Overview of Estimating

Engineering Encyclopedia
Saudi Aramco DeskTop Standards
Overview Of Estimating
Note: The source of the technical material in this volume is the Professional
Engineering Development Program (PEDP) of Engineering Services.
Warning: The material contained in this document was developed for Saudi
Aramco and is intended for the exclusive use of Saudi Aramco’s
employees. Any material contained in this document which is not
already in the public domain may not be copied, reproduced, sold, given,
or disclosed to third parties, or otherwise used in whole, or in part,
without the written permission of the Vice President, Engineering
Services, Saudi Aramco.
Chapter : Project Support & Controls For additional information on this subject, contact
File Reference: PMT1021R J.L. Kissack on 874-2514
Engineering Encyclopedia Project Support & Controls
CONTENTS PAGES
APPLICATION OF SAUDI ARAMCO ESTIMATES ........................................... 1

Budgetary Estimate ...................................................................................... 1
Study Estimate .................................................................................. 1
Budget Estimate ................................................................................ 4
Expenditure Request Estimate...................................................................... 4
Company Estimate........................................................................................ 4
Standard-Contract Estimate .............................................................. 4
Change Order Estimate ..................................................................... 5
Short Form Contract Estimate........................................................... 5
APPLICATION OF SAUDI ARAMCO ESTIMATE ACCURACY,
ESCALATION, COST TRENDS, AND PROJECT CONTINGENCY................... 6
Estimate Accuracy........................................................................................ 6
Escalation and Cost Trends .......................................................................... 6
Contingency ............................................................................................... 12
INTERRELATION AND APPLICATION OF SAUDI ARAMCO CAPITAL
PROGRAM APPROVAL, ERA, AFE, AND ERC ............................................... 13
Capital Program Approval.......................................................................... 13
Definitions .................................................................................................. 13
Expenditure Request Approval (Saudi Aramco Form 56D) ........... 13
Authorization for Expenditure (Saudi Aramco Form 6035-A) ....... 13
Expenditure Request Completion (ERC) ........................................ 13
ER Approval............................................................................................... 17
AFE Development ...................................................................................... 18
Levels of Approval..................................................................................... 18
APPLICATION OF EXPENDITURE REQUEST (SAUDIARAMCOFORM56D) .... 20
Introduction to Saudi Aramco Form 56D................................................... 20
Preparation of Saudi Aramco Form 56D.................................................... 22

DEVELOPMENT AND APPLICATION OF SAUDI ARAMCO

ESTIMATING METHODS ................................................................................... 23
Project Strategy and Estimating Method Required..................................... 23
Capacity-Factored Estimating Method ....................................................... 23
Factored Estimates From Equipment Cost Method.................................... 24
Detailed Estimating Method....................................................................... 25
PS&CD ORGANIZATION AND RESPONSIBILITIES........................... 26
PS&CD Estimating Clients......................................................................... 26
PS&CD Estimating Responsibilities and Mandates ................................... 26
Support Functions ...................................................................................... 28
PS&CD ESTIMATE REVIEW AND APPROVAL CYCLE ................................ 29
Preliminary Review .................................................................................... 29
Final Review............................................................................................... 29
Attendees ........................................................................................ 29
Review Package.............................................................................. 29
DEVELOPMENT, ADMINISTRATION AND APPLICATION OF SAUDI
ARAMCO MISCELLANEOUS CAPITAL PROJECTS BI-1900 ........................ 38
Miscellaneous Capital Projects (BI-1900).................................................. 38
Development of BI-1900 ER Package........................................................ 38
Summary (BI-1900) ................................................................................... 52
GLOSSARY .......................................................................................................... 56

APPLICATION OF SAUDI ARAMCO ESTIMATES
The estimator will be involved in the preparation of various types of estimate during the life
of a project. There are three principal categories of estimate, each of which serves a different
function. Requests for estimates are made by the proponent organization on Saudi Aramco
forms. Refer to Figures 3, & 4.
Budgetary Estimate
Budgetary estimates are the broadest category of estimate, and they may be based on differing
degrees of design and engineering definition, ranging from a simple statement of facility type,
capacity and probable site location to a complete engineering study. In practice, these
estimates are categorized as study estimates or budget estimates.
Study Estimate
This estimate is produced in the initial stage of project development, and it is normally based
on a definition consisting only of facility type, capacity and probable site location.
Consequently, the accuracy of the estimate may vary by plus or minus 40% of the actual final
project cost. It is produced as a basis for preliminary or feasibility process selections, site
location and layout studies.
The estimate may be prepared by one of the Saudi Aramco Estimating Units in Dhahran
(SAO) or by an engineering contractor.
The ideal source of information for the study estimate is historical data from similar
previously constructed facilities in Saudi Arabia. This data escalated to probable costs at the
planned construction date.
If such data is not available, a factored estimating system may be used. That system, which is
the Saudi Aramco Technical Estimating Guide (ATEG), is maintained by the Cost Services
Division (CSD)/PS&CD.
Saudi Aramco DeskTop Standards 1

FILL IN COMPLETE ALL APPLICABLE Estimating Control No.

REQUEST FOR ESTIMATING SERVICES INFORMATION AND FORWARD ORIGINAL COPY
Saudi Aramco 5759 (10/90) TO: Sr. Supvr., Cost Estimating
SUBJECT MATTER OR TITLE:
NUMBER CONTROL ESTIMATE
BUDGET ITEM NO. ER/ER SUPPLEMENT
JOB ORDER NO. COMPANY ESTIMATES*
CONCEPTUAL ESTIMATE NEW CONTRACT NO.__________________________________
AMENDMENT NO._________________________________FOR
STUDY
CONTRACT NO.___________________________________
CONTRACT CHANGE ORDER NOS.___________________FOR

BUDGET
CONTRACT NO.___________________________________
SCHEDULE "B" OF CONTRACT* OR SCOPE OF WORK
SCHEDULE "C" OF CONTRACT*
APPROPRIATE CONSTRUCTION AGENCY'S CHECKLIST, FORM SAUDI ARAMCO 5759, A, C OR D
DRAWING AND/OR SCKETCHES o MATERIAL LISTS o
OTHER
JOB EXPLANATION MEETING* DATE_________________ PLACE_____________________________________ TIME_________________
Requested by: Telephone: Department: Date:
Address: Charge No.

oDH oABQ oRT
Bid Closing/Date Estimate Required* Contract Rep:* Telephone:*
*Required for Company Estimate

Figure 3. Request for Estimating Services (Form 5759)

Figure 4. Estimate Cover Sheet (Form 6529)

Budget Estimate
This estimate is a refinement of the study estimate. It is based on the Design Basis Scoping
Paper (DBSP) and gives additional information. Ideally it lists equipment (major items being
priced) and a scope outline that identifies plant features. At this stage, there are still many
unknown factors, and, consequently, the accuracy of the estimate may vary by up to plus or
minus 40%.
The budget estimate facilitates further feasibility studies, if required, and evaluates the
probable final cost of the BI.
The resourcing for this estimate is the same as for a study estimate (using the same sources of
estimating information) plus any pricing information developed for the facility under study.
Expenditure Request Estimate
This estimate is a definitive estimate that supports the ER when fund allocation for a
particular BI is requested.
The ER-estimate may be prepared by the Saudi Aramco estimating functions in SAO or by an
engineering contractor. However, in each instance, the estimate must be reviewed and
approved by Estimating Services Division (ESD/PS&CD), prior to submittal for the Board of
Directors' approval.
Guidelines for ER-estimate preparation are contained in the PS&CD document, Guideline for
the Preparation of ER Estimates. If the criteria that are contained in those guidelines are met,
it is probable that the project will be completed at a total cost within plus or minus 10% of the
ER-estimate value.
Company Estimate
Company estimates are required if there are less than 3 bidders for standard contracts, all
contracts with an anticipated value in excess of SR300,000 can be developed by the
proponent then submitted to PS&CD for review and approval, or PS&CD can prepare the
estimate.
Standard-Contract Estimate
This estimate is a detailed estimate for a specific portion of a project, and it is used to assist
the review team in the evaluation of the validity of contractors' bids. It forms the basis for cost
control and the evaluation of changes to the scope of work that may be required during
contract execution.

Change Order Estimate
A Change Order estimate is developed through use of the same method as is used in the
development of a standard-contract estimate, and it is used to support change-order action
between the Saudi Aramco proponent and the construction contractor. Most of the time,
change orders are handled by lump-sum-work-unit-rates, time rates or reimbursable costs,
which should be in accordance with Schedule 'C' of the main contract agreement. (Module 4
of this course deals with this aspect in detail.)
Short Form Contract Estimate
A Short Form Contract (SFC) is similar to a standard contract, but it has an abbreviated
format designed for prompt in-house use by proponent organizations.
Company estimates that are prepared using detailed drawings and construction specifications.
If the criteria that is described in a later module are met, then there is a high probability that
the work will be completed within plus or minus 10% of the company estimate value.
Company estimates that are prepared by the PS&CD estimating units in SAO; however, if the
cost is expected to be less than SR300,000, then the contract proponent department may
prepare the estimate.

APPLICATION OF SAUDI ARAMCO ESTIMATE ACCURACY, ESCALATION,

COST TRENDS, AND PROJECT CONTINGENCY
Estimate Accuracy
The accuracy of the estimate depends on the type of estimate that is being prepared, the
available information and the time that is devoted to its preparation (refer to Figure 5 & 6):
• A study estimate may have an accuracy of ±40% or greater.
• A budget estimate should be within ±40%.
• An ER estimate should be within ±10%.
• A company estimate will probably have an accuracy of at least +10%.
• A change-order estimate must have an accuracy better than +10%.
Escalation and Cost Trends
Estimates are usually generated in current prices, while the projects are executed in later years
after management approvals and funding. To allow for the cost increases during the planning
period of the project, escalation is added to the base cost, (which is the cost when the estimate
is prepared). Refer to Figure 7 & 8.

Figure 5. Estimate Accuracy

Figure 6. Types of Estimate

Dhahran
E-5350A, Tel: 875-2523
COST TREND FORECAST

IN SUPPORT OF THE SPRING 1993
CAPITAL PROGRAM
DISTRIBUTION
Table I: Expected Annual Cost Trends (%/Year)
Mix 1995 1996 1997 1998 1999

Engineering 13% 2 3 3 4 5
Materials 39% 2 2 3 3 3
Construction 48% 0 1 1 3 4
Composite 2 2 2 3 4
Previous Composite (05/31/92) 3 2 2 2 3
The above trends are applied to known and estimated cost data to forecast total project costs. The Wharton
Econometric Forecasting Model (October 1994 issue) is the technical basis of the currency and source country
price indices. Its impact on Engineering, Material and Construction is calculated based on a percentage split
between foreign and local sources. The results are adjusted, based on knowledge of the local and international
construction market.
Despite wide gyrations during recent months, the basic elements in the outlook for the dollar remain the same.
On a year end basis, the dollar is expected to strengthen against major trading currencies through the end of
1999.
The reduced trend forecast is due to a slower rate of depreciation for the dollar than previously expected and to
a more realistic evaluation of recessionary indicators and market conditions.

Figure 7. Cost Trend Forecast

Cost Trend
and
Escalation
Escalation
Cost
Base Base Cost

Cost
3/1994 3/95 96 97 98 6/99

ERA ERC
Figure 8. Cost Trend and Escalation

Contingency
A contingency is added to the base-cost estimate to provide for unforeseeable costs that may
occur in the execution of the project, as defined in the approved project proposal.
Contingency is intended to cover:
• Labor productivity variances.
• Unknown geographical conditions, such as rock, subka and subsea conditions.
• All contract Change Order activity.
• Increases in miscellaneous costs, such as air freight, camp cost, airfares and
prorates.
Contingency is not intended to cover:
• Variations from the scope, as defined in the approved project proposal.

• Excess cost, as a result of a natural disaster.
• Non-performance by contractors.
The use of contingency included in an estimate is tightly controlled following ER funding and
is not released in an authorization for expenditure. The project manager does not have access
to contingency funds without an approved release of contingency by the appropriate levels of
Project Management. Each release of contingency must be justified.

INTERRELATION AND APPLICATION OF SAUDI ARAMCO CAPITAL

PROGRAM APPROVAL, ERA, AFE, AND ERC
Capital Program Approval
After a project has been included in the Approved Capital Program, preliminary engineering
may commence, leading to the Project Proposal and ER.
TC-68 funds are provided for this purpose, usually 3% of the budget estimate can be allocated
for preliminary engineering in accordance with G.I. 202.451.
Definitions
Expenditure Request Approval (Saudi Aramco Form 56D)
An approved ER is the authority given by EXCOM or the board of directors to commit and
expend company resources for the purchase and construction of a facility. That process is
known as the ERA of the project. Refer to Figure 9.
Authorization for Expenditure (Saudi Aramco Form 6035-A)
The AFE provides approval to an SAPMT to commit and expend funds against funded
projects. An AFE is not required for BI-1900. Refer to Figure 10.
Expenditure Request Completion (ERC)
Expenditure Request is completed when the project construction is completed, and turned
over to proponent and financially closed out.
Performance Acceptance Certificate (PAC) is signed off when the facility has been operating
to the conditions set out in the Project Proposal (Refer to Figure 11). Refer to G.I. 2.710 for
updated information.
As part of the close out procedure the SAPMT engineer will also develop the Final Cost
Report which will be used to update PS&CD data base of estimating procedures. Refer to
procedure AEP-23.

Figure 9. Expenditure Request (Form 56D)

Figure 10. Authorization for Expenditure (Form 6035-A)

PERFORMANCE ACCEPTANCE CERTIFICATE SERVICE DATE
Aramco 7214 (11/81)

B.I. NO. J.O. NO. [ ] PARTIAL COMPLETION
[ ] FINAL COMPLETION
DESCRIPTION:
I hereby certify that the equipment installed on this project has been demonstrated to perform within Aramco standards
and project drawings and specifications.
CONSTRUCTIONAGENCY DATE:
MECHANICAL SERVICES/MAINTENANCE DATE:
OPERATIONS ENGINEERING DEPT. DATE:
II hereby certify that I have witnessed or conducted operating tests demonstrating the operability of the project, that I
have received adequate operating instructions including safety requirements, and that this project conforms to the approved
Expenditure Request and project drawings and specifications except as noted below.
SUPERINTENDENT, OPERATING ORGANIZATION DATE:
EXCEPTIONS:
Original to: Fixed Assets & Work-In-Progress Accounting Department

1st Copy Operating Organization
2nd Copy Construction Agency (N/A Equipment Purchases)
3rd Copy Inspection Department
4th Copy Loss Prevention (N/A Equipment Purchases)
5th Copy Power Systems Oper. Dept.- Chief Power Dispatcher
6th Copy Operations Engineering Department
7th Copy Fixed Assets & Work-In-Progress Accounting Department, immediately after signature by Constr. Agency.
Figure 11. Performance Acceptance Certificate (Form 7214)

ER Approval
An approved ER is the authority to commit and expend the Company’s resources for the
purchase or construction of assets that are necessary to meet the Company’s stated goals and
objectives. While an ER is used primarily for funding capital projects, it is also used as the
authority to fund non-capital projects that serve the Company’s interest. Examples of non-
capital BIs are Saudi Aramco-built government schools, home ownership, community
development, major roads, project management budgets and accounts for capital and non-
capital expenditures.
The ER is a formal request for TC-60 funding of a specific BI, and it is authorized by the
board of directors or EXCOM.
No commitments may be made or expenditures incurred prior to ERA (except for TC-68
funds).
Separate rules apply to master appropriation ERs.

AFE Development
The cost engineer prepares an AFE on Saudi Aramco Form 6035-A. The AFE shows a
breakdown by major cost element (engineering, material and construction) and a contingency
allowance for each JO in the BI.
Contingency allowances are distributed in accordance with decisions that were reached
previously by the SAPMT.
When routing the initial AFE for approval, supporting ER forms that contain the detail
information must be attached. The ER JO phase listing provides a listing of all phases for each
JO and allocated JO funds to each phase by the six cost categories:
• SAPMT engineering
• Contractor engineering
• Direct Charge (DC) material
• SAMS material
• Contract construction
• Saudi Aramco and other construction
The initial package, which usually consists of the AFE, supporting ER forms and a formal
transmittal memorandum, is routed for approval. After approval, the package is sent to
PS&CD's Financial Analysis Unit (FAU), which establishes the JO component phases for the
financial master. FAU maintains the file for all original AFEs and revisions. Upon receipt of
approved AFE form, ER forms, and a construction job order assignment notice from FAU,
Accounting inputs the JO and phase numbers into the financial master. Refer to Figure 12.
Levels of Approval
Less than $50,000,000 Department Manager

Between $50,000,000 and $100,000,000 General Manager
Greater than $100,000,000 Vice President
Movement of funds between ER elements of Engineering, Material, and Construction must be

approved by the Vice President.
The Cost Manual must be used as the reference guide when processing AFE documentation

Figure 12. Construction Job Order Assignment Notice (Form 4258)

APPLICATION OF EXPENDITURE REQUEST (SAUDIARAMCOFORM56D)
Introduction to Saudi Aramco Form 56D
An ER Estimate, which is prepared on Saudi Aramco Form 56D, is a definitive estimate

prepared in support of a request for the approval of funds for a specific BI. Refer to Figure
13.
The control budget for each JO in a BI is based on an ER-estimate detail. When an ER

amount is approved by the board of directors, funds are officially allocated for expenditure.
Funds can be released only through an AFE. The AFE provides authorization to an SAPMT
to make commitments and incur expenditures for detail engineering, material procurement
and construction contracts.
The ER estimate is prepared after the project proposal is approved but, if required by the
schedule, it may be prepared in parallel. In all cases, the minimum criteria must be met to
support the required accuracy of ±10% of final cost.
In addition to Saudi Aramco Form 56D, SAPMT submits to PS&CD a cash-flow forecast for
the BI.
Each ER estimate and cash-flow forecast is reviewed and approved by the SAPMT Project
Manager and Superintendent of ESD, or the Manager of PS&CD before it can be transmitted
to the budget director for presentation to the board of directors for approval.
After the SAPMT project manager endorses Saudi Aramco Form 56D and the ER estimate
amount, he has the overall responsibility for that ER Estimate.
When an ER amount is approved by the board of directors, funds are officially allocated for
that specific BI. An AFE has to be approved before the SAPMT can make commitments or
incur expenditures.

Figure 13. Expenditure Request

Preparation of Saudi Aramco Form 56D
Saudi Aramco Form 56D is part of the ER approval package that is assembled by the Budget
Director, FPD. The SAPMT should ensure that the Form 56D is accurate before it is issued to
PS&CD. Refer to Figure 13.
Form 56D has many cost items that the project proposal contractor may not understand. It is
recommended that the SAPMT personnel review Form 56D thoroughly with the contractor
during its preparation.
Each JO in a BI is estimated separately at phase level on Form 56D. Then, a summary Form
56D is prepared to show all the JO subtotals and the total ER estimate amount.
The number of job orders is dependent on the established project execution plan and structure
of cost control as determined by SAPMT in consultation with PS&CD.
It is important that the data elements are entered in the proper columns on Form 56D, as the
form is the basis for the project's initial budget and cost control. Saudi Aramco's Accounting
Department uses phase codes to summarize and to monitor cost data. Phase codes are also
used for work breakdown structure, and the estimated costs should be developed in detail by
the phase codes to be entered on the 56D. They will be opened in the financial master which
will then be used for cost control and monitoring.
A typical ER estimate is shown in Figure 13. It reflects the basic Saudi Aramco cost structure
that includes the three major cost elements of engineering, material and construction. Each
cost element is subdivided into two cost-categories. Spaces are provided on the form for six
cost-category subtotals (marked A in Figure 18) and three cost element totals (B). Space is
also provided to identify contingency (D) and cost-trend amounts (C). Those contingency
amounts are added to the cost-category subtotals (B). The amounts that are shown for cost
trends are not additive. As noted on the form, those amounts, if any, will have already been
included in (A), and they are for information purposes only.
Contingency, which is included in the ER estimate, is for unforseeable costs that may occur in
the execution of a project, and it would normally be 5% of base cost. Contingency covers
productivity variances, unknown soil conditions, change orders, changes to assumed rates,
and items such as air freight, catering and accommodation, and prorates. Contingency is not
intended to cover scope changes, natural disasters, contractor non-performance and claims.
The SAPMT completes the cash-flow expenditure forecast fields (quarters and year) in terms
of capital and expense.

DEVELOPMENT AND APPLICATION OF SAUDI ARAMCO ESTIMATING

METHODS
Project Strategy and Estimating Method Required
At the initial strategic planning and development stage, when engineering studies are limited
and very little is known about the scope, the use of the capacity-factored method of
conceptual estimating is utilized. After the economic analysis is developed and the proponent
agrees on a specific scheme, a budget estimate can be developed by means of factored
estimating from equipment costs and by using ATEG method. Detailed estimating starts
along with or after the Project Proposal, preliminary engineering. Equipment list along with
quotes and bulk material quantities are furnished to an PS&CD estimating group in
preparation for the ER estimate. Detailed estimating is also used when a company estimate is
required.
Capacity-Factored Estimating Method
Also called capacity exponent method, this method is based on the known capital cost for the
same process, but it is of a different capacity.
For ease of development, it can be expressed as the following equation:
n
A2
C2=C1
A1
Where C1 = Historical capital cost

C2 = Proposed capital cost
A1 = Historical capacity
A2 = Proposed capacity
n = Variable
The exponent n is purely empirical and is based on historic cost data of capital projects. It is a
“rule of thumb” method and is recommended only when data is not available.

Example:
A new 40,000 bbl cone roof tank is required.

Recent 20,000 bbl cone roof tank cost $162,000.
Using the above equation developed the price for the 40,000 bbl unit.
C1 = $162,000
A1 = 20,000
A2 = 40,000
n = 0.6
0.6
 40,000 
C2 = $162,000
20,000 
C2 = $162,000(2)0.6 = $245,546
This estimating method requires a high contingency because of the limited design information
that is available at that time.
Factored Estimates From Equipment Cost Method
This estimating method is based on the premise that the total installed cost of a specific
equipment item is directly related to the delivered price of that equipment item.
The method assumes an individual equipment module cost that includes the following:
• All bulk materials

• Direct and indirect construction labor
• Field supervision
• Home office cost
• Saudi Aramco prorates
Modular costs can be reasonably estimated by using a set of multipliers that are specially
formulated for each equipment category. The sum of the installed equipment module costs
then becomes the total installed cost of a defined process unit.

Example:
A new 550,000 bbl floating roof tank is required.
Material cost is $2,400,000
Installation cost = 1.66 x $2,400,000 = 3,999,999
Total cost = Material cost + Installation cost
$2,400,000 = $4,000,000 = $6,400,000
Installation cost factor (1.666) has been developed by using historical data from
previous projects.
Since the preliminary conceptual estimate pertains to a processing facility that might be
constructed sometime in the future, equipment costs must be escalated to the time when the
equipment will be ordered.
Detailed Estimating Method
Also called definitive estimating method, this method is based on drawings, specifications,
equipment lists and layouts, buildings, structures, piping runs, and many other design items
that have been prepared from scale drawings.
Unit costs from up-to-date vendor quotations and current price lists are used to determine
estimated field material costs.
Labor productivity, crew mixes and production rates for performing the various field labor
tasks that must be accomplished to assemble and install the equipment are developed from
Saudi Aramco data bases.
The detailed estimating technique is the most accurate estimating method but it is time
consuming and expensive. As a result, the definitive estimate is usually prepared only once,
and only for those projects that have been given prior approval from management.

PS&CD ORGANIZATION AND RESPONSIBILITIES
PS&CD Estimating Clients
ESTIMATE
TYPE CLIENT
Study Proponent or FPD
Budget Proponent or FPD
ER SAPMT
Proponent or FPD.
Company Project Management Team (PMT)
Contracting Department
PS&CD Estimating Responsibilities and Mandates
The PS&CD is responsible for providing project controls and construction support services to
project management in support of the capital program in the following areas (refer to Figure
14):
• Estimating services, from conceptual application through funding and contract-

level requirements.
• The maintenance of standard estimating methods, procedures and an historical

estimating database.
• Participation in setting out Saudi Aramco ER estimate preparation (the

backbone of capital projects) by providing basic information to the engineering
contractor early in the project-proposal phase.
• The review and endorsement of all ER estimates that are prepared by SAPMT
or engineering contractors.
• The development, when requested, of ER estimates for ERA in support of the

capital program and capital budget.
• Preparation of study and budget estimates that are required for strategic
planning, economic analysis, for long-term capital programs and capital
budgeting.
• Preparation of the company estimate, which is required during the selection of

construction contractors when there are less than four bids.
• Preparation of or concurrence with Change Order estimates over SR300,000.

• The updating and maintaining of all estimating procedures and manuals.
• The development and maintenance of training programs for new Saudi Arab
graduates and new hires.
Figure 14. PS&CD Organizational Chart

Support Functions
PMT cost engineers have a close interface with the Estimating Services Division (ESD) in
PS&CD whose primary responsibility is to provide estimating support. In addition, the
Project Controls Division (PCD) in PS&CD provides cost engineering planning and
scheduling support.
PS&CD SUPPORT FUNCTIONS

ACTIVITY DIVISION
ESTIMATING
Budget estimates Assists cost engineers in preparing budget estimates for Saudi ARamco's five-year capital
program.
ER estimate Works with cost engineers in preparing ER estimates.
Company estimate Prepares Company estimates for evaluating contract awards, amendments and change orders.
Develops and monitors historical costs and updates and maintains the estimating data base.
Historical data
COST ENGINEERING
Recruits and trains cost engineers for assignment to SAPMTs.

Training
Distributes cost and related reports to the SAPMTs.
Cost reports
Develops, implements and interprets cost control procedures and manuals for application to the
Procedures and manuals engineering and construction of capital projects.
Does financial and status analysis of capital projects and prepares quarterly variance reports.
Analysis and reporting
Prepares a monthly newsletter that covers the latest developments of interests to SAPMTs/cost
Cost engineering newsletter engineers.
Assists SAPMTs in resolving cost-engineering problems.
PLANNING/SCHEDULING
Support
Recruits and trains planning/scheduling engineers for assignment to SAPMTs.
Training
Developes, implements and interprets planning/scheduling procedures and manuals for
Procedures and manuals application to the engineering and construction of capital projects. (The Saudi Aramco
Planning/Scheduling Manual has related information that complements this manual.)
Assists in developing project execution plans and summary-level project schedules and provides
Planning/scheduling planning and scheduling services through computerized systems.
Support functions for Out-of-Kingdom (OOK) activities at the Aramco Services Company
(ASC), Houston, and the Aramco Overseas Company (AOC), Leiden, utilize Saudi Arabian
Organization (SAO), Dhahran, personnel or OOK personnel, if available. For many projects
in their early life cycles, when design and procurement efforts are intense, the OOK
supporting activities are of major importance.

PS&CD ESTIMATE REVIEW AND APPROVAL CYCLE
PS&CD ensures that all ER estimates prepared by engineering contractors and submitted for
endorsement prior to ERA, can be used as a basis for project cost control.
Preliminary Review
The PS&CD unit supervisor or his designated representative conducts a comprehensive

review of the estimate package.
The completed ER-estimate package must be submitted to the supervisor of the estimating
unit three weeks prior to the required submittal date to the budget director. Depending on the
level of PS&CD involvement in developing the estimate, that time may be reduced.
Final Review
The PS&CD unit supervisor is responsible for arranging and coordinating the final review
meeting.
Attendees
The estimating unit supervisor chairs the meeting to which the following individuals are
invited:
• Manager, PS&CD
• Superintendent, Cost Services Division
• Project Department or Project Management representative(s)
• Assigned PS&CD estimators involved
• Others, as required
Review Package
The following item copies are provided to the attendees at least one day, prior to the final
review meeting (refer to Figure 15a to 15h):
• Completed 56D sheets

• Original budget brief
• BI supporting information (BISI)
• ER brief
Basis of estimate and detail backup will be available for reference at meetings.

Figure 15A. BI-3285 ER - Job Order Phase Listing

TITLE |PROPONENT |B.I. NO.

UPGRADE NORTHERN AREA WIDEBAND|COMP. COMM. & OFF. |
SYSTEMS |SYS., |3285
|PROGRAM
|INDUSTRIAL SUPPORT
This budget item provides for the upgrade of the Northern Area microwave and fiber optic
communications systems.
Presently, Saudi Aramco utilizes microwave radio and fiber optic systems for telephone and data
communications between the operating areas in the Northern Area. Several microwave links in these
systems are at or near capacity. The equipment utilized in many of the microwave systems is over 15
years old and is no longer supported by its manufacturer. One of these systems is a major
communications route between Dhahran and Ras Tanura which carries telephone and data
communications to the main industrial centers in the Northern Area through which 87 percent of Saudi
Aramco's products flow. Seventy-eight percent of the existing microwave links are analog and cannot
meet the increasing demand for digital transmission. The existing fiber optic system between Dhahran
and Tanajib is operating at capacity and utilizes equipment that is no longer manufactured.
It is proposed to upgrade the wideband backbone capacity to the Northern Area by replacing obsolete
multimode fiber optic system between Dhahran and Ras Tanura with a higher capacity and more easily
maintained single mode fiber optic system and extending the fiber optic system from Tanajib to Safaniya.
The existing multimode system from Ju'aymah to Tanajib will be expanded through the reuse of excess
electronics recovered on ER-3290, Upgrade SA Wideband Systems, and routes south of Ras Tanura. This
option allows the deferal of approximately $11,000,000 of capital expenditures for approximately four
years. Also, the secondary microwave networks serving facilities in the Northern Area will be upgraded
and reconfigured with digital radio equipment, thus decreasing maintenance and increasing reliability and
data transmission capabilities. Three new cooled shelters will replace existing uncooled shelters between
Qaisumah and Safaniya to extend the life of the radio equipment.
The primary justification of this budget item is to provide traffic carrying capacity to handle increased
requirements, anticipated through forecasting historical growth of existing services, and adding capacity
for new services. This forecast shows the primary backbone traffic increasing by over 50 percent between
1993 and 1997. The capacity of the new systems provided by this Budget Item will be sufficient through
the year 2005, except on the deferred Ju'aymah to Tanajib link where a future project is under
development. Additionally, this budget item will provide reliable communications for Company
operations through the timely replacement of communications equipment as it reaches the end of its useful
life and has become difficult and expensive to maintain.
The alternative of replacing the multimode fiber optic system from Dhahran to Tanajib was rejected due
to its higher cost. The use of recovered multimode fiber optic equipment to delay the $11,000,000
expansion cost, provided a better economical alternative while still meeting the projected Corporate
communications requirements.
No additional manpower is required as a result of this budget item. Net direct expenditures will decrease
by an estimated $200,000.
Figure 15B. BI-3285 ER Brief

TITLE PROPONENT B.I. NO.
COMP. COMM. & OFF. SYS. 3285

PROGRAM
INDUSTRIAL SUPPORT
The total cost of $38,000,000 includes $500,000 of expense for building improvements. The remaining
book value of the existing Dhahran to Ras Tanura multimode fiber optic system, which will be abandoned
in place, is $1,235,000 and will be charged to expense.
APPROVED BY BOARD OF DIRECTORS

NOVEMBER 10, 1992
M. Z. IRAANI
CONTROLLER
PRIMARY JUSTIFICATION DCFRO ERA ERC TOTAL B.I.

R COST
OPERATIONAL REQUIREMENT 11/92 2/95 $38,000
EXPENDITURE SCHEDULE
1992 & PRIOR 1993 1994 1995 1996 SUBSEQUENT YEARS
$2,500 $12,800 $16,100 $6,600
1993 CAPITAL BUDGET
FUNDS APPROVED FOR APPROVAL TOTAL
PRIOR YEARS NOVEMBER 1993 BUDGET B.I. NO.
$38,000 $38,000 3285
Figure 15C. BI-3285 ER Approval

BUDGET ITEM SUPPORTING INFORMATION

BI-3285: UPGRADE NORTHERN AREA WIDEBAND SYSTEMS
BACKGROUND/PRESENT SITUATION
Presently, the Saudi Aramco Northern Area wideband communications systems consist of backbone
systems connecting Dhahran, Ju'aymah, Ras Tanura, Safaniya and Tanajib and a number of
secondary microwave systems serving the Gas Plants, Refinery, Terminals and other Saudi
Aramco facilities in the Nothern Area through which approximately 87 percent of Saudi Aramco's
products flow.
One of the the microwave systems on the backbone has been in service for over 15 years, and its
radios are no longer being supported by the manufacturer. Equipment maintenance is increasing,
and system reliability is decreasing. Several communication links are at or near capacity and
some of the present backbone systems are not capable of handling the high speed data
requirements projected for the 1995 time frame. The backbone multimode fiber optic system
from Dhahran to Tanajib uses outdated technology and is no longer supported by the manufacturer.
The secondary communications systems in the Northern Area are essentially configured without
alternate routing capabilities. Some links have analog radio equipment that is over 15 years old
and no longer supported by the manufacturer. This is leading to increased maintenance and
decreased reliability. In addition, some of the links are at or near capacity.
PROPOSED SCOPE
It is proposed to eliminate all microwave radios older than 15 years in the Northern Area by either
direct replacement or by system reconfiguration. The system reconfiguration will provide multiple
routes to many areas for alternate service and will delete or replace 28 existing analog microwave
links. Equipment will be added to provide additional channel capacity. Cross-connect equipment
will be installed to enhance the alternate routing capability of the system. An interconnection for
alternate routing will be provided.
This project will provide additional fiber optic system capacity between Dhahran and Safaniya.
This will be accomplished by: 1) replacing the existing obsolete fiber optic system between
Dhahran and Ras Tanura, 2) utilizing recovered multimode fiber optic equipment to increase the
capacity between Ju'aymah and Tanajib, and 3) installing a new fiber optic system between
Tanajib and Safaniya.
Three new cooled shelters will replace existing uncolled shelters between Qaisumah and Safaniya
to extend the life of the radio equipment. The existing uncooled shelters are open to the
atmosphere and cannot be upgraded to cooled shelters.
JUSTIFICATION
The primary justification for this budget item is to provide the long term, modern, reliable
communications required by Company operations. This project is required in order to replace
obsolete equipment, (over 15 years old and not supported by the manufacturer,) and address
system capacity, (backbone forecast increases are shown in Appendix III,) and reliability concerns.
Figure 15D. BI-3285 Budget Item Supporting Information (1 of 5)

BI-3285: UPGRADE NORTHERN AREA WIDEBAND SYSTEMS BISI: 2 of 5
RELATED BUDGET ITEMS

This budget item is supportive of:
ER-3283, Improve Terminal Communications

ER-3290, Upgrade Southern Area Wideband Systems
BI-3291, Upgrade East/West Wideband Systems
BI-3302, Fiber Optic Cabling - District Offices
ALTERNATIVES
The alternative of doing nothing and retaining the existing systems was rejected because the
systems in place would not be able to address current and future data and voice requirements.
Also, it would result in increased maintenance cost and decreased system availability.
The alternative of replacing the entire multimode system from Dhahran to Tanajib was rejected
due to a higher life-cycle cost. The section between Ju'aymah and Tanajib will be replaced
approximately four years after this Budget Item, resulting in a cost deferral of approximately
$11,000,000. This Budget Item covers the basic capacity and service requirements during the
deferral and does not require the purchase of a large amount of obsolete equipment.
The alternative of not replacing any of the multimode fiber optics was rejected with its capital cost
deferral of approximately $4,000,000 due to its higher life cycle cost and its requirement to purchase
a large amount of obsolete fiber optic equipment.
SENSITIVITIES AND RISKS

This project is sensitive to EXPEC, security and medical data transmission requirements. The
single mode fiber installed under this project will support future EXPEC and othe forecasted
company growth by installing the appropriate fiber optic electronics at the time these requirements
are defined. However, if the EXPEC requirements increase too rapidly, the reused multimode
fiber equipment between Ju'aymah and Tanajib may have to be replaced at an earlier date.
AREAS OF CONCERN
This project is dependent on the release of surplus multimode electronics from ER-3290,
Upgrade Southern Area Wideband Systems. If ER-3290 incurs substantial delays, the fiber
portion of BI-3285 will also have to be delayed.
SUMMARY OF ATTACHMENT
I. Schedule and Financial Summary
II. Proposed Northern Area Wideband Backbone
III. Backbone Capacities
Figure 15E. BI-3285 Budget Item Supporting Information (2 of 5)

ATTACHMENT I
SCHEDULE AND FINANCIAL SUMMARY
SCHEDULE
A summary of major milestones achieved to date include:
DBSP Approved February 1991

Project Proposal Approved September 1992
The February 1995 ERC is predicated on meeting the following milestones:
ERA November 1992

Detailed Design Start December 1992
Construction Start November 1993
System Testing Complete January 1995
ERC February 1995
FINANCIAL ANALYSIS (Thousands of Dollars)
TC-68 Funds Approved: $1,968
TOTAL COST ER PERCENT

PROJECTBASE TRENDS CONTINGENCY ESTIMATE OF TOTAL
Engineering 6,302 70 428 6,800 18
Materials 15,451 149 1,600 17,200 45
Construction 11,618 1,127 1,255 14,000 37
Total $33,371 $1,346 $3,283 $38,000 100
VARIANCE BETWEEN BUDGET ESTIMATE AND ER ESTIMATE
Addition of single mode fiber optics Dhahran to Ras Tanura $4,800,000.
Addition of digital cross-connect equipment & network management system $2,800,000.
Upgrade microwave to meet standards and add capacity $2,200,000.
Minor increases and decreases -$1,300,000.
Upgrade DC power at communications sites $1,800,000.
SSD enhancements and drawing updates $ 700,000.
SDH fiber optic equipment $3,000,000.
Total Variance $14,000,000.
Figure 15F. BI-3285 Budget Item Supporting Information (3 of 5)

ATTACHMENT II
PROPOSED NORTHERN AREA WIDEBAND BACKBONE
Figure 15G. BI-3285 Budget Item Supporting Information (4 of 5)

ATTACHMENT III
BACKBONE CAPACITY
Dhahran - Ju'aymah 1993 1997
Capacity / Traffic / $ Fill Capacity / Traffic / $ Fill
3,870 / 2,835 / = 73% 8,640 / 4,440 / = 51%
Present Backbone is a Future Backbone will be

combination of Multimode Single Mode Fiber Optics
Fiber Optics, Analog and and Digital Microwave.
Digital Microwave.
• Increase in Capacity is = 123%.

• Increase in Traffic is = 57%.
× Capacity will increase faster than Traffic.

× The Backbone will be adequate through 1997.
Ju'aymah - Tanajib 1993 1997
Capacity / Traffic / $ Fill Capacity / Traffic / $ Fill
3,210 / 2,730 / = 85% 6,720 / 4,320 / = 64%
Present Backbone is a Future Backbone will be

combination of Analog and Multimode Fiber Optics
Digital Microwave. and Digital Microwave.
• Increase in Capacity is = 110%.

• Increase in Traffic is = 58%.
× Capacity will increase faster than Traffic.

× The Backbone will be adequate through 1997.
Figure 15H. BI-3285 Budget Item Supporting Information (5 of 5)

DEVELOPMENT, ADMINISTRATION AND APPLICATION OF SAUDI ARAMCO

MISCELLANEOUS CAPITAL PROJECTS BI-1900
Miscellaneous Capital Projects (BI-1900)
Capital projects having an estimated cost of less than US$2,000,000, of which the capital
portion is US$10,000 or more of the total cost, are considered to be miscellaneous capital
projects (BI-1900). Funding procedures for those projects differ from the procedures for
funding regular BIs. Refer to Figure 16.
The Management Committee is responsible for recommending to the Chief Executive Officer
[CEO] an allocation of BI-1900 funds. The CEO, on request from an administrative area,
issues a letter that formally allocates BI-1900 funds to that area. The Management Committee
can also review requests for additional allocations of BI funds from unallocated funds that are
controlled by the CEO.
There are two methods of ER release for BI funds:
• BI-1900 Project - (from US$70,001 to US$2,000,000) ER release has to be

reported individually and which requires the standard ER form. Refer to
Figures 17A through 17J.
• BI-1900 MAMI - (US$10,001 to US$70,000) ER releases are used for very low
value projects and are approved in total. The appropriate signatory level
approves purchase requisitions and work orders. The allocations are monitored
by Fixed Assets and Work-in-Progress Accounting Department (FA &
WIPAD).
Projects ranging from US$10,001 to US$70,000 are termed monthly appropriations

miscellaneous items (MAMI).
Projects consisting of capital cost do not require a formal expenditure request. They are
reported monthly, in total, by each applicable business line.
Development of BI-1900 ER Package
There are three ranges of BI-1900 funding approval/development.
$70,000 or less Low value, developed by project team

$70,000 tp $500,000 Project team with PS&CD involvement
$500,000 and above FPD and PS&CD full involvement
When developing a BI-1900 project G.I. 20.620 must be used as the reference documents.

PS&CD
FIGURE 16. Development of BI-1900 ER Package

EXPENDITURE REQUEST ARABIAN AMERICAN SEE G.I. 20.500-4 FOR USE AND Date
OIL COMPANY PREPARATION 26 June 1990
Aramco 56 (4/84)
PROJECT Engineering Plant Number
TITLE PURCHASE HIGH PRESSURE WATER CUTTING UNIT FOR
NSD
PROJECT BRIEF
PROPOSAL: Purchase a self-contained portable high pressure water/abrasive cutting unit.
PRESENT SITUATION: Abrasive disk cutting wheels, grinders, air-arc and oxy-acetylene
flames are used to cut old tubes on alrge heat exchangers to extract and have baffles and tube
sheets for rebuilding/retubing exchangers. Eye hazards, long manhours and difficult operation
extends turnaround times greatly.
JUSTIFICATION:
1. Improved safety as flying hot metal particles, detonation of trapped gases or

liquids, arc spatter and hot metal fragments would be eliminated by the cold water,
sparkless abrasive cutting method.
2. Reduced turnaround of 8 days per job and reduced labor of 68M-H/job to rebuild
35 large heat exchangers per year (annual savings $42,000).
3. Reduced material costs as abrasive disks, gas and arc electrodes would not be
consumed. Water and low cost abrasive instead to be used (annual savings
$39,000).
Note: Total annual savings (42,000 + 39,000) = $81,000, payback is expected to be 3

years.
ALTERNATIVE:
1. Continue to do the tube cutting by the present labor intensive and hazardous
method.
2. Contract out of the work.
HAZARDS: The water pressure never exceeds 3000 psig, however, high velocity
abrasives must be controlled with fixtures provided and trained personnel. The blast
effect poses no uncontrollable environmental hazards. Glass, sand or other
environmentally acceptable abrasives can be used. Minimal personnel protection
required. Unit has 5 automatic shutdown modes.
(Continued on Page 2)

Figure 17A. ER - Project Brief (Form 56) (1 of 2)

EXPENDITURE REQUEST ARABIAN AMERICAN SEE G.I. 20.500-4 FOR USE AND Date
OIL COMPANY PREPARATION
Aramco 56 (4/84)
TITLE
PROJECT BRIEF
Page 2
COMPLETION DATE: JANUARY 25, 1991
BUDGET REF NO:
Budget Ref: 42.31.........................................................$150,000

Transfer From Budget Ref: 42.34.......................... 75,000
Transfer From Budget................................................... 18,000
Total......................................................................................$243,000
CHARGE Capital Expense Expense Account Total Cost Prev. Approved Amt. this Request
DATA (If Applicable)
$243,000 - $243,000 - $243,000
BUDGET Budget Year and Title Item No. Amount
DATA
1990 MISCELLANEOUS CAPITAL BUDGET BI-1900 $243,000
Proponent Department Originator's Name Phone No.
MECHANICAL SERVICES SHOPS/NORTHERN SHOPS R.L. BANTA 873-4118
DIV.
Recommended Date Recommended-Management Date
Committee
BED BRIAN E. DUNLOY
Recommended Date Approved-Company Date
AAK A.A. AL KHALIFA
Recommended Date S.A. AL ASHGAR Date
Senior Vice President
AJG Operations Services
Recommended Date Approved- Executive Committee Date
Board of Directors
SVC
Recommended Date Date
JAM
Recommended Date Date
SAH
Recommended Date ER No. Job No.(s)
Figure 17B. ER - Project Brief (Form 56) (2 of 2)

Figure 17C. Expenditure Request (Form 56D)

BI-1900 MATERIAL COST ESTIMATE WORKSHEET

For MAMI Items and Projects Under $500M
FPD Budget Ref No.:
Cost Estimate Worksheet Line Item No.:
Prepare a separate MATERIAL COST ESTIMATE TYPE & SOURCE OF MATERIAL**

WORKSHEET for each Line Item on Part 1 of 2 DC DC LDOR AMS
AOC/ASC SAO/PD SAO/PD Stock
A: Estimated Weight of Shipment (lbs) 10505
B: Estimated Volume of Shipment (Cu Ft) 680

10' X 8' X 8 1/2 = 680 Ft 3
C: Supplier's Invoice Cost, FOB POE* $ 186500 $ $
OR AMS Catalog Price $
D: Materials Handling Rates (ASC/AOC)

1. Procurement Charge: 4$ of Line C $ 7460
2. Traffic Charges:
a. Air Shipments (0.31 x Line A) OR $ 561 $ NOTE:
b. Boat Shipments ($61/Shp Advice)(*)
Estimate Inland Freight= $500 These charges
3. Export Pkg Charge: ($1.15 x Line B)(*) $ 782 $ apply ONLY to
material purchased by
E: Shipping Charges SAO PD for OOK
1. AIR From USA ($1.13 x Line A) delivery, and DO NOT
AIR From Europe ($0.65 x Line A)(*) $ $ apply if material is
OR purchased through
2. BOAT From USA ($154.00 x Rev Ton)*** SAO PD for direct
From Europe ($81.10xRev Ton)***(*) $ 1379 $ delivery to the Dhahran
Storehouse
F: Customs Charges
Custom Duty Rate_____% x Line C $ $
(Per MSO Standardization 875-4131)
G: Total Landed Cost (Lines C thru F) $196682 $ $ $
H: Materials Overhead Rate

1. 12% of Line G for DC Materials $ 23601 $
2. 6% of Line G for LDOR Materials $
3. 32% of Line G for AMS Materials $
I: Materials Cost From Each Source (Lines G+H) $ 220284 $ $ $
J: Total Materials Cost from all Sources $ 220284

(Total of Line I Entries, and enter in Column 2 of Part I)
(*) DENOTES CHANGES.
* If supplier's price is ex-works, add estimated inland freight to get POE price.
** Boxes include which charges must be applied to each type and source of material: complete only those
portions applicable to the expected source of materials.
*** Rev Ton (Revenue Ton) = 2240 lbs or equivalent to 40 Cubic Feet of volume, use whichever gives the higher
value.
NOTE: For further details regarding various rates refer to the latest issue of GI 216.965-1
Figure 17D. BI-1900 Material Cost Estimate Worksheet

Figure 17E. Construction Job Order Assignment Notice (Form 4258)

MECHANICAL COMPLETION CERTIFICATE Date Prepared: Service Date:

Aramco 7213 (4/88) 2/15/92 12/31/91
B.I. No. J.O. No. Proponent Org. Code [ ] PARTIAL COMPLETION
1900 60-67212 758-716 [X] FINAL COMPLETION
DESCRIPTION:
PURCHASE HIGH PRESSURE WATER CUTTING MACHINE FOR HEX SHOP - NSD
I HEEREBY CERTIFY THAT THIS PROJECT, OR PORTION THEREOF, HAS BEEN COMPLETED IN ACCORDANCE WITH THE
APPROVED EXPENDITURE REQUEST, PROJECT DRAWINGS, AND SPECIFICATIONS EXCEPT AS NOTED BELOW:
Construction Agency Phone No. Date:

Name N/A Signature
Mechanical Svcs.Maintenance Phone No. Date:
Name N/A Signature
I HEREBY CERTIFY THAT I HAVE INSPECTED THIS PROJECT AND THAT IT COMPLIES WITH ALL APPLICABLE SAFETY AND
FIRE PROTECTION REQUIREMENTS EXCEPT AS NOTED BELOW:
Loss Prevention Engineer Phone No. Date:

Name N/A Signature
Loss Prevention Engineer Phone No. Date:
Name N/A Signature
I HEREBY CERTIFY THAT ON BEHALF OF THE INSPECTION DEPARTMENT THAT I HAVE INSPECTED THIS PROJECT, THAT ALL
MATERIALS MEET APPLICABLE ARAMCO STANDARDS, AND THAT FACILITIES ARE CONSTRUCTED IN AGREEMENT WITH
DESIGN AND ENGINEERING SPECIFICATIONS.
Chief Proj. Inspection Engineer Phone No. Date:

Name N/A Signature
I HEREBY CERTIFY THAT ON BEHALF OF POWER SYSTEMS OPERATIONS DEPARTMENT THAT THE FACILITY SUBSTATION
HAS BEEN CHECKED AND THAT IT IS BASICALLY A SOUND INSTALLATION. IT CAN BE ENERGIZED WITHOUT HAZARD TO
THE POWER.
Supt. Area Power Operations Division Phone No. Date:

Name N/A Signature
I HEREBY CERTIFY THAT I HAVE WITNESSED OR CONDUCTED TESTS DEMONSTRATING THAT THIS PROJECT IS
MECHANICALLY COMPLETE AND READY FOR START-UP, THAT I HAVE RECEIVED ADEQUATE OPERATIONG INSTRUCTIONS
INCLUDING SAFETY REQUIREMENTS, AND THAT THIS PROJECT CONFORMS TO THE APPROVED EXPENDITURE REQUEST AND
PROJECT DRAWINGS AND SPECIFICATIONS EXCEPT AS NOTED BELOW.
Superintendent, Proponent Organization Phone No. Date:

Name F.M. AL. SHAWAN Signature
EXCEPTIONS:
Original to: Fixed Assets & Work-in-Progress Accounting Department

1st Copy Proponent Organization
2nd Copy Construction Agency (N/A Equipment Purchases)
3rd Copy Inspection Department
4th Copy Loss Prevention (N/A Equipment Purchases)
5th Copy Power Systems Oper. Dept. - Chief Power Dispatcher
6th Copy Operations Engineering Department
NOTES: FOR EQUIPMENT PURCHASE JOB ORDERS ONLY THE SUPERINTENDENT, PROPONENT ORGANIZATION
SIGNATURE REQUIRED. SERVICE DATE IS DATE WHEN THE PROJECT IS READY FOR START-UP.
Figure 17F. BI-1900 Mechanical Completion Certificate (Form 7213)

Figure 17G. Job/Well Closing Report (Form 903)

Figure 17H. New Asset Record Transaction Entry Form (Form 9032)

Figure 17I. Monthly Subledger for Type Code

BI 1900 STATUS REPORT AS OF JULY 10, 1990

(IN THOUSAND OF DOLLARS)
TOTAL FUNDS
1990 YEAR-TO REQUESTED REMAINING
BUDGET DATE PENDING THIS BI-1900
BUSINESS LINE ALLOCATIO RELEASES APPROVAL RELEASE FUNDS
N
EXPLORATION & 4,100 1,547 2,553

PRODUCING
MANUFACTURING SUPPLY 9,500 4,244 1,648 3,608

& TRANSPORTATION
ENGINEERING & PROJECT 2,300 1,661 639

MGMT.
OPERATIONS SERVICES 5,100 2,427 164 243 2,266
INDUSTRIAL RELATIONS 1,400 276 1,124
ADMINISTRATIVE & 1,400 201 1,199

GENERAL
MANAGEMENT 6,200 6,200

COMMITTEE
UNALLOCATED FUNDS
TOTAL AS OF JULY 10, 1990 30,000 10,356 1,812 243 17,589
FINANCE - PROGRAMS, FORECAST

AND ANALYSIS DEPARTMENT
RELEASE NO. 51

Figure 17J. BI-1900 Status Report

Projects with capital costs less than US$10,000 are considered as expense and are included in
the net direct expenditure (NDE) budget.
An overrun on a BI-1900 project is approved by any of the following alternatives:
• ER supplement
• Overrun letter
• Approval of Saudi Aramco Form 903 signed by the original approving
authority (Refer to Figure 17G)
Summary (BI-1900)
Based on the estimated capital cost of the project, capital projects fall into three categories:
• Major projects greater than US$2,000,000

• BI-1900 projects from US$70,001 to US$2,000,000
• BI-1900 MAMI from US$10,001 to US$70,000
The main difference between a major capital project and a BI-1900 project is that a BI-1900
project does not require a formal DBSP, or project proposal. However, for BI-1900 projects
with a capital cost of greater than US$500,000 that require Facilities Planning Department
(FPD) review, a design basis must be established for the project and sufficient preliminary
engineering work must be done to satisfy the requirements of PS&CD, before an ER quality
cost estimate can be generated.
Refer to Figure 18 and 19 for clarification on completing ER 56 Expenditure Request.

EXPENDITURE REQUEST SAUDI ARABIAN SEE G.I. 20.500-4 FOR USE AND Date
Saudi Aramco 56 (12/89) PREPARATION
OIL COMPANY
TITLE BI-1900 QUICK REFERENCE: ORIGINAL
RELEASE
PROJECT BRIEF
BLOCK# DESCRIPTION/COMMENTS
1. Capital portion of the project/purchase funded by BI-1900.

2. Expense portion of the project/purchase funded by Proponent Net Direct Expenditures.
3. Expense Account to be charged for the expense portion of the project/purchase shown in Block 2.
4. Total Cost = Capital (Block 1) + Expense (Block 2)
5. Used for Supplement and Full or Partial Cancellation releases. Please refer to "BI-1900 Quick
Reference: Supplement or Cancellation" for instructions and description.
6. This is the Capital (Block 1) amount. Remember, if Total Cost (Block 4) > $500,000:
A Form 56D endorsed by Resources Planning Dept. and either the assigned Construction Agency or
the Proponent (if no Const. Agcy. assigned) is required.
FPD must review the scope, estimate, economic justification and environmental impact of the
release.
7. If this project/purchase appeared in FPD's beginning-of-the-year listing of Miscellaneous Capital
Items, show the number they assigned.
If this project/purchase is in addition to that listing, show "NEW". Also, place a statement in the
release text that the Proponent has or will reprioritize the items in FPD's listing to accommodate the
new work.
8. The budget amount shown in the FPD list. Leave this blank for "NEW" projects/purchases.
9. Give a contact person's name and phone number in case of questions or problems.
10. Capital Programs should review the release just prior to submission for final approval.
Revision 1 (March 1, 1993)

CHARGE Capital Expense Expense Account Total Cost Prev. Approved Amt. this Request
DATA 1 2 (If Applicable) 3 4 5 6
BUDGET Budget Year and Title Item No. Amount
DATA 199X BI-1900 Miscellaneous Capital Items 7 8
Proponent Department Originator's Name Phone No.
9
Recommended Date Recommended-Management Committee Date
Recommended Date Approved-Company Management Date

10
Recommended Date
Recommended Date Approved - Executive Committee Date

- Board of Directors
Recommended Date
Recommended Date
Recommended Date ER No. Job No.(s)

Figure 18. Expenditure Request (56D)

Figure 19. Highlights

GLOSSARY
ACE Saudi Aramco Cost Estimating Manual

AFE Authorization for Expenditure
ATEG Saudi Aramco Technical Estimating Guide
BI Budget Item
BISI Budget Item Summary Information
CE Chemical Engineering
CEO Chief Executive Officer
ESD Estimating Services Division
DBSP Design Basis Scoping Paper
DC Direct Charge Material
ENR Engineering News Record
ER Expenditure Request
ERA Expenditure Request Approval Date
ERC Expenditure Request Completion Date
EXCOM Executive Committee
FA&WIPA Fixed Assets and Work-In-Progress Accounting Department
D
FAU Financial Analysis Unit
FPD Facilities Planning Department
JO Job Order
MAMI Monthly Appropriations Miscellaneous Items
MANCOM Management Committee
NDE Net Direct Expenditure
PAC Planning Advisory Committee
PAER Prior Approval Expenditure Request
PMT Project Management Team
PS&CD Project Support & Controls Department
SAMS Saudi Aramco Material Supply
SAO Saudi Arabian Operations
SAPMT Saudi Aramco Project Management Team
SFC Short Form Contract
TC Type Code

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Engineering Encyclopedia

Saudi Aramco DeskTop Standards

APPLICATION OF SAUDI ARAMCO ESTIMATES ........................................... 1

Saudi Aramco DeskTop Standards

DEVELOPMENT AND APPLICATION OF SAUDI ARAMCO

Saudi Aramco DeskTop Standards

APPLICATION OF SAUDI ARAMCO ESTIMATES

Saudi Aramco DeskTop Standards 1

FILL IN COMPLETE ALL APPLICABLE Estimating Control No.

SUBJECT MATTER OR TITLE:

NUMBER CONTROL ESTIMATE

BUDGET ITEM NO. ER/ER SUPPLEMENT

JOB ORDER NO. COMPANY ESTIMATES*

CONCEPTUAL ESTIMATE NEW CONTRACT NO.__________________________________

CONTRACT CHANGE ORDER NOS.___________________FOR

SCHEDULE "B" OF CONTRACT* OR SCOPE OF WORK

SCHEDULE "C" OF CONTRACT*

APPROPRIATE CONSTRUCTION AGENCY'S CHECKLIST, FORM SAUDI ARAMCO 5759, A, C OR D

DRAWING AND/OR SCKETCHES o MATERIAL LISTS o

JOB EXPLANATION MEETING* DATE_________________ PLACE_____________________________________ TIME_________________

Requested by: Telephone: Department: Date:

Address: Charge No.

*Required for Company Estimate

Saudi Aramco DeskTop Standards 2

Figure 4. Estimate Cover Sheet (Form 6529)

Saudi Aramco DeskTop Standards 3

Expenditure Request Estimate

Saudi Aramco DeskTop Standards 4

Change Order Estimate

Short Form Contract Estimate

Saudi Aramco DeskTop Standards 5

APPLICATION OF SAUDI ARAMCO ESTIMATE ACCURACY, ESCALATION,

• A study estimate may have an accuracy of ±40% or greater.

• A budget estimate should be within ±40%.

• An ER estimate should be within ±10%.

• A company estimate will probably have an accuracy of at least +10%.

• A change-order estimate must have an accuracy better than +10%.

Escalation and Cost Trends

Saudi Aramco DeskTop Standards 6

Figure 5. Estimate Accuracy

Saudi Aramco DeskTop Standards 7

Figure 6. Types of Estimate

Saudi Aramco DeskTop Standards 8

COST TREND FORECAST

Table I: Expected Annual Cost Trends (%/Year)

Mix 1995 1996 1997 1998 1999

Saudi Aramco DeskTop Standards 9

Figure 7. Cost Trend Forecast

Saudi Aramco DeskTop Standards 10

Base Base Cost

3/1994 3/95 96 97 98 6/99

Figure 8. Cost Trend and Escalation

Saudi Aramco DeskTop Standards 11

Contingency is intended to cover:

• Labor productivity variances.

• Unknown geographical conditions, such as rock, subka and subsea conditions.

• All contract Change Order activity.

Contingency is not intended to cover:

• Variations from the scope, as defined in the approved project proposal.

Saudi Aramco DeskTop Standards 12

INTERRELATION AND APPLICATION OF SAUDI ARAMCO CAPITAL

Capital Program Approval

Expenditure Request Approval (Saudi Aramco Form 56D)

Authorization for Expenditure (Saudi Aramco Form 6035-A)

JOB EXPLANATION MEETING* DATE_ PLACE_____ TIME_