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SESSION 1. Today’s Vision – Tomorrow’s Reality?. Session Presenter. Bill Hall Managing Director, Mega Projects WorleyParsons. Agenda. Many challenges today Commodity pricing – fundamental shifts Equipment and labor costs Project execution impacts Strategies to meet the challenges. - PowerPoint PPT Presentation
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Today’s Vision – Tomorrow’s Reality?
Session Presenter
Bill HallManaging Director, Mega ProjectsWorleyParsons
Bill HallManaging Director, Mega ProjectsWorleyParsons
SESSION 1
Agenda
Many challenges today Commodity pricing – fundamental shifts Equipment and labor costs Project execution impacts Strategies to meet the challenges
Significant Challenges: Today and Tomorrow
Annual Engineering Graduates in 2006• USA 60,000• China 200,000
Average USA “Professional Workforce” Age in ECC industries• Over 50 years old
And many more issues
But even more critical:What is happening in overseas markets?
Commodity Pricing - Fundamental Shifts
Global Metals Outlook
Global Metals Outlook
Global Metals Outlook
14Mta
Fundamental Pricing Shift
Steel Prices to Surge
“There is a strong view within the Chinese industry that miners will achieve the 85 percent increase, exceeding a 65 percent rise already agreed with a key Brazilian miner.”
The Australian Financial Review
April 2008
Equipment and Labor Costs
Equipment Costs RiseEquipment Cost Indexes Since 2000
600
800
1000
1200
1400
1600
1800
2000
2000 2001 2002 2003 2004 2005 2006 2007 2008
Source: Oil & Gas Journal (Nelson-Farrar Index)
Pumps, Compressors, etc.
Internal-Comb. Engines
Instruments
Heat Exchangers
Misc. Equipment Avg.
Labor Cost Indexes Since 1990(Base index: 1913 = 100)
4000
4500
5000
5500
6000
6500
7000
7500
8000
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008
Source: Engineering-News Record (Skilled Labor Index)
Labor Costs Rise
1990-2000: 3% YOY increase 2000-2008: 4% YOY increase
Project Execution Impacts
Project Delays
Increasing Risk
Increasing Development Time
Increasing Engineering Backlogs
Strategies to Meet the Challenges
Strategies
HSE performance Workshare Accepting increased responsibility Partnering Early engagement New technologies
Strategies
HSE performance
Strategies
HSE performance Workshare
Strategies
HSE performance Workshare Accepting increased responsibility
Strategies
HSE performance Workshare Accepting increased responsibility Partnering
Strategies
HSE performance Workshare Accepting increased responsibility Partnering Early engagement
Strategies
HSE performance Workshare Accepting increased responsibility Partnering Early engagement New technologies
