White Papers

It is tempting to think that you can simply take an existing plant and create that same asset in a different location for the same cost. Sadly, there’s no such thing as identical projects. However, management often seems to think so. What to keep in mind when building a plant abroad? This article zooms into some of the location and productivity factors and gives an insight on how to obtain them.

The world has been relying on coal, oil, and gas for decades. Due to the increasing energy demand, a popular question is where to get the energy from in the near future. To utilize clean energy resources, offshore wind energy is one of the fastest growing sources of renewable energy. However, it is often criticized for being too expensive.

In this article, as published in the leading Chemical Engineering magazine, Cost Engineering Consultancy provides insight into how the business processes related to process design can be better integrated into the processes of the cost engineering department. Focus is not just on the people working in those fields, but also on the tools they use and how integrating them can save both time and money. 

Cost Engineering is proud to welcome you to the Cost Engineering Event 2015, the fifth edition of the most important cost engineering event in Europe. Nowadays we see more and more pressure for projects to be delivered in time, within the established budget and with the best quality. Therefore, the theme for this year’s Event is “Cost Estimating and Project Control: Closing the loop”. A title that refl ects the necessity of bringing estimating and…

Escalation can be defined as changes in price levels driven by underlying economic conditions. Escalation reflects changes in price-drivers such as productivity and technology, as well as changes in market conditions such as high demand, labor shortages, profit margins and so on. Escalation also includes the effects of, but differs from, inflation which is a general change in prices caused by debasement of the value of a currency. From an estimator’s perspective, escalation it is…

As a recommended practice of AACE International, the Cost Estimate Classification System provides guidelines for applying the general principles of estimate classification to project cost estimates (i.e., cost estimates that are used to evaluate, approve, and/or fund projects). The Cost Estimate Classification System maps the phases and stages of project cost estimating together with a generic maturity and quality matrix, which can be applied across a wide variety of industries.

Cost estimates for refinery turnarounds can lack accuracy, but lessons learned from capital project estimating could improve matters.

Many organizations do not have competency models or career development paths for their cost estimating or other cost engineering staff. A model helps employees understand the skills and performance required for each position in alternate career paths and allows them to proactively participate in managing their career development. Using models, supervisors can more effectively lead and manage staff performance in a way that links to overall company strategies and supports improved organizational effectiveness. This paper…

This paper focuses on many of the issues and problems associated with rough order of magnitude estimating. How do you prepare an estimate when there is very little information on which to base the estimate? While teaching at the University of Chicago, physicist Enrico Fermi had a reputation for asking his students, without any warning, seemingly impossible questions, such as, "how many piano tuners are there in Chicago?" We face similar conceptual estimating problems everyday…

This article discusses the development of a parametric model used to prepare conceptual estimates for process control costs on capital projects. This discussion is based on a specific parametric model used by the Eastman Kodak Company, which is probably unique to its capital projects. However, the specific algorithms and the model are not the focus —this article describes how the model was developed, and how it is being used.

There are many issues to deal with organizationally when creating and maintaining an estimating department. This article reviews some of these issues and shows examples from the authors’ experience that may benefit others in similar situations. Identifying and documenting estimator skills and competencies, developing estimating training plans, acquiring estimating tools and resources, managing the estimating workload, measuring department performance, and interfacing with project management and controls—all of these topics are important in achieving an effective…

Within seconds of answering the phone, those ominous words were muttered by the project manager, "do you remember that estimate you did for me a few months ago? Well the project is way over budget." Your immediate reaction is one of impending doom, but your anguish quickly disappears as you realize that you have nothing to worry about—your estimates are always expertly prepared. Each and every one of your estimates contains appropriate detail, is sufficiently…

For those in the business of executing projects, it is widely recognized that one of the most important ingredients to a successful project is the accurate definition and effective control of project scope. Recognizing project scope definition as one of the most important factors influencing project success is certainly not a new concept. In 1982, the Construction Industry Institute (CII) Business Roundtable issued a report stating that “poor scope definition at the (budget) estimate stage…

For many owner companies, the process for managing and executing capital projects relies on a “phases and gates” approach. The move toward this type of capital process began more than 10 years ago, as companies faced increased competition to reduce cycle time and improve cost effectiveness in their capital programs. The sequence of activities to engineer, design, procure, and construct capital projects is divided into phases. By clearly specifying the project deliverables for each phase,…

This classic article reviews the current AACE International Classification System. It discusses various estimation methodologies, from conceptual to definitive, for calculating the cost of capital projects in the CPI, and identifies the technical deliverables required to prepare each class of estimate. The techniques used for each type of estimate are discussed. These estimating methodologies, and the engineering information required to support them, should be understood by all engineers.

The subject of estimate accuracy is always guaranteed to be a topic of debate among cost engineering professionals. The phrase itself can be considered an oxymoron, which means that it is a conjunction of contradictory terms. From its definition to its application in the control of projects, ten different people will often have ten different views on the subject. This paper will present the author's viewpoint on the topic.

This article focuses on the application of a fit-for-use methodology to the process of performing estimate review and validation and covers the contractor’s and owner’s points of view. The major steps of the estimate review and estimate validation cycle are examined. How good is your estimate? These are the first words that we, as estimators, normally hear upon presenting our estimates to our management or to our customers; and they are the same words we…

How many times have each of us asked ourselves “if I only had the chance to do that over again?” Or maybe you’ve said, “if only I knew then what I know now.” All of us, whether we are 9 or 90, make decisions based on our past experiences. As a point of reference, sometimes we ask others about their experiences, especially if we don’t have our own history to fall back on. So, why…

It has been reported that oil sand deposits in Alberta, Canada may total over 1.6 trillion barrels of bitumen, with potentially over 300 billion barrels of oil recoverable using existing technologies [1]. This makes the Canadian oil sands potentially the largest petroleum resource in the world, perhaps larger than Saudi Arabia. Announced investments to develop oil sands projects currently total over $80 billion. In the last several years, however, there have been significant cost and…