This survey assists them in their selection of potential new sites based on expected investment and operational costs for the different locations.

A location factor is an overall total project factor for translating all of the project cost elements of a defined construction project scope of work from one geographic location to another. This factor recognizes differences in productivity and costs for labour, engineered equipment, commodities, freight, duties, taxes, procurement, engineering, design and project administration.

A simplified overview of the location factoring method includes the following:

  • selecting a detailed estimate for the base location;
  • creating a parallel estimate by applying overseas labour, material, and equipment factors (all developed at a constant exchange rate) to the base estimate
  • calculating allowances for taxes, fees, import duties, freight, etc., with expected percentages for the foreign location,
  • calculating engineering, design, procurement, and project administration costs with expected percentages or factors for the foreign location taken into account that part of it cannot be executed locally;
  • dividing the base estimate to the parallel factored/percentaged estimate to produce a location factor

A location factoring method requires a detailed survey of labour, material, equipment, and other project-specific data completed for the base location. The same survey then is priced out according the current prices and norms of the selected  compared to the base data. The survey must be organized, constructed, and worded in such a way that all parties understand exactly what is being requested.

For this we were in close contact with local partners and EPC contractors to gather all the necessary local information for our survey.

We were able to deliver our client next to the quantitative calculations, the main uncertainties together with a detailed risk assessment. Adjacent we gave for each potential country an overview of the more qualitative information, like information on geography, economy, demography, culture, transportation and education; information that possibly influences the choice for a particular location.

The outcome of the project costs based on our Location Factor Survey was challenged by an independent estimate of the client and we proved to be within 10% accuracy of the investment costs !