International Approach to Predicting Construction Labour Hours

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Presented 10th November 2009 at International Research and Practice Conference, Omsk, Siberia. Participants included ACostE, Union of Russian Builders, Government of Omsk Region, FSI, OJSC, Siberian Regional Cost Estimating Centre

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International Approach to Predicting Construction Labour Hours

  1. 1. International Approach to Predicting Construction Labour Hours Speaker – Shane Forth Vice President – Association of Cost Engineers Manager of Project Controls – AMEC Power and Process Europe Siberian Regional Cost Estimating Centre International Research and Practice Conference 10th – 11th November 2009 – OMSK, Russia
  2. 2. Shane Forth FACostE, FAPM Power and Process Europe  Association of Cost Engineers – Project Controls Strategy – Vice-President – Operational Excellence – Chairman, Planning & Scheduling SIG – AMEC Project Management Academy – Project Support – Chairman Project Control Managers  Whessoe Oil & Gas Working Group – Bid Manager and Project Services  Kuwait Santa Fe Braun – Scheduling Engineer – Various Working Groups, Graduate & Apprenticeship Schemes Occupational Standards  Other Experience – Kvaerner, ICI, Simon Carves, John Laing 2
  3. 3. Estimate Accuracy There is no merit in attempting to achieve a level of accuracy that is inconsistent to the amount of information available, particularly as this could lead to the Estimate being given a ”perceived” credibility it does not deserve 3
  4. 4. Estimate Accuracy 1 Feasibility (- 25% to + 50%) 2 Concept (- 15% to + 25%) 3 Basic Design (- 10% to + 15%) Estimate Accuracy 4 Detail Design (- 5% to + 10%) + _ 0% Completeness of Design 95% 4
  5. 5. Information for Estimating 1 Feasibility Generalised scope definition Required capacity of plant Approximate Weights Preliminary project schedule 5
  6. 6. Information for Estimating 2 Concept Plant Location Preliminary process diagram Main statutory requirements Equipment list Outline engineering specifications Preliminary “block” plot plan Offsites and utilities by system and capacity Budget quotes for Equipment Preliminary equipment data sheets Preliminary process and instrument diagram 6
  7. 7. Information for Estimating 3 Basic Design Firm quotes for major equipment Detailed scope definition Finalised heat and mass balance calculations P & ID’s for process and offsites Detailed plot plans Detailed engineering specifications Preliminary Material Take Offs Operators requirements Local authority requirements Project master schedules Information on site conditions 7
  8. 8. Information for Estimating 4 Detail Design Local availability of labour and materials Detailed equipment list Completed and approved plant layout Electrical single line diagrams Detailed equipment specifications/data sheets Detailed material take offs Firm quotations from potential vendors Quotations from potential contractors Commissioning and operating information Installation and fabrication specifications Construction subcontract enquiries Production design phase continues 8
  9. 9. 1 Feasibility - Factors Cost x 4.0 Cost x 5.0 Estimated Total Installed Cost (from which construction manhours can be estimated) Cost x 3.0 Cost x 6.0 9
  10. 10. 1 Feasibility - Factors Construction % of Total Installed Cost Average Labour Manhour Rate = Estimated Construction Manhours 10
  11. 11. 1 Feasibility - Order of Magnitude 11
  12. 12. 1 Feasibility - Order of Magnitude 12
  13. 13. 2 Concept - Principle Quantities Unit of Unit Measure Qty Piping Pipework Metres 75000 Supports Tonnes 200 Tests No off 40 Valves No off 300 E&I Electrical cable Metres 100000 Instrument cable Metres 50000 Electrical devices No off 800 Motors No off 26 Instruments No off 400 Control Systems I/O Count 6000 13
  14. 14. Onshore 1 Feasibility 2 Concept (typically - 25 % to + 50 %) (typically - 15 % to + 25 %)  In house Estimates for Equipment and  Preliminary details from suppliers for Major Tagged Items Equipment and Tagged Items  Factored from Equipment and Tagged  Principle quantities (approximate) for Items for Bulk Materials bulk materials  Order of Magnitude from historical data on  Base norms adjusted for location factors and similar projects productivity assumptions  Estimate for Project Sanction  Estimates for Optioneering 3 Basic Design 4 Detail Design (typically - 10 % to + 15 %) (typically - 5 % to + 10 %)  Firm details from suppliers for 80%-90% of  Firm details from suppliers for 90% -100% of Equipment and Tagged Items Equipment and Tagged Items  Preliminary MTO – in house, forced detail  Intermediate and Final MTO’s  Base component norms adjusted in house  Base component norms adjusted in house for location factors and productivity for location factors and productivity assumptions, or as provided by assumptions, or as provided by subcontractors subcontractors  Target Cost Estimate  Definitive Estimate 14
  15. 15. Offshore 1 Feasibility 2 Concept (typically - 25 % to + 50 %) (typically - 15 % to + 25 %)  In house Estimates for Equipment and  Preliminary details from suppliers for Major Tagged Items Equipment and Tagged Items  Estimated Weight  Estimated Weights for Bulk Materials  Order of magnitude from historical data on  Base norms adjusted for location factors and similar projects productivity assumptions  Estimate for Project Sanction  Estimates for Optioneering 3 Basic Design 4 Detail Design (typically - 10 % to + 15 %) (typically - 5 % to + 10 %)  Firm details from suppliers for 80%-90% of  Firm details from suppliers for 90% -100% of Equipment and Tagged Items Equipment and Tagged Items  Preliminary MTO – in house, forced detail  Intermediate and Final MTO’s  Base component norms adjusted in house  Base component norms adjusted in house for location factors and productivity for location factors and productivity assumptions, or as provided by assumptions, or as provided by subcontractors subcontractors  Target Cost Estimate  Definitive Estimate 15
  16. 16. Shutdown For Poorly Defined scope Rough Estimate Estimate in manhour ranges 500 Jobcards + management fee 7000 Activities = 140,000 Manhours 20 Manhours per Activity 116 Improved Estimate 120 - Lump Sum, must exclude emergent work - For repeat shutdown at the same plant, 89 estimate manhours using historical data 100 - Visit site during tender period for preliminary 75 71 discussions and assessment - especially important 80 for unfamiliar plant 60 49 30 30 40 23 17 20 0 Vessels Control Exchangers Drums NRVs Fin Pumps Towers Other Inspect Valves Fans 16
  17. 17. Shutdown Tender Period Preparation Shutdown Event (typically 2 months) (typically 6 months) (typically 3 weeks) A Preliminary Turnaround list D Prepare Work Packs E Prepare Jobcards F Preliminary Plan H Final Plan and B Assess Workscope (activities, manhours, etc) Manhours Agreed C Outline Plan G Review Preliminary Plan J Shutdown Event 17
  18. 18. Shutdown 18
  19. 19. Estimate - Base Norms Location Factor Adjustments 19
  20. 20. Estimate – Base Norms Project Specific Adjustments Considerations  Climate  Site Layout and Access  Site Location – How Remote ?  Clock In and Walking Time to Workface  Work Days and Hours  Labour Density  Industrial Relations  Availability of Skilled Trades (Competing Projects, use of Local & Travelling Labour)  Use of Equipment, Working Methods (eg.Machine or Hand Excavate)  Permit to Work on Brownfield Sites  Contract Conditions 20
  21. 21. Estimate - Quantity Allowances Certain quantity allowance may also be applied to the base estimate for expected but unidentified work: Engineering Material Cutting Construction Growth Take Off & Waste Increase Allowance Allowance Allowance Allowance Anticipated Applied to for Anticipated Applied to design growth additional amount of construction due to internal materials to be materials that is labour, design changes supplied due to cut and wasted equipment and anticipated (eg.due to services due to Engineering standard anticipated Growth pipe lengths, Engineering Allowance loose flanges Growth Allowance 21
  22. 22. Component Norms - Construction INDEX 1 22
  23. 23. Component Norms - Construction INDEX 1 2 23
  24. 24. Component Norms - Construction INDEX 1 2 3 24
  25. 25. Component Norms - Construction INDEX 1 4 2 3 25
  26. 26. Construction Manhours Prediction INDEX 1 Estimated Manhours = Component Norms x Estimated Quantities 26
  27. 27. Construction Manhours Prediction INDEX 1 Estimated Manhours = Component Norms x Estimated Quantities 2 Revised Manhours = Component Norms x AFC Revised Quantities 27
  28. 28. Construction Manhours Prediction INDEX 1 Estimated Manhours = Component Norms x Estimated Quantities 2 Revised Manhours = Component Norms x AFC Revised Quantities 3 Achieved Manhours = Component Norms x Installed Quantities 28
  29. 29. Construction Manhours Prediction INDEX 1 Estimated Manhours = Component Norms x Estimated Quantities 2 Revised Manhours = Component Norms x AFC Revised Quantities 3 Achieved Manhours = Component Norms x Installed Quantities 4 Actual Manhours = Expended Manhours 29
  30. 30. Construction Manhours Prediction INDEX 1 Estimated Manhours = Component Norms x Estimated Quantities 2 Revised Manhours = Component Norms x AFC Revised Quantities 3 Achieved Manhours = Component Norms x Installed Quantities 4 Actual Manhours = Expended Manhours 5 Predicted Manhours = Actual Manhours + Productivity Forecast for Revised to go 30
  31. 31. Construction Manhours Prediction INDEX 1 Estimated Manhours = Component Norms x Estimated Quantities 2 Revised Manhours = Component Norms x AFC Revised Quantities 3 Achieved Manhours = Component Norms x Installed Quantities 4 Actual Manhours = Expended Manhours 5 Predicted Manhours = Actual Manhours + Productivity Forecast for Revised to go This is part of Earned Value Analysis (EVA) 31
  32. 32. Estimating – Historical Data Key Aspect Production of accurate estimates from high quality estimating base data The Solution Past projects close-out information and statistics  Bulk material quantities, weights and costs  Engineered items details and costs  Project Controls Information (documents, changes, man-hours and costs) must be processed promptly at project completion to maintain factors, norms etc. 32
  33. 33. Thank you for your attention. Excellence in Cost Engineering www.acoste.org The Association of Cost Engineers 33

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