Bp Zhuhai Chemical Project Cost Management Case Study

China petrochemical market has become increasingly competitive for lots of foreign investments are surging in recent years. Thus, petrochemical project and operation cost is vital important for these companies to maintain their long term competitiveness. Many petrochemical businesses has arrived in the era of competing to survive by scale production, high reliability, lower energy cost, lower capital cost & lower operation cost. How to build an low energy consumption, high reliability and low capital cost petrochemical project has become a challenge to many petrochemical companies.BPZH Chemical Co., Ltd.(BPZH)'s project No.1, a 500,000MT PTA production capacity plant was invested by BP PLC during 1999 to 2003. Despite of the strong demand of international market, steel metal's price has increased by more than 80%. The project No.2 (year 2005 to 2007), a 900,000MT PTA production capacity plant was built at 300 million USD, which means that the project No.2's capacity has gone up by 80%, but over project cost decrease 25%. It is obvious to see that the project No.2 is much more cost efficiency than project No. 1. Due to the successful of project No.2, BPZH has become lowest capital cost PTA plant worldwide. And the company has lowest various cost of production for a new process technology applied to the project too. The plant is now producing PTA at USD30/ton lower than her rivals. The article researched and analyzed the cost management of project No.2 of BPZH Chemical Co., Ltd, in order to summarize successful project cost management experience for the parent company future investment worldwide.The article is divided into 4 chapters, the first chapter described the concept, procedure, and methodology of project cost management. The second chapter is main content and key scenario of the BPZH project story. The third chapter analyzed the root cause of cost management variation. The last chapter summarized the successful experience.Some main successful experience summarized as following: 1) Build the aggressive cost management culture and ensure the project team is adapt to the culture. 2) Specify the project cost management principle and task. 3) Innovative project management organization for cost control purpose. 4) Innovative design to reduce the project cost. 5) Combination of lowest cost material & equipment sources. 6) Fund management and utilization. 7) Tax planning. 8) Equipment installation management (Quantity Survey). All these project cost management mechanism or factor are worthy to future reference.