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A Guide Line To Perform

EPC Project Contract Cost

EstimationIn the Field of

Oil, Gas & Petrochemical Industries

Held by : FARAGOSTARAN

Present by: Hassan MirzaieDate : 11 January 2007

Location: Simorgh Hotel

Tel. & Fax : 021- 8870 29 24 , 8870 45 84

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No Body Plans to Fail, But

Fails to Planning!

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EPC Key Approach

EPC Project Contract Cost Estimation

Contractors Know-How For EPC Project Executing

Project Work Break Down Structure (WBS)

Identifying and Managing Risks in EPC Projects

Managing & Control of Project Changes in EPC Projects

EPC Project Management

Engineering & Design Phase Documents Flow Diagram

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A Guide Line To Perform

EPC Project Contract Cost

EstimationIn the Field of

Oil, Gas & Petrochemical Industries

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Seminar Approach

1. EPC Project Definition

2. Functional WBS Code for EPC Project

3. Methodology and Flow of Cost Estimating

4. Main Questions to be Asked to Cost Estimate

5. Why People Get Estimating Wrong

6. Risk Related Cost Estimating7. Summary

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1. EPC Project Definition

Performing of Feasibility Study

Preparation of Bid Documents

License Agreement and Engineering Design (Basic,FEED & Detail Activities)

Procurement

Construction / Erection and Pre-CommissioningCommissioning and Start-up

Training

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DefineScope

Funding /Budgeting

Feasibility

Study

PlanningPhase

PMC/Engineer

Selection

Process/

Basic Design

ITB

Preparation

Evaluation

& Clarification

ITB

Bid Evaluation &Clarification

Bid Negotiation

Letter of Intend

Contract Negotiation& Signing

Marketing/SalesApproach

Bidding Strategy

Partnering

Site Survey &Clarification

Cost Estimate &

Bid Submission

Project DefinitionPhase

Project Execution

Engineering

Design

Procurement

/Supply

Construction

Implementation Phase

EPC Project Flow Diagram

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Typical Weight Percent of An EPC

Project

1Logistic and Others7

1Training6

2Commissioning and

Start-up

5

20-25Construction Pre-Com450-60Procurement3

7-10License & Engineering2

1Feasibility Study1

% RangeDescriptionItem

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2. Functional WBS Code for EPC

Project

PrefossinalServices Materials Labor Work Transportation

Direct / IndirectExpenses

Others

EPC Project

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Professional Services

Professional

services

Detail

Engineering

Quality MGT

Procurement

Const. MGT &

Supervision

Project MGTBasic

Engineering

Project

Administration

Comm. &

Operation

Training

Others

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Professional Services (1/2)

Project Management and ControlProject Directing, Organization and Stuffing, Project Planning and Control,

Project Coordination, Estimating, Management Support

Basic EngineeringProcess Design, Plant Safety, Instrumentation, General Civil, Plant Layout andPiping Specification

Detail EngineeringCivil and U/G, Structure, Building, Equipment, Piping, Instrumentation,Electrical, Paint AND Insulation,

ProcurementProcurement General, Purchasing, Subcontracting, Expediting, Traffic andCustom Clearances

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Professional Services (2/2)

Quality ManagementQuality Assurance, Quality Control, Shop Inspection, Field Inspection,

Maintenance Inspection, Plant Diagnosis

Construction Management and SupervisionConstruction Management and Super-intendance, Planning,Field Controlling,Field Installation Supervision, Field Technical Support, Field Engineering,Subcontracting Administration

Commissioning and OperationCommissioning and Operation General, Pre-commissioning, Commissioning,Operation Services

Project AdministrationAdministration General, Personnel Control, Project Accounting, Communicationand Correspondence, Document Handling, Camp Organization, General Affairs

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Materials

Materials

Spare Parts OthersDirect

Materials

Ind. Mat. for

Tem. Facilities

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Materials

Direct Materials

Civil Materials, Structure Materials, Building Materials, Equipment,Piping and Bulk, Instrumentation, Electrical, Insulation and Painting,FireProofing and Surface Protection, Catalysts, Chemicals, and Utilities

Indirect MaterialsTemporary Building, Utilities and Telecommunications, HousingEquipment and Furniture, Shop Equipment and Tools,CommonScaffolding, Canteen

Spare Partsspare Parts for Commissioning and Start-up, Spare Parts for Operation (2Years)

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Labor Work

Labor Work

Indirect Field

Operation

Construction

Equipment

Supervisory

Others

Direct Labor

Work

Ind. Lab.

Work for

Temp. Work

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Labor Work (1/2)

Direct Labor WorkCivil General, Concrete Structure, Steel Structure, Building, Equipment

Installation, Piping, Instrumentation, Electrical, Insulation and Painting, FireProofing and Surface Protection, Catalysts, Chemicals and Utilities, Othersincluding System Test Preparation

Indirect Labor Work For Temporary FacilitiesTemporary Building, Utilities and Telecommunications, Housing Equipment andFurniture, Assembling of Shop Equipment and Tools, Installation of CommonScaffolding, Canteen,

Indirect Field OperationCommissioning and Operation, Project Administration

Supervisory

Civil General, Concrete Structure, Steel Structure, Building, EquipmentInstallation, Piping, Instrumentation, Electrical, Insulation and Painting, FireProofing and Surface Protection, Catalysts, Chemicals and Utilities

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Labor Work (2/2)

Construction Equipment

Construction equipment, Operator and Driver

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Transportation

Transportation

Onshore OthersOffshore Ocean Frieght

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Transportation

Offshore

Packing, Handling, Transportation, Shipping and Custom Clearances

Ocean FreightOcean Freight, Air Freight

OnshorePacking, Handling, Transportation,

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Direct and Indirect Expenses

Financial

Charge

Tax and

Duties

Insurance

Licensors

Charge

Home and

Branch Office

Expences

Field Office

Expenses

Consultant

Fee

Third Party

InspectionCharge

Agent Fee Others

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Direct and Indirect Expenses (1/2)

Home and Branch Office ExpensesTraveling and Traffic Charge, Telecommunication Charge, Office Charge,Social

Charges, Miscellaneous Charges

Field Office ExpensesTraveling and Traffic Charge, Telecommunication Charge, Office Charge,SocialCharges, Miscellaneous Charges

Financial ChargeL/C Charge, Bond Charge, Interest Charge

InsuranceGovernmental Insurance, Transport Insurance, Travels, Accident Insurance,Social Insurance, Construction Insurance, Provisional Liability Insurance

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Direct and Indirect Expenses (2/2)

Tax and Duties

Import Duties, Corporate Charge

Licensors ChargeRoyalty, Know-How Fee, Basic Design Fee, Design Checking Fee,

Operation Charge

Consultant FeeEngineering Consultant Fee, Training Consultant Fee, Accountant Fee,

Lawyer Fee

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Others

Others

Rate

Difference ContingencyGeneral

Overhead

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3. Methodology and Flow of Cost

Estimating3.1 Definition of Cost

3.2 Type of Costs3.3 Cost Estimation Methodology (Tools and

Techniques)3.4 Cost Estimation Templates for EPC

Project

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3.1 Definition of Cost

A Resource (People, Equipment, et.) whichForeseen to Achieve a Specific Objective

Cost Estimating Should be Based on a WBS toImprove Accuracy

Cost Estimation Includes all the Work Needed to

Complete the Project Including: Quality Efforts,Risk Efforts, Management Time

Cost Estimates are Generally Expressed in Units of

Currency (Dollars, Euro, Rials,etc.,)

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3.2 Type of Costs (1/2)

Variable Costs: Any Cost that Changes With the Amount ofProduction or the Amount of Work. Examples Include the

Cost of Material, Supplies, Labor, etc. Fixed Costs: Costs That Do Not Change as Production

Changes. Examples Include Set-Up, Rental, etc.

Direct Costs: Costs That Are Directly Attributable to the Work

on the Project. Examples are Team Travel, Recognition andRewards, Cost of Materials, Training

Indirect Costs: Overhead Items or Costs Incurred for theBenefit of More Than on Project. Examples Include Taxes,

Benefits, Insurances, etc. Opportunity Costs: Net Present Value of a Project. Is Really a

Choice to Do / Not to Do a Project

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3.2 Type of Costs (2/2)

Type of Guest Accuracy Rate Rough Order of Magnitude (ROM) -25% to 75%

Budgetary -10% to 25%

Approximate Estimate (Informational) + or 15%

Definitive (Based on Detailed Information) + or 5%

3 3 C E i i M h d l

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3.3 Cost Estimating Methodology

(Tools and Techniques)3.3.1 Analogous or Top-Down

3.3.2 Parametric or Bottom-Up3.3.3 Cost Budgeting

3 3 1 A l T D

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3.3.1 Analogous or Top-Down

Estimating (1/2) Uses the Actual Cost of a Previous, Similar Project as the

Basis for the New Estimate

Advantages: Quick

Activities Need not be Identified

Less Costly to Create

Disadvantages: Less Accurate

Estimates are Prepared with a Limited Amount of Detailed Information andUnderstanding of the Project

Requires Considerable Experience to Do Well

Extremely Difficult for Project With Uncertainty

3 3 1 A l T D

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3.3.1 Analogous or Top-Down

Estimating (2/2) Examples:

Estimation of Engineering Man-Hour from Previous Projects

Weight Of Piping Bulk Materials

Cost of Temporary Equipment to be Used During Construction

3 3 2 P t i B tt U

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3.3.2 Parametric or Bottom-Up

Estimating (1/2) Estimate Individual Work Items and Sum Them to Get a

Total Estimate

Advantages: More Accurate

Gains Buy-In From Team Because the Team Creates Estimates the CanLive With

Has Been Prepared Based On a Detailed Analysis of the Project Provides a Basis for Monitoring and Controlling, Performance Measurement

and Management

Disadvantages: Takes Time and Expenses

Tendency for the Team to Pad Estimates Unless Taught About Reserves

Requires that the Project be Well Understood

Requires Time to Break the Project Down into Smaller Pieces

3 3 2 P t i B tt Up

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3.3.2 Parametric or Bottom-Up

Estimating (2/2)

Examples: Detailed Estimation of Cost of Engineering Manpower, Equipment,Materials, Construction Fee Based on Conceptual Design Information

and Document.

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3.3.3 Cost Budgeting

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3.3.3 Cost Budgeting

A Budget is Merely a Compilation of the IndividualCost Estimates.

Management Reserves: Extra Amount of Funds tobe Set Aside to Cover Unforeseen Risks or Change inthe Project

Contingency Reserves: Percentage of the Subtotal ofthe Cost of Project Items, Supplemental Work,Materials and Expenses

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Report from GG5, Dec. 20, 2005

General Methodology

Create Technical

Requirements Document

Develop Technical

Conceptual Design

Create the WBSEstablish C/S

Coordinator

for each WorkPackage

Establish rules for C/S &

define assumptions

Set up tools and

format for data input

Develop the RLSand Mgmt Docs

Estimate Cost &Schedule and

create the BOE

ReviewNo

Yes

Fund Starts

C/S = Cost & ScheduleWBS = Work Breakdown StructureBOE = Basis of EstimateRLS = Resource Loaded Schedule

Interpret this Core

Cost in each Region

3 4 Cost Estimation Templates for

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3.4 Cost Estimation Templates for

EPC Project (1/2) A Commercial Proposal for an EPC Project Normally

Includes Following Sections:

EngineeringMan Power (Basic Engineering, Endorsement, Detail Engineering)

Consumable

Office and Furniture

Management

Overhead Contingency

Procurement

Procurement Engineering and Man Power (Technical Doc. Preparationand Material requisition, Bidder Clarifications, Proposal Evaluation(Technical, Commercial, Expediting and Inspection)

Equipment (LC Opening, Purchase Order, Manufacturing, Test andInspection)

Bulk Materials (LC Opening, Purchase Order, Manufacturing, Test andInspection)

Logistic (Shipment, Custom Clearances and Delivery to Site)


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EPC Project (2/2) Insurance

Provisional Cost

Overhead and Contingency

Construction Site Preparation

Site Establishment Plant Construction

Safety and Security

Camping

Pre-Commissioning Commissioning

Management Man Power

Contingency

Construction Insurance

EPC Cost Weight Percent

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gDescription (Sub (Total Remarks

8.5

Man Power 66 Engineering TeamConsumable 7.5 Stationary, Doc. / Dwg.

Office and Furniture 8.5 Soffice Included all Stationary Equipment

Management 5

Overhead 8 Taxes, Duties, Social Fees

Contingency 5

64Equipment 65 Mechanical, Electrical, Instrument

Bulk Materials 18.5 Piping, Steel Str., Inst., Ele., Paint, Ins., F&G, Chem.,

Logestic and Custom Clear 4 Transp, Costum Du, Insp, Load and Unload, Heavy Li

Man Power 2.8

Insurance 0.7 Financial and Logestic Insurance

Overhead and Contingency 0.5 Office Rent, ConsumablesProvisional Cost 8.5 2 Years Spare Part, Duties

27.5

Site Preparation 5 Site Preparation and Site Access

Site Establishment 2 Mobilization / Demobilization, Workshop, Spool Shop

Plant Construction 70 Civil, Structures, Mechanical, Electrical, Inst. Installat

Safety and Security 2.5 HSE, Guard Housing, Fire Station, First AidCamping 8.5 Camp, Catering, Transportation

Pre-Commissioning 2 Mechanical Complition, Test Packages

Commissioning 2.5 Test Running, Performance Test, Vendor Specialist

Mangement Man Power 1.5

Contingency 5

Construction Insurance 1 Full Risk

100

Engineering

Procurement

Construction

Total

Overall S Curve

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Overall S Curve

Finishing

PeriodMay-2

00

5

Jun-2

00

5

Ju

ly-2

005

Aug-2

005

Sep-2

00

5

Oc

t-200

5

Nov-2

00

5

Dec-2

00

5

Jan-2

00

6

Fe

b-2

00

6

Mar-2

00

6

Apr-2

00

6

May-2

00

6

Jun-2

00

6

Ju

ly-2

006

Aug-2

006

Sep-2

00

6

Oc

t-200

6

Early Pla 0 0 1 1 4 11 18 26 37 48.2 59.8 72 83 90.9 96 98 99 100

Actual

Cummulative Plan Progress

0

10

20

30

40

50

60

70

80

90

100

May-2

005

Jun-

2005

Ju

ly-2

005

Aug-

2005

Sep-2

005

Oct-2

005

Nov-2

005

Dec-

2005

Jan-

2006

Feb-

2006

Mar-

2006

Apr-2

006

May-2

006

Jun-

2006

Ju

ly-2

006

Aug-

2006

Sep-2

006

Oct-2

006

MONTH

PR

OGRE

S

Early PlanActual

Engineering S Curve

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Engineering S Curve

Finishing

Period

May-2

005

Jun-2

005

Ju

ly-2

005

Aug-2

005

Sep-2

005

Oc

t-2005

Nov-2

005

Dec-2

005

Jan-2

006

Fe

b-2

006

Mar-2

006

Apr-2

006

May-2

006

Jun-2

006

Ju

ly-2

006

Aug-2

006

Sep-2

006

Oc

t-2006

Early Plan 3.40 12.81 24.00 34.00 43.00 51.50 60.00 70.30 78.70 80.01 84.27 88.31 90.40 91.09 91.60 92.05 95.80 100.00

Actual


0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

80.00

90.00

100.00

May-2

005

Jun-2

005

July

-2005

Aug-2

005

Sep-2

005

Oct-2005

Nov-2

005

Dec-2

005

Jan-2

006

Feb

-2006

Mar-2006

Apr-2006

May-2

006

Jun-2

006

July

-2006

Aug-2

006

Sep-2

006

Oct-2006

MONTH

PROGRESS

Early PlanActual

Procurement S Curve

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Procurement S CurveFinishing

Period

May-2

005

Jun-

2005

July-2

005

Aug-2

005

Sep-

2005

Oct-

2005

Nov-2

005

Dec-2

005

Jan-

2006

Feb-

2006

Mar-

2006

Apr-

2006

May-2

006

Jun-

2006

July-2

006

Aug-2

006

Early Plan 0.00 0.00 0.00 0.00 1.35 7.95 15.14 22.77 34.54 46.64 59.25 72.14 84.51 94.15 98.58 100

Actual


0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

80.00

90.00

100.00

May-2

005

Jun-2

005

Ju

ly-2

005

Aug-2

005

Sep-2

005

Oc

t-2005

Nov-2

005

Dec-2

005

Jan-2

006

Fe

b-2

006

Mar-

2006

Apr-

2006

May-2

006

Jun-2

006

Ju

ly-2

006

Aug-2

006

MONTH

PROGRES

Early Plan

Actual

Construction S Curve

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Construction S Curve

FinishingPeriod

May-20

05

Jun-2

0

05

July-20

05

Aug-20

05

Sep-20

05

Oct-20

05

Nov-20

05

Dec-20

05

Jan-2

0

06

Feb-20

06

Mar-20

06

Apr-20

06

May-20

06

Jun-2

0

06

July-20

06

Aug-20

06

Sep-20

06

Oct-20

06

Early 0.00 0.00 0.00 0.35 6.20 12.35 20.11 28.54 37.54 47.04 57.14 67.88 77.48 84.12 89.15 94.16 97.17 100

Actual


0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

80.00

90.00

100.00

May-2

005

Jun-2

005

Ju

ly-2

005

Aug-2

005

Sep-2

005

Oc

t-2005

Nov-2

005

Dec-2

005

Jan-2

006

Fe

b-2

006

Mar-

2006

Apr-

2006

May-2

006

Jun-2

006

Ju

ly-2

006

Aug-2

006

Sep-2

006

Oc

t-2006

MONTH

PR

OGRE

S

Early Plan

Ac tual

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Engineering Man-Hour EstimationQty

Size Sheets Eng. Draft. Eng. Draft. Total

Specifications / Manuals

Standard DrawingsCalculation Notes

Drawings

Data Sheets

Sketches

Inspection and Test Plan

Vendor Document Review Form

Bid EvaluationVendor Drawing / Document Review

Construction Tender Documents

QA DocumentationCoordination Activities

Man-HourDescription

Doc / Dwg Unit Man-Hour

Eq ipment Cost Estimation

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Equipment Cost Estimation

Drums

Columns / Towers

Reactors

Exchangers

Air Coolers

Tanks

Filters

HeatersFurnaces

Flares

Ignitor Packages

Incinerators

Reformerspumps

Compressors

Gas Turbines

Steam Turbines

Diesel / Gas Engines

Packages

Miscellaneous

Inter.Com.

Spa.

2Y.

Spa.

Cost

Inst.For.

Mat.

For. Gr.

Tot.

Description

Tr.

Wgh.

Loc. Loc.Qty

Mat.

Cod.

Est.

Dim.

Op.

Wgh.

B lk M i l C E i i

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Bulk Material Cost Estimation

Bulk and Piping Mat.

Electrical Equipment

Electrical Bulk

Instrument Eq.

Instrument Bulk

Steel Structures

SupportsPaint

Insulation

Other Coating Mat.

Fire and Gas

Fire FightingGeneral Building

Miscellaneous

2Y.

Spa.

Inst.Description Qty

Mat.

Cod.

Est.

Dim.

Est.

Wgh.

Tr.

Wgh.

Cost

Loc.Inter.

Com.

Spa.

Loc.

Fab.

For.

Mat.

For. Gr.

Tot.

Ch i l / C l C E i i

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Chemical / Catalyst Cost Estimation

Init. F Fir.

Y.

Init.

F.

Fir.

Y.

Chemical

Catalyst

Cost

Loc. Supp.Qty.

Init. F.

Qty.

Fir. Y.

Init.

Fill.

Description

Aso.

Pck.

Eq.Tag.

No.

Gr.

Tot.

Inst.

Consumption

Init.

Fill.

First

Y.

Transpor

tation

First

Y.

For. Supp.

Construction Cost Estimation

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Excavation and Backfilling M3

Concrete Works M3

Reinf. Con. Process Buldg & Fin.

Protection of Buried Cables / Pipes M3

Drainage System M3

Asphalting, Ballasting & Dickes M3

Underground Piping IDErection of Fixed & Floating Roof Tanks Ton

Prefab. of Large Bore Piping (2" and Above) ID

Prefab. And Erection of Pipe Support ID

Erection of Steel Structure Ton

Erection of Fixed Equipment and Heat Exch. Ton

Erction of Large Bore Piping (2" and Above) IDPrefab. And Erction of Small Bore Piping ID

Erection of Machinery and Packages Ton

heavy Equipment Erection (90 Tons and Above) Ton

Erection of Internal Parts of Equipment Ton

Installation of Earthing System Unit

Electrical Cables Laying and Connections L.MPlant Lighting System Unit

Panel Installation inControl Room / Substation Cu.

Cathodic Prtection L.M

Electrical / Instrument Cable Tray L.M

Field Installation of Instrument Unit

Pneumatic / Electrical Connections Unit

Painting of Piping, Equipment and Tanks M2

Insulation of Piping, Equipment and Tanks M2

P.W (%)Av. Unit Price PriceDescription Unit Qty Man-Hour

Indirect Machinery DistributionTotalMonthSL

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

Batching Plant

Truck MixerLoader

Truck Mixer

Excavator

Roller

Grader

Water Tanker

Btumen Car

Finisher

Craner 800 Ton

Craner 250 Ton

Craner 100 Ton

Craner 45 Ton

Craner 30 Ton

Craner 20 Ton

Craner 15 TonTIG Welding Set

Diesel Welding Machine

Air Comp.250 (CFM)

Air Comp.450 (CFM)

Stress Relieve Set

Sand Blast Set

Airless Spray SetTractor With Trailer

Lift Truck 10 Ton

Lift Truck 5 Ton

Trailer

Diesel Generator 50 KW

Diesel Generator 150 KW

Pick Up Van

PatrolMini Bus

Bus

Ambulance

Total

M/M

MonthSL.

No.Description

Direct Manpower Distribution

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

Foreman

Tank Fabricator

Code Welder

S/S WelderSteel Erector

Burner

Scaffolder

Mill Wright

Machine 1Machine 2

Helper

Labour

Foreman

Mason

Carpenter

Barbender

S/S Welder

Blacksmith

HelperLabour

Description

Month Total

M/MStatic & Rotary Equipment

Civil, Building and Structure


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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

Foreman

S/S Welder

Scaffolder

Sand BlasterElectrician 1

Electrician 2

Helper

Labour

Foreman

S/S Welder

Instrument Fitter 1

Instrument Fitter 2Scaffolder

Electrician

Helper

Labour

Electrical and Telecommunication

Instrumentation

DescriptionMonth Total

M/M


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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

Foreman

TIG Welder

Code Welder

S/S Welder

Steel Erector

Burnerman

Pipe Fitter

Mechanic 1

Mechanic 2

Stress Relive Tech.

Scaffolder

Blacksmith

Wrapping ManHelper

Labour

Foreman

Scaffolder

Insulator

TIN SmithHelper

Labour

Foreman

Painter

Scaffolder

Sand Blaster

Helper

Labour

Piping

Insulation

Painting


M/M

Indirect Manpower Distribution

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18Project Director

Site General Manager

Secretery

Contract Administrator

CoordinatorSenior Safety Engineer

Plan. & Project Cont.Manager

Cost Controller

Planner

Project ControllerPlanning Reporter

S/S Superintendent

S/S Engineer

S/S Technician

SurveyourSurveying Worker

Mechanical Supperintendent

Mechanical Engineering (Rotary)

Mechanical Technician (Rotary)

Mechanical Engineering (Static)Mechanical Technician (Static)


M/M

Indirect Manpower DistributionM th T t l

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

Piping EngineeringPiping Technician

Electrical Supperintendent

Electrical Engineering

Electrical Technician

Instrument SuperintendentInstrunment Engineering

Instrument Technecian

Paint and Insulation Technecian

QA /QC Supervisor

QA /QC Staff

Field Eng. & QC Manager

Technical Office Staffs

Draftsman

Document Center Senior Officer

Document Center Officer

Stress Relieve StaffNDT Staff

NDT Worker

Precommissioning manger

Precommissioning Engineer

Precommissioning Technecians

Commissioning Manger

Commissioning Engineer

Commissioning Technecians


M/M

Indirect Manpower Distribution

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18Training Manger

Training Engineer

Training Technecians

Proc.t & Stores Superintendent

Store Supervisor

Store Controller

Store Worker

Buyer (Site)

Buyer (Home Office)

Adm. & Finance Superintendent

Administration Staff

Accounting

Camp Service Officer

Site Service Officer

Nurse

Watchman

Teaman

Cleaner

Chief Cooker

Cooker

Postman

General Helper

General Worker


M/M

4. Main Questions to be Asked to Cost

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Estimate Were Historical Data Used?

Were Inflation Rates Used?

Were Project Scope Definition Have Been CompletelyUnderstood and Interred in the Cost Estimating Formats?

Were Geometrical and Site Condition CompletelyUnderstood?

Were Codes and Standards Have Been Clarified?

Were Any Regulation to be Followed During Contract HaveBeen Asked From Client?

Were Training Requirements for Client Personnel HaveCommunicated?

Is There Any Client Facilities during Contract Execution?

5 Why People Get Estimating Wrong?

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5. Why People Get Estimating Wrong?

Over Optimistic Nothing Will Go Wrong

Underestimating Things Like Control the Activity, Coaching, Supervision,Project Meeting

Lack of Understanding of Project Scope Ignoring Reality Assuming Nothing Will Change

Just Guessing

Estimating Isnt a Managed Activity!

Junior People Involvement Cross Section Communication During Estimation Time

Double Estimating

Unclear Scope of Supply Between Procurement and Construction

Department Underestimating Cost of Temporary Facilities, Consumables, Tools, etc.,

for Construction, Pre-commissioning, etc.

Lack of Good Relations With Subcontractors (Vendors)

Giving Gold Plating Instead of Following Scope

6 Risk Related Cost Estimating

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6.Risk Related Cost Estimating

Type / Complexity of Project

Procurement Restriction and LawClient / Contractor Resources (personnel, etc.,)

Project Schedule

Clients / Contractors Ability to Finance Project

Scope Changes

Design Criteria

7.Summary (1/2)

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7.Summary (1/2)

Project Cost Management / Estimating is PrimarilyConcerned with the Cost of the Resource Needed to

Complete a Defined Activity. Project Cost Management Should Also Consider the Effect

of Project Decisions on the Cost of Using, Maintaining, andSupporting the Product, Service, or Result of the Project.

Project Cost Estimating Consider the InformationRequirements of the Project Stakeholders. DifferentStakeholders will Measure Project Costs in Different Ways

and Different Items. On Some Projects, Especially Ones of Smaller Scope, Cost

Estimating and Cost Budgeting are so Tightly Linked thatare Reviewed as a Process that can be Performed by a

Single Person.

7. Summary (2/2)

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7. Summary (2/2)

Some Organizations have Predefined Approachedto Cost Estimating. Where these Exist, the ProjectOperates Within the Boundaries Defined by thePolicy

Cost of Quality Should be Also be Used to Preparethe Schedule Activity Cost Estimate.

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Thank You