2001am Est06 Slides

8/16/2019 2001am Est06 Slides

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Easy Factored Estimating

& Process Cost Engineering

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Some Observations:

In general an estimate is a true reflection of

Scope Of Work

If the Scope Of Work is not well defined Estimate

won’t be definitive

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Scope Generation

At number of hemical companies all !ro"ects are

being e#ecuted through the use of !$!

% !ro"ect $anagement !rocess&

!$! is a structured process with clearl' defined

phases of work

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What Is An Estimate(

In general the Estimate is the 'ardstick againstwhich cost performance of a pro"ect is measured)

It is a technical document that defines a value or

a range of values of the most probable cost of a pro"ect or a portion of a pro"ect based on theagreed scope of work* the estimate basis and theuncertaint' of their components)

It is a management tool that provides the basis for pro"ect planning* budget preparation and costand schedule controls)

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+easons for !reparing an Estimate

,easibilit' studies

Selection from alternate designs

Selection from alternate sites

Appropriation of funds

!resentation of bids

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,actors Affecting Accurac' of Estimates

Weather

-ime .ela's

Overtime %+e/uired&

hanging 0ocation

hanging apacit'

1pgrading $aterials

2ob handled in a different manner %1nion vs) 3on4

1nion* 0umpsum vs) ost !lus&

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ommonl' 1sed Abbreviations

5 Acron'ms

DSP .ecision Support !ackage

EFD Engineering ,low .iagram

EFS Effective ,ield Start

EPC Engineering* !rocurement and

onstruction

FEL ,ront End 0oading

FIOH ,ield Indirects 5 Overheads

HAZOP 6a7ards 5 Operabilit' Stud'

ISBL Inside 8atter' 0imits

MTO $aterial -ake4Off

NP 3et !resent 9alue

OSBL Outside 8atter' 0imits

P&ID !iping 5 Instrumentation .iag)

PCE !rocess ost Engineering

PEP !ro"ect E#ecution !lan

PFD !rocess ,low .iagram

PMP !ro"ect $anagement !rocess

P !resent 9alue

!AB uantit' Ad"usted 8udget

"FP +e/uest ,or !roposals

SAP S'stems* Applications 5 !roducts

SPE Special !ro"ect E#pense

IP 9alue Improving !ractice

#BS Work 8reakdown Structure

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,ive !hases Of !ro"ect $anagement

!rocess %!$!&

onceptual

Anal'sis

.efinition E#ecution

Evaluation

;Each !hase has clearl' definedOb"ectives and .eliverables<

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!rocess ost Engineering %!E&

!E is a subset of !$!

!E provides an integrated process and guidelines

to achieve established ob"ectives regardless of thesi7e of pro"ect

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!E Integrated ,unctions

ost Estimating

ost ontrols = Schedule ontrols

$aintaining ost .ata 8ase

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ost Estimate

AAE International defines ost Estimate as: ;An

evaluation of all costs of the elements of a pro"ect or

effort as defined b' an agreed4upon scope of work)<

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ost Estimate is based on:4

Accurac' of Scope of Work

-ime allotted to prepare the estimate

Skill of the estimator alculation -echni/ues

ost accurac' desired

8usiness +isk Assessment

!erspective of the preparer %Owner* ontractor

or .esigner etc)&

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,ront End 0oading %,E0&

-he work performed to develop a thorough Scope .efinition ofthe pro"ect prior to start of E#ecution !hase) -his includes allactivities from the onceptual !hase through !ro"ectauthori7ation and the start of .etailed Engineering at the end of

.efinition !hase) $a"or deliverables of this process include:>Engineering documents such as !lot !lan* !5I.’s* !,.’s*

Single line electric diagrams and$a"or E/uipment data sheets > Strateg' for e#ecutingthe pro"ect > ost estimate

with plus or minus ?@ accurac'

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-'pical Sources for ost Estimates:

!ublished ost Information

osts from similar !ro"ects and osts of pro"ect E/uipment

6istorical compan' ost data files and from

In46ouse !ro"ects

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Estimating( 4 aution

;+efrain from issuing definitive estimates

based on sketch' scope of work or even worse

based on some verbal instructions<)

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$ethods for Estimating

ost of E/uipment

!revious !ro"ect E/uipment costs

!reliminar' 9endor uotations

!ublished E/uipment ost .ata ,irm 0ump4Sum /uotes

omputeri7ed Estimating !rograms

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ommon Sources Of ost .ata

onceptual ost Estimating

Icarus 4 B@@@ or similar other products

WinEstimator* -imberline 5 Other omputer based

!rograms

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Estimating 4 1ncertaint'(

ost estimate* b' definition is an uncertain /uantit')

1ncertaint' is an unavoidable component of business

decisions)

$ethods available for identif'ing 5 /uantif'inguncertainties)

ost estimate components help determine an estimate

range)

Estimate ranging supports the concept of portfoliomanagement and can lead to better business decision

making)

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$a"or +easons ,or Good Estimates

Good definition of pro"ect re/uirements prior to

starting !E) Including:4

Scope Of Work

!ro"ect !lansEstimating 8asis 5 Assumptions

-eam 1nderstanding and bu'4in toward !rocess ost

Engineering towards achieving goals and ob"ectives)

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6ow does the !E functions appl'

to the !$! !hases(

ost Estimating activities are related to the following

three phases:4 onceptual !hase %C=4 D@&

Anal'sis !hase %C=4 @& .efinition

!hase %C=4 ?@&

E#ecution !hase: ost 5 Schedule ontrols

!rimar' Activit'

Evaluation !hase: ,inal cost closing data to bestored

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!E Activities in onceptual !hase

.eveloping the initial work breakdown structure

%W8S&

!repare cost estimates for determining

pro"ect feasibilit'

!reparing plan for controlling ,E0 cost controls

.eveloping the overall pro"ect timetable

and ke' milestones

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!E Activities in Anal'sis !hase

+efining the initial work breakdown structure %W8S&

Initial set4up to control ,E0 costs

!repare plan for controlling E#ecution phase costs

.efine control Schedule for ,E0

+efine overall pro"ect schedule and ke' milestones

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!E Activities in .efinition !hase

!rimar' activities in this phase are 4 completing the

cost estimate for the purpose of obtaining and

developing in detail cost=schedule controls

,ull' develop W8Sontrol ,E0 costs

set4up cost control s'stem

Share ,E0 osts with data base

Setting4up controls for E#ecution phase.efining all other ke' milestones

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!E Activities in Evaluation !hase

Cost contro$s and Sc%ed$e contro$s are

t%e 'rimary acti(ities )or t%is '%ase o)

*or+, T%is %e$'s Pro-ect team ma+e

in)ormed decisions, Ty'ica$$y 'ro-ectcost contro$ s'ecia$ist 'er)orms ongoing

ana$ysis to 'resent 'ro-ect stats.

)orecast and 'otentia$ o/stac$es,

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!E Activities in Evaluation !hase

$ain activities for this phase are storing and

managing data base) ,inal cost closing report is

to be issued and stored at the end of the pro"ect)

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Some Elements Of ost Estimate

Indirects On 0abor %Shown on spread sheet&

ontractor Engineering %See spread sheet&

Owner Engineering %See spread sheet& ontingenc'

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Indirects On 0abor

$a"or ,actors Affecting Indirects on 0abor

?) +elative si7e of pro"ect

B) -'pe of pro"ect %Grassroots or +etrofit&

) 0ocal 0abor 5 onstruction practicesF) Site specific location 5 conditions %0ike

dail' transport of workers or allowances

for seasonal weather conditions&

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Indirects On 0abor should include:4

,ield supervision 5 Indirect support staff

-ravel=+elocation=and field per diems

-emporar' facilities and structures

onstruction e/uipment and tools Safet' and ,irst Aid

,ield office furnishings and communications

onstruction consumables

Insurance=-a#es* Statutor' !a'roll 8urdens 5 8enefits

!rofit=,ee etc) 6ome office overheads* 6ome office e/uip) 4 !’s* !urchasing

services etc)

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Statutor' !a'roll 8urdens Include

Social Securit'

$edicare

1nemplo'ment

Workers omp) Insurance

General 0iabilit' Insurance

health 5 Welfare 8enefits

!ension

Industr' ,und

9acation Allowance -'picall' this averages between to D@ of base

hourl' wage rate)

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-'pical $ake4up for Indirects on labor

for 1)S) Gulf oast

,ield Supervision 5 ,ield office e#penses ?H to H

-emporar' ,acilities and Structures to ?D

onstruction E/uipment 5 -ools ?F to B

onstruction onsumables 5 small tools to ?B

Statutor' !a'roll 8urdens 5 8enefits to D@

$isc)) Overheads 5 Indirects B to

!rofit=,ee for onstruction $anagement ? to B)D

$obili7ation=.emobili7ation to D)D

Scaffolding B to F 44444444444444444444

-otal J@ to ?D

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,ull' 0oaded Avg) 6ourl' +ates

1)S) Gulf oast Area

8rickla'er K@)@

arpenter K@)?H

Electrician K)FH

!ipefitter KD)F

!lumber KF)JJ

Sheetmetal Worker KF)JB

Structural Iron Worker K)F

Source: Engineering 3ews4+ecord $arch B* B@@@

%.ata from ost Engineering 9ol) F=3o) B ,ebruar' B@@?&

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0abor +ate omparison

0ocation +ate Inde#

L 1)S) Gulf oast ?)@@

L 8ra7il @)?

L hina @)?L Indonesia @)??

L 2apan ?)@D

L $e#ico @)?F

L Singapore @)DD

L 9ene7uela @)BD

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0abor !roductivit' omparison

0ocation !roductivit' Inde#

L 1)S) Gulf oast ?)@@

L 8ra7il B)?@

L anada ?)?D

L hina )J@

L Indonesia )@@

L Ital' ?)?D

L 2apan ?)BD

L $e#ico ?)HDL Singapore ?)BH

L 9ene7uela ?)D

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ontractor Engineering 4 Grassroots !ro"ect

-hree wa's to estimate:4

?B to ?H of -otal !ro"ect ost

or B@ to @ of all .irect osts

or 8ased on man4hours per e/uipment itemF@@ to H@@ 6rs) per item for small pro"ects

J@@ to ?BD@ 6rs) per item for Grassroots !ro"ect

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ontractor Engineering 4 +etrofit !ro"ects

BD to FD of all .irect osts %Included in the

direct cost is e/uipment* material and labor ost&

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ontractor 6ome Office 6ours -'p) .istribution

%Allocation of 6ours b' .iscipline&

Engineering M @

Engineering 4 3on -echnical M F

!ro"ect $anagement M

!ro"ect ontrols M

!rocurement M ?B

onstruction $anagement M D

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Owner Engineering

H to ?B of all .irect osts

or @ to FD of ontractor Engineering

based on t'pe of pro"ect

,or Overseas !ro"ects in addition to the

above cost don’t forget living 5 travel cost on a

'earl' basis

An allowance should be included in the estimatefor Operations 5 maintenance personnel

i

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ontingenc'

A general proposed definition from AAEINs Standard ?@S4J@ is provided here)

Contingency is an amount added to an estimate to allow for unknown items*conditions* or events that e#perience shows will likel' occur) -'picall'estimated using statistical anal'sis or "udgment based on past pro"ecte#perience) ontingenc' usuall' e#cludes?& ma"or scope changes such as changes in end product specification*capacities* and location of the pro"ectB& E#traordinar' events such as ma"or strikes and earth/uakes& Escalation and currenc' effects)

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ontingenc' 4 ontinued Well established process design D to ?@

Well established process design 4 .ebottleneck t'pe B@ toD

OS80 1nit BD to F@

8rand 3ew !rocess ?D to @

.S Implementation ?@ to ?D

In addition to these suggested ranges* +isk Anal'sis is the mostappropriate wa' to establish contingenc' amounts)

S ! t ti l t t i , +i k

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Some !otential ost ategories ,or +isk

Sharing or +isk Anal'sis

Site onditions

Site Access

!roductivit'

!ermits 5 0icenses

Weather

0abor ,orces

ost Escalation

-ime +elated +isks

onstruction +isks

Site Safet'

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Plant Construction Cost Index

(Base Year 1990 = 100)

Year Index Increase %/Year

1990 100 ------1991 103.8 3.8%

1992 108 4.0%

1995 130 6.8%

2000 149 2.9%

2001 153.5 3.0%

2002 159 3.6%

2003 164 3.1%

2004 169 3.0%

2005 174.5 3.3%

2006 180 3.2%

2007 185 2.8%

2010 202 3.1%

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Investment .ecisions(

When decisions are made based on uncertain information* it is

important that decision4makers have the best possible

information about the uncertainties involved)

ontingenc' should not attempt to cover scope changes) +isk anal'sis or !robabilistic anal'sis should be normal part

of ever' estimate)

All decisions should be made with full consideration of

over4run risks)

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,uture Issues and -rends:4

6ow to work as a team 4 Owners* ontractors and 9endors)

We ma' see more Alliances !artnerships)

All Estimating and ost ontrols related information

available on4line for eas' access b' all personnel all overthe world) ,or down4loading the workable Spreadsheet

%please visit the following Web4site: http://www.o-l-c.com

and then click on OLC Forum)

An Estimating !rogram that goes from 4. A. .rawing

to Estimating to Scheduling to ost ontrol etc)

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!E 5 1se of ost 5 Schedule ontrols

Alwa's to be used in a -imel' $anner

Increases the chances of successful !ro"ects

> 8' ma#imi7ing favorable trends

> 8' mitigating unfavorable trends

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!E 5 Information to .atabase

It helps promote shared learning

It helps capture the !ro"ect’s .ata 5 E#periences

It helps ,uture !ro"ect’s with improved performance

Eas' ,actored Estimating 8ased On

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Eas' ,actored Estimating 8ased On

ost Of E/uipment

,or most hemical or !etrochemical !lants

e/uipment cost alone represent about D of total

e#penditures 4 so be careful in estimating the

e/uipment cost accuratel'

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0abor 5 $aterials 8reakdown

arbon Steel %S& F@ 0abor = @ $aterial

Stainless Steel D 0abor = D $aterial

%$aterial and 0abor ratios are different for other

t'pes of metallurg'&

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Instrumentation

$aterials B@ to D of -otal E/uipment ost

0abor @ to FD of Instrument materials ost

%In general Instrumentation cost is directl'

dependent on the total e/uipment cost of facilit'&

Installation ,actors for E/uipment

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Equipment Type Multiplier Equipment Type Multiplier Agitators 1.4 Evaporator 2.2

Air oo!e" E#$%a&gers 2.2 E#$%a&ger ('%e!! *+e) 2.1

B!e&"er 1.5 E#tr*"er 1.5B!o,er 1.5 ee"er 1.85

Boi!ers 1.6 i!ter (otar/) 1.8

B*!!ets - ress*re" 1.5 ire" eater *r&a$e 1.3

e&tri*ge 1.7 !are 'ta$ 1.8

%ei$a! &e$tio& a$age 1.8 e&erator 1.6

!airiier 1.6 opper (Bo!te") 'i!os 1.8

o!*&s 2.5 oa"i&g Ars 1.4

opressors 1.6 e!!eti:er 2.1op*&"er 1.4 *ps - A ;<otor 1.6

o&"e&ser 1.95 *ps - %e. ;<otor 2.25

o&ve/orsE!evators 1.4 ea$tor 2.2

oo!i&g o,er 1.9 ea$tor <*!tit*+!er 2.3

ra&e 1.3 erigeratio& =&it 1.6

/$!o&e 1.6 '$re, o&ve/or 1.6

>r*s - ori:o&ta! 1.8 'p%res 1.1

>r*s - ?erti$a! 2.6 'torage a&s 1.95

>r/er Evaporator 2.2 o,er 2.2

>*st o!!e$tor 1.9 ra&sorer 1.4

Ee$tor E"*$tor 1.4 ;eig% '$a!e 1.2

Items not included in Installation ,actors

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$ain Electric Substation

ontrol room with $otor ontrol enter %$&

Anal'7er 8uildings

$aintenance Shop

$ain !rocess Sewer 5 Storm Sewer

Oil' Water Separator Waste Water -reatment !ond

!iling 4 If re/uired

onduits 5 able runs from $ain Substation to $

!lant Areas to be returned as Wet 0ands

Online Constructor, Inc. 060801

WBS E i tT L b M t i l

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WBS Equipment Type Bare Equip. Cost Multiplier Less Equip. Cost Labor Material

113 Agitators 1.4

105-02 Air oo!e" E#$%a&gers 10000 2.2 10000 4800 7200

101-03 Boi!ers 1.6

107-01 o!*&s 28500 2.5 28500 17100 25650

109-01 opressors 82500 1.6 82500 19800 29700

110-04 op*&"er 1.4

107-01 >r*s - ori:o&ta! 20000 1.8 20000 6400 9600107-01 >r*s - ?erti$a! 14500 2.6 14500 9280 13920

112-05 >r/er Evaporator 2.2

105-03 Evaporator 2.2

105-01 E#$%a&ger ('%e!! *+e) 32500 2.1 32500 14300 21450

110-04 E#tr*"er 1.5

108 *ps - A ;<otor 1.6

108 *ps - %e. ;<otor 22000 2.25 22000 11000 16500

107-01 ea$tor 2.2

111-02 'p%res 1.1

111-01 'torage a&s 1.95

107-01 o,er 2.2

Total Equipment Cost 210000 82680 124020

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E@*ipe&t or t%is E#ap!e

Air oo!e" E#$%a&gers 10000

o!*& 28500

opressor 82500

>r* - ori:o&ta! 20000

>r*-?erti$a! 14500

E#$%a&ger (') 32500

*p ;it% <otor 22000

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nline Constructor Inc. E"#Y $"CTE& C#T E#T. $M"T

ageC 1

;DC

Title' /pi$a! E#ap!e (nit' A& 'B <o"ii$atio&s Base" D& E@*ipe&t A-A-EC

Pro). M*r.' Location' A&/ !a&t o$atio& B/C

>ateC 050401

/peC $actored

C"$T L"B M"TEI"L #(B+ TT"L

WBS DESCRIPTION ,(# C#T C#T C-T"CT C#T

&IECT C#T#'

100 E@*ipe&t ost (-ro Atta$%e" '%eet) 210000 210,000224 >' .e!ate" ost 50000 50,000

210 'ite reparatio&

211 i!i&g .e@*ire"

A&/ 'pe$ia! .e@*iree&ts

B(L M"TEI"L /0% L"B 10% $ E2(IP. M(LTIPLIE 4593 82680 124020 206,700

$EI3,T45%Mat6 10021 10,021

#(B+TT"L &irect Cost 4,5! "#,$"% !44,%4& 5%,%%% 4'$,'#&

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300 C-#T%(CTI- I-&I%ECT C#T#'

)eporar/ -a$i!ities ( 'tr*$t*res 10.0% >9 8,268

o&str*$tio& 'ervi$es2'*pp!ies2E#pe&se 10.0% >9 8,268

-ie!" '*pervisio& ( -ie!" Di$e E#pe&ses 35.0% >9 28,938

'tat*tor/ a/ro!! B*r"e&s ( Be&eits 45.0% >9 37,206

o&str*$tio& E@*ipe&t ( )oo!s 30.0% >9 24,804

o&str*$tio& o&s*a+!e ( 'a!! )oo!s 10.0% >9

8,268

'$ao!"i&g 7.0% >9 5,788

9a+or ro"*$tivit/ 8.0% >9 6,614

Dver )ie A!!o,a&$e 5.0% >9 4,134

Dter >9

TT"L Construction4TC6 ($%,%%

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T,E% P%7ECT C#T#'

400 E&gi&eeri&g >esig& ro$*ree&t(E) 20.0% ota! E o*rs 60 8!000 $122,000

414 re-roe$t !a&&i&g ost 5.0% $30,000

416 o&tra$tor ee (E DF9Y) 2% to 4% 3.0% $301600 D,&er E&gi&eeri&g 7.0% E $51,000

512 532 E&viro&e&ta!B eritsB 'aet/ 'tart*p 3.0% E $301

511 'pare arts ?aries 3% to 5% 4.0% $24,360

510 a#es ('a!es a# ?aries or ea$ !o$atio&) 6.25% $22,000

520 &s*ra&$e

515 ata!/st

521 Es$a!atio& ( 2% to 3% Yr.) 3.0% A $26,000

522 o&ti&ge&$/ (?aries 10% to 25%) 10.0% A $88,000

#(B+TT"L @Round ('!,%%%

ota!

9:;5!000

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Documents

2001am Est06 Slides