W5_HERU_Preparation of Engineering Estimate

1.       Problem recognition, definition and evaluation

before the start estimator calculations, we know a lot of obstacles to start the job. Among them we have to coordinate with the planner and scheduler, WBS, cost databases, format or template and the most important is the guidelines or rules of the company.
Ploblem: Do we have to prepare everything well?

2.       Development of the feasible alternatives

To facilitate the preparation phase of the engineering estimate, explained there are several requirements that must be met:

1.  Guidelines, a set of guidelines for estimate development need to be in place. These guidelines provide the framework for the Estimating process.
2.  WBS, determine a structure, against wich estimates are organized, must be established.
3. Formats / Templates, standard framework for explaining the value that is used as an explanation of the structure.
4.  Cost Data, a reference source to get the value range estimate.

There are three basic approaches to estimating: actual cost, historic data, and a combination of historic data and actual cost. One of the most important factors in obtaining a good engineer's estimate is the experience of the estimator.

3.       Development of the outcomes

results obtained after we made preparations that much easier, more organized and determined in accordance with procedures adopted by the company. Certainly allows us to do the job next project estimation. Be explained below:

1. Actual Cost Approach

The actual cost approach takes into consideration factors related to actual performance of the work (i.e. the current cost of labor, equipment, and materials; sequence of operations; production rates; and a reasonable value of overhead and profit). This approach requires the estimator to have a good working knowledge of construction methods and equipment. Also the estimator should have resources available for determining production rates from actual work performed by the contracting industry on similar type projects as well as resources for determining current construction methods and equipment. While adjustments for current market conditions may be required, this approach typically produces an accurate estimate and is useful in the bid review process in aiding the decision to award or reject the project. However, this method may be more time consuming and may not be practical for all projects.

2. Historic Data Approach

The use of historic data from recently awarded contracts is a cost-effective method to develop the engineer's estimate, however, solely relying on historic data may not be appropriate when the data is based on a non-competitive bidding environment. A file of previous unit bid prices should be maintained according to type, size, and location of project. Upcoming projects should be matched to the most recent projects to develop base prices for estimating the value of the unit prices. Under this approach, bid data are summarized and adjusted for project conditions (i.e., project location, size, quantities, etc.) and the general market conditions.

This approach requires the least amount of time and personnel to develop and produces an adequate estimate for use in budgeting/programming, as long as competitive bid prices are used to build the estimate. Non-competitive bidding and unbalanced practices are the least recognizable using the historic data approach to estimating. Further adjustment of the base prices should be considered based upon the ages of the similar projects, but past inflation rates should not be projected into the future unless based on circumstances which can be reasonably expected to occur, such as labor rate increases through labor negotiations and known material price increases. Where the magnitude and timing of future increases are uncertain and would have a major effect on critical unit prices, price adjustment clauses may be a better alternative.

3. Combination Approach

This approach combines the use historic bid data with actual cost data.. Current material costs are obtained from local approved sources. Equipment costs can be obtained through rental companies or equipment dealers based on a reasonable depreciation schedule. The remaining items are estimated based on historical prices and adjusted as appropriate for the specific project.

4.       Selection of criteria

from the data above, we can see the most important being the cost data. meet with complete data estimation methods cost estimate: Actual Cost Approach, Historic Data Approach, Combination Approach.

5.       Analysis

After we do the preparation of engineering estimate not stop at one level only, are still needed and explained estimate what we will do. Work done gradually estimation of preparation and the terms, type estimation, contingency, profit and much more.We know that the estimate divided by four types of the conceptual, preliminary, detailed and definitive. There is still more work to refine an estimate that can be described in a subsequent blog post.

6.       Selection of alternatives

Below is an example of the cost data obtained by the following calculation :

PERT ANALISYS

=(O + (4*ML) + P) / 6

= (322.51 + (4*340.64) + 355.45)/6

= 340.08

 

Actually there are a lot of analysis used, pert analysis is one of the techniques used in making the estimate. 

7.       Performance Monitoring & Post Evaluation of Result

More detail can be seen in the schematic diagram below:

Price estimate step by step

to be skipped in order to get a price estimate can be made ​​more accurate and trusted by management.

References

Humphreys, Gary C. (2011). Project management Using Earned Value.United State of America. Humphreys & Associates,Inc.

Amos,PE, Dr. Scott J. Skill & Knowledge of Cost Engineering. United State of America. AACE International

United States Department of Transportation-Federal Highway Administration (January 20, 2004). Guidelines on Preparing Engineer's Estimate, Bid Reviews and Evaluation. Retrived from : http://www.fhwa.dot.gov/programadmin/contracts/ta508046.cfm

Purdue online writing lab. Reference List: Electronic Sources (Web Publications). Retrieved from : http://owl.english.purdue.edu/owl/resource/560/08/