Cost InsightsSo you know that labor costs are rising sharply, that they’re one of the largest components of your projects, and that midstream companies have historically had low visibility into them. In this final installment of our Labor Deep Dive, we’ll arm you with the top 3 tools that you need to respond to the labor shortage.
It was April, 2014, and Peter Cella, CEO of Chevron Phillips Chemical Co., faced the impossible challenge of announcing a $1B cost overrun on the company’s latest plastics plant.
What’s the key to solving the cost overrun problem at its root?
Improved project estimates.
Accurate estimates allow midstream companies to make investment decisions with full visibility into their consequences, when there’s still time to set clear expectations for expected rates of return or to deploy capital in more productive avenues. But when estimates are too low, the possibility of cost overruns remains hidden until significant amounts of capital have already been sunk into the initial phases of a project.
In this piece, we outline 4 ways to leverage data to achieve a more fact-based, consistent, and most importantly, accurate, approach to estimating project costs.
Our energy experts recommend 4 ways to begin improving your estimates today:
Labor: it’s the greatest expense for any midstream project (55% of total costs) and the most difficult to predict. In this 3-part deep dive, we’ll give you the tools to understand and respond to the rising labor costs that are driving the midstream market in 2015. You’ll learn:
1.Why labor is the fastest rising and most significant cost of any midstream project
2.What the labor shortage means for your company
3.Strategies to proactively mitigate the impact of high labor costs
Wondering why accurate project estimates matter? In this installment of our project estimation deep dive series, we'll show you how bad estimates can have consequences that ripple through an organization and impact its highest level financial metrics. At the end, we’ll give you the tools you need to remedy the estimation problem and prevent the 3 scenarios below.
In this first installment of our project estimation deep dive series, we show you the most common reasons midstream companies end up with inaccurate estimates. By the end of the series, we'll provide you with specific tips, tools, and strategies for addressing every one of those challenges.
Wondering why project estimates are so important? Click here to learn why accurate estimates are the cornerstone of any robust investment strategy.
The midstream industry is experiencing more pressure than ever before: with rising costs, missed estimates, and the threat of declining volumes, midstream companies are experiencing challenges from all sides. In this industry overview, our energy experts show you the hard data behind the 3 biggest challenges you’ll face in the coming year.
