EMGT 835 FIELD PROJECT: Front End Loading (FEL) and Process Engineering Workflow By Ryan C. Spangler, P.E. Master of Science The University of Kansas Spring Semester, 2005 An EMGT Field Project report submitted to the Engineering Management Program and the Faculty of the Graduate School of ‘The University of Kansas in partial fulfillment of the requirements for the degree of Master of Science. Rett fet “falos Dr. Robert Zerwekh Date Committee Chair ~\ > : Jn nr Dg SEES Annette Tetmeyer Date Committee Member 4 Kenda Caskey Committee MemberFront End Loading (FEL) and Process Engineering Workflow TABLE OF CONTENTS Executive Summary |. Introduction 1 A. Historical Perspective B. Definition of FEL C. Value of FEL in Project Development Ul, Project Scope 5 A. Objectives B. Review Approach C. Selection of Sample Projects lil. Review of FEL Deliverables 8 A. Definition of FEL Deliverables B. Scope of Deliverables IV. Process Engineering Workflow 21 FEL Deliverables and Responsibilities FEL1 Activities FEL2 Activities FELS Activities Development of Sample Report mMoOOD> V. Recommendations& Conclusions 27 A. Effective Management of FEL B. Execution of FEL Engineering C. Transition from FEL to Detailed Design D. Additional Work Appendices | References Il Project Team Abbreviations Il Sample FEL Report ENGT 835 ~ Spring 2005 F:\Report Documents\Table of Contents. dos yan Spangler rspangler@ gmail.comFront End Loading (FEL) and Process Engineering Workflow LIST OF TABLES AND FIGURES Page Figure 1 — Project Timetine 3 Table 1 ~ FEL Projects List 7 Table 2 - Standard FEL Deliverables 8 Table 3 - FEL Deliverables and Responsibilities at Table 4 ~ FEL 1 Workflow — Activities and Responsibilities 23 Table 5 - FEL 2 Workflow — Activities and Responsibilities 24 Table 6 - FEL 3 Worktlow — Activities and Responsibilities 25 EMGT 835 ~ Spring 2005 yan Spangler F \Report Documents\Tables and Figures.doc ‘spangler@ gmail.comExecutive Summary Project development for the oil refining industry is typically performed through a process called Front End Loading (FEL). In recent years, the Process and Industrial Division of Burns and McDonnell has performed several FEL efforts for various refining industry clients. A review of past FEL efforts indicates significant variation in the FEL deliverables provided, the content of these deliverables, and the overall quality. The primary objective of this field project report was to perform a review of past projects, and develop a comprehensive list of “standard” FEL deliverables. ‘Once these deliverables were defined, a review of engineering workflow activities for each stage of the FEL process was performed. The list of deliverables and the engineering workflow activities provide a solid basis for the planning and execution of future FEL efforts. As a byproduct to this report, a standard FEL sample report was also developed. This sample report is intended to benefit the division in three areas; 1) as a training tool for the introduction of FEL to new employees, 2) as a template or guide for future FEL efforts, and 3) as a sales tool for the demonstration of an FEL document to potential clients. Finally, several recommendations were made regarding the management of an FEL, effort, execution of FEL engineering, and the transition of FEL to detailed design For management of FEL, four key recommendations have been identified: * Use of a 3-Phase FEL approach. ‘* Managing and maintaining consistent client “buy-in” throughout the FEL process. EMGT 895 ~ Spring 2005 Ryan Spangler F \Report Documents\Executive Summary.doc rspangler@ gmail.com* Utilizing early involvement of individual design disciplines and construction, * Conducting PDRI reviews following each stage of FEL to measure progress. ‘* Use independent FEL benchmarking for larger or more complex projects. For execution of FEL engineering, four key recommendations were identified: + Emphasis on the development of a written Process Design Basis in early FEL. * Focus on thorough documentation of design assumptions by individual engineering disciplines. ‘+ Obtain operations input from the client in early FEL. + Improve quality review procedures specifically for FEL projects. Finally, ive recommendations were made for transition of FEL to detailed design. ‘+ Maintain strong continuity of project team, specifically with lead engineers and piping designers. * Improve format standard for FEL data to streamline communication of data in detail design, * Maintain adherence to FEL design assumptions were at all possible to minimize scope creep. ‘* Limit unresolved issues from FEL by conducting a final open items review to track ail uncertain or outstanding issues prior to start of detailed design. * Implement management of change process in FEL to ease transition to detail design. EMGT 835 - Spring 2005 yan Spangier F\Report Documents\Exceutive Summary. doc rspangler@ gmail.comIntroduction A. Historical Perspective The oil refining industry is one of the largest and most dynamic industries in the world. In the United States, the oil refining industry has grown out of necessity since the late 1800's, producing the fuels required to drive the economical expansion of the 20" century. The products of a modern day refinery include gasoline, diesel, jet fuel, home heating oil, and petroleum based lubricants. Also produced are various petrochemical byproducts, used as raw materials to make numerous products from plastics and synthetic fibers, to beauty products and pharmaceuticals, There are currently 149 operating refineries in the United States, processing more than 16.9 million barrels per day (BPD) of raw crude oil (NPRA, 2004). Many of the companies that own and operate the modern day refineries are descendents of the country’s first oil companies, who started in the early days of oil field exploration, and developed refining and product marketing capabilities as the industry grew. These companies are typically referred to as the “fully integrated” or “major” refiners, reflecting their capability to compete in all aspects of the oil and gas industry including exploration, transportation (pipeline), refining, and product marketing. These companies tend to be the largest oil refiners due to their established assets and infrastructure, and are the product of long, storied histories, steady growth, and strategic mergers and consolidation, In the U.S., these companies primarily include six major oil companies; ConocoPhillips, Exxon Mobil, BP Amoco, ChevronTexaco, Marathon Oil, and Royal Dutch/Shell Oil. Each of these companies have total U.S. refining capacity (in terms of total EMGT 835 - Spring 2005 yan Spangler F Report Documents Introduction doe rspangler@ gmail.comcrude oil processing capacity) of more than 500K BPD. Together, the six “majors” process more than 9.0 million BPD of crude oil (roughly 55% of the market). The balance of the industry is controlled by the “independent” refining companies. These companies generally have little or no exploration or transportation capability, and therefore must purchase crude oil on the open market, and refine this oil to finished products. Some independent refiners own wholesale or retail marketing outlets, while others sell their products to independent marketing companies. There is a wide range of processing capabilities within the independent refiners. Some of the largest independents include Valero Energy, Sunoco, Premcor, Tesoro, and Koch Industries. Each of these companies process more than 500K BPD of crude oil. There are also dozens of smaller independents, which process anywhere from a few thousand barrels to 100K BPD or more. The smaller independents include those such as. Sinclair Oil, Frontier Oil, NCRA/Cenex, Coffeyville Resources (formerly Farmland), Ergon/Lion Oil, Western Refining, Suncor Energy, and Hunt Refining. B. Definition of FEL ‘The FEL (Front End Loading) process is a common strategy in the development of capital projects for the oil refining industry. For other process industries, this may also be referred to as FED (Front End Design), or FEED (Front End Engineering Design). However, in all cases, the overall idea of an FEL process is the same, and includes all project development activities from early project, conceptualization to project authorization and funding. The FEL process is typically broken down into two or three project development phases. Figure 1 2 EMGTT 835 - Spring 2005 yan Spangler Report Documental Introduction doc rspangler@ gmail.comillustrates a typical FEL timeline, assuming a three-phase approach (FEL 1, FEL 2, and FEL 3). FIGURE 1 — Project Development and Execution Timeline Front End Loading (FEL) Project Execution SS FEL raz reus F : ‘cousraucrion Business Planning = Review of Atemates |- Class "A" Design | PETAL DESIGN, 7m Matter Stes” “Pretmnary Design | Hazards Arayss Detaled Engnorng | Mobizaon Feetnotogy *Prtminay Exits |-Detinave Estate |"ETwBMeN Purchase | Cenarion Evaluation “Proje Ecopomics "Project onemce | SubEENIBELSK | Comm |- Conceptual Design |- Risk Analysis. - Risk Analysis: e = Project Econonice [Risk Anais TIMELINE, > C. Value of FEL in Project Development For an engineering contractor in the oil refining business, it is critical to develop effective FEL processes and procedures for working with both the major and independent refiners. For the major refiners, it is essential for all engineering contractors who bid on the development and execution of large capital projects to. demonstrate a complete understanding of the FEL process. In general, the major refiners tend to have established and structured methods to project development. These companies are committed to the FEL process and recognize the value of FEL in developing successful projects. When working for a major refining company, the engineering contractor must be flexible enough to tailor their FEL process to the needs of the client. Typically, a major refiner will have specific expectations regarding the type of FEL deliverables required and the quality of such deliverables. It is up to the 3 EMT 835 - Spring 2005 yan Spangler F \Report Documents - Introduction doe ‘[email protected]engineering contractor to demonstrate an understanding of the critical elements of a thorough FEL package, and be willing to provide this information in a way that meets the expectations of the client. For the independent refiner, project development is often a greater challenge. These operating companies typically have limited engineering resources and less corporate structure in the execution of capital projects. Nevertheless, this does not make FEL any less important when working for an independent. In fact, working for an independent often requires the engineering contractor to have an even better understanding of the FEL process. Many independent refiners tend to spend less in FEL engineering, opting to skip over some of the later FEL activities and award directly to an EPC contractor on a lump sum basis, This strategy is based on the perception that this minimizes up-front investment, streamlines the process of project funding, and shifts the project responsibilty and risk to an EPC contractor. However, perception is not always reality, and it is up to the engineering contractor in this scenario to sell the benefits of a good FEL process to a client who may not appreciate the advantages of such an approach. An incomplete FEL process inevitably results in poor scope definition. If the scope is poorly defined, there is a greater chance for major scope changes or surprises in detailed design. This creates added costs, project delays and engineering rework, which could often be avoided with a thorough FEL approach. ENGT 835 - Spring 2005 Ryan Spangler F:\Report Documental - Introduction. doc rspangler@ gmail.comIl, Project Scope A. Objective The objective of this field project report is to perform a review of recent FEL efforts in the Process and Industrial Division of Burns & McDonnell, with a focus on developing a standard list of FEL deliverables, and a complete definition of the Process Engineering Workflow required to support these deliverables. It is intended that this report will benefit the division in several areas: + Training Provide an introduction to the FEL process for new process department employees. * Benchmarking Provide a starting point for development of future FEL efforts, and a standard by which to measure and evaluate FEL performance. * Sales Tool Provide a sample document to demonstrate the value of a structured FEL approach for potential clients. As a byproduct to this report, a “standard” FEL template report will be developed, which can function as a guide for future FEL efforts, and/or demonstration document for sales of the FEL process to potential clients. EMGTT 836 ~ Spring 2008, yan Spangler F.\Report Documentsill - Project Scope.doc sspangler@ gmail.comB. Review Approach This report focuses only on the FEL process from the initial stages of project. development, to the release of engineering for detailed design (point at which project funds are approved to initiate detailed design). Process workflow activities during detailed design and construction are outside the scope of this report. However, proper execution of an FEL package must be developed with an eye to the final end product (a fully functional process plant, built on schedule and on budget). Therefore, the review of FEL deliverables and any recommendations proposed will be made in the context of promoting effective transition from the FEL stage to detailed design and construction. C. Selection of Sample Projects A thorough discussion of the workflow required to effectively execute an FEL project requires definition of a proper set of FEL deliverables, To achieve this objective, a search of recent projects was performed to identify a sample of significant FEL efforts completed by the division over the past 4 years. The selected project list is shown in Table 1, and includes FEL projects for one major refiner and two independent refiners. These FEL efforts provide the basis for this report. EMGT 835 — Spring 2005, yan Spangler F\Report Documents\l- Project Scope. doc rspangler@ gmail.comTABLE 1 - FEL Projects List - (Selected sample from Jan 2001 to Dec 2004) Client FEL Scope Proceed to Detail Project Design? ConocoPhillips ULSG - Ponca FELS Yes Crude Unit Revamp FELI/FELO/FELS Yes Coker Revamp FELO/FELS No NOx Reduction Project FEL1/FEL2/FELS No. ULSD — Denver FEL1/FEL2/FEL3 No Coker Project FELI/FEL2/FELS Yes ULSD — Ponca FEL1/FEL2/FEL3 Yes ULSG = Lake Charles FEL1/FEL2/FEL3 Yes ULSD = Lake Charles FELI/FEL2/FELS Yes Sinclair Oil Corporation HTU Revamp FEL/FEL2FEL3 Yes NHDS Project FEL1/FEL2/FEL3 Yes Sulfur Block Project FELi/FEL2/FEL3 Yes. ‘CRU Revamp FEL3 Yes National Cooperative Refinery Assoc. (NCRA) ‘Amine Regenerator FELS Yes ‘Sour Water Stripper FEL3 Yes EMGT 695 — Spring 2008 yan Spangler F\Report Documents\l- Project Scope.doc rspangler@ gmail.comIll. Review of FEL Deliverables A. Definition of FEL Deliverables The list of sample projects identified in Table 1 covers a wide range of project, types and scope. A review was performed to evaluate the FEL deliverables provided for each of these projects. The result of this review was the development of a comprehensive list of FEL deliverables for each phase of FEL. Table 2 lists the FEL deliverables identified, and indicates in which phase or phases a specific deliverable is typically issued. For documents to be issued in more than one FEL phase, these documents are issued in multiple revisions as project information is better defined from one phase to the next. TABLE 2 ~ Standard FEL Deliverables Deliverable Phase FEL1 | FEL2 | FEL3 Project Scope Documents Project Description X ! ><] Project Execution Plan Design Basis Documents Process Design Basis X Material and Energy Balance Utility Summary Emissions Summary ><]><|><|><]>< Equipment Design Basis Piping Design Basis Civil/Structural Design Basis Electrical Design Basis Instrument and Controls Design Basis Fire Protection Design Basis Insulation Design Basis Protective Coatings Design Basis >| ><|><|>]><}>| ><>] ><] ><>} >< ><] Cost Estimate Basis x x Key Drawings Block Flow Diagrams x Process Flow Diagrams x Piping and Instrumentation Diagrams >|><|>¢| Materials of Construction Diagrams 8 EMGT 835 - Spring 2005 yan Spangler F\Report Documentsll- Review of FEL Delverables.coc rspangler @ gmail.comSite Plan’ x General Arrangements x Piping One-Line Drawings ><|><]><| > Electrical One-Line Diagrams Specifications Equipment Specifications Piping Specifications Instrument Specifications Motor Specifications |><|><)><]>< Insulation Specifications Lists/Summaries Line List Tie-in List Equipment List x x >]><]><|><] ><}><|>«! Instrument Data Sheets ‘Schedules Overall Project Schedule x x x! Estimates Factored Cost Estimate x Preliminary Estimate x Definitive Estimate x Project Definition Reports PDRI Summary Xx B. Scope of Deliverables A review of deliverables trom the sample projects indicates significant variation, both in the content of the deliverables and the overall quality. In many cases, some variation is required due to the different types of projects defined. However, all FEL reports should follow the same general outline, providing the ‘same basic types of information. In general, the deliverables provided in a 9 EMGT 835 - Spring 2008 yan Spangler FAReport Documentslll- Review of FEL Deliverables. doo spangler@ gmail.comcomplete FEL package should include the following: 1, Project Scope Documents The Project Scope Documents include the Project Description and Project Execution Plan. The purpose of these documents is to provide the overall ‘summary of the project scope and intent, and to outline the key factors to successful project execution, including key assumptions, limitations and challenges. In general, the Project Description must include the general scope (what), location (where), purpose (why), and the infrastructure and utilities required (how). The Project Execution Plan describes the key activities required for project completion. The execution plan must consider requirements and limitations based on engineering, equipment deliveries, and construction duration. This document should also evaluate the contracting and procurement strategies for the project, and interface responsibilities between the owner and various contractors/sub-contractors. 2. Design Basis Documents The design basis documents define the overall engineering basis of design for each specific discipline required for execution of the project. For most process plant design projects, this would typically include: 10 EMGT 835 - Spring 2005 yan Spangler F\Report Documentsill- Review of FEL Deliverables.doc [email protected]- Process Design Basis The Process Design Basis is the most important design basis document in early FEL. This document defines the unit operations required, the characteristics and quality of available feed stocks, the minimum performance criteria or product quality standards, and the assumed conditions for any supporting utlities. The Process Design Basis also includes the project Material and Energy Balance, Utility Summary, and Emissions Summary. - Equipment Design Basis The Equipment Design Basis describes the key parameters required for all critical process equipment, including the sizing basis, performance requirements, materials of construction, spare equipment philosophies, over-design margin, and future expandability. The Equipment Design Basis also identifies specific design codes or standards, as well as client- specific specifications and preferences required. - Civil/Structural Design Basis The Civil/Structural Design Basis describes the overall general site conditions, structural design codes and standards, special geotechnical or foundation requirements, and region-specific wind, snow and earthquake design requirements. This section also defines the style or type of facilities that will be provided based on the client’s requirements. This can include design features such as special access, landscaping, types of paving, fireproofing, building materials, and architectural requirements. in MGT 635 ~ Spring 2005 yan Spangler F.\Ropor Documientsill - Review of FEL Deliverables doc rspanglor@ grallcom- Electrical Design Basis The Electrical Design Basis defines the requirements for design of new electrical power systems, including a summary of new power loads required, the electric distribution systems needed to support these new loads, major electrical equipment required, such as substations or transformers, and low voltage distribution requirements for instrumentation and controls. This section also identifies any electrical requirements related to general lighting, grounding, lightning or cathodic protection, and heat tracing systems for piping. Finally, this section defines the required design codes and standards, electrical area classifications for equipment, and physical design requirements and philosophies to be followed in regard to wiring, conduit, cable tray, electric motors, design redundancy, emergency power, and utility power (welding and general purpose receptacles). - Instrument and Controls Design Basis The Instrument and Controls Design Basis defines the type of instruments to be installed (manufacturer, technology, materials of construction) for each process service and function, including control valves, process instrumentation (flow, level, pressure and temperature), and any special analyzers. This document also defines control philosophy (DCS, PLC, or other), applicable codes and standards, client preferences, acceptable manufacturers, units of measure, calibration requirements, and winterization (freeze protection) philosophy. 2 EMGT 695 ~ Spring 2005 yan Spangler F\Repont Documental - Review of FEL Deliverables. doc rspangler@ gmail.com3. Key Drawings There are several key drawings that must be developed during FEL. In early FEL, these drawings are generally preliminary in nature, with the purpose of illustrating options or assumptions. In late FEL, these drawings should be issued for review and approval, and provide the basis for the start of detailed design. The key drawing documents include: - Block Flow Diagram The Block Flow Diagram is a simplified drawing that illustrates the major process steps required for the overall process design. This drawing indicates the major feed stocks required (inputs), the process steps to be Performed (unit operations), and the resulting products created (outputs). The Block Flow Diagram may be issued as an independent drawing, or incorporated into the written Process Design Basis for reference. - Process Flow Diagrams (PFDs) The Process Flow Diagrams illustrate the overall process flow scheme in order to define all unit operations required and their relative sequence in the overall process operation. This drawing is typically used as a reference document for the Material and Energy Balance to provide overall flow data and process conditions for all major process and utility streams. - Piping and Instrumentation Diagrams (P&IDs) In the FEL process, the P&lDs are the most important single document used to illustrate the process design required and the overall scope of 13 EMGT 835 ~ Spring 2005 Fyan Spangler F \Report Documerts\ll- Reviow of FEL Deliverables. doo rspangler@ grai.com‘equipment, instrumentation and piping for the project. The P&IDs are based on the same flow scheme illustrated by the PFDs, but with significantly more detail. At the end of FEL, the P&iDs should contain ail information required for the start of detailed design and should illustrate all equipment, piping, valves, special fittings, instruments and safety devices required to construct a complete, safe, and operable refinery Process plant. - Materials of Construction Diagrams (MSDs) ‘The Materials of Construction Diagrams (MSDs) are very similar to the PFDs, with added information to define the equipment and piping metallurgy requirements for the project. These requirements are based on client preferences, required corrosion resistance, and the economic plant lite expectancy. Site Plan The Site Plan Drawing illustrates the overall layout of the new process unit in relation to the overall facility and any key infrastructure and access features of the site (roads, railways, sewer and fire water systems, etc.).. This drawing is also used to illustrate the availability of major utility streams (cooling water, service water, instrument air, plant air, ete.) when required to be obtained from locations outside the scope boundaries (battery limits) of the new process unit. 14 EMGTT 895 — Spring 2005 yan Spangler F.\Report Documentsill - Review of FEL Deliverables doc sspangler@ gmail.com- General Arrangements ‘The General Arrangement Drawings illustrate the relative layout of ‘equipment within the process unit boundaries of the project. This drawing shows the outline dimensions and orientation of all equipment in the project, as well as any major buildings or structures. The General Arrangement drawings are used to evaluate access issues associated with safety, operability, maintenance, and constructability. - Piping One-Line Drawings The Piping One-Line Drawings provide a simplified one-line illustration of all major pipe runs required for the project. This drawing is typically produced with the General Arrangement or Site Layout as the background for consistency. The Piping One-Line Drawings are critical in the development of a thorough FEL project cost estimate, because they are often used in the tabulation of piping material take-offs and preliminary design of major support structures and piperacks. - Electrical One-Line Drawings The Electrical One-Line Drawings illustrate the overall electricat interconnects required for the project in a simplified, one-line format. This drawing illustrates the power feed to all electric motors, and shows all major electrical equipment including main power feeders, generators, transformers, switches, contactors and motor control centers (MCCs). 15 EMGT 895 ~ Spring 2005 Ryan Spangler F:\Ropon Dacumentslll- Review of FEL Deliverables dac rspanglar@ gmail.com4. Specifications The specification documents define the quality of design, fabrication, and installation required for equipment and materials in the project. The extent and type of specifications developed in FEL may vary significantly based on the type of project being considered. However, the specification documents typically include: - Major Equipment Specifications Includes written specifications for major equipment such as storage tanks, pressure vessels, fired heaters, heat exchangers, pumps and compressors. These specifications may be based on standard in-house specifications, client specifications, and/or industry standard specifications (such as PIP (Process Industry Practices) or other). Piping Specifications The piping specifications define the design and installation requirements for all piping materials on the project. The full compliment of piping specifications for a typical project covers a wide range of metallurgy and pressure classifications to cover the various types of piping services required. - _ Instrument Specifications The instrument specifications define the specific design and installation requirements for process instrumentation, control valves and relief devices on the project. The instrument specifications may be in a written format to cover general requirements, or may be communicated via 16 EMGT 895 ~ Spring 2005 yan Spangier F\Report Documentsll- Review of FEL Delverables.coc repangler@ gmail.comindividual instrument datasheets for each required device (discussed further below). Motor Specifications ‘The motor specifications define the general sizing, selection, and performance requirements for electric motors on the project. These specifications are typically broken down based on motor voltage and horsepower, and typically identity enclosure types, service factors, acceptable manufacturers, minimum efficiencies, and other client preferences as required. - Insulation Specifications The insulation specifications define insulation materials, types and design criteria for piping and equipment insulation on the project. These specifications are typically based on client specific preferences or industry standards, and vary based on process specific requirements and local environmental conditions. 5. Engineering Lists The engineering list documents include the key project tabulations for identifying and quantifying equipment items (Equipment List), as well as, material commodities such as piping and insulation (Line List), process instrumentation (Instrument List), motors (Motor List), and control system components (VO List). The engineering lists may be issued in preliminary format in early FEL, but are typically most valuable at the end of FEL for use in development of the definitive cost estimate. 7 EMT 895 - Spring 2005 yan Spangler FAReport Documents - Review of FEL Deliverabies. doc rspanglor@ gmail.com6. Data Sheets Includes individual datasheets for equipment and critical instrumentation (analyzers, control valves and relief devices). In early FEL, these datasheets typically only include key process data (capacity, flow, temperature, pressure) and general metallurgy requirements. In late FEL, additional information may be specified, such as model numbers, connection sizes, and special features. 7. Schedules The project schedule is a key reference document throughout the entire process of FEL. In early FEL, a preliminary schedule should be developed to analyze requirements for engineering workload, long lead equipment deliveries, and general construction schedule requirements (key completion dates, milestones, shut-down durations, etc.) At the end of FEL, a comprehensive overall schedule should be prepared, which will serve as the basis for project execution through detailed design and construction. 8. Cost Estimates ‘Overall project cost estimates should be prepared at the end of each phase of FEL. Assuming a three-phase FEL process, the cost estimates to be prepared include: - FEL 1 Estimate Typically referred to as an “Order of Magnitude” or “Factored Cost Estimate.” There are several methods by which an FEL 1 estimate can be developed. One method is to prepare an order of magnitude estimate 18 EMGT 835 — Spring 2005 yan Spanger FAReport Documerts\ll- Review of FEL Deliverables. doc repangler@ gmail.combased on published project data (literature search) or through comparison to similar projects executed by the client or engineering company. This method may be sufficient for certain types of well understood projects, A second method is based on utilizing assumed installation factors, which are multiplied by budgetary cost estimates of equipment to obtain the total installed cost. The cost factors used are typically based on industry standard cost factors with adjustments based on in-house experience, comparison to similar projects, and special project conditions, Depending on the method used, and the quality of the reference data available, the overall accuracy for this type of estimate is typically +/- 30 to 70%. - FEL 2 Estimate Typically referred to as a “Preliminary Estimate.” This type of estimate requires additional engineering effort to develop sufficient scope definition to allow preliminary quantities of basic materials to be estimated. This includes piping, insulation, instrumentation, steel, concrete, etc, Typically, equipment costs are based on budgetary vendor quotes and preliminary sizing. The overall accuracy for this type of estimate is typically +/- 15 to 30%. - FEL3 Estimate Typically referred to as a “Definitive Estimate.” The key differences between an FEL 2 estimate and an FEL 3 estimate are improved equipment pricing, and sharpened take-off quantities for all bulk materials. Equipment costs for an FEL 3 estimate are based on multiple vendor quotations, with sufficient bid conditioning to ensure firm pricing 19 EMGT 886 ~ Spring 2005 yan Spangler F \Report Documental Review of FEL Deliverables doo rspangler@ gmail.comon all major equipment items. Take-off quantities are improved through additional engineering, including one-line piping studies, preliminary design of foundations and structures, and vendor quotations on control valves, major instrumentation and control systems. The overall accuracy for this type of estimate is typically +/- 5 to 10%. The FEL 3 estimate is typically the basis used for the final application for project funding. 9. Project Definition Rating Index (PDR!) Reports The Project Definition Rating Index (PDRI) is a method for evaluating whether the FEL process has been performed with sufficient detail and effort to provide a reasonable level of confidence that the project will be successful. This is a technique that was originally developed by John Hackney (Hackney, 1992), and is endorsed by the Construction Industry Institute (Cll), Determination of a PDRI score requires working through a list of typical project topics and issues, and assigning points based on the level of definition accomplished in FEL. The PDRI rating is typically developed through a joint effort of all major project participants and should be done at multiple points in the FEL process. For a three phase approach (FEL 1, FEL 2, FEL 3) it is recommended to perform a PDRI review at the end of each FEL phase. 20 EMGT 835 ~ Spring 2005 yan Spangler F \Report Documentslll Fleview of FEL Deliverables. doc rspanglor@gmalicomIV. Process Engineering Workflow A. FEL Deliverables and Responsibilities A review of Process Engineering Workflow activities for FEL requires a definition of the responsibilities for each of the FEL deliverables defined in Section III — Review of FEL Deliverables. Table 3 lists each of the identified FEL deliverables and indicates the responsible project team member for each deliverable. The process engineering responsibilities are indicated by “PE”. The other project, team abbreviations are provided in Appendix Il. TABLE 3 — FEL Deliverables and Responsibilities Deliverables FELT FEL2 FEL3 Project Scope Documents Project Description PE PM PM Project Execution Plan PM PM PM Design Basis Documents Process Design Basis PE PE PE Material and Energy Balance PE PE Utility Summary PE PE Emissions Summary PE PE ‘Equipment Design Basis PET ME, Piping Design Basis PL GiviStructural Design Basis CE Electrical Design Basis EE Instrument and Controls Design Basis iE Fire Protection Design Basis ME Insulation Design Basis ME Protective Coatings Design Basis. ME Cost Estimate Basis PM. PM PM Key Drawings Block Flow Diagrams PE Process Flow Diagrams PE PE, Piping and Instrumentation Diagrams PE PE Materials of Construction Diagrams PE PE Site Plan CE CE ‘General Arrangements PL. PL Piping One-Line Drawings PL Electrical One-Line Diagrams EE 2 EMGT 835 ~ Spring 2005 yan Spangler F:\Report Documents\lV Process Engineering Worktiow doe rspangler@ gmail.com[Specifications Equipment Specifications ME Piping Specifications PL Instrument Specifications rE Motor Specifications EE Insulation Specifications ME Lists/Summaries Tine List PE" RL Tie-in List PET/PL Equipment List Pew ME Instrument List PEv IE VO List 1 [Datasheets Process Data Sheets PE Equipment Data Sheets PET ME Control Vaive Data Sheets PETE Relief Valve Data Sheets PEM IE Instrument Data Sheets PETE [Schedule Overall Project Schedule PM PM PS Estimate Factored Cost Estimate ES Preliminary Estimate ES Definitive Estimate Ey Project Definition Reports PDRI Summary PM FEL. '"" Initiated by Process Engineering. To be completed by the lead discipline at the end of B. FEL1 Activities The purpose of FEL 1 is the economic and feasibility review of a process design scenario, proposed as a potential solution to a specific business objective. For ‘an engineering contractor, the customer typically performs the earliest stages of FEL 1. The customer is the operating company (refiner) who continually reviews their own position in the market, and identifies potential projects that will provide MGT 835 - Spring 2005 22 F\Report DocumentstlV - Process Engineering Workflow doc yan Spangler ‘spangler@ gmail.comsome economic advantage. Once the business objective is identified, it is at that Point that an engineering contractor is often hired to perform many of the FEL 1 activities. Table 4 highlights the major activities that must be performed for a typical FEL 1 effort. TABLE 4 ~ FEL 1 Workflow - Activities and Responsibilities Workilow Activity Description [Responsible] Code Lead 7.1 [Business Planning 1.1.1 Identify Business Need or Opportunity ‘Owner 1.1.2 Assess Economic Factors for Success ‘Owner, 1.1.3 Review General Feasibility With Engineoring ‘Owner 72 [Market Studies 1.2.1 Perform Market Review ‘Owner, 1.2.2 Evaluate Availability of Critical Feedstocks ‘Owner 1.2.3 Evaluate Marketabilily of Products/By-products ‘Owner 1.2.4 Identify Market Risk Factors (Le. - Competitors, Market | Owner Variability, Emerging Technologies, Regulations) 1.3 [Technology Evaluation 1.3.1 Perform Literature Search / industry Survey PE 1.3.2 List Potential Process Alternatives PE 1.3.3 Identity Technology Providers/Licensers PE 1.3.4 Perform Preliminary Screening of Alternatives PE 1.3.5 Finalize List of Potential Alternatives PE 14 [Conceptual Design 1.4.1 Prepare Preliminary Process Design Basis PE 1.4.2 Develop Preliminary Block Flow Diagram(s) PE 43 Prepare Preliminary Project Description PE/PM 1.4.4 Develop Milestone Project Schedule ‘Owner/PM 1.45 Develop Preliminary Cost Estimate Basis PMIES 15___ [Project Economics and Risk Analysis 1.5.1 Develop Order-of- Magnitude/Factored Cost Estimate | _PM/ES 1.5.2 Prepare Preliminary Economic Scenario ‘Owner 1.5.3 Run Economic Model to Check Project Benefit ‘Owner 1.5.4 Identify Risk Factors / Uncertain Variables ‘Owner 1.5.5 Run Economie Mode! With Variation (Monte Carlo) ‘Owner 1.5.6 Make Go / No-Go Decision on FEL 2 ‘Owner 1.5.7 Perform PORI Analysis for FEL Measurement ‘Team 2B EMGT 635 ~ Spring 2005 yan Spangler F:\Report DocumentsilV - Process Engineering Workilow.doc rspangler@ gmail.comC. FEL 2 Activities The purpose of FEL 2 is the continuation of project development, with the objective of selecting the most appropriate technology and overall design approach. Table 5 highlights the major activities that must be performed for a typical FEL 2 effort. TABLE 5 - FEL 2 Workflow — Activities and Responsibi Workllow Activity Description Responsible Code Lead 2.1 [Review of Alternates 2.1.1 List Alternate Technologies/Methods from FEL 1 PE 2.1.2 Collect Additional Data / Research Altematives PE 2.2 [Preliminary Design 2.2.1 Revise Process Design Basis PE 2.2.2 Revise Block Fiow Diagram(s) PE 2.2.3 Develop Preliminary Process Flow Diagram(s) PE 2.2.4 Prepare Material and Energy Balance(s) PE, 2.2.5 Prepare Utility Summary PE 2.2.6 Prepare Emissions Summary PE, 2.2.7 Develop Preliminary Plot Plan CE 2.2.8 Develop Preliminary General Arrangement(s) PE/ME 2.2.9 Prepare Process Data Sheets on Equipment PE 22.10 Prepare Preliminary Equipment List PE 2.2.11 Revise Project Description PM 2.2.12 Prepare Project Execution Plan PM 2.3 [Preliminary Estimates 2.3.1 Obtain Budget Quotations on Equipment PEIME 2.32 Develop Preliminary Take-ofis on Long Run PE/PL Piping 2.3.3 Develop Preliminary Quantities of Materials for Major CE Foundations and Structures 2.3.4 Revise Preliminary Cost Estimate Basis PMES 2.4 [Review Project Economics and Risk Analysis 2.4.4 Develop Preliminary Estimate PMES Revise Economic Scenarios ‘Owner Revise Economic Model ‘Owner Update Risk Factors / Uncertain Variables ‘Owner Run Economic Model With Variation (Monte Carlo) ‘Owner ‘Select Preferred Project Alternative ‘Owner Make Go/No-Go on FEL 3 ‘Owner Perform PDAI Analysis for FEL Measurement Team EMGT 895 ~ Spring 2005 FAReport Documents\lV - Procass Engineering Werkllow.doc 24 ‘Ryan Spangler ‘spangler@ gmail.comD. FEL 3 Activities The purpose of FEL 3 is the continuation of project development, with the objective of developing a full definition of the project scope based on the process alternative selected in FEL 2. At the end of FEL 3, the project should have a definitive cost estimate, which is sufficient for application of project funding. Table 6 highlights the major activities that must be performed for a typical FEL 3 effort. TABLE 6 ~ FEL 3 Workflow - Activities and Responsibilities Workflow Activity Description Responsible Code Lead 3.1 [Class “A” Design 3.1.1 Revise Process Design Basis PE 3.1.2 Revise Block Fiow Diagram PE 3.1.3 Revise Process Flow Diagram(s) PE 3.1.4 Prepare Materials of Construction Diagram(s) PE 3.1.5 Finalize Material and Energy Balance(s) PE 3.1.6 Revise Utiity Summary PE 3.1.7_Revise Emissions Summary PE 3.1.8 Revise Piot Plan CE Revise General Arrangement(s) MEICE Revise Equipment Design Basis ME Prepare Equipment Data Sheets ME Revise Equipment List ME Develop Piping One-Line Drawings PUPE Develop Electrical One-Line Diagrams EE Develop Equipment Specifications ME Develop Piping Specifications PL Develop Instrument Specifications TE Develop Motor Specifications EE Develop Insulation Specifications PL Prepare Line List PE/PL Prepare Tie-in List PEPL Prepare Instrument List PEE Prepare VO List TE Prepare Control Valve Data Sheets PEVE Prepare Relief Vaive Data Sheets PEE Prepare Instrument Data Sheets PENE Develop Piping Design Basis PL [— Develop CivilStructural Design Basis CE Develop Electrical Design Basis EE Develop Instrument and Controls Design Basis iE Develop Fire Protection Design Basis ME 25 EMATT 835 ~ Spring 2005 yan Spanglor Report Documents\lV - Process Engineering Workflow.doc rspangler@ gmailcom3.1.32 Develop Insulation Design Basis MEPL 3.1.33 Develop Protective Coatings Design Basis MEIPL 3.1.34 Revise Project Description PM 3.1.35 Revise Project Execution Plan PM | 3.2 [Hazards Analysis 3.2.1 Issue P&iDs for HAZOP Review PE 3.22 Conduct HAZOP Review Team 3.2.3 Implement HAZOP Recommendations in Design PE 33 Definitive Estimate. 3.3.1_Obtain Multiple, Firm Quotations on Equipment PEME 3.3.2 Condition Bids to Ensure Firm Pricing PM/ME 3.3.3 Develop Refined Take-offs on Long Run Piping PL. 3.3.4 Develop Refined Quantities of Materials for Major CE Foundations and Structures 3.3.5 Revise Cost Estimate Basis PM/IES 3.3.6 Develop Overall Project Definitive Estimate ES 34 Review Project Economics and Risk Analysis 3.4.1 Finalize Economic Scenarios Owner. 3.4.2 Finalize Economic Mode! Owner 3.4.3 Update Risk Factors / Uncertain Variables Owner 3.4.4 Run Economic Model With Variation (Monte Carlo) ‘Owner 3.4.5 Make Go/No-Go on Project Funding to Detail Design Owner, 3.4.6 Perform PDRI Analysis for FEL Measurement Team E. Development of Sample Report This report has developed a comprehensive list of FEL deliverables based on a review of past FEL efforts. This report also defines the activities required to ‘support these deliverables in the actual execution of an FEL effort. Using this information as a basis, an FEL sample report has been developed, and is included as Appendix Ill. This report is intended to further illustrate the type of information required for a complete FEL package, and may serve as a guide for future FEL efforts, and/or demonstration document for sales of the FEL process to potential clients, ENGT 835 - Spring 2008, FAReport Documents\V - Process Engineering Workflow.dec 26 Ryan Spangler rspangler@ gmail.comV. Recommendations ‘Several recommendations can be made, based on the review of past FEL efforts. ‘These recommendations are classified as one of three types; 1) recommendations for effective management of FEL, 2) recommendations for execution of FEL engineering or 3) recommendations for transition from FEL to detailed design. A. Effective Management of FEL Management plays a significant role in the execution of a successful FEL effort. ‘Some critical recommendations that should be emphasized for effective management of FEL include: 1. ‘Three-Phase Approach ‘The recommended FEL strategy described in this report focuses on FEL management through a three-phase approach. The three-phase FEL is a common method used by many refining companies in the development of projects. The three phases each have a specific objective and should not be combined or skipped if at all possible. Following each phase, a documented package of deliverables should be prepared, and project economics should be evaluated to provide justification for moving to the next FEL phase. Glient “Buy-In” All phases of a successful FEL effort must be performed with close contact to the client to ensure 100% “buy-in” to all FEL decisions and assumptions. In the development of any project, many assumptions must be made in the early phases where information is either not available or will require further work to 21 EMGT 835 ~ Spring 2005 yan Spangler F.\Report Documents\V - Recommendations. doc ‘spangler@ gmail.comdefine. Often times these assumptions will make or break a project, and therefore all key assumptions shouid be clearly stated, documented, and reviewed with the client to ensure the best available information is being considered. Interface between the client and the FEL team to maintain client “buy-in” is one of the most important tasks of FEL management. 3. Early Involvement of Design Disciplines and Construction Typically, the process engineering group leads FEL 1 and 2, utilizing a small project team with direct interface to the client. This is due to the fact that ‘most engineering activities in early FEL are related to early conceptual design, and technology evaluation. By FEL 3, the project development starts to become more focused, and additional discipline engineers (mechanical, piping, electrical, structural) are required. However, by this time, many of the key project decisions may have already been made, and the project suffers due to a lack of early input from the key disciplines. To avoid this missed opportunity for value added input, it is recommended that periodic design reviews be performed with project leads from all disciplines, starting at the end of FEL 1. Additionally, these reviews should also include representatives from construction to receive early input on constructability issues and safety, Inclusion of these project team members as early as possible will maximize design efficiency in the later stages of project development and will help to avoid costly design changes and/or rework in detail design. 4, PDRI (Project Development Rating Index) Reviews One common way to measure FEL progress from a managerial perspective is the use of PDRI reviews. At a minimum, it is recommended that PDRI 28 EMGT 895 - Spring 2005 yan Spangler F.\Report Documents\¥ - Recommendations doc ‘spangler@ gmail comreviews be performed at the end of each FEL phase. This provides a gauge by which the overall FEL progress can be measured. At the end of FEL 3, the PDRI analysis is used to indicate whether the overall FEL effort is ‘Sufficiently complete to provide a reasonable probability of success. The Construction Industry Institute (Cll) indicates that projects that score a 200 or less in the PDRI index are significantly more likely to succeed based on ‘overall cost, schedule and scope creep. For the Process and Industrial Division it is recommended that all FEL 3 efforts should score 175 or less. before being considered complete. In cases where a significantly higher score is obtained, the weak areas of scope definition should be identified and improved. If FEL cannot be extended to improve the PDRI score, the final score obtained should be a consideration in the analysis of project risk and the establishment of project contingency for detailed design and construction. 5. FEL Benchmarking In addition to PDRI scoring, which is an internal measurement activity, there are several companies that specialize in performing independent project reviews and analysis for FEL efforts. One such company is IPA (Independent Project Analysis), based in Ashburn, VA. IPA specializes in providing FEL project evaluations, and can provide empirical statistics based on a database of past projects to analyze a project's probability of success, This type of independent analysis may not be required for all projects, but should be strongly considered for the larger and more complex capital projects. EMGT 835 ~ Spring 2008, yan Spangler F.\Report Documents\v - Recommendations. dee ‘spanglor@ gmail.comB. Execution of FEL Engineering Besides the managerial aspects of FEL, the other key component to a successful FEL effort is the execution of FEL engineering. Several recommendations can be made regarding FEL engineering. Some of the more critical recommendations that should be emphasized include: 1. Process Design Basis One of the earliest and most critical activities of an FEL effort is development of the process design basis. The information contained in the process design basis will significantly impact the type of process developed, the technologies considered, and the overall project economics. Too often the process design basis is developed based on preliminary information or poorly defined assumptions. Any information considered preliminary or tentative in nature should be noted within the process design basis, and a plan should be developed for improving the certainty of such data (pilot piant testing, lab analysis, literature search, etc). Significant effort should be taken to ensure that the process design basis is as complete and accurate as possible before any additional FEL activities are performed. 2. Documentation of Discipline Design Assumptions While the process design basis is the most critical in early FEL, the other discipline design basis documents are essential in the complete definition of the project scope. Typically, the design basis assumptions are documented in the Design Basis section of the FEL report. It is critical that these documents include sutficient detail to define ail key design parameters required for the project. 30 ENGT 835 — Spring 2005 yan Spangler FAReport Documents - Recommendations doc ‘spangler@ gmail.com