784 Figure 56– Distribution of global project costs – variation by decade and execution model Figure 2 illustrates that over three decades there has been a shift in costs from direct costs (Bulk Materials, General Equipment, Specialized Equipment / Systems and Industry Specific Equipment) to indirect costs (Field Distributable and Remote and Offshore Expenses). This shift can be ascribed to the type of project delivery model that is used, either EPCM or EPC. Secondly, the projects being delivered in Peru and Chile involve establishing construction sites complete with worker camps in remote and at altitude. This adds costs. Figure 2 is deceptive in light of the fact that not all owners costs are captured by the delivery contractors cost control systems. Westney (2014, 2015a) describes the increase in owners’ costs between 1995 and 2014 as being due to increased pressure to control projects and the subsequent operations. This includes increased owners insurance costs etc. Another cause of increased construction costs is related to the planning and management of construction activities. In an attempt to improve declining construction productivity, contractors, academics, and consultants have promoted planning and managing the work to a much higher level of detail (Increased scrutiny). In addition, due to deteriorating project results and the trend to shift more risk to owners, the owners have increased oversight and increasingly requested this additional detail. This has resulted in a dramatic increase in the amount of detailed information created, processed, and managed for today’s projects. Figure 57– Distribution of direct project capital costs by facility – variations by decade
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