1. Problem recognition, definition
and evaluation
After sourcing multiple vendors to obtain a reference
price for material procurement project in 2012, the bid price of the vendor as
follows:
a. Company A offers
materila price of USD. 40.000,00
b. Company B offers
materila price of USD. 35.000,00
c. Company C offers
materila price of USD. 38.000,00
Previously we had bought the material in 2010, and it
turns PO price is USD. 29000.00.
2. Development of the feasible
alternatives
Based on engineering calculations
estimate, for the above case we can choose the three methods for determining a
value estimated as follows:
a.
Using the
lowest value of the reference obtained in 2012
b. Using the last
reference to PO (the tender in 2010) with escalation price
c.
Using the
estimate range (software Palisade @ risk) low cost-mean-high cost
3. Development of the outcomes
The calculation of an estimate obtained as follows:
4. Analysis and comparison of the
alternatives
Of the three results of these calculations, we decided to
use the management escalation methods. Due to regulations in Pertamina more
important than the accuracy of the prices with the range of estimates.
5. Selection of the preferred alternative
escalation method using index nelson farrar (www.ogj.com
/ index.html) with a value index 1.52, then obtained an estimate of the value
of the procurement of materials for the project in question is USD. 30,508.00.
6. Performance
Monitoring & Post Evaluation of Result
At the time of price negotiations occur negotiating hard
and the end result can be achieved under owner estimate.
The estimated price is a range that is processed by the estimator and approved by the management who took the decision.
The estimated price is a range that is processed by the estimator and approved by the management who took the decision.
7. References
Soewarto & Ali SY. Metode Eskalasi dan
Koreksi.Seminar Cost Engineering. Pertmaina-Dit Pengolahan
Oil & Gas Jurnal. Index Nelson Farrar. Retrieved from
: www.ogj.com/index.html
Purdue online writing lab. Reference
List: Electronic Sources (Web Publications). Retrieved from : http://owl.english.purdue.edu/owl/resource/560/10/
Very interesting case study, Pak Heru!!! Excellent!!
ReplyDeleteBUT..... Your numbers don't make sense to me.... If your Nelson Farra Index was 1.52 wouldn't that mean it was 29,000 X 1.52 = $44,080? Seems like you missed something in using the factor?
Another check. Using the "Gold Equivalency Method) in 2010 $29,000 was equal to $29,000/$1250 = 23.2 ounces of gold. Today, gold is averaging $1,700 an once X 23.2 ounces = $39,440. And if you use the last 30 day average price of gold you are looking at $1,725 X 23.2 ounces of gold = $40,252.
So it looks to me like your (Pertamina) cost estimates are way too low and that that bids from your suppliers look like they are pretty accurate.
Bottom line- what you are doing now is NOT working, correct? Your projects are consistently coming in LATE and OVER BUDGET, yes?
My challenge to you is to STOP using the same tools and techniques you are using now and start to use the tools and techniques you are learning about in this class to try to help you make BETTER cost and schedule analysis decisions.
Suggest for your W3 posting you take this same problem and this time, apply gold equivalency and see what you come up with. Check out the blog postings from Hari Kumar and Lilly Wasitova from previous class blogs and you can see why your models using indices are broken.
BR,
Dr. PDG, Jakarta
sorry Pak Paul, wrong type should be written index value 1.052
ReplyDeleteI'll try what you suggested Pak Paul, thank you.
OK, not a problem at all, just that your numbers didn't make sense to me. But if you are serious about forecasting any costs, using any indices based on dollars is EXTREMELY risk. And not only dollars, but Euros and today the Bank of Japan announced they too are going to print more money. Sooner or later all this "quantitative easing" (which is nothing more than printing unlimited amounts of paper currencies) is going to result in high inflation.
ReplyDeleteThat means any costs projected too far into the future are likely to be grossly underestimated.
BR,
Dr. PDG, Jakarta