LNG Project Design Competitions - A contractor

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LNG Project Design Competitions - A
contractors viewpoint
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Topics

• Contractor selection for LNG projects
• Design competition strategies
• Key issues for design competition
• Scope and structure of design competition
• Conducting a design competition
• Recommended guidelines

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LNG Project Contractor Selection Traditional
Approach
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LNG Project Contractor Selection Design
Competition

• Benefits overall project
• Promotes innovative solutions and competition

Complete Pre-FEED Studies
Contractor X
Contractor A or B
Contractor A and B
9 - 12 months
3- 6 mths
Scoping phase
EPC BID
Evaluation Criteria
Generally Lump Sum
EPC Terms
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LNG Project Contractor Selection Design
Competition

• Benefits overall project
• Promotes innovative solutions and competition

Complete Pre-FEED Studies
Contractor X
Contractor A or B
Contractor A and B
9 - 12 months
3- 6 mths
Scoping phase
EPC BID
Evaluation Criteria
Generally Lump Sum
EPC Terms
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Strategies for Design Competition

• Dependent on several factors
• Project drivers, goals, ownership structure,
  liquefaction technology, type of facility
  (grassroots/expansion), etc.
• Two primary approaches
• Based on owner specifications
• Owner provides detailed specifications and
  requirements
• Less freedom for contractor to make technical
  changes
• Based on fit-for-purpose philosophy
• Owner specifies overall requirements and guiding
  principles
• Contactor designs fit-for-purpose plant

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Choosing Contractor for Design Competition

• Contractor selection has impact on cost of
  facility
• Demonstrated experience in developing and
  managing novel technology and execution
  innovations
• Competition should be among peers
• Design competition process relatively new and
  evolving
• Past design competitions generally well managed
• Lessons learned

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Issues with Design Competition

• Scope of design competition
• What to include and what not to include? That
  is the Question!
• Structure of design competition
• The Fairness Factor
• Methodology of design competition
• Many things have worked well in past design
  competitions. However, the purpose of this paper
  was to highlight the things that could be
  improved. Hence the examples are a one sided view
  of design competitions.

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What to include and what not to include?

• Determination of level at which design
  competition is conducted
• Scope restriction results in less room to
  innovate
• Mind reading should to avoided
• Key issues
• Confidentiality of information
• Rely upon items
• Avoid a liars contest
• Do not confuse design basis issues versus ideas
• Protecting competitive advantage
• Identify what is in best interest of the project

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Common Elements of Design Scope

• Minimum safety requirements
• Site data
• Feed gas compositions/contaminants
• Product specifications
• Definition and requirements for proven equipment
  vs. prototype

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Common Elements of Design Scope

• Licensed technologies selected
• Guarantee philosophy
• Availability of plant
• Plant OM philosophy
• Plant capacity
• EPC Schedule ? (liars contest)

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What to include in a design competition?some
examples

• Execution strategy
• Plant configuration
• Compressor and driver configuration
• Cooling medium selection
• Equipment specifications
• Design philosophy sparing, flaring, etc.
• Plot plan
• Design optimizations
• Rotating equipment maintenance cost

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Structuring a Design Competition

• Similar to a tendering process
• Set and implement guidelines
• Decide on evaluation criteria early
• Owners team
• Composition, role, and behavior
• Set procedures for handling of confidential
  information and intellectual property rights
• Basis of design versus owner preferences
• Explicit economic evaluation guidelines
• Equalize scope and compensation
• Cross pollination of ideas and impact on
  innovation

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Recommended Guidelines for Design Competition

• All designs must be based on a workable LNG
  process technology
• Guideline applies to not just the technology but
  also the critical equipment and other design
  aspects
• Whatever definition of workable is, it should
  be applied consistently with all contractors
• All designs must use the same design basis and
  design philosophy
• Owner shall define the level at which the design
  competition is implemented
• Guidelines set at beginning of design competition
  should be closely followed to ensure fairness and
  integrity of competitive process

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Recommended Guidelines for Design Competition
(continued)

• Define evaluation criteria and terms of EPC
  contract prior to start of FEED
• Equal treatment of competing teams in terms of
  scope, compensation, schedule and
  terms/conditions
• All competing bids should be submitted at the
  same time (Sequential bidding should not be
  considered)
• Owner should specify certain items, whose claims
  cannot be verified at the time of the award, e.g.
  schedule, etc.
• All competing teams should be free to chose
  vendors, sub-contractors and partners from an
  approved list

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What does it take to conduct a design
competition?

• All parties working towards the benefit of the
  overall project
• Setting uniform guidelines to ensure fair
  competition

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Is design competition right for you?

• Design competitions are effective but may not be
  a good solution for every project
• The owner has to decide if this strategy is good
  for his specific project