The document discusses the importance of a structured cost estimating process. It outlines key aspects of an effective process including producing quality estimates, consistency, accuracy, competency development, and risk reduction. It then describes the key stages of the capital cost estimating process including inputs, estimating procedures and tools, quality procedures, types of estimates, estimating presentation standards, and example estimating software.

1. “The Estimating Process”
A Applied
Cost C
E Engineering
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2. Why is a process critical?
A “structured estimating process” should produce:
• Quality Estimates
• Consistency – Checks & Balances
• Improve Accuracy/Confidence
• Improve Competency/On-boarding new staff
• Align all Parties
• Reduce uncertainty
• Reduce Costs
• Save Time
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3. Capital Cost Estimating Process
What
USD
How
Accuracy
When
Risk
Where
Project Cost Project
Preparation INPUT Estimating OUTPUT Evaluation
Sound technical basis Appropriate tools & data
Realistic execution plan Qualified Estimators
Proper project planning
Risks and opportunities
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4. What makes a good Quality Estimate
• Qualified and experienced estimator
• Good estimating method and data
• Proper planning of the process
• A realistic execution plan
• A sound finalised technical basis
• Understand the risks and opportunities
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5. Input to the Estimating Process
Scope Definition
WHAT • PDF/P&ID
• Equipment data
• Layout
• MTO’s
• Engineering Standards Standard list of
Execution Strategy deliverables
HOW for each
• Project organisation
• Contracting strategy type of estimates
• Constraints
Schedule
WHEN • Market
• Escalation
• Currencies
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6. Input to the Estimating Process
Location (project) specifies
WHERE • Supply sources
• Import regulations
• Cost local supplies
• Productivity
Cost Engineering
• Engineering standards
activity
• Etc
supported by
Project Engineering
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7. Estimating Process
Key Procedures:
• Overview total estimating process
• Review estimating requirements
• Planning the estimate
• Structuring the estimate
• Developing the estimate
• Analysing cost risk and contingency allocation
• Documenting
• Review and issue estimate
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8. Estimating Process
Estimating Process Tools
Request for
Cost Estimate
Estimating Agree effort Sign for
Package & timing Evidence
Delivery of Business Process
Estimating Package (Exceptions!!)
Clarify Sign for
Estimating Package Evidence
No Package
complete
Yes
Yes Scope
Change or Additional Estimating Procedures
Inform Tools/ Data
No
Prepare
Estimate
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9. Estimating Process
Estimating Process Tools
Draft Estimate
Ready
Internal Procedure
Internal (Competence!)
Verification
Acceptance Sign for
Customer Evidence
Standard Report
Sign for
Estimate Report (Template)
Evidence
Distribution
And
Filing
Structured
Database
End
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10. Quality System (Flow Diagram)
1 Request Estimate/Agree timings
2 Delivery of estimating package
3 Assignment of Work
4 Clarify Estimating Package
No
5 Package Complete?
Yes
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11. Quality System (Flow Diagram)
6 Register Estimate
7 Prepare Input Data
8 Prepare Project Location Factor
9 Verification and Approval (R/V/A proposal)
10 Acceptance Check by the Activity Leader
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12. Quality System (deliverables)
Deliverable Type 1 Type 2 Type 3
+/- 30% +/- 30% +/- 30%
A. General
Terms of Reference
Project Specification (PS) or Basic Design & Engineering Package (BDEP)
Basic Design Package (BDP)
Project Implementation Plan (PIP)
Project Execution Plan (PEP)
Project Execution Strategy (PES)
Overall plot plan and Overall plot plan rev. A
Preliminary General Foundation Advise
Special facilities required for access
Project Specific Sourcing, Cost and Scope
Recent Sourcing, Cost and Scope Survey Report
Recent Local Cost Data
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13. Types of Estimates
 GSP/1 generally prepare 50/50 Estimates. This implies an
equal chance on over or under run.
 Estimates have a 80% probability to fall within ranges
identified.
• Preliminary Magnitude +/- > 30% Scouting
• Order of Magnitude +/- 30% FED1 (BOD/PES)
• Study Type +/- 20% FED2 (BDP/PEP)
• Budget Type +/- 10% FED3 (BDEP or PS/PIP)
• Control +/- 10% During Implementation
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14. Estimating Presentation
User / develop standard form:
Estimate details • Summary
To be included:
• Details
• Accuracy and contingency
• Validity (ref date/exch. rates)
• Escalation
Estimate information • Project reference
• Reference input documents
• Premises, assumptions and exclusions
• Risks & Opportunity
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15. Estimating Tools/Software Selection
CAPCOST Designed for large, small, revamp projects (process plant)
CES Topdown, systems based, EP projects
IbisCalc Database available for civil works only
Cleopatra Designed for new projects and maintenance (process plant)
ICARUS 2000 Designed for large projects (process plant)
Questimates In plant project (process plant)
Timberline Powerful system but its database for construction of building
Success Designed for power plant
G2Estimation Database available for civil works only
Pipemate Suitable for construction of piping only
Richardson Designed for process plant projects (detailed method)
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16. Development of Norms
Essential Steps
• Data Management
• Standard methods and data
• Review / Reconciliation of discipline
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17. Development of Norms
Critical Elements
• Documentation of design basis
• Documentation of execution basis
• Estimate documentation
• Standard methods and data
• Review discipline
• Filing practices
Without documentation, numbers are just numbers!
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18. Development of Norms; the Process
Data Storage FEEDBACK
& Retrieval
• Site Agreements
• Price Lists
• Quotes
Analyse
• Publications & Review
• Books
Standard Norms PROJECTS
&
Factors
Design
WHAT
INPUT Standard Apply Project Project
HOW Execution Cost Estimate Factor Estimate
WHEN INPUT
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19. Development of Norms
Databank Features:
• Should meet site needs
• Norms should be normalised (to remove abnormalities)
• Establish a ‘single source’ (e.g. a data book)
• Develop cost coding structure (maintain kind of order)
• Feedback and maintenance system
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20. Development of Norms
Criteria for an effective coding system:
• Reflect job execution approach
• Defines in- and exclusions
• Geared for project cost control
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21. Development of Norms
Use consistent method:
• Standard format
• Use cost coding structure
• Define estimate input requirements
• Define validity
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22. Capital Cost Estimating Process
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23. Development of Norms
Essential Steps
• Data Management
• Standard methods and data
• Review / Reconciliation of discipline
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24. Handing over of the estimating package
Seamless hand over from Estimating Department to Project Team
If you can’t convince them, confuse them!
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25. Estimating strategy/methodology
Agree upfront: Type input data
Timing / cost
Estimate format (deliverables)
Verification procedure
To be included:
• Estimate details • Summary
• Details (breakdowns)
• Accuracy and contingency
• Validity (ref date/exch. rates)
• Escalation
• Estimate information • Project reference
• Reference input documents
• Premises, assumptions and exclusions
• Risks & Opportunities
• Applied estimating methods/tools
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26. Estimate Validation
Options :
• Witness whole estimating process
• Participate/ witness the review/verification steps
• Benchmarking (IPA)
• Counter Estimate
• Verification deliverables
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27. Estimate Validation
Structured Approach:
Quality supporting documents (accuracy)
Estimating process
Consistency of project scope
Estimating tools/data
Completeness of the estimate (exclusions)
Risks and contingency
Schedule and escalation
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28. Estimate Verification
Cost Check:
Overall Cost Reference plant
Cost per unit of product
Cost ratios Statistical breakdown
Equipment vs. bulk
Material vs. labour
Indirects vs. directs
Detail Equipment Number / Bulk Quantities
Unit rates
Labour rates (HO office, Direct Labour)
Norms
MTO basis
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29. Lessons Learned/tips
• Agreed TOR with customer
• Avoid time squeeze
• Be prepared (type project/process/location)
• Own a tool kit (Knowledge)
• Up front agreement estimate format
• Kick off meeting (explain purpose / express expectations/agree process)
• Willingness to share
• Stay at highest level possible
• Consult home front
• Close out meeting (provide feedback/agree actions)
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30. Estimate Types, Tools & Level of Detail
Type Tools
1. CES/CAPCOST Platform
Facility
System
Gas Processing
Group
2. CES/CAPCOST Gas Dehydration
System
3. CAPCOST/ IBISCALC Equipment Breakdown Pump
4. IBISCALC Item list – Bill of Materials 20m of 6” Pipe
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31. Q’s & A’s
Discussion
End
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