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A mega company such as Halliburton is a full service engineering, procurement, and construction entity. When bidding EPC for a billion dollar contract on a lump sum basis, the quality of that estimate is only as good as the estimate information provided by the client. For that reason, lump sum estimates are submitted + or - 5 to 25%. During execution of the project, “production check estimates" are scheduled on a regular basis to re-cast the original estimate and release contingency funds. When in construction, field change notices are written to reflect added work do to client changes or engineering errors or in schedule delays because of bulk material and equipment delays. Every change notice except for engineering errors is a reimbursable cost either from the client or the equipment vendors. Those change notices are then submitted to the client and reimbursed by them. Legal action is usually required to gain non-performance costs from vendors. However; each dollar held in the form of a construction change notice OR an engineering scope change is an account receivable at the end of plant commissioning.

I will not even try to go into contracts that are based on joint venture construction projects that a commonly made up of 2 or more multinational EPC firms with Halliburton being the Project Manager for the overall effort.

I think that there is a bit of confusion about project contingencies and project changes. The contingencies are based on the confidence of the estimates, from the award estimate through the various check estimates. These contingencies are NOT booked as revenue until the money is justified by the estimate and signed off on by the client. The greatest costs generated in these estimates are in bulk material quantity increases. All construction man-hour and schedule estimates are based on the time required to install bulk materials.

Engineering change orders are issued for schedule delay caused by client delay in document approval, estimate reviews and sign-offs of client changes of installation documents and the overtime required to keep schedule dates.. Over the life of a 2-year engineering schedule these costs can run into the millions over several projects. Those are man-hours that Halliburton is paying up front for at about 40 bucks engineering man-hours out of its own pocket. Those changes are not a part of the contingencies BUT are real hours expended and billable to the client. The same scenario holds true for construction but on a much larger scale. Just for a typical point of reference, a single Ammonia-Urea complex with bagging facilities require up to 200,000 engineering man-hours alone. Triple that for construction. Halliburton in good times may have 5 of these running at any given time. Then look at the amount of money under "investigation" I believe it was about 30 mil

A mega company such as Halliburton is a full service engineering, procurement, and construction entity. When bidding EPC for a billion dollar contract on a lump sum basis, the quality of that estimate is only as good as the estimate information provided by the client.

All 'fixed' bid contracts are done on the same basis regardless of scale. Low bids assume the specifications will change and changes are where profit is to be found.

I can never decide which company I love more, Halliburton, Red Adair, Otis or Schlumberger.

Amazing men. Extraordinary companies.

Klayman should be in Levenworth for this crap. He couldn't carry their cowboy boots...the little, pink baby-man.