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(TCM-3245) Cost Engineering as a Driver of Capital Efficiency

Level: Intermediate
Venue: 2019 AACE International Conference & Expo, June 16-19, 2019, New Orleans, LA, USA

Abstract: The roots of cost engineering and AACE® International were in Chemical Engineering. At one integrated oil firm, represented at the founding of AACE International, those engineering roots remain strong. This paper describes how cost engineering is viewed there as being similar to other engineering disciplines where competency is developed by a combination of formal engineering training and on-the-job experiences working along with engineering. While this company’s cost engineers may not apply all the skills and knowledge of cost engineering as described by AACE International, the engineering link is seen as essential [2]. When properly applied with this engineering perspective over the project lifecycle, it enables improved competitive outcomes by identifying specific return on investment facility and execution optimizations to improve venture economics and overall competitiveness.

The maximum value of cost engineering is realized when it is seamlessly integrated with different, but equally important skills, such as process design, facilities planning and execution planning. These should be coordinated via a set of clear venture objectives during the development and execution phases. Resulting outcomes from this integration include improved venture economics, balanced cost/benefit assessments on facilities and execution decisions as well as more predictable cost/schedule projections.

Examples will be referenced in which significant cost savings were achieved as a result of this highly integrated approach but with an engineering focus.