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The barriers to develop cost benchmarking for decommissioning projects

The introduction of cost benchmarking in decommissioning projects can face various barriers, challenges, and complexities. Overcoming these barriers requires a collaborative industry approach, the development of standardized practices, and a commitment to transparency. Organizations in the decommissioning sector need to work collectively to address these challenges and unlock the benefits of cost benchmarking for improved project management and efficiency. Here are some common barriers to the adoption of cost benchmarking in the decommissioning process:

Limited availability of accurate and comprehensive historical cost data for decommissioning projects can be a significant barrier. The quality and reliability of existing data may also vary, affecting the precision of benchmarking comparisons.

Decommissioning projects can vary widely in terms of size, complexity, geographic location, and regulatory environments. Finding comparable benchmarking partners or projects with similar characteristics becomes challenging due to the inherent heterogeneity of decommissioning activities.

The absence of standardized metrics, methodologies, and reporting formats for decommissioning costs can impede benchmarking efforts. Establishing consistent standards across the industry is crucial for meaningful comparisons.

Decommissioning projects often involve sensitive and proprietary information. Concerns about confidentiality and reluctance to share detailed cost data with industry peers can hinder the establishment of benchmarking partnerships.

The regulatory landscape for decommissioning can be complex and subject to changes. Uncertainty regarding regulatory requirements and evolving compliance standards may complicate benchmarking efforts. regulations and standards.

Building a network of organizations willing to participate in benchmarking initiatives can be challenging. The lack of a sufficient number of benchmarking partners reduces the pool of available data for comparison. radioactivity levels and assessing environmental impacts.

Decommissioning projects are influenced by market conditions, economic factors, and geopolitical events. These dynamic factors can introduce volatility, making it difficult to establish stable benchmarking baselines.

Advancements in decommissioning technologies and methodologies can quickly render benchmarking data outdated. Rapid technological changes may make historical benchmarking less relevant for current and future projects.

Limited collaboration and knowledge-sharing within the decommissioning industry can hinder the development of benchmarking best practices. A lack of industry-wide initiatives may result in isolated efforts with less impact.

Decommissioning costs are often intertwined with other project phases, such as exploration and production. Allocating costs accurately to decommissioning activities can be complex, impacting the precision of benchmarking analyses.

Resistance to adopting new methodologies or incorporating benchmarking practices into established decommissioning processes may exist within organizations. Cultural resistance to change can impede the successful implementation of benchmarking initiatives.

Limited financial resources and expertise within organizations may constrain their ability to invest in benchmarking tools, technology, and dedicated teams for decommissioning cost benchmarking.

ABEX Estimate step based time-line

The decommissioning estimate process involves several key steps in a timeline. Here’s a summarized outline:

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Step 1

Scope of work analysis

To gather data on project scope, resource requirements. Definition of objectives, and analyse regulatory requirements for decommissioning. Stablish a project team and assign responsibilities. Clearly articulate the project scope, including objectives, deliverables, and constraints.
Identification of all elements and phases of the project that will contribute to the cost. Identification and involving relevant stakeholders in the cost estimation process. Understand the specific requirements and expectations of stakeholders regarding cost information.

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Step 2

ABEX Estimation Plan

Develop a detailed cost estimation plan in line with AACE International principles. Creating a baseline cost estimate for the decommissioning project. Considering factors such as labor, equipment, materials, and disposal costs. Defining the basis of estimation, such as activities, quantities, labor rates, material costs, and productivity factors. Establishing the level of detail required for accurate estimations. Choosing the  appropriate cost estimation methodologies based on the project characteristics. Creatinng a detailed Work Breakdown Structure that breaks down the project into manageable components.
Assigning cost centers and codes to each WBS element.

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Step 3

Quantities' Survey Review

The close alignment of Quantities’ Survey Review with engineering team deliverables is essential for accuracy, consistency, communication, risk mitigation, and effective decision-making throughout the project lifecycle. It ensures that the survey data accurately reflects the evolving nature of the engineering design and project scope. The Work Breakdown Structure (WBS) is a fundamental component of project management. Quantities’ survey data should align with the WBS, providing detailed information for each work package defined by the engineering team.

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Step 4

ABEX Development - BOE Final report

Using Kpex historical data from similar past projects to serve as a basis for estimating costs. Analyze historical performance, costs, and productivity metrics. Choosing appropriate cost estimation methodologies approved in the Cost Estimating Plan and based on the project characteristics.
Common methodologies will depend on the maturity of data coming from the quantity survey.

We have experience in preparing decommissioning estimates (ABEX/DECOMEX) for both onshore and offshore installations around the world.

We prepare decommissioning estimates  using our proprietary estimating model based on cost benchmarking data analysis, originally developed from actual project data and regularly updated and optimized sing a know-how method to reflect current market conditions and the latest decommissioning practices.

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