Technical Program Abstracts

(EST) Estimating

(EST-2385) Benchmarking Project Estimate - A Case Study for Process Unit

Level: Basic

Author(s): Vijay S. Jambhekar

Wednesday, Jun 14 8:00-9:00/Celebration 3-4

Abstract: The oil and gas industry has since the 1990’s followed a structured process for project development, funding, and management or Stage Gate process. At the end of each project stage and based on a set of engineering deliverables, the project team develops a cost estimate, writes a decision support package and is expected to benchmark project estimate with similar analogs.

This paper will explain the role and function of benchmarking, planning for benchmarking, discuss differences between estimate and benchmark, discuss data collection as well as the common approach used to benchmark a project estimate. It will show how a project estimate was benchmarked against similar projects around the world.

The case study will also highlight challenges faced by a project estimator and the project controls team in benchmarking project estimates. It will show how benchmarking results were communicated to the project review team / project sponsor to gain acceptance of the project scope and estimate and concludes with the importance of benchmarking in the stage gate process.

 

(EST-2391) (Presentation Only) Cost Estimate Review Simulation

Level: Intermediate

Author(s): Larry R. Dysert, CCP CEP DRMP FAACE Hon. Life

Monday, Jun 12 3:30-5:45/Celebration 3-4

Abstract: This presentation will involve a simulated cost estimate review between a project owner client (the estimate requester) and an EPC contractor (the estimate provider). It will illustrate several examples of common problems and issues that occur in the estimate review process, as well as provide recommended approaches that help to ensure that both client and contractor obtain maximum benefit from a comprehensive estimate review for a project.

By exploring real-life practical examples and situations, this presentation will be useful to project teams from both owners and contractors.

 

(EST-2447) Estimating Construction Costs in an Emerging and Unsophisticated Market

Level: Intermediate

Author(s): Juan P. Malo R.; Gustavo Vinueza C.

Sunday, June 11 2:45-3:45/Celebration 3-4

Abstract: Construction in Ecuador has been evolving at a speed never seen before.  The growth and stability of the economy, plus a government believing in local spending and consumption has generated a new market condition. The housing market has been propelled by a mortgage increase from both public and private banks, which gave birth to a market worth billions of dollars.

One of the crucial components in real estate business is to accurately estimate the construction costs for each project. Nowadays, companies use several usually unprolific methods in order to generate estimations for feasibility analysis. Speed and precision are keys to succeed in this process. 

Our objective through this investigation is to test and describe a methodology for estimation processes in an emergent market.  These estimations are based on prices per unit combined with a series of local factors for profiling each segment.  Calculations are detailed ahead.

 

(EST-2486) Getting Granularity in Project Life PM and Engineering Costs

Level: Intermediate

Author(s): Shoshanna Fraizinger

Tuesday, Jun 13 4:30-5:30/Celebration 3-4

Abstract: Typically, project management (PM) & engineering costs are estimated as a percentage of the overall direct field construction costs and are developed using a simple set of known estimating metrics and fragnets for engineering phases of work.

This limited approach lacking an interrogative basis, results in cost estimates for PM and engineering functions which are very limited making it difficult for an owner to validate baseline budgets & schedules.

We have recently developed a new estimating tool and approach to developing these functional costs to a situation where development of these costs is based on the activity, tasks, deliverables & resources defined by the client organization’s governance.

This achieves a bottom’s up, granular estimate which quickly approaches an AACE® class III level estimate with a high level of confidence very early on in the project life cycle. It is proposed that articulation of the process, when applied fully, will build confidence in stated AACE® Class and provide assurance of PM and engineering costs as early as the investment appraisal and conceptual engineering phases

In addition, because we are able to develop these costs on a resource-deliverable basis, the data coming from the tool has potential to improve a variety of organizational planning and reporting activities such as owner’s organizational resource validation, confirmation of headcount requirements over project life cycle phases, validation of lace ups between interfacing governance procedures.  It provides the planner with the tools for alignment to the work breakdown structure, is aligned to any stage gate syndrome and through its resource identification provides an early sight of potential performance management issues.

 

(EST-2501) Engineering Estimate Accuracy of Highway Construction Alternative Delivery Methods

Level: Intermediate

Author(s): Douglas S. Alleman, PE; Dr. Daniel Tran; Arthur Antione; Dr. Keith Molenaar

Sunday, June 11 12:00-1:00/Celebration 3-4

Abstract: Early accuracy in highway cost estimating is vital for proper project planning and program budgeting.  The primary audience for this research includes state and federal departments of transportation (“agencies”) using or developing alternative project delivery methods.  This study focuses on examining Engineering Estimate (EE) accuracy across four main delivery methods in highways, including: design-bid-build (D-B-B), design-build/best value (D B/BV), design-build/low bid (D B/LB), and construction manager/general contractor (CM/GC).  The objective of this paper is to explore the estimating accuracy of project delivery methods, and where inaccuracies exist, explore whether agencies typically over or under estimate the contract award value.  The main findings are as follows: 1) D-B/BV and D-B-B have no difference in means of EE accuracy; 2) agencies obtain the greatest estimating accuracy for CM/GC projects; and 3) agencies tend to overestimate D-B-B, D-B/LB, and D-B/BV.  These findings come from analyzing 275 state and federal highway construction projects, completed from 2004 to 2015, validated by agency representative interviews. This paper contributes to the construction body of knowledge by presenting one of the first studies that evaluate the accuracy of agency estimates across different project delivery methods in highways and is the first to empirically prove that CM/GC highway construction projects have greater EE accuracy than other delivery methods.

 

(EST-2525) FPSO Bid, the Delicate Choice of Class of Estimate

Level: Intermediate

Author(s): Ousmane Aidara

Wednesday, Jun 14 9:15-10:15/Celebration 3-4

Abstract: In the FPSO Lease and Operate industry, bidding phases are generally short and presales cost often partly or totally paid by the Contractor. When it comes to prepare an offer for such uncompensated tenders, the Contractor always faces the difficult decision to know the sufficient level of project maturity to develop a confident price for a lump sum contract. Although AACE practices recommend having a class 2 or 1 estimate for a firm price, such level of maturity requires a long FEED with high cost. This leads to the development of a customized class 3 estimate sufficiently mature to develop a bid price for an FPSO project with an optimized presales cost.

Moreover, several construction models are involved where different estimating methods can be used. While using an analytical estimating method would require advanced engineering, the gain of accuracy appears to be limited when Contractors use internal standards with strong benchmarks.  

This paper refers to experiences acquired from this development for FPSO products, derived estimating methods, and recommendations that could be applied in other industries.

 

(EST-2573) Comparison of the International Use of Point and Range Estimating

Level: Intermediate

Author(s): Robert MacDonald; Mikhaela Gray

Tuesday, Jun 13 3:15-4:15/Celebration 3-4

Abstract: Deterministic and Probabilistic Estimating provides a “single-point estimate,” a specific cost for a project to be completed. Range estimating, as the name suggests, provides a cost range. This paper looks at the use of both deterministic and range estimating by roads authorities in four countries: Australia, New Zealand, the UK and the USA. The paper will determine the technique they adopted, and ask their opinion whether it is effective and sufficiently accurate. The results are compared with the AACE best practices for cost estimating in order to determine whether the best practice is actually being implemented in these countries. The findings will assist in recognising whether roads authorities are adopting the best cost estimating techniques and attempt to uncover any deficiencies with the current approaches.

 

(EST-2578) Estimating in Step with Advanced Work Packaging (AWP) for Enhanced Project Control

Level: Intermediate

Author(s): Lakshmanan Simhadri; Yogesh Srivastava; Glen Warren

Sunday, June 11 1:15-2:15/Celebration 3-4

Abstract: Advanced Work Packaging (AWP) is a structured mechanism that was co-developed by Construction Industry Institute® (CII) and Construction Owners Association of Alberta (COAA) as best practice for project planning and execution. However, predictability and closer cost control are contingent on producing a good quality funding estimate.

This paper proposes the concept of enhanced estimating work process implementation to provide estimate quantities, cost and man-hours as close as possible to actuals when the project is completed. In addition, providing estimated man-hour inputs by construction work packages (CWP) and by contract to project controls will enable far superior construction planning, scheduling and control in the field.

Estimate details will align with the AWP boundaries of engineering work packages (EWP) and construction work packages (CWP) so that budget information is available at the same level which will facilitate data integration into various project software. It is of paramount importance that estimated material/equipment quantities also be tracked and reported at the EWP/CWP level commencing in the front end vs. the common traditional tracking by commodity level for the overall project.

Predictability of cost and schedule are among the most important KPIs by which success of a project will be judged.

 

(EST-2618) Cost Variability Estimation at Different Levels of Project Definition

Level: Intermediate

Author(s): Franco Manuel Sanchez Romero; Edisson Perez Lopez

Sunday, June 11 4:00-5:00/Celebration 3-4

Abstract: The project cost estimation is carried out according to the engineering study level, while performing better engineering definition, project cost estimation will be more accurate. Therefore, is important to ask the question about what is the accuracy range of the project estimation cost for each engineering level.

For this paper development, estimates of different development projects in the mining industry will be used, and cost variances will be analyzed as these projects progress at different levels of project definition. As a result, the accuracy ranges the cost estimate has, according to each engineering level will be obtained; which can be used as a reference for future projects, and trends are interpreted to reach a better cost management for similar projects.

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