Analysing your Projects through your Estimating Life Cycle

Raymond Hagedoorn (CCE)

Project Life Cycle

Identification phase Definition phase Execution phase Operational phase Abandon phase

Project initiation note

40% Screening estimate Economics Step 1

Feasibility study
25% Study estimate

Development plan
25% Budget estimate Economics Step 3 Initial commit. plan

Basis for design

Project specification
10% Control estimate
commit. plan Economics Step 4 Project execution plan

Detailed design

Materials procurement

Construction

Commission. start-up handover

Economics
Step 2

Commit. & cost control

Change control 5% Counter estimate Step 5

Step 6 Operations reference plan Identical to Execution phase

Step 7 Identical to Execution phase

Close out
Abandon project

Approval

Approval

initial execution plan

Operations reference plan

Review Review Approval Approval

Contract control Purchase order control Reporting

Project debrief

How much time is spent?

AACE Cost Estimate Classification System - Process Industries
Primary Characteristic ESTIMATE CLASS 5 LEVEL OF PROJECT DEFINITION 0% to 2% END USAGE concept screening Secondary Characteristic

METHODOLOGY

EXPECTED ACCURACY RANGE L: -20% to -50% H: +30% to + 100%

PREPARATION EFFORT 1

capacity factored, parametric models, judgment, or analogy equipment factored or parametric models semi-detailed unit cost with assembly level line items detailed unit cost with forced detailed take-off detailed unit cost with detailed takeoff

1% to 15%

study or feasibility budget, authorization or control control or bid / tender check estimate or bid / tender

L: -15% to -30% H: +20% to + 50% L: -10% to -20% H: +10% to + 30%

2 to 4

10% to 40%

3 to 10

30% to 70%

L: -5% to -15% H: +5% to + 20% L: -3% to -10% H: +3% to + 15%

4 to 20

50% to 100%

5 to 100

Estimating cycle: the ideal scenario

INITIATION UP TO CLOSE-OUT PHASE

Analyse your Projects through the Life Cycle

> Learn from your estimates in previous phase

> Compare class 4 -> class 3 -> class 2 > Learn from your past projects
> Compare similar projects and historical data > Classification required!

> Analyze scope development

> Perform health checks to be more confident

> Time analysis and cash flow trending > Determine key metrics to benchmark your organization > Business intelligence through regression analysis, pivot tables, or other methods of data mining
www.costengineering.eu

Estimating with Cleopatra

> > > > Estimate your whole project life cycle (design, build, maintain) in one system; Class 4 (40%), Class 3 (20%), Class 2 (10%) in one package Gradual increase of accuracy (Class 3, Class 2) Closing the loop: analyze benchmarks in class 2 estimates as input for class 4 estimates. > Enhance your business intelligence through transparency: > Knowing your exact cost
(direct, allowances, indirect, escalation, contingency)

> Knowing the effects on cost of scope changes > Keep an overview in complex projects

www.costengineering.eu

Breakdown structures How to compare various levels of granularity?

www.costengineering.eu

Breakdown structures: multi-dimensional view

www.costengineering.eu

Show case:

Example project Estimating through the project life cycle Analyse the various phases

www.costengineering.eu

Show case: Example Plant

> Scope
> Distillate process: raw product to middle distillate > By products: top and bottom > 28 pieces of equipment (columns, heat exchangers, tanks, pumps, vessels) > Executed in Western-Europe > Price level date 2011 > Finish date: November 2012 > Project life cycle: from feed to execution

> Plant design

> 3D model > Process flow diagram > Equipment list

www.costengineering.eu

Show case: Example Plant

> Class 4 estimate (40% accuracy):

> > > >

>

Based on Factors Parametric Equipment Models Applying Hand methodology Distribution of disciplines
Object re-use (Engineering Standards) Tuning for more accuracy Include allowance, indirect, escalation and contingency Disciplines: piping, mechanical, E&I, civil, etc. Parts to be estimated

Class 3 estimate (20% accuracy):

> > > > >

>

Class 2 estimate (10% accuracy)

> Detailed Unit-Cost > Bill of Quantity / Material take off input > Equipment Parameters
www.costengineering.eu

Show case: Example Plant

> Learn from estimates in previous phases
> Compare Class 4 with Class 3 Estimate > Compare Class 3 with Class 2 Estimate > Compare Class 2 (industry norm) with Class 1 (vendor norm)

> Metrics & Benchmarking

> Analyze metrics using pivot tables > View Key Quantities > Closing the loop: class 1 ratios for factor estimating

> Business intelligence

> Regression analysis > Create What-if scenario

> Cash Flow Analysis

> Show cash flow and schedule
www.costengineering.eu

Questions ?

Cost Engineering
E-mail: info@costengineering.eu www.costengineering.eu