OVERVIEW OF KBRS
FRONT END
LOADING (FEL)
WORK PROCESS
KELLOGG BROWN & ROOT, INC.
FRONT END LOADING (FEL)
DEFINITION
A Specialized And Adaptable Work Process
Translates A Marketing And Technological Opportunity
Into A Well Defined Capital Project
Prepares Deliverables In Sufficient Detail To Receive
EPC Funding
Forces Critical Decisions To Be Made Earlier
Improves Project Definition Thereby Reducing Changes
During The EPC Phase
Identifies Purposely And Proactively Alternatives To The
Projects Baseline Premises, Scope, And Design
FRONT END LOADING (FEL)
GOALS AND OBJECTIVES
Develop A Well-defined And Economically-viable Project
Define The Primary Technical And Financial Drivers For
Capital Project Investment
Challenge Baseline Premises And Purposely Seek Out
And Evaluate Alternatives And Opportunities
Enhance Predictability Of Lifecycle Costs
Minimize Changes During The EPC, Turnover And
Startup Phases To Reduce Project Schedule And
Reduce Capital Cost
Reduce The Business And Project Execution Risk
Balance Project Technical, Financial, And Operational
Profitability Drivers
WHY ARE FEL PROJECTS
DIFFERENT?
Assigns project responsibility to multi-discipline / multifunctional integrated team
Demands far higher level and frequency of communication
than EPC projects
Far more informal interfaces than EPC projects
Close and effective Client-Contractor management
interfaces assume a higher level of importance than for
EPC projects
Projects Co-led by the Client and Contractor are more
successful
Improves capital productivity of projects by using best
available technology
Requires more development of personal relationships that
result in respect and trust than EPC projects
WHY ARE FEL PROJECTS
DIFFERENT?
Emphasizes Elimination Of Low Or Zero Value Scope
Demands Continuous Re-alignment Of Clients Desires And
Requirements With Contractor Needs
Demands Significantly Higher Frequency Of Client
Satisfaction Feedback
Timescale Is Far Shorter Than EPC Projects
Focuses On Overall Project Profitability Rather Than Only
Cost, Schedule And Work Hours
Focuses Almost Entirely On Clients Business Needs
Demand More Experienced Staff When Compared To EPC
Projects Results In Higher Hourly Rates
Demands Significant Access To Downstream Experience
Early During Process Design Phase (Operations,
Maintenance, Construction)
VIPs DRIVE LOWER INVESTMENT
Industry Average Cost
FEL Improvement Only
FEL Improvement
+
Value Improving Practices
Engineering
Procurement
Construction
Turnover & Startup
EARLY FEL IMPLEMENTATION
EXPERIENCE - CHEVRON
17% Cost Index Improvement
14% Execution Schedule Index
Improvement
4% Operating Performance Index
Improvement
Based on 1999 IPA Data Gathered over 5-year Period
FEL vs EPC
FEL
EPC
Project State
Undefined
Defined
Changes
Actively Seeks Changes
Actively Resists
Changes
Impact Of Change
Low
High
Opportunity For Change High
Low
Contract Type
Typically Reimbursable
Typically Lump Sum
Value Improvement
Potential
High
Low
Client Participation
Encouraged
Discouraged
Philosophy
Information Driven
Deliverable Driven
ABILITY TO INFLUENCE PROJECT
ECONOMICS
Project Planning
100
% Influence on Project
90
Conceptual Design
80
70
60
50
40
Basic Engineering
FEL 1
30
20
FEL 2
Detailed Engineering
10
0
Construction
FEL 3
EPC
PRIOR TO THE 1980s
Clients completely developed their business
concepts and project scope in-house (FEL 1)
Clients had large in-house engineering staff
Clients developed process designs (FEL 2) and
contractor EPC bid packages (FEL 3)
Contractors executed detail engineering,
procurement, and construction (EPC)
Clients typically handle commissioning and
startup with some contractor assistance
CURRENTLY
Clients Partially Develop Their Business Concepts And
Project Scope In-house
Clients And Contractor Jointly Complete Development
Of Project Scope (FEL 1)
Clients Have Much Smaller Engineering Staff
Clients And Contractor Jointly Develop Process Designs
(FEL 2) And Contractor EPC Bid Packages (FEL 3)
Contractors Executed Detail Engineering, Procurement,
And Construction (EPC)
Clients And Contractor Jointly Handle Commissioning
And Startup
FEL IN PROJECT LIFE CYCLE
FRONT END LOADING (FEL)
Conceptual
FEL-1
Feasibility
FEL-2
Definition
FEL-3
EPC
= Decision Gates (stage process)
PARAMETERS OF FEL PHASES
FEL 1
FEL 2
FEL 3
(CONCEPTUAL)
(FEASIBILITY)
(DEFINITION)
+/- 40%
+/- 25%
+/- 10%
Cumulative
Engineering
Hours Spent
1-5%
5-15%
15-30%
Contingency
15-20%
10-15%
8-12%
Cost Estimate
Accuracy
FEL IS CLIENT FOCUSED
Focuses on Client Goals and defined business
needs
Focuses on Client Profitability not Contractor
hours and costs
Balances clients project profitability drivers
Assists Client in getting data required for EPC
and Operations Phases
Proactively seeks data, resources, support,
decision making
FEL PROJECT PERFORMANCE
Co-Led FEL Projects Result in Superior Project
Performance in Terms of Cost & Schedule
ENGINEERING & CONSTRUCTION
SCHEDULE SLIP
Source: IPA Inc., The Changing Role of Design Contractors:
Their Effective Use in Project Definition, November 1993.
15
10
C o -L e a d
O w ner
C o n tra c to r
C o -L e a d
PER C EN T
20
O wner
10
9
8
7
6
5
4
3
2
1
0
C o n tra c to r
PER C EN T
COST GROWTH
COMPARISONS OF POORLY DEFINED VS WELL
DEFINED PROJECT
Cost Growth
Adapted from IPA Data
Schedule Slip
GOOD PROJECT DEFINITION
REDUCES RISK
% Cost Deviation (Actual/Estimate)
60
+ Standard
Deviation
Median
40
- Standard
Deviation
20
-20
Best Practical
Good
Fair
Poor
Front End Loading Index
Screening
FEL 1 (CONCEPTUAL PHASE)
DELIVERABLES
Strategic Business Assessment
Key Technology Selected & Risk Identified
Market Assessment For Feed, Products & Capacity
Potential Sites Identified & Under Evaluation
Cost Estimate (+/- 40%)
Preliminary Project Milestone Schedule
Block Flow Diagrams Completed
Process Cases Identified
Critical Long Lead Equipment Identified
VIP Reports
FEL 2 (FEASIBILITY PHASE)
DELIVERABLES
Strategic Business Assessment
Project Schedule Level 1
Cost Estimate (+/- 25%)
Overall Project Execution Strategy
Contracting & Purchasing Strategies
Permitting & Regulatory Compliance Plan
Soil Survey & Report
Project Alternatives Analysis
Process Flow Diagrams For Selected Option(s)
Preliminary Utility Flow Diagrams & Balances
Preliminary Equipment List & Equipment Load Sheets
Materials Of Construction
VIP Reports
FEL 3 (DEFINITION PHASE)
DELIVERABLES
Strategic Business Assessment
Detailed EPC Project Master Schedule
Completed Environment Permit Submittal
Project Plan / Project Execution Plan
Cash Flow Plan for EPC Phase
Training, Commissioning & Startup Plans
Contracting Plans
Materials Management Plan
Safety Process & Quality Management Plan
Cost Estimate (+/-10%)
Finalized Utility Flow Diagrams & Balances
FEL 3 (DEFINITION PHASE)
DELIVERABLES (CONTD)
P&IDs - Issue IPL
Plot plans & Critical Equipment Layouts
Equipment List & Equipment Datasheets
Single-line Electrical Diagrams
Control System Summary & Control Room
Layout
Materials of Construction
VIP Reports
Process Hazards Analysis
