COST ESTIMATING
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Transcript of COST ESTIMATING
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COST ESTIMATINGCOST ESTIMATING
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Time DataCost DataPerformance DataProcurement DataOwner special Data
Brainstorming ProcessCompany NeedsMarket Research.Feasibility StudyChange of ObjectivesNew Product Development
Proposal DevelopmentConceptual Estimate PaperDesign basis PaperFull Proposal
Proposal
Project Plan
Project Control
AnalysisCorrectiveActions
Commissioning
Project MeetingProject Status ReportProgress MeasureProcurementContractual Conditions
Contractor ProductivityProcurement DeadlinesManpower LoadingClaim Request
Change OrdersTime/Cost Analysis
Project Management Systems
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PROJECT LIFE CYCLE
PB DP F.P. CLIENT. APP.
COSTESTIMATE PROJ PLAN
LLIPPROJ.EXCU.
COMMISSIONINGPB- Conceptual PaperDP- Design PaperFP- Full Proposal
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• Cost estimating is an essential part of project management. It provides the project information everyone is striving to know from the beginning of a project to its completion.
• Cost estimates are activities people do most of the time to see if they can afford what they want or if they can continue doing as they are doing.
• Indexes, factors, methods, equations, rates, productivity profiles, historical data basis, performance measurement procedures and the like are developed and maintained with the sole purpose of producing better cost estimates and improve the probabilities of success.
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Order of Magnitude EstimatesOrder of Magnitude Estimates
Accuracy: -30% to +30%Accuracy: -30% to +30%
Basis :Basis : Cost capacity curves Cost capacity curves
Cost capacity ratiosCost capacity ratios
Use : Use : Investment screening Investment screening
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Preliminary EstimatesPreliminary Estimates
Accuracy: -15% to +30%Basis : Flow sheets
Layouts Equipment details
Use : Budget proposal Expenditure approval
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Definitive EstimatesDefinitive Estimates
Accuracy -5 to +15%Accuracy -5 to +15%
Basis: Defined Engineering dataBasis: Defined Engineering data
Use : Use : Processing Processing
ConstructionConstruction
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Information RequiredInformation Required :
• Capacity• Location• Utility requirements• Service requirements• Building requirements• Raw materials and storage requirements• Finished products and its storage requirements
Order of magnitude
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PreliminaryInformation RequiredInformation Required :
Site description, surveys and soil studies
Preliminary process flow sheet Equipment Engineering specifications Preliminary structural design Preliminary Architectural design Preliminary construction plan Preliminary utility heat balance/flow
sheets Rough insulation specifications Motor list and sizes preliminary Substations specifications Preliminary lighting specifications Engineering and drafting man-hours
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Definitive estimateInformation Required:Information Required:
• Full site information• Process flow sheet• Equipment and vessels specifications
and Engineering• Arrangements• Detail Engineering Building and
structures drawings• Insulation drawings and specifications• Electrical installations drawings and
specifications• Utility installation drawings and
specifications• Man-hours calculations for Engineering,
drafting, labor, and supervision
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ORDER OF MAGNITUDE ESTIMATING METHODSORDER OF MAGNITUDE ESTIMATING METHODS
COST INDEXESCOST INDEXES
NCC ={ Cost in the past } [ I(2) / I(1) ]
where, NCC = Needed current cost I (1) = Index value at past time
I (2) = Index value at present time
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Cost Indexes LimitationsCost Indexes Limitations
Indexes do not take local Indexes do not take local conditions into consideration.conditions into consideration.
Indexes do not make provision Indexes do not make provision for technological advance.for technological advance.
Indexes are recommended Indexes are recommended within a 10 years range of within a 10 years range of
known past cost onlyknown past cost only..
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KNOWN COST INDEXESKNOWN COST INDEXES
ENGINEERING NEWS-RECORD CONSTRUCTION INDEX
This index is based on an index value of 100 for the year 1949 and is developed upon a composite cost for 2,500 pounds of structural steel, 1,088 feet board measure of lumber, 6 bbl of cement and 200 hours of common labor.
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KNOWN COST INDEXESKNOWN COST INDEXES
MARSHALL AND SWIFT EQUIPMENT-COST INDEXES
The Marshall and Swift indexes are divided in two categories as follows:
The all-industrial equipment index
The process-industry equipment index
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EQUIPMENT COST EQUIPMENT COST BY SCALINGBY SCALING
Cx = Cy ( Qx/Qy )Cx = Cy ( Qx/Qy )0.6 0.6
where, Cx = Cost of equipment (x)where, Cx = Cost of equipment (x)
Cy = Cost of equipment (y)Cy = Cost of equipment (y)
Qx = Capacity of equipment (x)Qx = Capacity of equipment (x)
Qy = Capacity of equipment (y)Qy = Capacity of equipment (y)