the estimating process
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10/04/2023 The Estimating Process 1
“The Estimating Process”
A Applied
CCost
E Engineering
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Why is a process critical?
A “structured estimating process” should produce:
• Quality Estimates• Consistency – Checks & Balances• Improve Accuracy/Confidence• Improve Competency/On-boarding new staff• Align all Parties• Reduce uncertainty• Reduce Costs• Save Time
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Capital Cost Estimating Process
INPUT OUTPUTProjectPreparation
ProjectEvaluation
CostEstimating
WhatHowWhenWhere
USDAccuracy
Risk
Sound technical basisRealistic execution planProper project planningRisks and opportunities
Appropriate tools & dataQualified Estimators
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What makes a good Quality Estimate
• Qualified and experienced estimator• Good estimating method and data• Proper planning of the process• A realistic execution plan• A sound finalised technical basis• Understand the risks and opportunities
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Input to the Estimating Process
WHAT
WHEN
HOW
Scope Definition
Schedule
Execution Strategy
• PDF/P&ID• Equipment data• Layout• MTO’s• Engineering Standards
• Project organisation• Contracting strategy• Constraints
• Market • Escalation• Currencies
Standard list ofdeliverablesfor eachtype of estimates
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Input to the Estimating Process
WHERE
Location (project) specifies
• Supply sources• Import regulations• Cost local supplies• Productivity• Engineering standards• Etc
Cost Engineeringactivitysupported byProject Engineering
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Estimating ProcessKey Procedures:
• Overview total estimating process• Review estimating requirements• Planning the estimate• Structuring the estimate• Developing the estimate• Analysing cost risk and contingency allocation• Documenting• Review and issue estimate
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Estimating Process
Delivery of Estimating Package
Agree effort& timing
Sign forEvidence
Sign forEvidence
Clarify Estimating Package
Packagecomplete
Scope Change or Additional
Inform
PrepareEstimate
EstimatingPackage
No
No
YesYes
Estimating Process ToolsRequest for
Cost Estimate
Business Process(Exceptions!!)
Estimating Procedures Tools/ Data
10/04/2023 The Estimating Process
Estimating Process
9
InternalVerification
Draft EstimateReady
Sign forEvidence
Sign forEvidence
AcceptanceCustomer
Estimate Report
Tools
Internal Procedure(Competence!)
Structured Database
DistributionAnd
Filing
End
Estimating Process
Standard Report(Template)
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Quality System (Flow Diagram)
Request Estimate/Agree timings
Delivery of estimating package
Assignment of Work
Clarify Estimating Package
Package Complete?
2
1
3
4
No
Yes
5
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Quality System (Flow Diagram)
Register Estimate
Prepare Input Data
Prepare Project Location Factor
Verification and Approval (R/V/A proposal)
Acceptance Check by the Activity Leader
7
6
8
9
10
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Quality System (deliverables)
Deliverable Type 1+/- 30%
Type 2+/- 30%
Type 3+/- 30%
A. General
Terms of Reference
Project Specification (PS) or Basic Design & Engineering Package (BDEP)
Basic Design Package (BDP)
Project Implementation Plan (PIP)
Project Execution Plan (PEP)
Project Execution Strategy (PES)
Overall plot plan and Overall plot plan rev. A
Preliminary General Foundation Advise
Special facilities required for access
Project Specific Sourcing, Cost and Scope
Recent Sourcing, Cost and Scope Survey Report
Recent Local Cost Data
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Types of Estimates
GSP/1 generally prepare 50/50 Estimates. This implies an equal chance on over or under run. Estimates have a 80% probability to fall within ranges identified.
• Preliminary Magnitude +/- > 30% Scouting• Order of Magnitude +/- 30% FED1 (BOD/PES)• Study Type +/- 20% FED2 (BDP/PEP)• Budget Type +/- 10% FED3 (BDEP or PS/PIP)• Control +/- 10% During Implementation
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Estimating Presentation
User / develop standard form:
Estimate details
Estimate information
To b
e in
clud
ed: • Summary
• Details• Accuracy and contingency• Validity (ref date/exch. rates)• Escalation
• Project reference• Reference input documents• Premises, assumptions and exclusions• Risks & Opportunity
10/04/2023 The Estimating Process
Estimating Tools/Software Selection
15
CAPCOST Designed for large, small, revamp projects (process plant)CES Topdown, systems based, EP projectsIbisCalc Database available for civil works onlyCleopatra Designed for new projects and maintenance (process plant)ICARUS 2000 Designed for large projects (process plant)Questimates In plant project (process plant)Timberline Powerful system but its database for construction of buildingSuccess Designed for power plantG2Estimation Database available for civil works onlyPipemate Suitable for construction of piping onlyRichardson Designed for process plant projects (detailed method)
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Development of Norms
Essential Steps
• Data Management
• Standard methods and data
• Review / Reconciliation of discipline
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Development of Norms
Critical Elements
• Documentation of design basis• Documentation of execution basis• Estimate documentation• Standard methods and data• Review discipline• Filing practices
Without documentation, numbers are just numbers!
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Development of Norms; the Process
WHAT
HOWWHEN
DesignINPUT
ExecutionINPUT
• Site Agreements• Price Lists• Quotes• Publications• Books
Data Storage& Retrieval
Analyse& Review
Standard Norms &
Factors
StandardCost Estimate
Apply Project Factor
Project Estimate
PROJECTS
FEEDBACK
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Development of Norms
Databank Features: • Should meet site needs• Norms should be normalised (to remove abnormalities)• Establish a ‘single source’ (e.g. a data book)• Develop cost coding structure (maintain kind of order)• Feedback and maintenance system
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Development of Norms
Criteria for an effective coding system:
• Reflect job execution approach
• Defines in- and exclusions
• Geared for project cost control
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Development of Norms
Use consistent method:
• Standard format
• Use cost coding structure
• Define estimate input requirements
• Define validity
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Capital Cost Estimating Process
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Development of Norms
Essential Steps
• Data Management
• Standard methods and data
• Review / Reconciliation of discipline
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Handing over of the estimating package
Seamless hand over from Estimating Department to Project TeamIf you can’t convince them, confuse them!
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Estimating strategy/methodology
Agree upfront: Type input dataTiming / costEstimate format (deliverables)Verification procedure
To be included:• Summary• Details (breakdowns)• Accuracy and contingency• Validity (ref date/exch. rates)• Escalation
• Project reference• Reference input documents• Premises, assumptions and exclusions• Risks & Opportunities• Applied estimating methods/tools
• Estimate details
• Estimate information
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Estimate Validation
Options :
• Witness whole estimating process
• Participate/ witness the review/verification steps
• Benchmarking (IPA)
• Counter Estimate
• Verification deliverables
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Estimate Validation
Structured Approach:
Quality supporting documents (accuracy)
Estimating process
Consistency of project scope
Estimating tools/data
Completeness of the estimate (exclusions)
Risks and contingency
Schedule and escalation
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Estimate Verification
Cost Check:Overall Cost Reference plant
Cost per unit of product
Cost ratios Statistical breakdownEquipment vs. bulkMaterial vs. labourIndirects vs. directs
Detail Equipment Number / Bulk QuantitiesUnit ratesLabour rates (HO office, Direct Labour)NormsMTO basis
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Lessons Learned/tips
• Agreed TOR with customer• Avoid time squeeze• Be prepared (type project/process/location)• Own a tool kit (Knowledge)• Up front agreement estimate format• Kick off meeting (explain purpose / express expectations/agree process)• Willingness to share• Stay at highest level possible• Consult home front• Close out meeting (provide feedback/agree actions)
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Estimate Types, Tools & Level of Detail
Type Tools
1. CES/CAPCOST
2. CES/CAPCOST
3. CAPCOST/ IBISCALC
4. IBISCALC
FacilitySystem Group
System
Equipment Breakdown
Item list – Bill of Materials
Platform
Gas Processing
Gas Dehydration
Pump
20m of 6” Pipe
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Q’s & A’s
Discussion
End