Economic and Technical Evaluations for Engineering and Maintenance Projects

Introduction

Engineering and maintenance projects involve complex engineering and economic tradeoffs while ensuring compliance with regulatory and code requirements. A sound understanding of the key aspects of project objectives, drivers, constraints, and profitability is crucial for the success of a project.  Fast-track schedules demand faster, more accurate technical and economic decisions earlier in the design process when engineers and business managers least understand project costs. Consequently, many projects cost more than they should. Moreover, maintenance projects typically have even shorter lead times and require quick technical and economic decisions in high-stress situations while safeguarding the mechanical integrity of the equipment and plant. Using the appropriate evaluation techniques and skills, engineering and economic decisions can be reached faster, more accurately, and with greater confidence, avoiding costly project delays, potential rework and possible failures, which is the focus of this course.

Objectives

To provide participants with fundamental understanding and tools of economic and technical analysis to enable them to implement fit-for-purpose project solutions that are both technically sound and cost-effective.

Training Methodology

The training methodology is interactive with group exercises and is suitable for all employees involved in functions management. The pace and level of the training workshop is customized to the understanding of the delegates. Ongoing back-up and support is available after the training on request to the supplier, and the training course is also available for in-house presentation as well as for “Competency Transfer”.

Who Should Attend?

This course is designed for professionals with a wide range of technical and industrial backgrounds and varying levels of experience seeking to broaden their skills and abilities in economic and technical valuation techniques required across industry.  Design, project, maintenance, and plant engineers, supervisors and managers in the manufacturing, chemical processing, petrochemical, power, food, pulp and paper, mining, and other process industries. Recent graduates benefit within the short period of three days from the extensive practical experience of the instructor.

Course Outline

Project Definition and Technical Viability

Registration And Coffee

Welcome And Introduction

1.1 Engineering and Maintenance Projects – Overview 

• Engineering projects - New, expansions/additions, revamps, engineering systems
• Maintenance projects - Shutdown, repair, alteration, replacements and improvements

1.2 Key Project Premises 

• Definition and scope – design basis
• Drivers and specific requirements
• Deliverables and key success factors 
• Resources and constraints
• Project Life Cycle considerations – costs, business-focused facilities

1.3 Project Development And Sensible Alternative

• Project Development Plan (PDP) – Preparation Guidelines
• Conceptual design alternatives 
• Preliminary cost estimates for alternatives

1.4 Key Issues In Feasibility Analysis 

• Technical analysis – Technical viability; sensible choices
• Economic analysis – financial viability; return on investment; risk 
• Environmental analysis – impact; mitigation; restoration measures/costs; due diligence 
• Life-cycle management (value management) 
• Renewal/replacement interval 
• Servicing cost 
• Failure consequence 
• Equipment redundancy and spare part 
• Maintenance strategie 
• Energy efficiency 
• Risk analysis and mitigation measures – types and levels of risk associated with the project

1.5 Technical Feasibility Analysis

• Technology maturity and validation 
• Compliance with applicable regulations, codes and standards
• Regulatory approvals – lead time, resources 
• Risk considerations – obsolescence, continuous technical support • Fitness-for-service 
• Constructability; operability and maintainability      

1.6 Workshop 1 - Key Principles And Guidelines For Successful Projects 

• Best practices for project success 
• Common causes of project failures 
• Case study – Anatomy of a project 
• Capturing key learnings Adjournment

Project Costs and Economic Evaluation

2.1 Project Cost Estimating

• Types of estimates, accuracy
• Preliminary estimates 
• Definitive estimates
• Estimating methods 
• Cost indices and economic indicators 
• Direct and indirect costs
• Life cycle costs and level of uncertainty in project life cycle 
• Contingency 
• Economic interpretation of engineering work

2.2 Equipment Sizing and Costs 

• Basic equipment design and sizing methodologies
• Preliminary sizing – rules of thumb
• Procurement policies, procedures and practices 
• Spare parts policies, procedures and practices

2.3 Objectives of Economic Evaluation Analysis 

• Definitions and overview 
• Typical categories of engineering economic decisions 
• Equipment and process selection 
• Equipment replacement 
• Cost reduction 
• Service improvement

2.4 Principles Of Time Value Of Money And The Discount Rate 

• Discounted cash flow (DCF) calculation – Definitions and premises 
• Project cash flow components 
• Discounting and time-value considerations 
• Distinguishing cash flow and other measures of profitability 
• Cost of capital and inflation issues 
• Capital budgeting techniques and best practices 
• Methods of computing time-value of money 
• The algebraic (or formula) method 
• The financial table method

2.5  Economic Evaluation And Ranking Methods 

• Basic concepts of economic evaluation 
• Economic evaluation methods – static and dynamic 
• Simple payback 
• Benefit-cost ratio (BCR) 
• Net present value (NPV) 
• Internal rate of return (IRR) 
• Profitability index (PI) 
• Capital equivalent of energy and maintenance savings 
• Ranking investment methods

2.6 Workshop 2 – Case Study: Economic Evaluation And 
        Justification Of A Capital Project

Adjournment

Types and Evaluation of Maintenance Projects

3.1 Maintenance Methods and Strategies

3.2 Types Of Maintenance Projects 

• Complete turnarounds – extent, frequency 
• Opportunistic minor turnarounds 
• Specialized repair methods 
• Replacement in kind and improvement opportunities 
• Specialized Inspection projects – Application and frequency 

3.3 Technical Evaluation Of Maintenance Projects 

• Key project characteristics and special requirements 
• Significance of schedule and maintainability – optimum cost or least downtime 
• Availability of human resources 
• Constructability considerations 
• Fitness-for-service assessments (FFS) 
• Basics of FFS 
• Run/repair/replace decisions 
• Alternative repair strategies and methods 
• Temporary repairs 
• Permanent repairs 
• Alternate repair technologies and procedures 
• Regulatory approvals
• Lead time
• Specific approval requirements

3.4 Management of Change 

• Basics of management of change 
• Impact of maintenance projects on mechanical integrity and reliability 
• Regulatory, codes and standards requirements

3.5 Economic Evaluation of Maintenance Projects

3.6 Workshop 3 – Case Study: Evaluation of A Maintenance Project