TRANSMISSION & DISTRIBUTION A Division of Power
COST ENGINEERING & PROJECT CONTROLS Pappur Shankar P.Eng
Engineers as Managers Conference - Mississauga Chapter, May 3rd, 2014
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AGENDA
1 What is Cost Engineering ? 2 A Cost Engineer’s Role 3 A Cost Engineer’s Role During Front End Engineering 4 Conclusion
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What is Cost Engineering? Are you familiar with these ?
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What is Cost Engineering ? An influential factor for making business decisions Cost is a major business driver Helps organizations with decision-making and cost management
Makes the difference between success and failure Lack of understanding on cost estimating, cost management and cost control
Is a necessity for survival and not a ‘nice to do’ Cost reduction cost control are essential for survival
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What is Cost Engineering ? A systematic approach to managing cost throughout the life-cycle of any enterprise, program, facility, project, product, or service. Accomplished through the application of Cost engineering and cost management principles Proven methodologies The latest technology in support of the management process
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What is Cost Engineering ? Cost engineers use specialized cost estimating, planning and scheduling techniques to help project managers and engineers understand the financial aspects of certain tasks Cost engineering plays an important role in the strategic development of a company Companies utilizing efficient cost engineering techniques can strategically plan a basis model for completing projects
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Where Cost Engineering is applied ? OIL & GAS
NUCLEAR ENERGY
MINING
TRANSMISSION & DISTRIBUTION
NON CONVENTIONAL ENERGY
TRANSPORTATION & INFRASTRUCTURE
….. IN EVERY SECTOR
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Project Life Cycle Example of a Capital Project Live-Cycle Project Screening
Initiation
FEED Phase
EPC Phase
Project Screening Financial feasibility study Investment Decision Making
Initiation Project team formation Project charter Summary level schedules, Class 5 estimates
Project Close Out
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Project Life Cycle Project Screening
Initiation
FEED Phase
EPC Phase
Project Close Out
FEED (Front-End Engineering & Design) Phase Engineering done prior to requesting the authorization to start Estimates and plans Develop detailed execution planning
EPC Phase Detailed Design Procurement Building of the physical asset
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Front End Cost Engineering During front-end engineering, conceptual estimates for decision making and use of capital information about project options. Cost Engineer is involved in: Profitability analysis Decision analysis Siting studies Cost Containment Capital Cost Bench Marking Value engineering Cost Estimates
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Process for Front End Planning Process Flow Diagrams
Plot Plans
P & ID IFD
Class 2 Estimate
Equipment List
Class III Estimate
P & ID
HAZOP Reviews
Cost Engineer plays vital role in estimate, schedule on back yard conditions Cost and schedule generated is subjected reviews for effective cost savings
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Estimate Preparation
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Class
Class
Definition (%)
Definition (%)
Typical Purpose of Estimate
Typical Purpose of Estimate
Accuracy Accuracy Range (%) (%) Range
Class 5 Class 4 Class 3 Class 2 Class 1
0 to 2 1 to 5 10 to 40 30 to 70 50 to 100
Concept Screening -50 to +100 Study or Feasibility -30 to +50 Budget, Authorization, or Control -20 to +30 Control or Bid/Tender -15 to +20 Check Estimate or Bid/Tender -10 to +15
-50 to +100 -30 to +50 -20 to +30 -15 to +20 -10 to +15
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What is required for Cost Engineer ? Conceptual Thinking The cost engineer should develop adequate, accurate, conceptual estimates Avoid getting buried in details
Objectivity Maintain objectivity and independence and use judgment and experience to separate value-adding scope from basic scope
Assertiveness Must assertively penetrate the scope and the reason it is included
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What is required for Cost Engineer ? Leadership Must lead the process and gain the commitment and alignment of the team
Thoroughness Must be thorough to consider key issues, risks
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Good Traits for Cost Engineers Organizational skills Communication and facilitation skills Articulate Extensive field experience (value engineering and constructability) Strong analytical skills Good perceptual and interpretive skills (bridging client needs to design decisions) Credible evaluative skills Experience based risk management skills Strong presentation skills
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Summary Involved in almost all you see, touch and rely upon
Can be an exciting career full of opportunities
Job market is generally good
Pay and benefits are among the top for the level of the company
Opportunities for leadership, global travel, and benefiting humankind abound
Many doors open to other exciting careers isuch as CEO, business administration
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WE CARE embodies SNC-Lavalin’s key corporate values and beliefs. It is the cornerstone of everything we do as a company. Health and safety, employees, the environment, communities and quality: these values all influence the decisions we make every day. And importantly, they guide us in how we serve our clients and therefore affect how we are perceived by our external partners. WE CARE is integral to the way we perform on a daily basis. It is both a responsibility and a source of satisfaction and pride by providing such important standards to all we do.
WE CARE about the health and safety of our employees, of those who work under our care, and of the people our projects serve.
WE CARE about our employees, their personal growth, career development and general well-being.
WE CARE about the communities where we live and work and their sustainable development, and we commit to fulfilling our responsibilities as a global citizen.
WE CARE about the environment and about conducting our business in an environmentally responsible manner.
WE CARE about the quality of our work.