Week 4_John Agbo_ Recommending the best alternative to a client on an offshore Waste Water Disposal Pre – Feed Project.

A client wishes to develop an environmentally friendly off-shore waste water disposal system in line with Govt regulations and therefore requested that a Pre-Feed study be carried out to evaluate the economics of the proposed development. The client has two alternatives and wishes that we recommend the preferred alternative. Client’s equipment will be used for installation and transportation and client has asked that it shouldn’t be a part of the cost.

Alternative 1 – Water from the living camp which used to be discharged directly into the sea, will be pumped to Area “A” water injection platform for injection about 10km from the camp and the route is along some bends. 20mm diameter pipes will be required (Of the 10km, 1km will be bends). The entire lines are to be subsea.

Alternative 2 – Water from the living camp will be pumped to Area “B” water injection platform for injection about 12km from the camp. It is proposed that 16mm diameter pipes will be used if following this route. 75% of the lines will be onshore while 25% of the lines will be subsea.

Analyzing the Alternatives

Alternative 1:

Cost of 20mm diameter Pipes (including cathodic protection, anodes, etc) -9km@$1,000/km = $9,000

Cost of 1HP booster pump - 1No @ $ 300 = $ 300

Cost of bends - 1km @ $1,500/km= $1,500

Cost of Labor and consumables for welding - 10km@$500/km = $5,000

Total $15,800

Alternative 2:

Cost of 16mm diameter Pipes (cathodic protection, anodes, wrapping,etc) -12km@$ 800/km = $9,600

Cost of 1HP booster pump - 1No @ $ 300 = $ 300

Cost of Labor and consumables for welding - 12km@$500/km = $6,000

Total $15,900

Conclusion and Recommendation

From the analysis we can see that the difference in cost is $100. Therefore, cost cannot be the right criteria to judge the alternatives. Alternative 2 has an advantage of having 75% of the lines onshore while 25% is subsea. This will be easier to maintain and replace in the long run than Alternative 1.

We will therefore recommend Alternative 2.

References:

1. Chapter 2, Skills and Knowledge of Cost Engineering. 5^th Edition Revised.

2. GAO Cost Estimating and Assessment Guide. Best Practices for developing and managing capital Program Costs