W8_Mohammed_Production Expansion

Problem definition

The Government has directed the company to increase the company oil production rate by additional 40,000BOPD before end of 2013 as per the encourage exploration results. As facility department our role is to decide which facilities needed to cover such expansion. The required facilities and the alternatives are the main challenges which are answered in the below Blog. The blog will highlight in brief the required WBS as per the proposed scope for the proposed options.

Development of the feasible alternatives

The targeted area is divided to two parts with respect of location and reservoir quantities expected, the facilities were proposed as following:

Scenario 1: Build one FPF with capacity covering the production of two areas.

Scenario 2: Build small capacity FPF in each area.

 

Analysis and comparison of the alternatives

Scenario 1: Development of AREA-1

1. AREA-1 & AREA-2 Field Surface Facilities (FSF) i.e. wells,  OGM and trunk line to Hadida FPF
2. AREA-1 FPF.
3. Transit line from AREA-1 to CPF, for LC & HC. Design capacity is 40,000 BOPD. At least one middle pump station shall be considered for future.
4. Consider 2 phases: short term or early production and long term. The early production is to export qualified 10,000 BOPD of LC from
5. Power Generation Plant and Distribution for FPF and other FSF Requirements.
6. Instrumentation, Control Philosophy &Telecommunication
7. Expansion in the Central Processing Facilities (CPF) to handle the extra fluid

Scenario 2: Development of AREA-1 & Area-2, Will be same as above, in addition to the following:

1. AREA-2 FPF
2. Transit Line from AREA-2 to AREA-1

Development of AREA-1 WBS			Development of AREA-1 & 2 WBS
1.0	Crude Expansion Projects		1.0	Crude Expansion Projects
1.1	Conceptual design		1.1	Conceptual design
1.2	Basic design		1.2	Basic design
1.3	Long Lead Items		1.3	Long Lead Items
1.3.1	Compressors		1.3.1	Compressors
1.3.2	Line Pipe		1.3.2	Line Pipe
1.4	Pre-Award Phase (Tendering and Award)		1.4	Pre-Award Phase (Tendering and Award)
1.4.1	Issuing of ITB		1.4.1	Issuing of ITB
1.4.2	Bid Evaluation		1.4.2	Bid Evaluation
1.4.3	Shareholders & Government Approvals		1.4.3	Shareholders & Government Approvals
1.4.4	Award		1.4.4	Award
1.5	Post Award Phase (EPCC & PCC Projects)		1.5	Post Award Phase (EPCC & PCC Projects)
1.5.1	Central Processing Facility Expansion (PCC)		1.5.1	Central Processing Facility Expansion (PCC)
1.5.1.1	Procurement		1.5.1.1	Procurement
1.5.1.2	Construction		1.5.1.2	Construction
1.5.1.3	Commissioning		1.5.1.3	Commissioning
1.5.2	EPCC for Field Processing Facility of AREA 1		1.5.2	EPCC for Field Processing Facility of AREA-1
1.5.2.1	Engineering		1.5.2.1	Engineering
1.5.2.2	Procurement		1.5.2.2	Procurement
1.5.2.3	Construction		1.5.2.3	Construction
1.5.2.4	Commissioning		1.5.2.4	Commissioning
1.5.3	EPCC for Pump Station (EPCC)		1.5.3	EPCC for Pump Station (EPCC)
1.5.3.1	Engineering		1.5.3.1	Engineering
1.5.3.2	Procurement		1.5.3.2	Procurement
1.5.3.3	Construction		1.5.3.3	Construction
1.5.3.4	Commissioning		1.5.3.4	Commissioning
1.5.4	PCC for Field Surface Facility (AREA-1 & AREA-2)		1.5.4	PCC for Field Surface Facility (AREA-1 & AREA-2)
1.5.4.1	Engineering		1.5.4.1	Engineering
1.5.4.2	Procurement		1.5.4.2	Procurement
1.5.4.3	Construction		1.5.4.3	Construction
1.5.4.4	Commissioning		1.5.4.4	Commissioning
1.5.5	Transit Line from AREA-1 to CPF (170km)		1.5.5	Transit Line from AREA-1 to CPF (170km)
1.5.5.1	Engineering		1.5.5.1	Engineering
1.5.5.2	Procurement		1.5.5.2	Procurement
1.5.5.3	Construction		1.5.5.3	Construction
1.5.5.4	Commissioning		1.5.5.4	Commissioning
			1.5.6	Transit Lines from AREA-1 to 2 (20km)
			1.5.6.1	Engineering
			1.5.6.2	Procurement
			1.5.6.3	Construction
			1.5.6.4	Commissioning
			1.5.7	EPCC for Field Processing Facility of AREA-2
			1.5.7.1	Engineering
			1.5.7.2	Procurement
			1.5.7.3	Construction
			1.5.7.4	Commissioning

Selection of the preferred alternatives

From the above WBS its shown that the only difference is in the additional FPF of AREA-2 and the additional transit line from AREA- to AREA-1, but actually, there are many differences are not shown i.e. The difference in the capacities which are resulted in the difference in the scope and accordingly the cost estimate which changed from one scenario to another.

Following the same WBS, the estimation were done for both scenarios and we found that it is better to go for scenario two but in two phases, firstly to build only one FPF and later to construct the second one. The conceptual study is on progress and the results of our decision will be clearer after getting the result of the conceptual study.

Performance monitoring and the post evaluation of results

The result of the chosen option will be determined after the conceptual study.

 

Conclusion

The company has taken the risk and concentrates on the second scenario considering it’s the most optimum choice and its added value more than the first scenario.

 

References

* Humphreys & Associates, Project management using Earned Value.

* W14_ADI_WBS Development for conceptual study phase of project

W13_ET_Reduce Cement Consumption in Paste Fill_Kristal2011

Problem Statement:

In back fill activity we are using 14% of cement content in the paste pouring to the area in underground mine that have been finished in ore mining. In order to be able to mine an ore drive beside or underneath it, we need to back fill it first before we are allowed to do mining in relation to comply with geotechnical requirement and safety factor. The higher cement percentage being used in back fill activity, means that higher consumption in cement.

Alternatives:

Review had been done with geotechnical and mine planning team for certain drifts to use lower cement percentage in order to reduce operating cost. There are some conditions that after we back fill certain drifts, we are not going to mine under or beside for more than 3 months depending on the mine planning team.

Criterion:

Ground stability is a priority and still in mining practice. Higher cement percentage will create faster curing time to be able to mine under or beside as soon as possible to get the ore areas. But for some reasons depends on mine planning, in certain areas we don’t need to mine as soon as possible.

Analysis and Comparison:

The table below shows areas that used 14% of cement and we will mine under or beside them in some stages

No.	Date	Location	%Cement	Material Usage					Paste Product
			Vs Dry Tuff	Cement	Water	Tuff	Tuff dry	Tuff
				Tons	Tons	Tons	Tons	M3	Tons	M3
1	5-Jul-11	K2-Sub 9’D’ Sill South OD.03	14%	83	286	774	578	846	1143	706
2	8-Jul-11	K2-Sub 12’B’ Sill South OD.03	14%	18	70	172	128	188	260	161
3	9-Jul-11	K2-Sub 12’B’ Sill South OD.03	14%	19	68	180	134	197	268	165
4	9-Jul-11	K2-Sub 9’D’ Sill South OD.01	14%	48	171	443	331	484	662	408
5	24-Jul-11	K2 – Sub 11 ‘A’ UC.1 North OD.05	14%	69	237	639	477	699	945	584
6	24-Jul-11	K2 – Sub 11 ‘A’ UC.1 North OD.05	14%	16	52	148	110	162	216	133
7	26-Jul-11	K2 – Sub 11 ‘A’ UC.1 North OD.05	14%	2	9	22	16	24	33	20
8	27-Jul-11	K2 – Sub 11 ‘A’ UC.1 North OD.05	14%	8	28	71	53	77	106	65
9	10-Sep-11	K2 – Sub 9 ‘D’ Sill South OD.1	14%	75	262	692	517	757	1029	635
10	28-Sep-11	K2 – Sub 12 ‘B’ Sill South OD.01 (#1)	14%	124	408	1151	859	1258	1683	1039
11	30-Sep-11	K2 – Sub 12 ‘B’ Sill North OD.02	14%	55	199	515	384	563	770	475
12	7-Oct-11	K1 – Sub 6 ‘A’ UC3 North OD.01	14%	134	453	1249	932	1365	1837	1134
13	8-Oct-11	K1 – Sub 6 ‘A’ UC.3 North OD.01	14%	24	89	225	168	246	338	209
14	8-Oct-11	K1 – Sub 6 ‘C’ UC.3 North OD.02	14%	65	232	603	450	659	899	555
15	8-Oct-11	K1 – Sub 6 ‘C’ UC.3 North OD.02	14%	55	183	508	379	555	746	461

 

The table below shows if the areas above will use 8% of cement in back fill instead of 14% cement

No.	Date	Location	%Cement	Material Usage					Paste Product
			Vs Dry Tuff	Cement	Water	Tuff (wet)	Tuff dry	Tuff
				Tons	Tons	Tons	Tons	M3	Tons	M3
1	40729	K2-Sub 9’D’ Sill South OD.03	8%	48	286	809	604	884	1143	706
2	40732	K2-Sub 12’B’ Sill South OD.03	8%	11	70	179	134	196	260	161
3	40733	K2-Sub 12’B’ Sill South OD.03	8%	11	68	188	140	206	268	165
4	40733	K2-Sub 9’D’ Sill South OD.01	8%	28	171	463	346	506	662	408
5	40748	K2 – Sub 11 ‘A’ UC.1 North OD.05	8%	40	237	668	499	730	945	584
6	40748	K2 – Sub 11 ‘A’ UC.1 North OD.05	8%	9	52	155	115	169	216	133
7	40750	K2 – Sub 11 ‘A’ UC.1 North OD.05	8%	1	9	23	17	25	33	20
8	40751	K2 – Sub 11 ‘A’ UC.1 North OD.05	8%	4	28	74	55	81	106	65
9	40796	K2 – Sub 9 ‘D’ Sill South OD.1	8%	43	262	724	540	791	1029	635
10	40814	K2 – Sub 12 ‘B’ Sill South OD.01 (#1)	8%	72	408	1203	898	1315	1683	1039
11	40816	K2 – Sub 12 ‘B’ Sill North OD.02	8%	32	199	538	402	588	770	475
12	40823	K1 – Sub 6 ‘A’ UC3 North OD.01	8%	78	453	1306	974	1427	1837	1134
13	40824	K1 – Sub 6 ‘A’ UC.3 North OD.01	8%	14	89	235	175	257	338	209
14	40824	K1 – Sub 6 ‘C’ UC.3 North OD.02	8%	38	232	630	470	688	899	555
15	40824	K1 – Sub 6 ‘C’ UC.3 North OD.02	8%	32	183	531	396	581	746	461

 

Selection of the preferred alternative:

			VARIANCE AFTER IMPROVEMENT			PRICE				COST SAVING AFTER IMPROVEMENT
No.	Date	Location				Cement	Tuff	Cement	Tuff
			Cement	Tuff	Tuff	USD / ton	USD / m3	IDR / ton	IDR / m3	USD	IDR
			Tons	Tons	M3	152.23	$ 10.46	1,351,473	92,234
1	5-Jul-11	K2-Sub 9’D’ Sill South OD.03	35	(35)	(38)	5,364	(366)	47,311,437	(3,228,879)	$ 4,998	44,082,557
2	8-Jul-11	K2-Sub 12’B’ Sill South OD.03	8	(8)	(8)	1,190	(81)	10,492,380	(716,077)	$ 1,108	9,776,303
3	9-Jul-11	K2-Sub 12’B’ Sill South OD.03	8	(8)	(9)	1,248	(85)	11,004,183	(751,006)	$ 1,163	10,253,177
4	9-Jul-11	K2-Sub 9’D’ Sill South OD.01	20	(20)	(22)	3,073	(210)	27,101,057	(1,849,575)	$ 2,863	25,251,482
5	24-Jul-11	K2 – Sub 11 ‘A’ UC.1 North OD.05	29	(29)	(32)	4,432	(302)	39,086,282	(2,667,534)	$ 4,129	36,418,747
6	24-Jul-11	K2 – Sub 11 ‘A’ UC.1 North OD.05	7	(7)	(7)	1,026	(70)	9,048,054	(617,506)	$ 956	8,430,549
7	26-Jul-11	K2 – Sub 11 ‘A’ UC.1 North OD.05	1	(1)	(1)	150	(10)	1,326,824	(90,552)	$ 140	1,236,272
8	27-Jul-11	K2 – Sub 11 ‘A’ UC.1 North OD.05	3	(3)	(3)	490	(33)	4,321,161	(294,908)	$ 456	4,026,253
9	10-Sep-11	K2 – Sub 9 ‘D’ Sill South OD.1	31	(31)	(34)	4,800	(328)	42,337,945	(2,889,452)	$ 4,473	39,448,493
10	28-Sep-11	K2 – Sub 12 ‘B’ Sill South OD.01 (#1)	52	(52)	(57)	7,977	(544)	70,354,071	(4,801,478)	$ 7,432	65,552,594
11	30-Sep-11	K2 – Sub 12 ‘B’ Sill North OD.02	23	(23)	(25)	3,571	(244)	31,491,745	(2,149,228)	$ 3,327	29,342,517
12	7-Oct-11	K1 – Sub 6 ‘A’ UC3 North OD.01	56	(56)	(62)	8,657	(591)	76,352,481	(5,210,853)	$ 8,066	71,141,628
13	8-Oct-11	K1 – Sub 6 ‘A’ UC.3 North OD.01	10	(10)	(11)	1,558	(106)	13,744,204	(938,005)	$ 1,452	12,806,198
14	8-Oct-11	K1 – Sub 6 ‘C’ UC.3 North OD.02	27	(27)	(30)	4,184	(286)	36,902,386	(2,518,489)	$ 3,898	34,383,897
15	8-Oct-11	K1 – Sub 6 ‘C’ UC.3 North OD.02	23	(23)	(25)	3,523	(240)	31,072,337	(2,120,604)	$ 3,283	28,951,733
						TOTAL SAVING FROM JUL-OCT’2011				$ 47,744	421,102,399

With this initiative in reducing cement percentage from 14% to 8%, cost saving in cement consumption from July – October 2011 is $ 47,744

Performance monitoring and post-evaluation of results:

This will be permanent practice going forward for back fill areas where we will be mining in the next more than 3 months later for mining beside ore drift.

 

Reference:

1. Sullivan William. Wicks M, Elin. Koelling C, Patrick. Engineering Economic, Fifteenth edition. Pearson International Edition, 2009

 

                                                    

 

 

W12_ET_Accelerator Cost Reduction_Kristal2011

Problem Statement:

Following up on the ground support consumables cost reduction project, one of the initiative is we are looking into alternatives in accelerator type to reduce 5% of overall ground support consumables cost. Currently we are using “A” product and looking for the opportunity to other product or brand

Alternatives:

After reviewing several offerings from several products and reviewed their specification who meets our technical requirements, we decided to trial “B” product.

Criterion:

The criterion will be technical requirement that can be accepted by geotechnical aspects and lower price from current supplier/product.

Analysis and Comparison:

Table below is for cost comparison only between two accelerators from “A” and “B” brand

Fibre Chip – Cost Savings Calculation
“A” Brand	11.05	SGD
1 SGD	6551.65	IDR
“A” Brand	72,395.73	IDR
“B” Brand	51,200.00	IDR
Saving Per Kg	21,195.73	IDR
Daily Shotcrete Consumption	60	M3/day
1 M3 Shotcrete	3	kg/M3
Cost Savings	Rp 3,815,231.85	IDR/day
Cost Savings per Annum	Rp 1,373,483,466.00	IDR/year
	$ 150,107.48	IDR/year

 

Selection of the preferred alternative:

Assuming that accelerator from “B” brand is reliable, accepted from geotechnical point of view, and based on the cost comparison above, we can come up with the decision to use accelerator from “B” brand which will give us $150,107.48 cost saving in accelerator consumption per year.

Performance monitoring and post-evaluation of results:

Geotechnical team will keep continue monitor the application of this accelerator especially in early strength and 28 days strength test in shotcrete to make sure the application will meet ground support standard to make sure a safe mine environment. Review and evaluation will be sent and done weekly and monthly for 6 months period.

 

 

Reference:

1. Sullivan William. Wicks M, Elin. Koelling C, Patrick. Engineering Economic, Fifteenth edition. Pearson International Edition, 2009

 

 

 

W11_ET_Development Cycle Process_Kristal2011

Problem Statement:

As part of improvement process in the business unit, we are doing an evaluation for our development cycle in order to find any ways to improve it. Development cycle in underground mine could be varying depends on its method. Underground mine has several mining methods depends on its ore body geometry and shape, geology characteristic, mineralization, rock characteristic, etc. Picture below shows a development cycle in our mine with underhand cut and fill method combine with long hole stope.

 

Alternatives:

When we determine and review the development cycle, this can be expanded to wider purpose as a multiple purpose project as the result gained can be used to evaluate each step in the cycle. In this instance, we can review further in Drilling activity – Charging activity – Ground support activity – etc to improve productivity on each step and will impact to the overall development cycle. In evaluating cycle time we can use data from Pitram/DOME that record our mine activities and also we can use actual data collecting in the field directly by assigning our production engineers.

Criterion:

Cycle time would be the parameter on this evaluation without ignores the safe production. The shorter development cycle we can gain is the better.

Analysis and Comparison:

From actual data collecting that was done by Production engineers, it can be compiled and found the Pareto chart as shown below:

 

There are top 4 activities that decided to be reviewed in detail and can be continued on its own improvement project leading by each project manager to be more focus develop some action plans to reduce the cycle time.

Selection of the preferred alternative:

As seen on the Summary Pareto Chart, there are top 4 activities:

1. Charging
2. Mesh & Bolting
3. Shotcrete
4. Grouting

Performance monitoring and post-evaluation of results:

Four activities above need to be highlighted in management concern as priority to be reviewed to reduce development cycle. Some actions need to be taken and divided in 4 different improvement projects that will be led by production engineers and the team. In instance, for Spraying Pareto chart below for shotcrete activity, activity “Waiting” need to be a concern and need to be reduced as soon as possible.

By implementing fish bone diagram to find the root cause, “Waiting” time should be eliminated and replaced with something that can give benefit to production.

 

Reference:

1. Sullivan William. Wicks M, Elin. Koelling C, Patrick. Engineering Economic, Fifteenth edition. Pearson International Edition, 2009
2. Paul Keller – Mc Graw Hill, Statistical Process Control, Chapter 7, 2011
3. The Memory Jogger 2, p122-134

 

 

                                                    

 

 

W13_Adi_CPM and Schedulling of “Establish a Schedule” Project (Humphreys Case Study Chapter 9)

Problem Statement

A project is about to begin. The project name is “Establishing Project Schedule” , its objective is to create the schedule in bar chart and also establish Critical Path Method to identify which activities are critical. A given date and activity list has been provided prior to the project planning.

Alternative Solution

Solution to execute this project will be describe as the following steps:

1. Breakdown all the activities items of the project scope.
2. Define the network logic for all activities.
3. Prepare the Precedence Diagram Method to Map all activities and its network logic.
4. Define duration of each activity
5. Set date and float calculation
6. Construct a abar chart.

 

Development of feasible alternatives

List of activities of project are as shown below:

Activity	Description
A	Define General Project Scope
B	Detailed Project Scope, Incl. Master List
C	Develop Master Schedule
D	Determine Level of Schedule Detail
E	Define Detailed Activities
F	Define Responsibility Assignments
G	Develop Detail Schedule Logic
H	Assign Resource to Activities
I	Determine Preliminary Activity Times
J	Determine Preliminary Lead Times
K	Review Acitivity Durations
L	Calculate Early and Late Dates
M	Check Feasibility & Efficiency of resource
N	Compare Calculated Dates for Milestones w/ Required Dates
O	Revise Detailed Logic and Durations
P	Resource Level the Schedule
Q	Review the Network for Inclusion of All Activities
R	Revise the Network
S	Review Activity Responsibility Assignments
T	Revise Responsibility Assignments
U	Review Network Logic
V	Revise Network Logic
W	Fineal Review of Resource Profiles
X	Revise Resource Plan
Y	Approve Schedule Baseline

 

All activities shall be connected each other by network logic to create a sequential and logical step of works that create a project.

A network logic has been define as follow:

NETWORK LOGIC
1	Activity A initiates the project
2	Activity A precedes activities B and C, which may proceed concurrently
3	Activity A precedes activity D
4	Activity C and F precede activity G
5	Activity D precedes activity E
6	Activity E precedes activity F
7	Activity G precedes activities H, I, and J, which may proceed concurrently
8	Activity H and I precede activity K
9	Activity J and K precede activity L
10	Activity L precedes activities M and N, which may proceed concurrently
11	Activity M and N both precede activity O
12	Activity O precedes activity P
13	Activity P precedes activities Q and W, which may proceed concurrently
14	Activity Q precedes activity R
15	Activity R precedes activities S and U, which may proceed concurrently
16	Activity W precedes activity X
17	Activity S precedes activity T
18	Activity U precedes activity V
19	Activity T,V, and X precede activity Y
20	Activity Y completes the project

 

After network logic has been defined, we can visualized the sequence by using Precedence Diagram Method:

 

 

Next step is to ddetermine the duration for each activity:

Activity	Durations (days)		Activity	Durations (days)
A	2		N	1
B	10		O	2
C	4		P	5
D	1		Q	1
E	4		R	1
F	2		S	1
G	8		T	1
H	3		U	1
I	2		V	1
J	4		W	1
K	2		X	4
L	1		Y	1
M	1

 

 

Analysis of Alternative Solution

To create a CPM, we need to analyze date and float from given PDM and duration. CPM will be created based on value of Early Start, Early Finish, Late Start, Late Finish, Total Float, and Free Float obtained by date and float analysis.

The early dates are calculated on the Forward Pass, while the Late dates are obtained by performing the Backward Pass. After running the two “passes” we should have visualization of CPM as shown below:

 

By create the CPM, we are not only obtain the Early and Late Dates, but also the value of float. If the value of float of a path is equal to zero, then the path sholud be noticed as Critical Path. The critical path on the above CPM is marked in red arrow.

W14_Adi_WBS development for Conceptual Study Phase of Project

Problem Statement

An “X” oil company has completed their exploration and drilling activity in eastern Indonesia for a gas field. Well completion has been done and ready to produce and process the hydrocarbon product. The well is located about 27 Km south of Sorong offshore. Well test report has result a significant number of hydrocarbon impurities (H2S and CO2) which need special treatment to produce gas that will meet the specification required by the gas buyer.

Alternative Solution

Alternative A :

Construct Central Processing Platform (CPP) near the offshore Wellhead Platform (WHP), which means to put all process equipment and facilities on the CPP. The impact of this option, is the size of platform structure will be enormous since lot of heavy equipment are mounted on it.

Alternative B :

Construct Central Processing Platform (CPP) at the nearest onshore area and connect it to Wellhead Platform (WHP) by 27 km Corrosion Ressistant Alloy (CRA) offshore pipeline, which means they can eliminate the necessity to construct an offshore platform.

Development of feasible alternatives

Identify and define the Major Scope of works for each alternative

Scope of Works Alternative A :

• Additional Wells Tie in
  • Well Site Facilities
  • Gas Gathering (Flowline) System and its Tie-in.
• Offshore CPP Fabrication and installation
  • CPP Topside, include risers,living quarters, helideck, flare, deck structures and appurtenances
  • CPP Substructures, including CPP Jackets, pile and mudmats
• Offshore Gas Processing Facilities
  • Gas Processing Train,
  • Condensate handling facility
  • Produced Water facility
  • H2S removal for HSE purpose
  • Amine system for CO2 removal
• Utilities and Off-site Facilities.
• Metering Facilities and its Tie-in
• Flowlines/Pipelines

Scope of Works Alternative B :

• Additional Wells Tie in
  • Well Site Facilities
  • 27 km CRA flowline and its Tie-in.
• Onshore Gas Processing Facilities
  • Gas Processing Train,
  • Condensate handling facility
  • Produced Water facility
  • H2S removal for HSE purpose
  • Amine system for CO2 removal
• Utilities and Off-site Facilities.
• Metering Facilities and its Tie-in
• Flowlines/Pipelines

Analysis and Comparison of Alternatives

Both alternatives will be mapped as Work Breakdown System to explore and identify all activities which become input prior to project scheduling and cost estimate development. The Work Breakdown System development in this Conceptual Study/ Several Options phase will refer to Physical Breakdown System of Norsk Standard Z- 014 to anticipate Class 5 – Class 4 cost estimate.

Alternative A :

Alternative B :

Selection of Preferred Alternative

From the both WBS above, we can categorize that Process and Utillities part (Yellow Boxes) are almost typical each other, while the rest of them (Pink Boxes) is completely different in terms of types and volume of works, that will govern a different project cost estimation in the end.

The preferred alternative can be determined by considering multiple Technical aspect and Economic/Cost aspect. Considering that “X” oil company has a lot of experiences of handling projects typical and more complex than this project, hence the Economic/Cost aspect will be the biggest concern in determining the preferrred alternative. A cost estimation shall be used as a basis to perform economic analysis and select the best alternative.

Performance Monitoring & Post Evaluation of Result

The next step to perform selection of alternative in this phase Conceptual Study/ Several Options of project, is to transform the developed WBS above into preliminary cost estimation. By using a set of guidelines for estimating, the established WBS shall be equipped with WBS dictionary which defines the boundary of scope for each element. A standard estimate template need to be defined prior to the estimating process to ensure that the cost estimation its consictency and traceability. Since the project execution will take times from starting point at phase Conceptual Study/ Several Options, it is important to take into account the escalating factor for both of material and labour cost so that we can deliver a more accurate cost estimation.

References

Humphreys, Gary C (2002),Project Management Using Earned Value, Orange,CA: Humphrey & Associates, Inc.

Norwegian Technology Centre (2002), SCCS Norsok Standard Z-014, Oslo: Norsk Teknologisenter.

Sullivan, William G., Wicks, Elin M. & Koelling, C. Patrick (1942), Engineering Economy15^th Edition, Singapore: Prentice Hall, Inc.

W10_ET_Reentry timeline after blasting_Kristal2011

Problem Definition:

Our current practice of reentry after we do the blasting at
the end of every shift is really impacting our productivity. The longer we can
clear the blasting so crew can go down the hole on the next shift, the less
productivity we would achieve. It is important for us to clear the blasting
area as soon as possible after we fire. Shift boss and Blaster are the man to
control this process and they should on top of it to make sure we can do this
process efficiently.

Development of Feasible Alternative:

The process of reentry should be done in the quickest way we
can get to make sure production continues without more delays after blasting.
Direct observation has had been done for 30 days to take actual data to
understand the real process what has been happening in the process.

Looking at the new initiative to do the clearing in K2 &
Klink area first and let the miners enter the mine after K2 clear, and Blaster
crew to continue the reentry in K1 area.

Selection of Criterion:

Any options to do the reentry as soon as possible in a safe
manner would be very helpful.

Analysis and Comparison:

Selection of the preferred alternatives:

Clearing area should be done at K2 & Klink areas first and let the
miners get down the hole after they are cleared while Blaster crew continuing
to clear K1 area. Average time duration of heading fired to tag board opened
for both K2 & Klink and K1 is about 80 minutes, but based on the data we
still have a lot of room to improve this duration to less than 80 minutes.

Performance monitoring and post-evaluation of results:

Firing time should be happened between 5:30am/pm – 6:00am/pm, any firing outside of
this time frame should be approved by Mine Manager or his alternate.

Reentry crew must to be at Portal tag board at the latest 30 minutes after heading
being blasted.

Manhaul and transportation support should be happened from all senior management.

Mine Control will report to Foreman if the blasting time exceed 1 hour. This
occasion will be investigated to prevent any recurrence.

Production engineer will do weekly observation on this process to make sure consistency on
this.

 

Reference:

1. Sullivan William. Wicks M, Elin.
   Koelling C, Patrick. Engineering Economic, Fifteenth edition.
   Pearson International Edition, 2009.

W9_Zakiya_Replacing Transportation Equipment

Problem Statement

Transportation equipment that was purchased in 2004 for $200,000 must be replaced. What is the estimated cost of the replacement, based on the following equipment cost index? If I only have budget of $250,000 then on which year should I change the equipment?

Year	Index	Year	Index
2004	223	2007	257
2005	238	2008	279
2006	247	2009	293

Alternative Solution

How much is the estimated cost of the replacement car for year:

• 2005
• 2006
• 2007
• 2008
• 2009

Selection Criteria

With the budget of $250,000, when should the transportation equipment change?

Analysis & Comparison of Alternatives

We will be using equation: Cn = Ck (Īn / Īk)

Where:

k              = reference year for which cost or price of item is known = 2004
n              = year for which cost or price is to be estimated (n>k) = 2005 – 2009
Cn           = estimated cost or price of item in year n
Ck           = cost or price of item in reference year k = $200,000
Īn            = ratio of index value in year n (see index table)
Īk            = ratio of index value in year k = 223

Year	Cost
2005	$200,000 x (238/223) = $213,452.91
2006	$200,000 x (247/223) = $221,524.66
2007	$200,000 x (257/223) = $230,493.27
2008	$200,000 x (279/223) = $250,224.22
2009	$200,000 x (293/223) = $262,780.27

Selection of preferred Alternatives

Since the budget is only $250,000 then the alternatives chosen is year 2007, which will cost $230,493.27 for transportation equipment replacement

Reference 

• Sullivan G. William, Wick M. Elin, Koelling Patrik C., Engineering Economy Chapter 3,Question 3-08, Page 129, Pearson International.
• Sullivan G. William, Wick M. Elin, Koelling Patrik C., Engineering Economy Chapter 3,equation (3-1), Page 103, Pearson International.

W8_Zakiya_Material Selection

Problem Statement

In the design of a tractor radiator, an engineer has a choice of using either a brass-copper alloy casting or a plastic molding. Either material provides the same service. However, the brass-copper alloy casting weighs 30 pounds, compared to 25 pounds for the plastic molding. Every pound of extra weight has been assigned a penalty of $6.50 to account for the increased fuel consumption during the life cycle of the car. The brass-copper alloy casting costs $3.85 per pound, whereas the plastic molding costs $7.90 per pound. Machining costs per casting are $6.50 for the brass-copper alloy. Which material should the engineer select, and what is the difference in the unit costs?

Alternative Solution

Engineer must choose 2 different types of material:

• Brass-copper alloy
• Plastic

Selection Criteria

Which material that gives the lowest cost

Analysis & Comparison of Alternatives

1. Brass-copper alloy

Casting Cost = 30 pounds x $3.85           = $ 115.5

Penalty          =   5 pounds x $6.50           = $   32.5

Machining Cost                                           = $     6.5  +

Total Cost                                                     = $ 154.5

2. Plastic

Casting Cost = 25 pounds x $7.90 = $197.5

Difference Unit Cost : $197.5 – $154.5 = $43

Selection of preferred Alternatives

Based on above calculation, it concluded that brass-copper alloy has lower cost compare to plastic. Difference cost between 2 materials is $43. So, brass-copper alloy is the chosen material.

Reference

• Sullivan G. William, Wick M. Elin, Koelling Patrik C., Engineering Economy Chapter 2,Question 2-33, Page 77, Pearson International.

W7_Zakiya_Which Sites is More Profitable?

 

Problem Statement

A municipal solid-waste site for a city must be located at Site 1 or Site 2. After sorting, some of the solid refuse will be transported to an electric power plant where it will be used as fuel. Data for the hauling of refuse from each site to the power plant are shown in below table. If the power plant will pay $9.50 per cubic yard of sorted solid waste delivered to the plant, where should the solid-waste site be located? Use the city’s viewpoint and assume that 250,000 cubic yards of refuse will be hauled to the plant for one year only. One site must be selected.

	Site 1	Site 2
Average hauling distance	5 miles	4 miles
Annual rental fee for solid-waste site	$10,000	$125,000
Hauling cost	$2.00 / yd3-mile	$2.00 / yd3-mile

Alternative Solution

Which one is the best alternative?

• Site 1
• Site 2

Selection Criteria

Which site with the lowest cost for municipal solid-waste location?

 

Analysis & Comparison of Alternatives

Cost Type	Fixed	Variable	Site 1	Site 2
Rent	X		$10,000	$125,000
Hauling		X	$2 x 5 x 250,000 = $ 2,500,000	$2 x 4 x 250,000 = $ 2,000,000
Cost / Year			$ 2,510,000	$ 2,125,000
Revenue			90 x 250,000 = $ 2,375,000	90 x 250,000 = $ 2,375,000
Profit			2,375,000 – 2,510,000 = -$135,000	2,375,000 – 2,125,000 = $250,000

Selection of preferred Alternatives

Site 2 has larger fixed cost, but has smaller total cost. Therefore site 2 is more profitable than site 1. Then alternative 2 is the chosen one.

 

Reference

 

• Sullivan G. William, Wick M. Elin, Koelling Patrik C., Engineering Economy Chapter 2,Question 2-4, Page 74, Pearson International.