sample cost control training proposal

Cost Management

Training &

Certification

Catalogue 2013

Tailore-Made

Tailor-made Courses

Tailor-made courses are designed to meet the specific requirements of your staff and organization. They can be delivered at your preferred location and date(s), and are thus a very cost effective solution if there is a large group of staff to be trained. They can take several forms:

A training course focusing on the specific situation, challenges and opportunities facing your organization

Combining modules from our different standard courses to meet your unique learning and development requirements

Develop a completely new course to precisely address your development requirements

for more information

Contact [email protected] or visit www.nodoc.eu

Dione Oil Co.

mailto:[email protected]

http://www.nodoc.eu/

Cost Management Training & Certification Catalogue 2013

Tailore-Made Course

2

Dione Oil Co.

1. An Introduction to Dione Oil Cost Management Model

In the project development cycle several engineering tasks

like design, procurement and construction have to be

executed. The execution of these tasks mainly involves

information processing and decision-making. Because costs

are an important factor in project management, adequate

information about costs is extremely valuable for all

engineering tasks. Therefore, a cost training programme for

the enhancing of cost knowledge for cost management and

cost control, integrated in the project development cycle, is

required. The Oil & Gas Project Costing Reference Model developed

at Dione Oil Co., is based on the use of a central information

management kernel that facilitates both the availability and

the accessibility of meaningful representations of the

evolving project information. This reference model is

designed especially for the integration of practice,

knowledge, technology and art for the development of the

cost management system.

Within the Oil & Gas Project Costing Reference Model,

generic cost management architecture has been developed.

The architecture consists of six functional modules arranged


Tailore-Made Course

3

Dione Oil Co.

around the information kernel of the model that are: Cost

Models, Cost Determination, Cost Control, Cost Monitoring,

Cost Reports, Risk Analysis, Data Analysis and Data Tuning.

The Cost Model module is used for the definition and the

management of cost models. Multiple cost models can be

defined in order to support all engineering tasks and to be

able to compare cost models.

Based on a cost model, the Cost Determination module

calculates the costs. A cost model can be selected based on a

specific cost model, or an integration of several cost models,

the required accuracy or the available information.

Cost Control, Cost Monitoring and Cost reports can be

created with the Cost Report module.

Information about the quality, the accuracy and the

sensitivity of the costs has to be provided by the Risk

Analysis module.

The analysis of (historic) data is a task for the Data Analysis

module, while the Data Tuning module has to tune data. A

new method for variant based cost estimation is proposed

and positioned in the architecture.

The cost models are defined based on the cost structure. With

the aid of the cost structure, costs can be defined for any

object causing costs. Because cost structures can be attached

to the information structures related to the Oil & Gas Project


Tailore-Made Course

4

Dione Oil Co.

Costing Reference Model, the costs can be calculated for any

object at any aggregation level. Additionally, the cost

structure enables the differentiated storage of cost

information. Based on the information structures and the cost

structures, cost views can be constructed.

The cost models are defined based on the cost structure. With

the aid of the cost structure, costs can be defined for any

object causing costs. Because cost structures can be attached

to the information structures related to The Oil & Gas

Project Costing Reference Model, the costs can be calculated

for any object at any aggregation level. Additionally, the cost

structure enables the differentiated storage of cost

information. Based on the information structures and the cost

structures, cost views can be constructed. These cost views

visualize the differentiated costs for the user.

The cost architecture and the cost structure enable the use of

four cost control loops: the engineering and planning

feedback loop, the order acceptance feedback loop, the

production feedback loop and the accounting feedback loop.

Some parts of the cost architecture have been implemented

in a prototype system. The prototype system is demonstrated

by means of an example from the project development cycle

in the project domain. Generative and variant based cost

management is used to demonstrate cost support and cost


Tailore-Made Course

5

Dione Oil Co.

control. For generative cost management two distinct cost

models, direct costing and activity based costing, are used.

2. The Cost Management Training Module (Tailor-made)

This module has been developed specifically for úú based

on the requisition datedú ..

The training based is based on the Oil & Gas Project Costing

Reference Model. The programme is to be aimed at the

development of specific competencies of specialists engaged

in Cost Control.

The training module has the following specification:

2.1 Training Title:

Cost Engineering and Cost Control for oil & Gas Projects

2.2 Training Description:

The Oil & Gas projects Cost Management, what is it and

why should we follow it? This training will define costs and

identify its components to implementing management and

control process. Participants will gain skills, strategies,

techniques, and methods, by practice and knowledge

development to implementing cost control in his own

projects.


Tailore-Made Course

6

Dione Oil Co.

2.3 Training Objectives

As a result of this training, participants will be able to:

Define Costs

Classify of Costs

Split Costs to its Components

Manage the Costs using various Techniques

Analyze Production Costs

Manage the Costs

Report the Cost for decision making

Doing Planning and Scheduling

Monitoring the Costs by Variances

Regular Achievement Analysis

2.4 Duration Of the training:

Five 5 days + 1 day for closing summary and evaluation

2.5 Training form

Workshop

Presentation

Project practice

Discussion

Brain Storm


Tailore-Made Course

7

Dione Oil Co.

2.6 Assessment by result of the Training:

Knowledge test

Practical application

Project work

Reports on participants� progress will be issued after each

module

2.7 Number of participants in one group:

15 employees

2.8 Training time schedule:

Following table show the training time schedule that describes

what will teach during the training period.

2.9 Training Material

The participants will be provided by handouts, Dione oil & gas

projects Cost management handbook and a DVD including

sample projects.

2.10 Training place

The training is assumed to be placed in Kazakhstan however it

could be placed in UAE or UK.


Tailore-Made Course

8

Dione Oil Co.

2.11 Course Trainers

Our expert trainers of this course have minimum 20 years

experience on cost engineering, cost management and cost

control field. They are graduated from well-known colleges and

had background on costing of the oil & gas projects in three

sectors: upstream, midstream and downstream both offshore and

onshore. They have 2,400 hours experience on training the

attendees of such courses for more than 400 oil & gas

organizations, entities and institutes.

2.12 Certification

Successful Participants will be granted valuable certificates at

the end of the training course after appraisal the customer.

2.13 Training Fee

For this special course the trainng fee is Euro ..... per

participant.

50 % of the fee should be paid to Dione Oil Co. account as

advanced payment.

The balance should be paid to that account at the end of

the training.


Tailore-Made Course

9

Dione Oil Co.

Day Time Content Outline Presentation Methods Handouts/Material

Day 1

9:00 - 10:30

Welcome and Introductions Introduction of instructor and participants. Review Training Objectives

Introductions: Briefly introduce self, training objectives for training session, and training agenda. Exercise: Large Group Discussion: discuss the elements of costs that they have faced before.

-

Give background information about Oil & Gas Project Cost Management and Cost Definition The Essence of Cost Management: 1. Cost Management means taking into account everything we know about how project develop and learn and matching that to the content and strategies planned for the executer. 2. Cost Management means treating project as an individual, not as a cohort group. 3. Cost Management means treating project with respect—recognizing changing capabilities and having faith in project's capacity to grow and produce the desired product.

Exercise: Small Group: Divide participants in three-four groups. Each group will select a project to complete handout 1 and share the results. • Identify three attributes of project in their classrooms and explore the teaching practices they think will support these attributes. Large Group: reporters share one project attribute and the related costs and identified by the group.

Presentation 1: definition of Costs Handout: project cost definition

10:30 – 11:00 Break


Tailore-Made Course

10

Dione Oil Co.


11:00- 13:00

Experiential learning. Cost Classifications:

according to the accountant standards: Capital Costs / Operating Costs

according to Nature or elements: Material Cost/Labor Cost/Expenses

according to Function: Production Cost/Selling & Distribution Cost /Administration Cost /RD Cost

according to Identifiably: Direct Cost/Indirect Cost

according to Behavior: Fixed/Variable/semi, fixed Variable

according Association with products: Product Cost/Period Cost

according to controllability: Controllable Cost/ Uncontrollable Cost

according to normality: Normal Cost/Abnormal Costs

Small Group: participants will consider the practices they identified further. Asking the following questions: 1. Is this practice in keeping with what I know about Costs? 2. Does this practice take into account project’s needs? 3. Does this practice demonstrate project? Large Group: facilitate a summary discussion of the experience, focusing on how much information and understanding the group’s questioning created.

Presentation 2: costs Classifications Handout: sample project cost classifications

13:00- 14:00 Lunch

14:00-16:00

Continue Classification of costs:

according to time: Historical Cost/Predetermined Cost

according To Relevance: Opportunity Cost/Relevant Cost/Sunk Cost/Shut down Cost/Differential Cost/Imputed Cost/Out of Pocket Cost / Marginal Cost and replacement Costs


Tailore-Made Course

11

Dione Oil Co.


Day 2 9:00 – 10:30

Experiential learning. Components of Costs Components of costs or cost elements are a hierarchical of costs that presents top-down (down- top) approach for budgeting, costing and finally decision making process. The participants will examine this topic in a real and live oil & gas project by gaining following knowledge. The four main components of costs are: (a) Prime Cost, (b) Works Cost, (c) Office Cost and (d) Total Cost.

Prime Cost: It consists of costs of direct material, direct labor and direct expense specifically attributable to the job. This is also known as flat, direct or basic costs.

Works Cost: It comprises of prime cost and factory overheads, (cost of indirect material, indirect labor and indirect expenses related to factory works). This cost is also known as factory cost, production or manufacturing cost.

Cost of Production (Office Cost): It is the sum total of works cost and office and administrative overheads <Cost of indirect material, indirect labor and indirect expenses related to office works>. This cost is known as office cost.

Small Group: participants will identify the costs of sample project by its components. Asking the following questions:

1. Is this practice in keeping with what I know about Costs components? 2. Does this practice take into account project’s specifications? 3. Does this practice demonstrate project's needs?

Large Group: facilitate a summary discussion of the experience, focusing on how much information and understanding the group’s questioning created.

Presentation 3: costs Classifications Handout: sample project cost Components

10:30 – 11:00 Break


Tailore-Made Course

12

Dione Oil Co.


11:00-13:00

Project Cost Management and Techniques: Project cost management includes the processes involved in estimating, budgeting and controlling costs so that the project can be completed within the approved budget.

Cost Estimation: For estimating the cost of oil & gas EPCF projects we need to have some data on hand such as:

o Enterprise environmental factors o Organizational Process Assets o Project scope statements o Cost breakdown structure vs. Work Breakdown

Structure o Project Cost management plan

Some of the Techniques that will be explain in the workshops are: o Analogous estimating o Determine recourse cost rates o Bottom-up estimating o Parametric estimating o Project management Tools o Vendor bid analysis o Reserve analysis o Cost of quality

Discussion: Participants will discuss key components in the DVD that displayed sample project techniques. Identify key aspects of cost management. Discuss any misconceptions they may have about cost management. Exercise Using the video segment and previously identified attributes as a reference, participants will identify a classroom problem or issue that needs attention and develop a plan of action to correct. Ask for participants to share their problem/issue and plan of action to correct understandings.

Presentation 4: cost Management Handouts :

1. Applying the Essentials of Cost Management (Sample)

2. Applying the

Essentials of Cost Management (Practice)

Materials:

DVD Pre-printed sample projects Cost management


Tailore-Made Course

13

Dione Oil Co.


13:00- 14:00 Lunch

14:00-16:00

Continue Cost Estimation: Using the inputs and techniques, some other objects will obtain that are used in the next step of cost management, cost budgeting. Cost Estimation outputs are presented based on the method of estimation. For example followings are the outcomes:

Activity based cost estimates

Resource based cost estimation

Parametric cost estimation

Analogy cost estimation

Activity cost estimate supporting detail

Requested changes

Cost management plan (updated)

Participants will estimate the cost of sample oil & gas project and will discuss in groups about the estimated costs and will compare the results estimated by different groups.


Tailore-Made Course

14

Dione Oil Co.


Day 3 9:00 – 10:30

Cost budgeting

Cost budgeting involves aggregating the estimated costs of individual cost elements in the cost centres or work packages to establish a total cost baseline for measuring project financial performance. In this step with some input information obtain from previous step (cost estimation) and applying the tools and techniques, budgeting will be done. For budgeting we need at least following Inputs:

Project scope statement

Work breakdown structure

Cost Breakdown Structure

Activity cost estimate supporting detail

Project schedule

Recourse calendars

Contract

Cost management plan

Using following techniques: Cost aggregation

Reverse analysis

Parametric estimating

Funding limit reconciliation

Participants will budget the cost of the sample oil & gas project and will discuss in groups about the project budget and will compare the results budgeted by different groups.

Presentation 5: cost Budgeting

Handout: Review the example to illustrate the activity that is presented in a DVD


Tailore-Made Course

15

Dione Oil Co.


10:30 – 11:00 Break

11:00-13:00

Continue Cost Budgeting Using the input information and techniques, some other objects

will obtain that are used in the next step of cost management, i.e.

cost controlling.

Cost Budgeting outputs:

Cost baseline

Earned value

Project funding requirements

Cost management plan (updates)

Requested changes

13:00- 14:00 Lunch


Tailore-Made Course

16

Dione Oil Co.


14:00-16:00

Cost controlling Cost controlling involves influencing the factors that create cost variances and controlling changes to the project budget. Cost controlling will also be done using some other input information obtains from previous step (cost budgeting) and applying the tools and techniques listed below: Necessary Inputs Information:

Cost Baseline

Project funding requirements

Performance reports

Work performance information

Approved change requests

Project management plan

Presentation 6: cost Controlling Handout : Review the example to illustrate the activity


Tailore-Made Course

17

Dione Oil Co.


Day 4

9:00 – 10:30

Continue Cost Controlling Techniques:

Cost change control system

Performance measurement analysis

Forecasting Project performance

Reviews Project management software

Variance management Output information obtains from cost controlling step are listed below:

Cost estimate (updates)

Cost baseline (updates)

Performance measurements

Forecasted completion

Requested changes

Recommended corrective actions

Organizational process assets (updates)

Project management plan (updates)

Participants will calculate the variances between planned and actual cost of the sample oil & gas project and will discuss in groups about the variances

Presentation 7: Cost Controlling Handouts: Comparing the outputs of a controlled cost project sample that is delivered in DVD.

10:30-11:00 Break


Tailore-Made Course

18

Dione Oil Co.


11:00-13:00

Production Costs

Production costs can be divided into two categories:

VARIABLE COSTS (direct) which are proportional to production. For followings are the items that are proposed as variable costs:

Raw Material

Direct Labor

Supervision

Maintenance

Utilities

Supplies

Royalties and Patents

Packaging & delivery

Participants will separate the production costs, split them to the components of production cost of the sample oil & gas filed and will discuss in groups about the production costs.

Presentation 8: Production Costs

Handouts: review DVD of sample production costs of the sample production costs.

13:00-14:00 Lunch


Tailore-Made Course

19

Dione Oil Co.


14:00- 16:00

Continue Production Costs

FIXED COSTS which are independent of production such as:

Depreciation

Property Taxes

Insurance

Credit (Financing)

Other Obligations

General Expenses

Research and Development

Public Relations

Accounting and Auditing

Legal Advice and Patents

Administration and management costs

Sale and distribution costs


Tailore-Made Course

20

Dione Oil Co.


Day 5 9:00 – 10:30

Monitoring by Variances

Variances tell us whether we are going in correct direction or we in wrong direction. Two types of variances in cost management are Schedule Variance (SV) and Cost Variance (CV).

Schedule Variance (SV): Schedule Variance tells us that how much we are ahead of or behind the schedule. Schedule Variance (SV) is a measure of schedule performance on a project.

Cost Variance (CV): Cost Variance tells us that how much we are over or under the budget. Cost Variance (CV) is a measure of cost performance on a project.

Participants will monitor the cost of the sample oil & gas project and will calculate and will discuss in groups about the variances and will compare the results in different groups.

Presentation 9: Monitoring by Variances

Handouts: preparation of variances for the sample project submitted in a DVD

10:30-11:00


Tailore-Made Course

21

Dione Oil Co.


10:30-13:00

Understanding Planning and Scheduling The project management team uses a planning process group to plan and manage a successful project for the organization. The planning processes develop the project management plan and also identify, define and mature the project scope, project cost and schedule the project activities. The planning process group facilitate project planning across multiple processes. The following list identifies the processes the project team should address during the planning process to decide if they need to be done, and if so, by whom. The planning processes are listed below:

Develop project management plan

Scope planning

Scope definition

Create WBS

Activity definition

Activity sequencing

Activity resource estimating

Activity duration estimating

Schedule development

Cost estimating

Cost budgeting

Quality planning

Human resource planning

Communication planning

Small groups will plan and schedule the sample project activities and will discuss if they have differences within

groups.

Presentation 10:

Understanding Planning

and Scheduling

Handouts: Review the

planning and scheduling of

a sample project delivered

in a DVD


Tailore-Made Course

22

Dione Oil Co.


Risk management planning

Risk identification

Qualitative risk analysis

Quantitative risk analysis

Risk response planning

Plan purchases and acquisition

Plan Contracting

13:00- 14:00 Lunch

14:00- 16:00

Cost reports and decision making

Reporting the cost of a project could be based on the project:

cost components

Cost types

Budget

Phase

Location

WBS

Cost Centers and elements

Risks

Resources

Factors

The participants divide to groups and prepare the reports for the sample oil & gas project. The reporter of each group presents the project cost report and others issue challenges to the reports.

Presentation 11: cost reporting Handouts: DVD that contains sample reports


Tailore-Made Course

23

Dione Oil Co.


Day 6

9:00 – 10:30

Closing Summary

Review the purpose and content of the training. Ask participants what they learned as a result of the training and how they will be able to use what they learned. Determine if there are still areas of misunderstanding and clarify where necessary.

Materials:

Learning materials

10:30 – 11:00 Break

11:00-12:00

Assessment: Each participant will be given a written assessment and will be expected to achieve 80% to receive training certificate.

Have participants complete the Participant Evaluation Form. Collect

Materials Learning Assessment Materials Participant Evaluation Form

Evaluation Regular Achievement Analysis

Personal Effectiveness module

18:00-21:00 Goodbye Party

sample cost control training proposal

Education