OGUK Decom Insight Report 2021

7. Appendices

7.1 Maturity of Estimates Each year UK operators provide the cost classification for each of their decommissioning projects using the Association for the Advancement of Cost Engineering (AACE) classifications. These seek to define the stage of each project and indicate the degree of uncertainty in the estimates. Class 4 or 5 estimates mean that the projects are in the early planning stages where the scope of work is still being defined and feasibility studies are being carried out. Class 5 estimates have an expected accuracy range of -20 to +100 per cent. This range narrows over time as more work is done to increase the understanding of the work involved. Class 2 estimates represent projects that are in the contracting stage with some activities already being executed. These have a higher degree of accuracy of between -5 and +20 per cent. The OGA has been working with industry to improve the reliability of costs estimates for decommissioning projects within the Asset Stewardship submissions. Now, 73 per cent of the estimates are class 4 or better with 21 per cent being class 3 or better. This chart demonstrates a significant improvement in the accuracy of the estimates, after the OGA placed emphasis on it in 2017, but there is still room for improvement.

Figure 16 – Cost Distribution by Estimate Quality

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

4% 4% 0% 0%

4% 4% 1% 3%

8% 4% 2% 6%

10%

12%

3% 2%

3% 3%

20%

11%

15%

43%

43%

38%

40%

72%

46%

37%

36%

27%

2017 Decommissioning Estimate

2018 Decommissioning Estimate

2019 Decommissioning Estimate

2020 Decommissioning Estimate

2021 Decommissioning Estimate

Class 5 Class 4 Class 3 Class 2 Class 1 Actuals

Source: OGA

DECOMMISSIONING INSIGHT 2021

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