DACE CCE Case study 2018-2019

Phase 1, conceptual phase…

Content

1 Current situation 3

2 Next steps in project development 4

3 Tender package 5
3.1 General info for contractor 5
3.2 Available project information 5
3.3 Content of contractor quotation 6
3.3.1 Project plan 6
3.3.2 Project Schedule 6
3.3.3 Project Organization 6
3.3.4 Factor estimate 6
3.3.5 Estimate for engineering phase 7

4 Case study assignment 8

4.1 Team assignment (report) 8
4.2 Team assignment (presentation) 8
4.3 Individual assignment (report) 8
4.4 Group presentation, individual appraisal 8
4.5 Appraisal 9
4.6 Questions 9

© Zuzeco. Course material may only be used after consultation bureau DACE, info@DACE.nl

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DACE CCE Case study 2018-2019 | Case study phase 1
1 Current situation

Project development of the Fatty Acid plant was stopped immediately April 2018. In the board of
Graci there was found some malpractice, as the management team of the selected EPC
(Engineering, procurement and Construction) organization Pasticcione was arrested for corruption.

Graci was not involved, but the board member that brought Pasticcione in the company was fired
as his presence reflected bad on market value. Shareholders demanded his resignation and he was
replaced.

As the new Fatty Acid plant was still an interesting business case, there was decided to create a
small owner project team. This Dutch team was situated on the Moerdijk location in a couple of
sheds without interference with the existing production location.

The project manager reports directly to the managing director of the Graci Fatty Acid division, but
as the plant will be built on the Moerdijk Location; the Plant Manager of Moerdijk will act as
delegated principal for short term decisions. Project manager, Plant Manager Moerdijk and
Manager Fatty Acid division form together the Steering Committee. Cost Control/ Finance and
Legal report to the project manager, but they also have a direct link to the Fatty Acid division. For
technological input, the team can rely on the knowledge of the Moerdijk location, but as those
engineers are very busy to keep the old plant up and running, they are limited in time.

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DACE CCE Case study 2018-2019 | Case study phase 1
2 Next steps in project development

The conceptual engineering Pasticcione developed was reviewed and quality of the design was
good. Intellectual property of the design was luckily Graci, so Graci is allowed to use all the
engineering documents created.

Although everybody is convinced that the business case for the new plant is still very good, a new
calculation was never made. There is also no realistic conceptual time schedule, the board of Graci
still thinks the new plant will deliver product early 2020 as there is no better information and
Pasticcione management did not tell the truth concerning project proceedings.

The project manager proposed a “stage gate” model, to develop the project in a structured but
quick way. The strategy is to be able to produce Fatty Acid as fast as possible, as the Fatty Acid
market is booming business according to Marketing. As there are still no signs of competitors
building new capacity, being the first will be essential. Currently, the following milestone schedule
is used:

The small Graci project team used the conceptual engineering to assemble a Tender package.
Contractors are able to make a quotation for basic engineering and make a plan to realize the
entire project. Based on this quotation, Graci will select a partner that will be awarded to build the
plant.

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DACE CCE Case study 2018-2019 | Case study phase 1
3 Tender package

3.1 General info for contractor

Graci, an Italian investment company is intended to build a new Fatty Acid Plant near the existing
facilities in Moerdijk (Netherlands). Graci has installed a small project team on site and is looking
for an EPC contractor that will help the Graci project team to engineer and construct the new
plant. Graci has the process technology know how to produce Fatty Acid and will provide a full
time process engineer and a commissioning engineer to support contractor.

Graci reserved a small budget to select a reliable EPC contractor and to create a project team.
Contractor selection will be based on transparency and confidence in contractor’s ability to realize
the project scope within time and within budget. Contractor will persuade Graci, by delivering a
quotation that shows commitment with project goals and showing that contractor is able to
support the project management organization of Graci. Contractor should show that “Project
Controls” including planning, scheduling and cost control are part of daily business.

The following dates are defined:

 Tender package EPC in the market 29th of November 2018

 Delivery of quotation Basic Engineering to Graci team, 15th of March 2019
 Presentation of Contractor teams to Project Team Graci, 19th of March 2019
 Contract award 19th of March 2019
 Delivery of Basic Engineering package and update business case 10th of May 2019
 Presentation of Contractor teams 21st of May 2019
 Go / no go project decision 21st of May 2019
 Start construction 22nd of May 2019
 Delivery of project update 15th of November 2019
 Mechanical complete & Presentation project update 28th of November 2019 to Graci Board
 First Fatty Acid 1st of January 2020
 Process on Spec and capacity 1st of February 2020
 Handover new plant to Moerdijk location team 1st of March 2020

Schedule and scope described are a first indication. Contractor should give advice concerning
realism of time schedule and show options and possibilities to deliver the plant as fast as possible.

3.2 Available project information

Contractor should create a quotation based on the following project documentation added to this
request for quotation:
 Case-Study-2018-General-Fatty-Acid-Plant-General-overview
 Case-Study-2018-General-Fatty-Acid-Plant-Project-Information
 Case-Study-2018-General-Fatty-Acid-Plant-Engineering-Docs
 Case-Study-2018-General-Fatty-Acid-Plant-Equipmentlist
 Case-Study-2018-Phase1-Fatty-Acid-Plant-Templ-Fact-Est
 Case-Study-2018-General-Fatty-Acid-Plant-Project-Readiness

Contractor cannot derive any rights from these documents.

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DACE CCE Case study 2018-2019 | Case study phase 1
3.3 Content of contractor quotation
Contractor quotation should contain the following elements:
1. A project plan describing the project life cycle and the applied controls
2. A project schedule
3. A proposal for the EPC contractor and Graci collaboration organization
4. A Factor estimate for the entire project
5. An estimate for next phase, engineering to sufficient detail level to make a class 4
estimate according to AACE Recommendation 18R-97.

3.3.1 Project plan

Contractor will provide a project plan, based on the described phases. EPC contractor will organize
all project management and project control activities. These elements will be described in the plan
and how contractor will realize project goals. Project boundary limits will be described in the plan.
Contractor should give Graci confidence that contractor is able to manage the project by
describing (briefly) methodologies and tools used if applicable.

Also, the ability to integrate control elements scope, time and money should be proved in the
project plan.

3.3.2 Project Schedule

Contractor will make a project schedule with a detail level based on the available information.
Schedule should be realistic. Graci project team already has information available concerning lead
times of equipment that will be distributed after specific request of contractor.

The tool for the time schedule is “Project Libre”, free download from http://www.projectlibre.com

Time schedule should fit proposed milestone scheme; if not possible, contractor should motivate
why.

Quality of time schedule should follow “good schedule practice” as can be found during CCE course
“scheduling”. Schedule should cover the entire scope, from start project until stable commercial
production. Time schedule should show important decision gates. A short “base of time schedule”
should be added to motivate the time schedule. In the time schedule structure, Graci must be able
to identify relations with other project control elements.

Contractor must provide a PDF Gantt chart and the original .POD file.

3.3.3 Project Organization

Contractor will make a proposal for the project and collaboration organization. Contractor will
realize and control the project in cooperation with Graci. Contractor is explicitly asked to give ideas
to create the best project organization. Also, ideas to change or to expand Graci project
organization will be welcomed with open arms as Graci knows that there is a lot to improve.

3.3.4 Factor estimate

Contractor will create a factor estimate for the entire project. This factor estimate will be used to
recalculate the business case that will support the Executive Board of Graci to make the go/no go
decision for starting the Basic Engineering.

A template of a Factor Estimate template is provided by Graci, Excel file

“CCEG1_Case-Study-2018-Fatty-Acid-Plant-Templ-Fact-Est”

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DACE CCE Case study 2018-2019 | Case study phase 1
In this file the yellow cells should be filled in by contractor. It is allowed to use a different format,
however, only a factor approach is allowed.

Contractor should explain which factors are used and give a motivation for these factors.
Contractor should explain accuracy of estimate.
Contractor should explain which uncertainties are in estimate regarding recalculation of business
case, CAPEX investment part. (Scope, pricing, schedule).

Contractor should provide the Excel file(s).

3.3.5 Estimate for engineering phase

After contract award, first phase will be the basic engineering phase. Contractor should make an
estimate and quotation for this phase. Based on this quotation budget for the Basic Engineering
will be requested from the Board of Graci.

Contractor shall make a proposal for the necessary engineering deliverables to be able to make a
25% accurate estimate, AACE Class 3 according to Recommended Practice 18R97, see document
“CCEG0_Case-Study-2018-Fatty-Acid-Plant-Project-Readiness”, especially table 3.

Contractor will be fully responsible for the Basic engineering package but should indicate the
necessary involvement of the Graci organization.

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DACE CCE Case study 2018-2019 | Case study phase 1
4 Case study assignment

4.1 Team assignment (report)

You are part of a contractor team making a bid to get the EPC contract from Graci. Your team will
create a quotation consisting of all elements described in chapter three accompanied by a short
quotation letter serving as summary and index of all documents.

In this tender only the requested documents should be added. Legal documents, safety
achievements, financial stability records etcetera are not required.

All information must be transparent. All calculations and time schedules should be delivered as
original file (Excel, ProjectLibre. pod) but also in PDF format.

As your team should make the impression that “you know your stuff”, you must motivate your
plan, schedule and estimate as much as possible, referring to experience, literature or course
material.

Remember that quantity is not the same as quality; your quotation must be complete consisting
only of relevant information. Use information of lessons “Communication skills by Marc Draijer”.

Hand in date assignment: 15th of March 2019.

4.2 Team assignment (presentation)

Your team will get the opportunity to present your quotation to the Project Manager of Graci and
his team. Every team member presents individually part of the work, about ten minutes each. You
can assume your audience has read the report, so your presentation should add value on top of
that. Project team of Graci will ask questions. Presentation date is 19th of March 2019.

4.3 Individual assignment (report)

As every cost engineer should be critical toward his or her own work every course attendee should
write a reflection of one part of the Team report, for example the time schedule. You can analyze
several aspects of the created schedule and based on theory or own experience you give your own
opinion about the team results for this item. Size indication: 3-5 pages A4. The report will be
judged concerning following criteria: readability (application of “communication skills by Marc
Draijer”, number of topics, links to theory, links to group work, critical judgement, learnings and
recommendations. It is not allowed to describe the process you went through with your group, the
report should show your ability to look critical at your own work or an aspect of the group
assignment, CCE CONTENT RELATED!

Hand in date individual assignment: 15th of March 2019.

4.4 Group presentation, individual appraisal

During team presentation every individual will be assessed regarding presentation skills. The skills
are discussed during the lessons of “Marc Draijer”. Presentation date is 19th of March 2019.

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DACE CCE Case study 2018-2019 | Case study phase 1
Presentation topic is described in 4.2, every team member will get an individual judgement, and
however, the different presentations of the team members should be related as you act as one
contractor team.

4.5 Appraisal
The total individual score is a combination of the above aspects. For every aspect you will get a
score. Total score is the sum of:
1. Score of team assignment, report: score x 65 %
2. Score of team assignment, presentation content: score x 10%
3. Individual assignment, report: score x 15%
4. Individual assignment, presentation skills: score x 10%

Example:
Pete is member of team red. Team red scores 7,5 for the report; 7,2 for presentation content; 8,0
for Pete’s individual assignment and he scores 7,0 for his presentation skills. Pete’s score for Case
study assignment “conceptual” is:
0,65 x 7,5 + 0,10 x 7,2 + 0,15 x 8,0 + 0,10 x 7,0 = 7,5

4.6 Questions
All teams should appoint a “chairman”. The chairman is allowed to ask questions about the case
study information, methodology etc. Questions will be answered as soon as possible; Questions
and answers are distributed to all other teams on insight of Case Study Coordinator.

Sent your questions to info@zuzeco.nl and to Estimate.proposal@gmail.com

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DACE CCE Case study 2018-2019 | Case study phase 1