Maintenance Turnarounds are major events for refineries and petrochemical facilities. They typically cost large sums of money to execute. But the cost of executing the turnaround is often dwarfed by the “opportunity cost” of production lost while the facility is shut down. Hence, historically, the development of accurate estimates and strong cost controls has taken a back seat while the focus has been placed on driving the turnaround schedule to minimize the lost production time. However, in recent years, refineries have become more interested in accurate costs as refining margins have narrowed. Similarly, petrochemical plants, where the production opportunity cost driver is less, are also beginning to focus on ideas for improving cost estimating and control.
The technical literature available to the cost estimator wishing to learn more about estimating for capital projects is prodigious. But there is a dearth of similar literature on estimating for turnarounds.
This paper examines the different estimate methodologies used to calculate the base estimate for a turnaround and the effectiveness of those methodologies. It then moves onto a discussion of how allowances and contingency are typically dealt with in turnaround estimates and draws on ideas from the project world to suggest how the calculation of these items might be improved.