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Get Out of the Gate Fast With Implementation Best PracticesDavid LeGrand, Sr. Manager – Product Marketing, AspenTech
Mike Monteith, CEO, Strategic Estimating Systems
October 18, 2016
© 2016 Aspen Technology, Inc. All rights reserved.2
Mike MonteithCEO, Strategic Estimating Systems
Today’s Presenters
David LeGrandSr. Manager - Product Marketing, AspenTech
© 2016 Aspen Technology, Inc. All rights reserved.3 © 2016 Aspen Technology, Inc. All rights reserved.3
Agenda
• Challenging Industry Environment – A different approach is available
– Best Practices and Pitfalls
– Organizational Success Factors
• Adoption Pathway
• Resistance to Implementation
• How Others Have Won
© 2016 Aspen Technology, Inc. All rights reserved.4
Those that will benefit
Cost Estimators
Process Engineers
Project Control
© 2016 Aspen Technology, Inc. All rights reserved.5
The Environment
Upstream projects hit hard“What began in late-2014 as a haircut to discretionary spend on
exploration and pre-development projects has become a full
surgical operation to cut out all non-essential operational and
capital expenditure.”, commented Mr. Angus Rodger, Principal
Analyst – Wood Mackenzie
Projects are smaller and more incremental"The majority of contracts are now [lump-sum] EPC fixed
price, where owners are taking advantage of the lower oil
scenario and pushing prices down through the value chain.
Megaprojects in the reimbursable EPCM space are more
limited. [Invitation to bids] are at the reduced level
commensurate with the project scenario outlined above,”
commented Graham Hill, EVP Business Development -
KBR
© 2016 Aspen Technology, Inc. All rights reserved.6
Pathway
• It’s not a journey, it’s a pathway
that’s been well traveled by others
• Evaluate, Optimize and Deploy are
major steps for implementation
• AspenTech – providing leading edge
innovative software and Strategic
Estimating Systems (SES) –
providing estimating knowhow, can
assist in moving down this pathway
© 2016 Aspen Technology, Inc. All rights reserved.7
Drawbacks of Proprietary Spread Sheets
Labor costs It’s hard to compress labor to manage spread sheets
Quality checking Data consistency and re-entry of data
Transparency Lack of the ability to see underlying calculations are performed
Inconsistencies Differences in approaches and methodology between estimators
Change control Cascade of changes during revisions and request for changes
AccuracyAbility of factor-based methods to handle estimates outside of known parameters
© 2016 Aspen Technology, Inc. All rights reserved.8
Best Practices and Pitfalls
Leadership sponsorship
Consistent communication plan
Vision to change
A team centric plan
Constructing a new business process
© 2016 Aspen Technology, Inc. All rights reserved.9
Success Factors
Designate a Technical Champion
Designate a Business Champion
Develop confidence and
commitment to the system
Train to understand the
software, but also the business
process
Collaborate
© 2016 Aspen Technology, Inc. All rights reserved.10
Viewer Poll
What are the barriers
to organizational
change at your
company?
© 2016 Aspen Technology, Inc. All rights reserved.11
Implementation Pathway
Evaluate
Empower the team to understand the current environment
• Current workflow
• Roles and responsibilities
• Methodologies
Kickoff and Planning
Sample Estimation
© 2016 Aspen Technology, Inc. All rights reserved.12
Run a Sample Estimate
Choose a “standard or routine” estimate as basis
Run your estimate
What are the differences in the two?
What have you learned?
What areas need to be inspected?
© 2016 Aspen Technology, Inc. All rights reserved.13
Implementation Pathway
Optimize
Empower the team to test and fine tune
• Code of Account definition
• Reusable template creation
• Tune at high level group level
Customization
Calibration
Move from “Engineer in a Box” to a system that reflects your
workflow and business environment
© 2016 Aspen Technology, Inc. All rights reserved.14
Overview of Calibration
• Calibration is an essential process for gaining maximum accuracy and efficiency from
ACCE
• Calibration may be desired with each pricing update to bring costs in line with local
conditions
• If a company has multiple fixed locations it may be desirable to create a calibration for
each of the locations
© 2016 Aspen Technology, Inc. All rights reserved.15
Why Calibrate?
Account Why calibrate?
Equipment Purchasing agreements
Local purchasing
Materials Purchasing agreements
Local purchasing
Piping specs Project-specific specifications
Field labor rates Location not covered by cost basis
Union labor
Field labor productivity Site conditions
Engineering man-hours Home vs remote offices
Project complexity
Engineering rates Home vs remote offices
Company cost structure
© 2016 Aspen Technology, Inc. All rights reserved.16
Conceptual and detail workflows vary on the effort
ACCE also adapts to the company specific requirements
• Document the sources of
information for the
estimate
• Determine the estimate
schedule
• Receive information and
review for completeness
• Equipment List
• Develop project
components from
equipment list
• Capture non-equipment
items (Site preparation,
electrical and
instrumentation scope)
• Add areas
• Capture design basis
• Adjust bulks
• Incorporate execution
strategy
Preparing the information Develop scope Refine scope Adjust cost
Typical Workflow to Develop an Estimate Using ACCE
Ensure consistency with engineering data
Ensure scope completeness
Align expectations of estimator and end user
• Adjust quoted items
• Calibrate remaining
components
Adjust costs and MH based on history
© 2016 Aspen Technology, Inc. All rights reserved.17
Work Process – Detailed Estimates
• Estimate Plan• Specs required
from disciplines are
defined
• Schedule of when
information is due
to estimating– Specs– Scope documents– Additional scope
items– Pricing– Construction
information
• Kick-off Meeting
• Enter Equipment –
from data sheets
• Enter Other Scope
based on engineering
deliverables
– Buildings
– Site work
– Pipe racks
– Interconnecting piping
• Modify selected system
defaults with project
specific scope items
– Basis of design
– P&IDs
– Miscellaneous MTOs
• Enter Plot Dimensions
– Area definitions
– Process control
– Power distribution
• Define Project
Execution
– Subcontracts
• Use procurement
cost
• Modify labor rates
and productivities
• Quoted equipment
Preparing the information Develop scope Refine scope Adjust cost
© 2016 Aspen Technology, Inc. All rights reserved.18
Calibration Steps
Capital Cost Estimator Output = Qualified Location & Time Specific Cost Model
Interfaced with recent project resources: Final Cost Report, Project Engineer, Lead Estimator and Project Controls
Quantities (sorted by COA)
Equipment Prices (by COA)
Material Prices ( by COA)
Labor MH ( by COA)
Labor Rate
Adjust product & area specs, assumptions, components
Apply % of equipment costs in component options
Adjust indices in bulk commodity project specs
Adjust indices in direct field labor project specs
Apply Labor rate in general rates project specs indices
Compare a recent project
completed “as-built’ data side by side
with initial ACCE model
Analyze and re[index ACCE as necessary to Final Cost of Recent project, Key
Quantity Items
Compare ACCE Estimate to Early and Baseline Project Estimates and Final Costs
of Recent Project
© 2016 Aspen Technology, Inc. All rights reserved.19
Implementation Pathway
Deploy
Empower the team to build confidence
• Fine tune Equipment, Materials and Engineering at detailed level
• Implement new workflow within business
Parallel Usage
Full Deployment
Build confidence by measuring against known system
Expand the visibility of use
© 2016 Aspen Technology, Inc. All rights reserved.20
In With the Good, Out With the Bad
“ ACCE results show that it isn’t as accurate as the current system
used”
“I still need to run my specialized spreadsheets, because I trust
them”“I like my current workflow and ACCE must fit into the existing
estimate workflow process”
“It seems like I spend a lot of time adding information for conceptual
estimates”
© 2016 Aspen Technology, Inc. All rights reserved.21
How Others Have Won
© 2016 Aspen Technology, Inc. All rights reserved.22
Webinar SummaryBest Practice for Implementing the Global Standard of Cost Estimating
• We do live in a challenging environment for
EPC’s and owner operators alike
• Management backing is an integral part of
success
• Basic steps of implementation are Evaluate,
Optimize and Deploy
• There is a better way than Excel-based
proprietary spread sheets than contribute to
speed and accuracy improvements
© 2016 Aspen Technology, Inc. All rights reserved.23
Additional Resources
White Paperwww.aspentech.com/strategic-weapon/
Infographichttp://www.aspentech.com/winning-infographic/
Resource Centerwww.aspentech.com/estimating-resource-center/
© 2016 Aspen Technology, Inc. All rights reserved.24
Sharpen Your Bid – Calibrating
ACCE Into a Strategic Weapon
November 8, 2016
Streamline Engineering
Projects - From Bidding to
Executionhttp://www.aspentech.com/epcperspectiv
es/streamline-projects/
Improve Collaboration on
Estimates Early in Your Projecthttp://www.aspentech.com/estimates-
early-project-Aug2016/
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© 2016 Aspen Technology, Inc. All rights reserved 26
Viewer Poll
Do you need help solving
your implementation
challenges?
© 2016 Aspen Technology, Inc. All rights reserved.27
Q&A
David LeGrand
Mike Monteith
AspenTech is ranked as a top innovative growth company
Thank You