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(INT-3435) Successful Holistic Approach for Cost Optimization in a Mega Project

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Level: Basic
TCM Section(s):
7.5. Value Analysis and Engineering
7.1. Project Scope and Execution Strategy Development
Venue: 2020 AACE International Conference & Expo

Abstract: The Pengerang Integrated Complex (PIC) is the largest greenfield downstream investment by PETRONAS in Malaysia at USD27 billion. Situated within Johor’s Pengerang Integrated Petroleum Complex (PIPC), PIC consists of a Refinery and Petrochemical Integrated Development (RAPID) and supporting facilities, including centralized utilities, a raw water supply and treatment plant, an air separation unit, a cogeneration plant, a deep water terminal and a regasification terminal.

Aligned with PETRONAS group-wide transformation and cost reduction efforts in response to the massive oil price drop in 2014, PIC embarked on strategic CAPEX reduction initiatives to optimize cost and sustain the project delivery.

This is accomplished through rigorous value improvement practices, including optimization of its extensive project management organization, implementation of value engineering during engineering, procurement, construction and commissioning (EPCC) phase, deferment of non-essential facilities and refinement of materials & services contracts management.

The successful implementation of the initiatives resulted in overall CAPEX reduction, and also provided effective project stewardship and control, resource optimization, productivity increment, enhanced coordination and alignment within the project team as well as improving preparedness for facility operation.