** **

- Problem Definition

The gas supply scheme has been choose using decision making models (previous weeks) is Offshore Regasification Facility. Gas demand from customer is 100 MMSCFD, so the facility shall be designed 100 MMSCFD at minimum capacity. Company has indicative price from 3 (three) different contractor (all good performance contractor). Since the company will be using the price for calculate economic model (conceptual), then the optimum average price for 100 MMSCFD gas facility must be develop, in this stage power sizing-model would be applied.

- Identify the Possible Alternative

There are indicative historical price from 3 (three) different companies, as follow:

Table 1. Indicative Price

Table above shows the indicative price from PT.A, PT.B, and PT. C with various capacities. Furthermore to get the requirement capacity 100 MMSCFD, correlation exponent will be obtained by power sizing-model.

- Development of The Outcome for Alternative

Picture 1 below shows the formula of power sizing-model using correlation between price and capacity.

Picture 1. Power Sizing Model Formula

Based on data and formulation above, here is the analysis and calculation for correlation exponent result:

Table 2. Correlation Exponent

Using correlation exponent (m), sizing model analysis for 100 MMSCFD for each contractor could be calculated as follow:

Table 3. Estimate Cost 100 MMSCFD

- Selection Criteria

The optimum average price for 100 MMSCFD offshore gas facility will be defining using power sizing model.

- Analysis & Comparison of Alternative

Picture 2. Estimate Cost 100 MMSCFD

The calculation above show still using 2012 database and to get reflection new cost 2017 the data shall be adjusted by index value.

Picture 3. Index Value Formula

Table 4. Index Value Result

- Selection of the Preferred Alternative

The table (4) above shows the indicative price of offshore regasification facility, with the lowest price is 130.99 MMU$ from PT. A compare to PT. B (145.84 MMU$) and PT.C (183.55 MMU$). Based on analysis above, PT. A indicative price will be chosen.

- Performance Monitoring and The Post Evaluation of Result

Power Sizing Model and Index Value above is a good formula to estimate the indicative price for conceptual economic calculation. It can be using of any kind project, such as oil & gas, automotive, power plant, etc.

Reference:

- Planning Planet (2017).
*Creating The Owners Cost Estimate (Top Down).*

Retrieved from http://www.planningplanet.com/guild/gpccar/creating-the-owners-cost-estimate

- Sullivan, G. W. (2014). Engineering Economy 16
^{th}Chapter 3 – Cost-Estimation Techniques, pp. 99-110. - Aziz, A. A. (2015).
*W12_AAA_Sizing Model and Economic of Scale (Gas Processing Facilities)*

Retrieved from https://garudaaace2015.wordpress.com/2015/05/30/w12_aaa_sizing-model-and-economies-of-scale-gas-processing-facilities/

- Diary, C.A (2017).
*Cost**Inflation Index – Capital Gain.*

Retrieved from https://cadiary.org/cost-inflation-index-capital-gain/

WOW Bu Irene….. AWESOME case study….. It would be PERFECT except for one small problem…. You used equipment costs in 2012 and equipment costs in 2017, but you were not clear what year the projects were going to be BUILT. You are making a very common mistake and that is to use “PRESENT YEAR” dollars to estimate a project going to be built in the FUTURE. By doing that, you are almost guaranteeing that your cost estimate will be too low. (Reference Module 8.1 http://www.planningplanet.com/guild/gpccar/introduction-to-managing-cost-estimating-budgeting Figure 8, line item #5)

You also failed to provide the R^2 value so we don’t know how good the fit of the curve is to your data. Also is there any way you can get more than just 3 data points? Ideally you should have 10 or more? If you cannot then it is OK but it increases the risk.

What I strongly urge you to do is continue the work you’ve started for your next blog(s):

1) Go HERE https://js-pag-cert-2017.com/w14_sjp_forecasts-part-6/ and look at the 4 methods Steve used to create his cost projections.

2) Try to DUPLICATE what Steve has done using your own data. Using the different regression analysis tools, you need to generate 3 values a Best Case, Worst Case and Most Likely but PROJECTED INTO THE FUTURE to the END of the proposed projects not the START of them.

3) If you follow what Steve has done using your own data, you will have a PERFECT paper.

If you wish to discuss this don’t hesitate to set up a Skype or WhatsApp chat. Bottom line, you’ve picked a really great topic but you can do a LOT more with it than just what you’ve shown us here……

BR,

Dr. PDG, Jakarta