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The EPC Role in Next Generation Biorefining Capital Projects
Ron Jones
Principal, Process & Industrial Group [email protected]
Click to edit Master title style Discussion Topics
Burns & McDonnell Overview
Project Lifecycle
Risk Mitigation
Technology
CAPEX
Drivers in EPC Partnerships
Traits of Successful EPC Partnerships
Click to edit Master title style Company Snapshot
• History – Founded in 1898 – 100% employee owned
• Strength – 3600+ employee owners – $1.1B annual revenue – 50% EPC balance
• Stability – Growth in a recession – < 4% employee turnover
• Service – 85%+ repeat client base – Relationship driven business model
Our Mission: Make Our Clients Successful
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• Business Case – Identify a business need and plan how to satisfy
• Definition & Front-End-Planning – EPC engagement – CAPEX allocation ready plan for project execution
• Project Execution – Execute project design, procurement and installation – EPC conclusion
• Operation – Startup through decommissioning and dismantling or other disposal
Expected Project Lifecycle
Click to edit Master title style Technology Risk Mitigation for a Serial #1
• Laboratory – Develop the basic chemistry / biology – Using lab grade chemicals, reagents and media
• Pilot (100 to 500 x Lab) – Prove out laboratory ideas – Usually still using lab grade materials
• Demonstration (100 to 500 x Pilot) – Demonstrate scalability and robustness – Introduce commercial grade materials
• First Commercial (20 to 50 x Demonstration) – Understand and plan accordingly – This is not the Nth Commercial
Understand the risk of skipping steps on the
technology curve
Click to edit Master title style Lab to Pilot
• Technical Evaluations: Build confidence in process – Process – Commercially Available Equipment – Scalability Issues
• Estimates: Begin to develop project cost parameters – Pilot Plant Goal Setting – Conceptual for Future Scale-up
• Funding Support: Build credibility in team – Application Input – Qualification Level Presentations to Investors – Leverage Technical Evaluations/Estimates
Click to edit Master title style Pilot to Demo & Demo to Commercial
• Technical Evaluations: Build Confidence in Scale-up – Commercial Scale Equipment Availability – Scalability Issues
• Estimates: Refine & Fix Project Cost Parameters – Demonstration Scale – Commercial Scale
• Funding Support: Build Credibility of Project – Leverage Success of Prior Phase – Definitive Estimates – EPC Commitment to Cost & Schedule
Click to edit Master title style CAPEX Risk Mitigation for a Serial #1
• Phase 0 – Develop Basic Business Case
• Phase 1 / Front-End-Planning 1 (FEP1) – First look at CAPEX needs
• Phase 2 / FEP2 – Alternative evaluation
• Phase 3 / FEP3 – Definitive Scope, Schedule & Budget
• Engineer, Procure & Construct (EPC)
Click to edit Master title style CAPEX / OPEX Influence
Start - up
Feasibility,
Concept and Basic Design
Total Cost Established
Permitting Procurement
Design and Construction Commissioning
Proect Timeline
Cash Flow
Enhanced Documentation, Commissioning and Qualification
Ability to influence Cost
Click to edit Master title style Drivers for EPC Partnership
• Risk management/mitigation (project and financial) – Help owner sort through technical options early (FEP phases) – Use pilot/demo and simulation to answer “will it work?” – Use solid Front-End-Planning to answer “how much will it cost?” – Use 3D rendering/animation to answer “what will it look like?”
• Cost control / early certainty – Core business (allows both parties to focus on what they do best) – Interface w/financial providers – Established supplier chain
• Schedule certainty – EPC firms do this for a living – Have a staff of professionals that specialize in required roles (CM,
Scheduling, Controls, Site Super, Discipline Super) • Need for entire project lifecycle to be defined & managed
Click to edit Master title style EPC Importance to the Funding Process
• EPC balance sheet – Remove financial provider concern of EPC health
• Leverage EPC track record – Capital project delivery is core capability – Project delivery capability, etc.
• Contract Structures – Open Book
• Price certainty • Shared savings • Promote partnership atmosphere
– Lump Sum • Price certainty
Click to edit Master title style EPC Partner Must Have Traits
• Safety Leadership • Leadership • Flexibility • Responsiveness • Can-do Culture • Teamwork Culture • Optimized Resource Use • High-Value Performance • Value Added Work Processes • Understands Risk in Biorefining Space • Established Risk Mitigation Practices • Willingness to put “Skin in the Game”
Click to edit Master title style Successful EPC Partnerships
• Require a special: – Leadership team – Board of Directors – Financial team – EPC partner
• Dependent upon a viable, well considered plan: – Laboratory through commercialization – Gated process – Risk mitigation – Comprehensive funding strategy (with back-up plan)
• This game is different
Click to edit Master title style Successful EPC Partnerships
Thank you!