1. Technical Manager; Bechtel Oil, Gas & Chemicals.
Financial Risk Analysis and Cost Reductions Alternatives for Dredging Projects
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Sample notes for replacement
For over 100 years, Bechtel has been a primary force in shaping the world's infrastructure. Power plants and pipelines and petroleum refineries that fuel economies on six continents. Airports and railways that move people and goods. Microelectronics facilities and telecommunications systems that create jobs and boost living standards. At Bechtel, we're proud of the role we've played in building the 20th century. But we're much more interested in the ways we can help meet the challenges of the next hundred years. Wherever the job. Whatever it takes to do it right. The way we always have.
Karim El Kheiashy PhD MBA PMP PE
Technical Manager; Bechtel Oil, Gas & Chemicals.
Maurice "Zickie" Allgrove C.Eng.
Director; Ports and Marine Terminals, Worley Parsons

2. Outline Introduction Cost Breakdown Risk Analysis
Contingency Determination
Cost Reduction Alternatives
Sample Notes Titles
Sample notes for replacement
For over 100 years, Bechtel has been a primary force in shaping the world's infrastructure. Power plants and pipelines and petroleum refineries that fuel economies on six continents. Airports and railways that move people and goods. Microelectronics facilities and telecommunications systems that create jobs and boost living standards. At Bechtel, we're proud of the role we've played in building the 20th century. But we're much more interested in the ways we can help meet the challenges of the next hundred years. Wherever the job. Whatever it takes to do it right. The way we always have.
Outline

3. Introduction Land cost Energy Exploration Maritime Infrastructure
Industry Capacity
Funding Limitations
Sample Notes Titles
Sample notes for replacement
For over 100 years, Bechtel has been a primary force in shaping the world's infrastructure. Power plants and pipelines and petroleum refineries that fuel economies on six continents. Airports and railways that move people and goods. Microelectronics facilities and telecommunications systems that create jobs and boost living standards. At Bechtel, we're proud of the role we've played in building the 20th century. But we're much more interested in the ways we can help meet the challenges of the next hundred years. Wherever the job. Whatever it takes to do it right. The way we always have.
The cost to replace the present system of locks is estimated at more than $125 billion. - ASCE
Introduction

4. Cost Breakdown Sample Notes Titles Sample notes for replacement
For over 100 years, Bechtel has been a primary force in shaping the world's infrastructure. Power plants and pipelines and petroleum refineries that fuel economies on six continents. Airports and railways that move people and goods. Microelectronics facilities and telecommunications systems that create jobs and boost living standards. At Bechtel, we're proud of the role we've played in building the 20th century. But we're much more interested in the ways we can help meet the challenges of the next hundred years. Wherever the job. Whatever it takes to do it right. The way we always have.
Cost Breakdown

5. Cost Breakdown Bare Costs Direct Costs Contract Cost Project Cost
Bare costs are defined as cost in a project that have no markups included. This excludes productivity, overtime,
any tax adjustments, any direct cost markups, contractor markups, special markups or owner cost markup.
Direct Costs
Direct cost equal bare cost plus all direct cost adjustments (Direct Labor, Direct Equipment and Direct Sub Bid) which includes overtime and productivity, but does not included contractor payroll taxes and insurance (PTI).
Contract Cost
The Contract Cost includes the Cost to Prime plus the performing contractor’s markups, subcontractor markups, sub-subcontractor markups, etc. Contractor markups are already included in the Cost to Prime. PTI and any allowances, such as small tools, are applied to the contractor’s own work and then any indirect markups, such as job office overhead (JOOH), home office overhead (HOOH), profit, bond, excise tax, etc., are applied to the total. Special markups are included in the cost; however, they are only included as an additional cost that is not subject to further compounding by markups at higher levels.
Project Cost
The Project Cost includes the cost to owner plus any owner markups, such as escalation, contingencies, SIOH (owner’s supervision, inspection and overhead) and/or other costs as defined.
Cost to Prime
The Cost to Prime includes the direct cost plus all contractor markups that apply, up to the item/folder that is being viewed. That is, the cost to prime is the cost to the performing contractor, not including his own PTI and indirect markups. The cost to prime does include any sub or sub-subcontractor's PTI and indirect costs, but not the performing contractor’s PTI and indirect markups. For example, the cost to prime includes the direct cost of the prime contractor’s own work, the direct cost of their subcontractor’s work and the subcontractor’s PTI and indirect markups on their work. PTI and any allowances, such as small tools, are applied to the subcontractor's own work and then any indirect markups, such as JOOH, HOOH, profit, bond, excise tax, etc., are applied as defined by the estimator. Any subcontractor, sub-subcontractor, etc., special markups are also included in the cost to prime; however, they are only included as an additional cost that is not subject to further compounding by markups at higher levels. 
Mark-ups
Markups may include direct cost markups, contractor markups, special markups and owner markups. Direct cost markups can include adjustments to the direct cost for productivity, overtime, taxes and/or other adjustments as defined by the estimator. Contractor markups can include PTI; allowances, such as small tools; indirect costs, such as JOOH and HOOH; profit; bonds; and/or other costs as defined by the estimator. Contractor markups are defined for each contractor, subcontractor, sub-subcontractor, etc. A special markup can also be defined by the estimator and applied by the contractor, subcontractor, etc. Owner cost markups can include escalation, contingencies, SIOH (owner's supervision, inspection and overhead) and/or other costs as defined by the estimator.
Sample Notes Titles
Sample notes for replacement
For over 100 years, Bechtel has been a primary force in shaping the world's infrastructure. Power plants and pipelines and petroleum refineries that fuel economies on six continents. Airports and railways that move people and goods. Microelectronics facilities and telecommunications systems that create jobs and boost living standards. At Bechtel, we're proud of the role we've played in building the 20th century. But we're much more interested in the ways we can help meet the challenges of the next hundred years. Wherever the job. Whatever it takes to do it right. The way we always have.
Cost Breakdown

6. Risk Analysis Risk factors Size of the job;
Portion of the work to be done by subcontractors;
Nature of work;
Where the work is to be performed and period of performance;
Relative difficulty of work, the reasonableness of negotiated costs;
Amount of labor included in the costs;
Environmental issues
Sample Notes Titles
Sample notes for replacement
For over 100 years, Bechtel has been a primary force in shaping the world's infrastructure. Power plants and pipelines and petroleum refineries that fuel economies on six continents. Airports and railways that move people and goods. Microelectronics facilities and telecommunications systems that create jobs and boost living standards. At Bechtel, we're proud of the role we've played in building the 20th century. But we're much more interested in the ways we can help meet the challenges of the next hundred years. Wherever the job. Whatever it takes to do it right. The way we always have.
Risk Analysis

7. A contingency value to account for project risks and unknowns.
Contingency in estimates is not additional profit or fee; it represents an actual construction cost.
Monte-Carlo Simulation for risk quantification / possible cost outcomes.
Contingencies, as defined in the Cost Narrative of the USACE Cost Engineering Report, provide “allowances to cover unknowns, uncertainties and/or unanticipated conditions that are not possible to adequately evaluate from the data on hand at the time the cost estimate is prepared but must be represented by a sufficient cost to cover the identified risks”
Sample Notes Titles
Sample notes for replacement
For over 100 years, Bechtel has been a primary force in shaping the world's infrastructure. Power plants and pipelines and petroleum refineries that fuel economies on six continents. Airports and railways that move people and goods. Microelectronics facilities and telecommunications systems that create jobs and boost living standards. At Bechtel, we're proud of the role we've played in building the 20th century. But we're much more interested in the ways we can help meet the challenges of the next hundred years. Wherever the job. Whatever it takes to do it right. The way we always have.
Contingency

8. Costs Bare cost Direct cost Contract cost Project cost Contingency
Operation & Maintenance
Sample Notes Titles
Sample notes for replacement
For over 100 years, Bechtel has been a primary force in shaping the world's infrastructure. Power plants and pipelines and petroleum refineries that fuel economies on six continents. Airports and railways that move people and goods. Microelectronics facilities and telecommunications systems that create jobs and boost living standards. At Bechtel, we're proud of the role we've played in building the 20th century. But we're much more interested in the ways we can help meet the challenges of the next hundred years. Wherever the job. Whatever it takes to do it right. The way we always have.
Costs

9. Benefits to Cost Ratio (BCR)
Bare cost
Direct cost
Contract cost
Project cost
Contingency
Operation & Maintenance
Sample Notes Titles
Sample notes for replacement
For over 100 years, Bechtel has been a primary force in shaping the world's infrastructure. Power plants and pipelines and petroleum refineries that fuel economies on six continents. Airports and railways that move people and goods. Microelectronics facilities and telecommunications systems that create jobs and boost living standards. At Bechtel, we're proud of the role we've played in building the 20th century. But we're much more interested in the ways we can help meet the challenges of the next hundred years. Wherever the job. Whatever it takes to do it right. The way we always have.
Benefits to Cost Ratio (BCR)

10. Owner – administer contract management
Engineering Procurement Construction Contracts
For large and long term dredging projects, it is better to devise a programmatic management approach to help control costs and reduce some of the indirect costs to projects.
A program management approach that would seek to reduce overall indirect costs would employ large engineering/design-procurement-construction (EPC) contracts for the project.
These large contracts that are program oriented would replace the numerous separate design and construction contracts.
Reduction of scheduled construction calendar time that requires the presence of construction companies with their management structures and other overhead costs that are charged directly to the construction project.
Fewer mobilizations and work location changes that reduce the total distances that materials, equipment, and people must travel.
Reduced prices of labor, materials, and transportation.
Reduced indirect project costs and general direct project costs.
Owner – administer contract management
EPC Contractor – Single point of responsibility, communication and coordination
Special consultants
Vendor
Sub-contractor
Sample Notes Titles
Sample notes for replacement
For over 100 years, Bechtel has been a primary force in shaping the world's infrastructure. Power plants and pipelines and petroleum refineries that fuel economies on six continents. Airports and railways that move people and goods. Microelectronics facilities and telecommunications systems that create jobs and boost living standards. At Bechtel, we're proud of the role we've played in building the 20th century. But we're much more interested in the ways we can help meet the challenges of the next hundred years. Wherever the job. Whatever it takes to do it right. The way we always have.
Cost Reduction

11. Cost Reduction Public Private Partnership
Government control (participation and ownership) with private efficiency and capital
Access to a broader range of financing
Access to additional capital
Fewer constraints on accessing capital (e.g. annual appropriation)
Risk sharing (specificity, complexity, uncertainty)
Lower costs of service through specialization
Sample Notes Titles
Sample notes for replacement
For over 100 years, Bechtel has been a primary force in shaping the world's infrastructure. Power plants and pipelines and petroleum refineries that fuel economies on six continents. Airports and railways that move people and goods. Microelectronics facilities and telecommunications systems that create jobs and boost living standards. At Bechtel, we're proud of the role we've played in building the 20th century. But we're much more interested in the ways we can help meet the challenges of the next hundred years. Wherever the job. Whatever it takes to do it right. The way we always have.
Cost Reduction

12. Cost Reduction Public Role Establishing infrastructure
Establish a regulatory framework
Establish a business environment
Encourage economic opportunity
Encourage private investment
Protect labor interest
Private Role
Generate a rate of return
Handle operational aspects
Manage commercial risks
Propose and implement investment policy
Incentives for high performance and competitive tariffs
Play a crucial role in fostering efficient logistics development
Sample Notes Titles
Sample notes for replacement
For over 100 years, Bechtel has been a primary force in shaping the world's infrastructure. Power plants and pipelines and petroleum refineries that fuel economies on six continents. Airports and railways that move people and goods. Microelectronics facilities and telecommunications systems that create jobs and boost living standards. At Bechtel, we're proud of the role we've played in building the 20th century. But we're much more interested in the ways we can help meet the challenges of the next hundred years. Wherever the job. Whatever it takes to do it right. The way we always have.
Cost Reduction

13. Cost Reduction Government Vs. Private Clients Labor Laws Taxes
Fuel Cost
Schedule (delivery dates / investment returns)
Location (intracoastal / navigation)
Environmental
Reclamation / Disposal
Project Size (Economy of Scale)
Negotiate / Industry Competition
Sample Notes Titles
Sample notes for replacement
For over 100 years, Bechtel has been a primary force in shaping the world's infrastructure. Power plants and pipelines and petroleum refineries that fuel economies on six continents. Airports and railways that move people and goods. Microelectronics facilities and telecommunications systems that create jobs and boost living standards. At Bechtel, we're proud of the role we've played in building the 20th century. But we're much more interested in the ways we can help meet the challenges of the next hundred years. Wherever the job. Whatever it takes to do it right. The way we always have.
Cost Reduction