Upload
herly-fajrie-hermaiita
View
232
Download
0
Embed Size (px)
Citation preview
8/9/2019 Cost Estimate-S1 Module 1
1/13
Cost EstimateCost EstimateModule 1Module 1
Dr. Ari SandhyavitriDr. Ari Sandhyavitri
Engineering FacultyEngineering FacultyUNRI, 2004UNRI, 2004
8/9/2019 Cost Estimate-S1 Module 1
2/13
PurposePurposess A close approximation of actual costsA close approximation of actual costs
Determine the forecast costs required to completeDetermine the forecast costs required to complete
a project in accordance with the contract plansa project in accordance with the contract plansand specifications.and specifications.
Reasonable accuracy for estimating direct costs ofReasonable accuracy for estimating direct costs ofmaterials, equipment and labours.materials, equipment and labours.
Does not establish the cost of a project; establishDoes not establish the cost of a project; establishthe amount of money, which contractor willthe amount of money, which contractor willreceive for constructing the project.receive for constructing the project.
May assist in the decision making process (asMay assist in the decision making process (asdecision making tools)decision making tools)
8/9/2019 Cost Estimate-S1 Module 1
3/13
ConsiderationConsideration
At a project inception, data are not alwaysAt a project inception, data are not always
available.available. Most likely estimate.Most likely estimate.
Past experience has shown that cost and timePast experience has shown that cost and time
overover--runs occurred.runs occurred.
Underestimate costs rather management failure.Underestimate costs rather management failure.
Need to revise.Need to revise.
The realism of estimate accuracy ofThe realism of estimate accuracy of
estimate.estimate.
8/9/2019 Cost Estimate-S1 Module 1
4/13
EstimatorEstimator
Determine a reasonable accuracy the directDetermine a reasonable accuracy the direct
costs for Materials, Labours and Equipment,costs for Materials, Labours and Equipment,
and indirect costs.and indirect costs.
Doest not establish the costs of a project.Doest not establish the costs of a project.
Establishes the amount which the contractorEstablishes the amount which the contractor
will received for constructing the project.will received for constructing the project.
8/9/2019 Cost Estimate-S1 Module 1
5/13
DefinitionDefinition An approach to estimate cost for theAn approach to estimate cost for the
establishment, development or implementationestablishment, development or implementationof a project (at the different time frame)of a project (at the different time frame)
As a tool in the decision making processAs a tool in the decision making process
Fundamental element for (i) bidding proposesFundamental element for (i) bidding proposes
and; (ii) estimating implementation cost of theand; (ii) estimating implementation cost of theproject.project.
The bid price adds indirect costs, contingencies,The bid price adds indirect costs, contingencies,and profits.and profits.
Profits = enough to allow the contractor toProfits = enough to allow the contractor tocomplete the work with a reasonable profit, yetcomplete the work with a reasonable profit, yetenough to be within the ownerenough to be within the owners budget.s budget.
8/9/2019 Cost Estimate-S1 Module 1
6/13
TimeTime vsvs CostCost Time delays, cost increases.Time delays, cost increases.
Time emphasises on planning andTime emphasises on planning andscheduling.scheduling.
Time relates to production rates, crewTime relates to production rates, crew
sizes, equipment spreads, material orderssizes, equipment spreads, material ordersand individual work items.and individual work items.
Combination of time and cost allow anCombination of time and cost allow an
integration of scheduling and estimatingintegration of scheduling and estimatingfunctions in the area of Projectfunctions in the area of ProjectManagement.Management.
8/9/2019 Cost Estimate-S1 Module 1
7/13
TimeTime vsvs CostCost
Time is crucial for gathering information toTime is crucial for gathering information to
improve the accuracy of an estimate.improve the accuracy of an estimate.
Torpedo diagram (Figure 1)Torpedo diagram (Figure 1)
Accuracy of an estimate from AACEAccuracy of an estimate from AACE(Module 2)(Module 2)
8/9/2019 Cost Estimate-S1 Module 1
8/13
Cost Estimate is not an ActualCost Estimate is not an ActualCostCost
Cost estimate is prepared before aCost estimate is prepared before aproject is constructed best a closeproject is constructed best a close
approximation of the actual costapproximation of the actual cost(more likely cost, not the actual cost(more likely cost, not the actual costof a project)of a project)
8/9/2019 Cost Estimate-S1 Module 1
9/13
Information vs EstimateInformation vs Estimate
Unrealistic to expect an estimate to be accurate inUnrealistic to expect an estimate to be accurate in
an accounting sense.an accounting sense. The degree of confidence depends on:The degree of confidence depends on:
The level of definition of the works;The level of definition of the works;
Available information provided; andAvailable information provided; and
Risks and uncertainty.Risks and uncertainty.
The range can be plotted against time (Figure 1).The range can be plotted against time (Figure 1). Estimate of cost and time are prepared andEstimate of cost and time are prepared and
revised at many stages.revised at many stages.
8/9/2019 Cost Estimate-S1 Module 1
10/13
Fig.1. Range of estimate over the project cycle (Barnes, 1974)
Torpedo DiagramTorpedo Diagram
8/9/2019 Cost Estimate-S1 Module 1
11/13
Time and InformationTime and Information
At FS information is minimum, range ofAt FS information is minimum, range of
uncertainties max.uncertainties max.
Information develop, range of risks mayInformation develop, range of risks may
be mitigated and controlled.be mitigated and controlled. Estimated base cost + contingency maybeEstimated base cost + contingency maybe
close to most likely.close to most likely.
Most likely is close to cost max.Most likely is close to cost max.
8/9/2019 Cost Estimate-S1 Module 1
12/13
The Role of ITThe Role of IT Storage, transfer, retrieval of data.Storage, transfer, retrieval of data.
Manipulation, analysis, calculation andManipulation, analysis, calculation andpresentation of data.presentation of data.
Not necessary improve the accuracy of estimateNot necessary improve the accuracy of estimate
but make it is easy to up date data and improvebut make it is easy to up date data and improveestimation process.estimation process.
Errors maybe identified more easily.Errors maybe identified more easily.
Data availability and accuracy.Data availability and accuracy. Human factors.Human factors.
Assist decision making process.Assist decision making process.
8/9/2019 Cost Estimate-S1 Module 1
13/13
ReferencesReferences
Smith, N. J. (Editor), Engineering ProjectSmith, N. J. (Editor), Engineering Project
Management, Blackwell Science, 1999,Management, Blackwell Science, 1999,UK.UK.
MernaMerna, A. and Smith, N. J. (1990), Project, A. and Smith, N. J. (1990), ProjectManagers and the Use of TurnkeyManagers and the Use of Turnkey
Contracts, International Journal of ProjectContracts, International Journal of Project
MnagementMnagement, 8 (3), 183, 8 (3), 183--189.189.