W9_AI_Contingency Estimation of O&M Cost Offshore Regasification Project

  1. Problem Definition

Offshore Regasification Project has been one of the most priority project. Therefore, calculation of O&M Cost of Offshore Regasification Project must be developed.

The objective of this calculation is to determine cost overrun probability during O&M period. Therefore, it is necessary to prepare cost contingency for the project to anticipate the additional cost.

  1. Identify the Possible Alternative

There are 4 methods to estimate cost (also time) contingency, as follow:

  • Expert Judgment
  • Predetermined Guidelines
  • Simulation Analysis
    • Range Estimation
    • Expected Value
  • Parametric Modeling

For this case, Author uses Simulation Analysis with Range Estimation method.

Range estimating is a risk analysis technology that combines Monte Carlo sampling, a focus on the few critical items, and heuristics (rules of thumb) to rank critical risks and opportunities. This approach is used to establish the range of the total project estimate and to define how contingency should be allocated among the critical items.

  1. Development of The Outcome for Alternative

The following steps will be used to determine cost contingency using range estimating:

  • Determines of ranges for each cost items.
  • Determines the probability that each item can be completed within the estimate.
  • Running Monte Carlo simulation for the cost range.
  • Determines of critical items based on result of Monte Carlo simulation.
  • Determine of contingency with reference to critical items only.

Following are base estimates for each cost items:

Table 1. Base Estimate of O&M Cost Offshore Regasification Facilities

Estimator has developed table (1) above, to determine range of each cost item. Good estimate shall be calculated equal probability of overrun and underrun (50% probability), hence the assumption being that some project will overrun while others will underrun, and in the end they will balance out.

But estimator shall be added some risk-aversed attitude, in this calculation P80 will be used. It means that probability of 80% that the project will not overrun.

Table 2. Range and Desire Probability of Each Component

After determining range and desire probability of component cost, further step is to conduct Monte Carlo simulation with 1000 iterations. The result as follow:

Table 3. Monte Carlo Simulation Result

  1. Selection Criteria

Estimator using Bottom Line Critical Variance to categorize critical item of each cost component, table show below:

Table 4. Bottom Line Critical Variances

  1. Analysis & Comparison of Alternative

Using Bottom Line Critical Variance table above, critical item result as follows:

Table 5. Critical Items

  1. Selection of the Preferred Alternative

After categorize critical component, then the next step is determining cost contingency, as shown in following table:

Table 6. Cost Contingency

Hence the total cost contingency will be used for this project is $ 126.000 (only for critical item).


  1. Performance Monitoring and The Post Evaluation of Result

During the implementation of Offshore Regasification Project, it is necessary to monitor O&M cost to prevent cost overrun exceed cost contingency.


  1. AACE International Recommended Practice No. 41R-08
    Retrieved from https://www.yumpu.com/en/document/view/50838191/41r-08-risk-analysis-and-contingency-determination-using-range-
  2. AACE International Recommended Practice No. 44R-08
    Retrieved from http://nebula.wsimg.com/ab1871cc797714d7bf4dc2bfc4f5c243?AccessKeyId=593FFA6B20F5002887D7&disposition=0&alloworigin=1
  3. Milza, R. (2016). W10_RM_Contingency Estimation in Gas Station Project.

Retrieved from https://goldenaace2015.wordpress.com/2016/03/08/w10_rm_contingency-estimation-in-gas-station-project/

  1. Asro. Y. W. (2014). W20_YAW_Contingency Estimation in Storage Tank Project.

Retrieved from  https://kristalaace2014.wordpress.com/2014/07/07/w20_yaw_contingency-estimation-in-storage-tank-project/


W8.1_AI_Tuckman Survey on Process Engineer Team

  1. Problem Definition

Process Engineer Team has been actively working together for the past 4 years. The challenge of this team is the increasing and complexity of gas infrastructure projects that will be faced. We now want to determine the leadership skills and styles which the group may benefit from as it enters this next phase of the project. Then for this week Tuckman Survey will be applied.

  1. Identify the Possible Alternative

In 1965, Tuckman published his Forming Storming Norming Performing model and completed with the fifth stage, Adjourning in 1970s. This model explains that as the team develops maturity and ability, relationships establish, and the leader changes leadership style from Directing (Telling), Coaching, Participative, and Delegating up to Directing (Concluding).

Fig. 1 Tuckman’s Team Development Model

Illustration graph of Tuckman Model Group Development Stages is shown in the next figure:

Fig 2. Tuckman Group Development Stages Model

  1. Development of The Outcome for Alternative

To determine current Process Engineer Team stage, each individual in team fill the excel format of Tuckman Survey Scoring Template.

Table.1 – Individual responses from the Tuckman Survey Scoring Template.

  1. Selection Criteria

Based on the above individual’s response, PERT analysis was performed to identify team behavior at P90 because these team already join over long time (4 years)

Table 2. P90 Delphi Technique Result

  1. Analysis & Comparison of Alternative

Based on Table 2, we can conclude team is in Performing stage (indicated by the rank). During this stage, team members often experience:

  • Constructive self-change;
  • Deep sense of belonging;
  • Understanding of each other’s strengths and weaknesses;
  • Self-organization of work;

Hints for team leaders:

  • Delegate all work that sensibly can;
  • Focus on developing team members;

Style of leadership this stage is “DELEGATING” mode where some leadership is shared by the team.

  1. Selection of the Preferred Alternative

Process Engineer team can achieve more than each team member individually. Being part of a high-performance team can be extremely rewarding, but it requires time and commitment to get to that stage. The team leader job is to help this team reach and sustain high-performance and leader has to adapt behavior and leadership style to the different challenges presented at each stage. The team leader responsibility is to be aware of the challenges the team will face and support the team to get aim together.

  1. Performance Monitoring and The Post Evaluation of Result

Team assessment should conduct periodically in six months ahead to capture team phase changing and select appropriate style of leadership, this evaluation can help the team to improve coordination and productivity.



  1. Tuckman, B. (1965). Tuckman’s Team Developmental Model. Retrieved from http://www.focusadventure.com/team-building/gallery/tuckmans-team-developmental-model/
  2. Michell, Tony (2017). W2_ABM_Folow Up Tuckman|EMERALD AACE 2017. Retrieved from http://emeraldaace2017.com/2017/08/08/w2_abm_follow-up-tuckman-survey-on-spj-offshore-construction-team/
  3. Irene, A. (2017). W2_AI_Tuckman Analysis|EMERALD AACE 2017.

Retrieved from https://emeraldaace2017.com/2017/08/01/w1_ai_tuckman-analysis-assigment/