Determination Of Contingence Fee For International FPSO Projects Based On Monte-Carlo Simulation

In recent years,the price of international crude oil has been languished and is going to maintain low in a certain period.Against the backdrop,domestic offshore enterprises,in the process of bidding and project implementation,have imposed a demanding standard to budget control,of which contingence fee hold the key.Similar to other engineering projects,the FPSO projects bear certain project execution risks of quality,safety,duration and etc.,which will weigh on the project budget to some extent.Other than that,the international FPSO projects,represented by the FPSO projects,are also affected by factors such as climate,politics,society,humanities and finance.Generally speaking,in the initial stage of preparation,the contingence fee in the budget are mainly based on a certain percentage of the direct cost of the project,which is hinged on the experience of conducting similar projects.This estimation-based method is relatively simple and easy-to-implement in normal FPSO projects,but cannot fully reflect the influences of dynamic variables on the various risks during project execution.This thesis,with the FPSO project as its subject,dug up the factors swaying risk control and the correlation between each influencing factor.By exploiting sourcing data from 16 actual execution international FPSO projects,this thesis studied the probability distribution function of each cost influencing factor;based on the MonteCarlo simulation method,the thesis set out the prediction method and simulation result of the contingence fee in investment estimates of the international FPSO projects;under a chosen confidence level,an estimate of the project cost and corresponding contingence fee was obtained.The thesis seeks to,when determining of contingence fee,replace the experience-estimation approach with the Monte-Carlo simulation method.The adoption of the Monte-Carlo simulation method to project the contingence fee of international FPSO projects is beneficial for China's offshore enterprises to choose a suitable forecasting method in decision-making,and to promote the chance of winning a bid while reducing the risk of cost control in project execution.