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(RISK-2700) Quantitative Cost Risk Analysis at Bid Stage

Level: Intermediate
Author(s): Didier Lagrange
Venue: 2017 AACE International Annual Meeting, Orlando, FL

Abstract: Bids submitted for main EPC contracts in the Oil & Gas Industry generally contain a number of qualifications or exclusions associated with the proposed price. The project execution strategy foreseen by each bidder is generally not clearly defined and may induce additional cost during the project execution. In order to better assess what is associated to the contractors’ offers, a detailed quantitative cost risk analysis at bid stage will help. It will also support the level of contingency required for each bidder considering the risk the Contractor and the Owner respectively will have to bear. The risk manager will be heavily involved in the bid evaluation process in order to register and assess all risks associated with each of the bids including the options not necessarily validated at this stage.