UNIT SUBSTATION

KVA

$

$

ELECTRICAL CABLE TRAY

LM

$

$

ELECTRICAL CABLE

LM

$

$

TOTAL INSTALLED COST (ELECTRICAL)

DOLLARS

$

$

DIGITAL CONTROL SYSTEM (DCS)

I/O

$

$

EMERGENCY SHUTDOWN SYSTEM (ESD)

I/O

$

$

VIBRATION MONITORING SYSTEM (VMS)

I/O

$

$

WORKSTATIONS QTY

EACH

$

$

NEW TRANSMITTERS QTY

EACH

$

$

INSTRUMENTATION CABLE TRAY

LM

$

$

INSTRUMENTATION CABLE TOTAL INSTALLED COST (PROCESS CONTROLS)

LM

$

$

DOLLARS

$

$

FIBER OPTIC CABLES

LM

$

$

COMMUNICATION EQUIPMENT TOTAL INSTALLED COST (COMMUNICATIONS)

EACH

$

$

DOLLARS

$

$

LIST MISCELLANEOUS FACILITIES

EACH

$

$

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Document Responsibility: Project Support & Controls Dept. Issue Date: 15 August 2006 Next Planned Update: 15 August 2011

ENGINEERING

CONSTRUCTION

SAEP-25 Estimate Preparation Guidelines

ENGINEERING (PROJECT PROPOSAL)

MHRS

$

$

ENGINEERING (DETAIL DESIGN)

MHRS

$

$

ENGINEERING (PMT SUPPORT)

MHRS

$

$

TOTAL COST (ENGINEERING)

DOLLARS

$

$

DIRECT CONSTRUCTION

MHRS

$

$

INDIRECT CONSTRUCTION

MHRS

$

$

CONSTRUCTION (PMT SUPPORT)

MHRS

$

$

TOTAL COST (CONSTRUCTION)

DOLLARS

$

$

CRUDE PRODUCTION FACILITY (GOSP)

MBD

$

$

ACTIVITY

DESCRIPTION

IN MONTH(S)

PROJECT PROPOSAL (PP) DURATION PROJECT PROPOSAL (PP) TO ERA DURATION DETAIL DESIGN DURATION SCHEDULING

ERA-MCC DURATION CONSTRUCTION DURATION START-UP & COMMISSIONING DURATION MATERIAL & EQUIPMENT WITH MORE THAN 6 MONTHS LEAD-TIME DELIVERY

VALUE PRACTICES CONTRACTING STRATEGY

LIST OF VALUE PRACTICES IMPLEMENTED TYPE OF CONTRACT TO BE EXECUTED (LSTK, OPENBOOK, LSPB, LSCR, etc.)

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