COST ESTIMATION

Parallel Check Estimation is a service provided to end users (normally owner-operators, financial investors, or joint venture partners) who are currently in the FEED process. A common approach is that SES is hired to perform an independent AACEI Class 3 (+/- 20%) estimate in order for the owner-operator to receive a current snapshot of the cost at a given point, usually midway through the FEED process. Then an AACEI Class 2 (+/-10%) will be completed and submitted by SES towards the end of the FEED process. Overall, as the engineering contractor provides deliverables to the owner-operator during FEED, the information is turned over to SES for continuous estimate development on behalf of the owner. The objective is to provide another cost estimating data point to compare against the EPC contractor. In such cases, it is normally desired for the parallel check estimate to be completed in advance of the owner receiving the final FEED package estimate from the contractor. That way, a review of the parallel check estimate (prepared by SES as a non-stakeholder) can be conducted with the owner, providing independent third party perspectives. Often times, a comparative analysis is developed by SES using both the EPC’s and SES’ estimate to identify and highlight the gaps.

Estimate Quality Assurance & Control (QA / QC) is a service that is typically provided as part of a comprehensive due diligence program on behalf of owner-operators, financial investors, or joint venture partners. SES would interview cost personnel (EPC) responsible for preparing the estimate to appreciate cost estimating workflows, methodologies applied, estimating tools, as well as assess the skill level of the cost estimators. Also, SES would review the estimate execution plan, the engineering deliverables, specific revisions of the input data, and other information used to build the estimate. Additionally, verification of key items such as bulk quantities (bill of material) for the project would be included for QA / QC. In some cases where the information is available, SES can use native files from Smart P & ID programs such as AutoCAD or Smart Plant (3D, P & ID) to conduct an automatic material take-off. The purpose is to check and verify against the existing bulk quantities developed in the project estimate. Finally, SES would deliver a report with findings, conclusions, and recommendations.

Project Estimation is a service provided independently to engineering, procurement, and construction (EPC) companies, owner-operators, financial investors, or joint venture partners. In some cases, an owner-operator only requests SES to prepare the cost estimate in early stages of the project development process to save time and cost. In other cases, the EPC contractor would use SES to prepare the cost estimate because their owner client requires quick results and the EPC is overloaded with other projects, or the EPC does not have any internal function or capability to handle the request. In addition, it is quite common that SES prepares independent cost estimates throughout the entire lifecycle of the project from concept to construction. That is to say, there is a significant advantage of continuous updating of the project estimate versus starting from scratch after each stage gate approval. Supplementing the estimate team on mega projects is quite common, whereby SES is only requested to evaluate specific units as part of the overall plant or process facility.

Risk Analysis is a service whereby SES will lead a formal risk meeting of the project estimate in order to agree on proposed risk ranges and set the project contingency for the estimate. The objective would be to determine the estimate risks by identifying parameters (ranges) based on the likelihood of some occurrence that would impact the costs in key estimate categories. From that, SES would perform a Monte Carlo risk analysis and work with the owner to set a reasonable contingency value for the estimate using the organization’s probability of overrun / underrun point.

“Cold Eyes” Review & Benchmarking is a function where SES reviews the project estimate prepared by an owner-operator or EPC contractor through a series of benchmarks and comparisons. The project estimate will be compared against similar project types, locations, or capacities in order to identify gaps or areas of the estimate that may be out of range according to the metrics and ratio analysis. Then, SES would prepare and deliver a final report with findings, conclusions, and recommendations.

Contractor Bid or Change Order (Notice) Request Evaluations are services provided to owner-operators, joint venture partners, or financial investor stakeholders. The primary objective is to provide due diligence and represent the owner’s interest when evaluating EPC prices during contractor selection and construction execution. SES would support the owner’s project team in order to assess all the quotations received during the invitation to bid (ITB) process or while construction is ongoing. In many cases, though not required as a prerequisite, SES would have already prepared a Parallel Check Estimate, “Cold Eyes” Review, QA / QC, or other Project Estimation services with advanced familiarity of the project particulars.

Supplemental Support and Site Secondment is a solution whereby the SES cost estimator would travel onsite and join the owner’s project estimating team at their office and the goal would be to represent the owner’s interest by conducting any of the above activities for an extended period of time. In other cases, the SES cost estimator is hired out by the EPC and is temporarily assigned to the EPC’s office full time to supplement the staff during peak workload periods as needed.

PROJECT CONTROLS

Although known for our reliability to produce quality cost estimating solutions up to final investment decision (FID), we have extended our project controls service to include planning & scheduling, schedule risk analysis, budget setting, and continuous cost tracking during construction through SES and our joint venture partner. Particularly regarding scheduling, SES leverages commercially available integrated software links from the cost estimating software directly to P6 (Oracle Projects). Resource loaded schedules are output by the estimating program and automatically uploaded to P6 for the scheduler to start their scope of work by applying the logic to the input received. This approach by SES significantly reduces man-hours and relieves the burden of manual data entry for thousands of lines of scheduling activities.

PROJECT MANAGEMENT

The Spear Group and Strategic Estimating Systems combine their strengths and form a joint venture (JV) to create added value throughout the entire project lifecycle. From concept to construction execution, the JV will support process manufacturers in various hydrocarbon based industrial segments as well as pharmaceuticals, power, and utilities. The goal is to assist owner-operators in effective decision making and achieving successful project outcomes through sensible economic evaluation workflows and outstanding project management skill sets and resources. The focus would be to prevent the following challenges:

  • Low Quality Cost Estimates
  • Missed Milestone Targets
  • Unclear Goals & Objectives
  • Scope Creep & Changes
  • Insufficient Resources
  • Poor Communication
  • Poor Change Management
  • Changes in Environment or Strategy
  • Unsatisfactory Risk Planning
  • No Executive Champions
  • Insufficient Stakeholder Participation

IMPLEMENTATION & WORKFLOWS

Leading owner-operators who have a commitment to organizational excellence often review internal software tools and work processes. The intent is to optimize departmental functions and determine areas where additional skills, capabilities, and tools can be developed, improved, or added. This helps to maintain a competitive advantage in markets where substantially sized capital projects are common. Often times, software tools and workflows employed have a significant impact on what decisions are made and when. Specifically, cost estimating departments in heavy industrial process plant industries who are responsible for preparing proposals, responding to invitations to bid, analyzing relative costs during early feasibility stages, or developing  due diligence functions for any level of estimate accuracy (FEL / AACEI).

Cost estimating has become a strategic function whereby the importance of such activity is vital to the success of an organization. Notwithstanding, all stakeholders have to trust the software tools, estimating methodologies, and workflows used to produce cost estimates with much confidence. I.e. Cost estimators, senior level upper management who make decisions based on the cost estimator’s work product, rely on the integrity of the cost estimates to inform and weigh key project decisions for funding, etc. As a result, a methodical approach to implementing new systems ensures that it is done properly in order to achieve the desired goals.

We have developed an implementation program that has been formulated over the past 20 years and demonstrates a proven track record of success for building estimating departments from the ground up or optimizing the existing functions. When the implementation steps are done properly with training, organizations can expect to achieve the following:

(1) Accuracy – The ability to prepare more accurate (+/-30%) feasibility estimates with limited information and (+/-10%) detailed estimates using expert and integrated software tools combined with best-in-class industry workflows. Additionally, quantity based estimating is inherently more accurate because it is derived from modeled engineering scope vs. factored estimating which breakdown with location and capacity changes.

(2) Consistency – The ability of the Cost Estimating department to adopt standard workflows that are consistent across each estimator, each discipline, and each office thereby generating consistent results no matter who performs the cost evaluation on a repeated basis. Leveraging activities such as standardizing on the same estimate program, same output summary reports for management, applying company standard or customized code of accounts, unit manhours, unit pricing, as well as setting up estimating template starter files create good and repeatable estimating habits within an organization’s cost evaluation culture.

(3) Efficiency – The ability of the cost estimating department to leverage an integrated software approach from process modeling to cost estimating and automatic material take-off features to scheduling and cost control. This could result in 3-5 times fewer estimating manhours vs. one-dimensional legacy systems and spreadsheets. Benefits include much quicker preparation time for proposals, rapid response to studies and project changes such as modularization vs. stick built cost analysis.

(4) Speed – The ability to prepare lump sum bids or check multiple change order notices quickly. Essentially complete any cost estimating activity such as QA / QC, Parallel Check Estimate, modularization vs. stick built cost analysis faster than normal.

TRAINING & WORKSHOPS

SES General Estimator Training (4 Days)

Best Practices for Basic Concepts – This type of training is designed for organizations that desire to build a new cost estimating department or who want to train cost estimators new to the organization or industry. This course may also be beneficial to existing cost estimators who desire to obtain best practices for the oil, gas, and chemical process industries, or for engineers and project control personnel who will transition into cost estimating roles. The training subjects include:

  • Keys to Successful Cost Estimating
  • A Review of the ACCEI Standards for Accuracy
  • The Current State of Estimating
  • How to Build an Estimate Execution Plan
  • Estimate Types
  • Direct Cost Items
  • Labor Cost / Productivity
  • Construction Indirects
  • Material and Equipment Pricing / Escalation / Foreign Exchange
  • Risk Analysis / Contingency / Benchmarking
  • Other Project Costs – Engineering / Owner’s Cost / Freight / Miscellaneous
  • Step by Step Review of Class 4 and Class 2 Cost Estimating Work Processes

Aspen Capital Cost Estimator (ACCE) Advanced Training (4 Days – 4 Weeks)

Classroom Presentation Modules -ACCE Advanced Training is a course that will be custom designed by Strategic Estimating Systems to match the needs of the individual organization. Presentation modules are used together with live software examples in a computer laboratory. This is often accomplished by analyzing the subjects above in more detail, in depth analysis of the modules below, or by using the organization’s historical project data for advanced concepts, also by using a current and live project that needs to be estimated to execute the training. Prior ACCE experience recommended. Modules include:

  • Cold Box Estimating
  • Modularization
  • Customized Equipment Model Building
  • P & IDs
  • Power Distribution
  • Reporting
  • Indirect Costs – Construction
  • Benchmarking / Analysis
  • Electronic Input / Export of Data
  • Process Control Systems
  • ACCE External Files

Aspen Economic Evaluation Software Implementation Workshop (4 Weeks – 3 Months)

Onsite Guidance Support Long-term Aspen users or recently acquired software licenses: organizations that desire to become more consistent, efficient, accurate, faster, or otherwise optimize the internal work process are encouraged to receive onsite guidance. This implementation program combines hands on cost estimating workshops and training for best-in-class methodologies when using any of the Aspen Economic Evaluation tools.

  • Onsite Cost Estimator from SES (Seconded)
  • Sample Estimates
  • Customized Equipment Model Building
  • Actual Estimating – Work on Current Projects
  • Calibration
  • Customization
  • Project Templates
  • Continued Remote Support

Aspen Capital Cost Estimator (ACCE) 4 Day Training 

ACCE Basic Training is a course that has been designed by Aspentech to help organizations navigate the tool out the box. This course identifies the keys to complete a cost estimate and how to evaluate your company’s projects in order to maximize the return on investment (ROI) and reduce the risk involved in making decisions. Project engineers, estimators, and discipline engineers new to the Aspen Capital Cost Estimator should participate in this course. The training subjects include:

  • How the ACCE system works
  • Creating a New Project
  • Add a Pump
  • Volumetric Modeling – Example
  • Component Data Entry Fields
  • Create a 285C Distillation Tower
  • Create a Field Fabricated Tank – Example
  • Piping Bulk Item Addition
  • Scan for Errors
  • Custom Pipe Specs
  • Piling
  • Special Instrument Valves
  • Code of Accounts & Indexing
  • Adding Quoted Equipment
  • Equipment Model Library Items
  • Creating a Unit Cost Library
  • Area Concepts
  • Calculating Field/ Shop Hours
  • Build a Plant (Key E&I Distances)
  • Navigating the Reference Documents
  • Setting Preferences
  • Steel Structures
  • Traced and Jacketed Pipes
  • Equipment Cost Models
  • Process Control
  • Contracts
  • Utility Components and Safety Showers
  • Power Distribution
  • Home Office
  • Contingency at a Project Level
  • Escalation Indices
  • Labor Rates & Craft Productivity
  • How ACCE Sizes Lines
  • Interactive Reports
  • File Location
  • Project & Scenario Nomenclature

Aspen Process Economic Analyzer (APEA) Training (3 Days)

The goal of this course is to learn to develop an economic evaluation and proposed design using the Aspen Process Economic Analyzer. Users will be able to analyze different process alternatives in simulation and determine the more profitable approach as deemed appropriate. This course teaches how to show the utility usage for your process, make adjustments to construction wages, how to adjust the system calculations to reflect your local costs, and obtain detailed design results for both equipment and installation bulks with minimal input, and by integrating operating cost, capital cost, and schedule. Process, project, plant, and research and development engineers should participate in this course, as well as, technology licensors who need basic training to get started as primary users of Aspen Process Economic Analyzer. Estimators, discipline engineers, and laboratory personnel may also attend this course. The training subjects include:

  • Overview and Introduction to APEA
  • Creating Standard Files
  • Starting a New Project
  • Defining Raw Materials and Product Streams
  • Developing Components and Run Reports
  • Evaluating Flow sheet
  • Evaluating Alternative Scenarios
  • Investigating Stream Data
  • Using Alternative Heating Utilities
  • Investigating Tower Configurations
  • Exploring Process Flow Diagrams
  • Importing Projects
  • Importing Additional Files
  • Manually Adding Components

ANCILLARY FUNCTIONS

By virtue of the cost estimating solutions we deliver to owner-operators and EPCs in the Oil, Gas, LNG, and Process industries, a secondary tier of end users request our services due to the unique type of expertise required on large mega projects. Such secondary tier customers include:

  • Banks & Financial Investors
  • Venture Capital Groups
  • Trading Companies
  • Claims & Resolution Support
  • Asset Valuations for Sales & Tax Purposes
  • Any Unique Debt / Equity Financial Scheme
  • Joint Venture Partners