project cotrols expo · synergy between cost estimating and project controls it is time to...
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Total Cost ManagementThe synergy between Cost Estimating and
Project Controls
Project Controls Expo – 13th Oct 2015Emirates Stadium, London
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About the Speaker
Aafje Jansen-Romijn, Managing Director at Cost Engineering Consultancy B.V.
Professional career:
1990-1998 Dow Chemical - Project Controls department
1998-2000 Stork Comprimo
2000-2001 Jacobs Engineering
2001- present Cost Engineering Consultancy B.V.
CCP, CEP by the AACE International standards.
Comprehensive experience in cost engineering and cost estimating solutions in wide variety of industries.
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Bulk storage
Construction industry
EPC(M)
Food and Nutrition
Government
Offshore
Oil & Gas industry
Heavy industry
Pharmaceutical industry
Petro-/chemical industry
Power industry
Mining & Minerals
References
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Project experience
One of the most important tools for an estimator is experience
Desire to improve capital cost estimating systems, tools, methodologies and practices.
Data collection of project cost, schedule and scope information required in a structured format
Missing feedback loop during the execution phase in order to validate and/or improve their estimating data.
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Broken feedback loop
Many reasons can be identified:
Disconnects exist between project management, estimating, planning and cost control, due to a lack of understanding of each other’s need which could disrupt a proper feedback cycle
The cost control baseline could lack the level of detail required to evaluate for instance compensation events during execution
It could be induced by opting for lump-sum turnkey EPC contracts for the majority of the projects, as engineering contractors are reluctant to share information regarding hours, costs and key quantities
Companies have a need for a project historical retrieval and analysis system
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Synergy between Cost Estimating and Project Controls
It is time to establish synergy between Cost Estimating and Project Controls by working with pre-set visual performance indicators during project execution.
Should start by setting up a proper baseline conforming to all requirements of the stakeholders.
Monitor project cost and schedule performance during Project Cost Control
Give improved forecasting information.
Meaningful ratios and statistics for your projects to aid estimate reviews, providing estimating database feedback and calibration information.
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Estimating the cost baseline
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Estimating the cost baselineEstimate classification
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Estimating the cost baseline Breakdown Structures
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Estimating the cost baseline Breakdown Structures
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Spending valuable time on things that matter
Handling,
correcting,
checking, 65%
Forecasting &
Change
Management,
10%
Controlling; 25%
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Forecasting – the link with estimating
The link with estimating
Better integration
Keep the estimate alive
Involvement estimator during project controls
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Forecasting – the link with estimating
The link with estimating
Changes based upon proper estimating
Visualize project developmentthrough time
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Project close-out
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Project close-out
Information of interest:
Cost Factors – for early phase estimating
Hand factors
Lang factors
Characteristic values and metrics – concept studies
Realized hours – benchmarking estimating norms
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TIC
factor
Develop characteristic
values / metrics
Project close-out
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Project close-out
What are important metrics?
Metrics used for quantitative estimating in order to determine the expected project quantities without having to involve a full design team to determine these quantities.
For example:
Length of pipe per main equipment item : 150 m pipe / eq.
Number of fittings per length of pipe : 0,6 fitting / m pipe
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Project close-out
The purpose of this focus on cost metrics is to extend to cost engineering practices. By using these metrics and research findings, companies can improve their project and business results.
These characteristic values will:
Support conceptual estimate
Support estimate reviews
Assess company performance against industry norms.
Support calibration and improvement of company tools and databases.
Improve asset cost evaluation and concept development
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Project close-out
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Objects
Project Structure
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PT
FT
Project Structure - objects
Metrics
@ 4.5” pipe
@ 150 m pipe per equipment
@ 0,9 - 1,2 Control valve per equipment
@ 5.5 Field instruments per equipment
@ 3 lighting fixtures per equipment
Cost database aligned with metrics
Core metrics in estimating are often key quantities
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Key quantities
Essential basis for metric development:
What is included in the metric – ISBL versus OSBL
Analyzing key quantities of projects
Develop useful characteristic values
No relation: Length of Electrical cable per meter pipe
Distinguish between different types of projects
Develop and maintain cost database inline with composites supporting the characteristic values
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Key quantities
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Project metrics
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Project metrics
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Project metrics
Database system for project historical retrieval and analysis system
Always actual metrics by using Estimate at Completion Quantities
Specify companies needs
Both project metrics and project controls EVM metrics
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Project metrics
Improving the Quality of Earned Value information:
Credible
Timely
Significant
Analyzed (numbers don’t speak analysts do)
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Earned Value ManagementExample Reporting
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Total Cost Management
Create synergy between estimating and project controls
Align estimate requirements with project controls system
Embed metrics reporting into your organisation
Involve estimating during forecasting
Do not wait till project closure – you will be too late!