Decommissioning Project Report: Costing, Budgeting and Analysis

This report provides a detailed analysis of a decommissioning project, focusing on project costing, budgeting, and financial appraisals. It presents a Work Breakdown Structure (WBS) with task durations, resource allocation, and associated costs. The report includes a cost-benefit analysis, outlining development and operational costs, along with projected savings. Key financial metrics such as Net Present Value (NPV), Return on Investment (ROI), and break-even analysis are calculated to assess the project's financial feasibility. The report concludes that the project is financially sound, with a positive NPV and a calculated ROI, supported by a break-even analysis chart demonstrating the relationship between benefits and costs over a five-year period. The document also includes a bibliography of relevant sources.

Running head: PROJECT MANAGEMENT
Decommissioning project
Name of the Student
Name of the University
Author’s Note

1
PROJECT MANAGEMENT
Table of Contents
5 Project costing, budgeting and financial appraisals................................................................2
5.1. Project costing and budgeting.........................................................................................2
5.2. Financial appraisals.........................................................................................................5
Bibliography.............................................................................................................................10

2
PROJECT MANAGEMENT
5 Project costing, budgeting and financial appraisals
5.1. Project costing and budgeting
It is found that the decommissioning project will be successfully completed within
the budget that is round $659,160. The report that is provided below reflects on the budget
that is needed for executing each of the project activities.
WBS Task Name Duration Resource Names Cost
0 Decommissioning project 815 days
$
199,570,400.00
1 Initial stage 53 days $ 94,640.00
1.1 Approval of the project 10 days Project manager $ 16,000.00
1.2 Site access 43 days $ 78,640.00
1.2.1 Inspection of area 12 days
Project manager, Project
planner
$ 36,480.00
1.2.2 Mapping of the location 14 days Inspector $ 19,040.00
1.2.3 Cleaning of the area 17 days Cleaner $ 23,120.00
2 Site set up 237 days $ 428,400.00
2.1 Onshore 152 days $ 266,480.00
2.1.1 Construction of offices 60 days Construction manager $ 86,400.00
2.1.2
Installation of
communication system
30 days Technical engineer $ 43,200.00
2.1.3
Allocation of health and
safety
35 days Contractor, Inspector $ 98,000.00
2.1.4 Installation of safety 27 days Technical engineer $ 38,880.00

3
PROJECT MANAGEMENT
2.2 Offshore 85 days $ 161,920.00
2.2.1
Installation of safety
equipment/signage
29 days Technical engineer $ 41,760.00
2.2.2
Health and safety
inspection and approval of
facilities
26 days Inspector, Project manager $ 76,960.00
2.2.3
Transportation to site of
equipment/machinery
30 days Supervisor $ 43,200.00
3 Resources 101 days $ 146,560.00
3.1 Recruitment of staff 22 days Hr manager $ 31,680.00
3.2 Duty holder 20 days Hr manager $ 28,800.00
3.3 Supply chain joint 25 days Hr manager $ 36,000.00
3.4 Partnership 16 days Project manager $ 25,600.00
3.5 Procurement 18 days Procurement manager $ 24,480.00
4 Execution activities 195 days
$
198,502,800.00
4.1 Completely depressurise 30 days
Construction manager,
Contractor
$ 86,400.00
4.2
Ensuring shutdown of oil
wall
27 days
Construction manager,
Worker
$ 73,440.00
4.3
Ensuring all equipment
testing
26 days
Sub-contractor,
Supervisor, Additional
cost [1]
$ 98,072,800.00
4.4 Plug and abonnement of 30 days Sub-contractor, Worker $ 79,200.00

4
PROJECT MANAGEMENT
oil well
4.5
Subsea infrastructure
removal
27 days
Construction manager,
Contractor
$ 77,760.00
4.6
Transport onshore
materials for recycling
30 days
Construction manager,
Materials [1]
$
100,043,200.00
4.7
Topside or platform
removal
25 days
Cleaner, Construction
manager
$ 70,000.00
5 Monitoring and control 149 days $ 233,040.00
5.1
Environmental
management system
20 days Monitoring manager $ 27,200.00
5.2
Hazard identification risk
assessment
19 days Risk manager $ 25,840.00
5.3
Integrated safe system of
work
18 days Construction manager $ 25,920.00
5.4
Health and safety policy
file
17 days Inspector $ 23,120.00
5.5
maintenance of cost
schedule
20 days Project planner $ 28,800.00
5.6 Risk assessment 10 days Risk manager $ 13,600.00
5.7 Regular meetings 18 days
Monitoring manager,
Procurement manager
$ 48,960.00
5.8
Regular stakeholder
engagement
12 days Project manager $ 19,200.00
5.9 Auditing 15 days Procurement manager $ 20,400.00

5
PROJECT MANAGEMENT
6 Closure and site clean up 80 days $ 164,960.00
6.1
Preparation of the
dismantling safety case
10 days
Construction manager,
Sub-contractor
$ 28,000.00
6.2
Removal of the electrical
installation
12 days
Cleaner, Technical
engineer
$ 33,600.00
6.3
Removal of mechanical
transport
12 days
Cleaner, Construction
manager
$ 33,600.00
6.4
Dismantlement of
buildings
14 days Construction manager $ 20,160.00
6.5
Production of
environmental impact
assessment report
12 days Project manager $ 19,200.00
6.6 Close out report 10 days Project planner $ 14,400.00
6.7 Site handover 10 days Project manager $ 16,000.00
5.2. Financial appraisals
Cost-Benefit - INPUT VALUES
Hardware $ 7,00,00,000.00
Software $ 5,00,00,000.00
Installation team salaries $ 6,00,00,000.00
Training $ 1,95,70,400.00
Total Development Cost $ 19,95,70,400.00
Hardware $ 5,00,00,000.00
Software $ 6,00,00,000.00
Operational Labour $ 4,50,00,000.00

6
PROJECT MANAGEMENT
Total Operational Cost $ 15,50,00,000.00
Approximate salary savings $ 10,00,00,000.00
Reduced operating cost $ 12,00,00,000.00
Total Benefit $ 22,00,00,000.00
Discount Rate Used 5.00%
The table that is given above represents the operational costs, investment costs as well
as the saving that are generally achieved by undertaking the entire project. It is found that the
development cost of the project will be around $ 19,95,70,400.00 whereas the operational
cost of the project will be around $15,50,00,000.00. In addition to this, the saving that are
achieved from the project is around $22,00,00,000.00.
Project
Cost-
Benefit
Analysis
Analysis
Variable
s:
Enter values for the cost-benefit
analysis in the INPUT_VALUES
worksheet.
Discount
Rate
Used
5.00%
Annual
Benefits
$
22,00,
00,000
.00
Annual
Operatio
nal Costs
$
15,50,
00,000
.00
One-
Time
Develop
ment
Cost
$
19,95,
70,400
.00

7
PROJECT MANAGEMENT
Year of
Project
0 1 2 3 4 5 TOTA
LS
Economic
Benefit
$0.00 $
22,00,
00,00
0.00
$
22,00,00,
000.00
$
22,00,0
0,000.0
0
$
22,00,00,
000.00
$
22,00,
00,000
.00
Discount
Rate
1.000
0
0.952
4
0.9070 0.8638 0.8227 0.7835
PV of
Benefits
$0.00 $20,9
5,23,8
09.52
$19,95,46
,485.26
$19,00,
44,271.
68
$18,09,94
,544.45
$17,23
,75,75
6.62
NPV of
all
BENEFI
TS
$0.00 $
20,95,
23,80
9.52
$
40,90,70,
294.78
$
59,91,1
4,566.4
6
$
78,01,09,
110.92
$
95,24,
84,867
.54
$
95,24,
84,867
.54
One-
Time
COSTS
$
(19,95
,70,40
0.00)
Recurring
Costs
$0.00 $
(15,50
,00,00
0.00)
$
(15,50,00
,000.00)
$
(15,50,
00,000.
00)
$
(15,50,00
,000.00)
$
(15,50,
00,000
.00)
Discount
Rate
1.000
0
0.952
4
0.9070 0.8638 0.8227 0.7835
PV of
Recurring
Costs
$0.00 $
(14,76
,19,04
7.62)
$
(14,05,89
,569.16)
$
(13,38,
94,827.
77)
$
(12,75,18
,883.59)
$
(12,14,
46,555
.80)
NPV of
all
COSTS
$
(19,95
,70,40
0.00)
$
(34,71
,89,44
7.62)
$
(48,77,79
,016.78)
$
(62,16,
73,844.
55)
$
(74,91,92
,728.15)
$
(87,06,
39,283
.95)
$
(87,06,
39,283
.95)
Overall
NPV
$
8,18,4
5,583.
59
Overall
ROI
0.0940
Break-

8
PROJECT MANAGEMENT
even
Analysis
Yearly
NPV
Cash
FLOW
$
(19,95
,70,40
0.00)
$
6,19,0
4,761.
90
$
5,89,56,9
16.10
$
5,61,49,
443.90
$
5,34,75,6
60.86
$
5,09,2
9,200.
82
Overall
NPV
Cash
FLOW
$
(19,95
,70,40
0.00)
$
(13,76
,65,63
8.10)
$
(7,87,08,
722.00)
$
(2,25,5
9,278.0
9)
$
3,09,16,3
82.77
$
8,18,4
5,583.
59
From the above analysis that is undertaken, it is found that the project is financially
feasible and the net present value that is estimated for the project will be around
$8,18,45,583.59 The overall ROI that is calculated for the project will be around 0.0940.
Break even analysis
Break-
Even
Chart
B-E
Analysis
Over 5
Years:
0 1 2 3 4 5
NPV of all
BENEFITS
$0.00 $
20,95,23,809.
52
$
40,90,70,2
94.78
$
59,91,14,
566.46
$
78,01,09
,110.92
$
95,24,84,8
67.54
NPV of all
COSTS
$
19,95,70,4
00.00
$
34,71,89,447.
62
$
48,77,79,0
16.78
$
62,16,73,
844.55
$
74,91,92
,728.15
$
87,06,39,2
83.95

9
PROJECT MANAGEMENT
0 1 2 3 4 5 0
$0.00
$200,000,000.00
$400,000,000.00
$600,000,000.00
$800,000,000.00
$1,000,000,000.00
$1,200,000,000.00
Break-Even Analysis: Decommissioning project
NPV of all BENEFITS NPV of all COSTS
Year
D
o
l
l
a
r
s
Figure 1: Break even analysis
(Source: Created by Author)
The chart that is provide below reflects on the comparison of NPV of all benefits
against the costs. It is found that the benefits after 5 years will be around $95,24,84,867.54
whereas it is found that the cost that is related with the project will be around $
87,06,39,283.95.