Embarking on a capital project entails a meticulous journey comprising several distinct stages, each crucial for its success and longevity. From conception to operations, every phase demands careful planning, execution, and monitoring. Understanding the life cycle of a capital project is essential for stakeholders to navigate through its complexities efficiently.
In this article, we delineate the critical activities involved in each stage of a capital project spanning 30 years, from Define to Operations.
Techno Economic Study
Project Execution Stage
Example:
Gas Production Unit Capital Project in the USA
Project Description: Imagine a scenario where a company plans to establish a Gas Production Unit in the USA to extract natural gas from shale formations. The project aims to harness the abundant natural gas resources available in the region to meet the growing energy demands sustainably.
Techno Economic Study Cost:
% Split of Expected cost spent during the tecno economic studies
Define Stage: During the Define stage, the company conducts feasibility studies, market research, and initial scoping exercises. Costs involved may include:
- Feasibility study costs: $200,000
- Market research expenses: $100,000
- Initial project team salaries and overheads: $150,000
- Regulatory compliance assessments: $50,000
Total Define Stage Costs: $500,000
Select Stage: In the Select stage, the company evaluates various options for gas extraction techniques, site locations, and technologies. Costs involved may include:
- Alternative solution assessment: $100,000
- Site selection and land acquisition: $1,000,000
- Technology evaluation and vendor selection: $300,000
- Environmental impact assessments: $250,000
Total Select Stage Costs: $1,650,000
Feed (Front-End Engineering Design) Stage: During the FEED stage, detailed engineering plans and specifications are developed. Costs involved may include:
- Engineering design fees: $2,500,000
- Geotechnical surveys and studies: $300,000
- Permitting and regulatory approvals: $500,000
- Long-lead item procurement: $1,200,000
Total Feed Stage Costs: $4,500,000
