W9_MFO_ Benchmark of Company Cost Estimating Template against NPS Template

  1. Problem Definition

Refer to Dr Paul comment in the 2nd Paper Submission, author want try to benchmark the Company cost estimating template against US National Park Service (NPS) estimating template using Likert Scale / Compensatory method.

  1. Identify the Possible Alternative

To make an estimate, the company already has a cost estimation template. But, using this template, our estimation results are mostly inaccurate so there needs to be an improvement on the template. The description of the template can be seen in figure 1.

Figure 1. Company Cost Estimating Template

Author want try to benchmark the company estimating template with “the best in class” that is US National Park Service (NPS) estimating template. National Park Services has 3 level of estimating, Class A, Class B and Class C. The best fit with Company estimating process regarding to National Park Services is Class A estimating, where Class A Construction Cost Estimates are referred to as actual estimates by the design. These estimates are generally prepared with a fully defined scope of work (SOW), complete with all drawings and construction details, and complete set of project specifications. The accuracy of Class A estimate is -5% to +15%. On figure 2, it shown the template use by National Park Services for estimate project with Class A estimate level.

Figure 2. National Park Services Template Class A Construction Cost Estimate

  1. Development of The Outcome for Alternative

Refer to company template and National Park Services/NPS template, there is gap between them from estimate mark-ups aspect, there is 11 aspect consider by NPS for creating an estimation, that are Published Location Factor, Remoteness Factor, Federal Wage Rate Factor, Taxes, Design Contingency, General Condition, Historic Preservation Factor, Overhead & Profit, Contracting Method Adjustment, Bond Permits, Inflation & Escalation, to identify each aspect author develop using likert to define which aspect must be consider, after that author can make purpose suggestion to company for a better estimate template, the likert score explain on table 1 below :

Table 1. Likert scale

  1. Selection Criteria

We will perform a checklist of each aspect proposed by NPS estimating template. If there are gap from the checklist and potentially to be fixed, it will be recommended to management to improve the estimation process.

  1. Analysis & Comparison of Alternative

Based on data in figure 1 and figure 2, the authors compare both template, calculate the average likert value and we will see which attributes meet the NPS template and which have not.

Table 2. Result of Company template vs NPS template

Refer to table 2, we get average of company template condition is 1.09. Refer to table 1, it means that the company template highly consider to implement NPS template because it effect on estimate value and the fact that estimation value almost always lower than actual value. Based on Table 2, it found that there are three critical aspect which still not fully consider on company template like design contingency, historic preservation factor, and contracting method adjustment. So, we can give the recommendation to the management to improve our template especially from aspect which still not fully consider.

  1. Selection of the Preferred Alternative

Based on above assessment and analysis, company must consider unimplemented aspect and improve the template for a better and reliable estimating process.

  1. Performance Monitoring and The Post Evaluation of Result

Management should consider to use of NPS estimating template to avoid over budget or under budget estimate and monitoring should be conducted during estimation process to ensure that all requirements are met.

Reference:

  1. GAO (March 2009). GAO Cost Estimating and Assessment Guide, A Reliable Process for Developing Credible Cost Estimates pages 8-11. Retrieved on 12th July 2014 from http://www.gao.gov/new.items/d093sp.pdf
  2. Sullivan, W.G., Wicks, E. M., Koelling, C. P. (2014). Engineering Economy, Chapter 14, page 559 to 617. Pearson. Sixteenth Edition.
  3. Cost Estimating Requirements Handbook National Park Service (February 2011). Retrieved on 18th July 2017 from https://www.nps.gov/dscw/upload/CostEstimatingHandbook_2-3-11.pdf
  4. Estimating Procedure Document. (2013). PT. ABCD. (Disguised).
  5. 08.0 – Managing Cost Estimating & Budgeting. Retrieved from http://www.planningplanet.com/guild/gpccar/
  6. Likert Scale (2017). Retrieved from https://www.surveygizmo.com/survey-blog/likert-scale-what-is-it-how-to-analyze-it-and-when-to-use-it/
 

W8_MFO_ Benchmark of Company Cost Estimate Process vs GAO Process

  1. Problem Definition

Refer to Dr Paul comment in the 2nd Paper Submission, author want try to benchmark the Company Estimate Process with GAO Estimate Process using Likert scale / Compensatory method.

  1. Identify the Possible Alternative

To make an estimate, company already has a procedure. We must follow the steps contained in that company’s procedures. There are at least five steps to follow. The description of the estimation process can be seen in figure 1.

Figure 1. Company Cost Estimating Process

GAO cost estimating process consist of The Twelve Steps of a High-Quality Cost Estimating Process. Each of the 12 steps is important for ensuring that high-quality cost estimates are developed and delivered in time to support important decisions. In below, we can see the GAO’s process and this is the same process which we need to apply as part of each Phase Gate, including the approved budget as part of each Phase Gate Decision Support Package.

Figure 2. GAO Estimating Process

  1. Development of The Outcome for Alternative

Base on both cost estimating process, author will compare that using the twelve steps GAO estimating process and compensatory method. For compare using compensatory method, author determine the likert scale like on table below.

Table 1. Likert scale

After determine the likert scale and refer to 12 steps GAO estimate process, we can put each task with Likert value who meet with current condition of company in estimation process like on table below.

Table 2. Company estimating process with likert value

  1. Selection Criteria

We will perform a checklist of each stage proposed by GAO approach in the estimation process. If there are gap from the checklist and potentially to be fixed, it will be recommended to management to improve the estimation process.

  1. Analysis & Comparison of Alternative

Based on the assessment of checklists in table 2, the authors calculate the average likert value and we will see which attributes meet the GAO requirements and which have not.

Table 3. Result of GAO vs Company Estimating Process

Refer to table-3, only step-1 or define estimate purpose which already meet with GAO, the other step (step 2 until step 12) still remind to consider highly and very highly implemented.  Company need to consider GAO for a better and reliable estimating process, because 12 steps purposed by GAO as one of  best practice in process estimation.

  1. Selection of the Preferred Alternative

Based on above assessment and analysis, company must consider unimplemented step for a better and reliable estimating process, because 12 steps purposed by GAO as one of best practice in process estimation.

  1. Performance Monitoring and The Post Evaluation of Result

Management should consider the use of GAO Estimating Process as part of the estimation stage process to avoid Over Budget and Behind Schedule Project and monitoring should be conducted during estimation process to ensure that all requirements are met.

Reference:

  1. GAO (March 2009). GAO Cost Estimating and Assessment Guide, A Reliable Process for Developing Credible Cost Estimates pages 8-11. Retrieved on 12th July 2014 from http://www.gao.gov/new.items/d093sp.pdf
  2. Sullivan, W.G., Wicks, E. M., Koelling, C. P. (2014). Engineering Economy, Chapter 14, page 559 to 617. Pearson. Sixteenth Edition.
  3. Estimating Procedure Document. (2013). PT. ABCD. (Disguised).
  4. 08.0 – Managing Cost Estimating & Budgeting. Retrieved from http://www.planningplanet.com/guild/gpccar/
  5. Likert Scale (2017). Retrieved from https://www.surveygizmo.com/survey-blog/likert-scale-what-is-it-how-to-analyze-it-and-when-to-use-it/
 

W8_TH_ Index and Power Sizing Technique for CNG Compressor Cost Estimating

1. Problem Definition

Electric Motor has been choosing as a prime mover type for gas station project on Blog Week 3. In 2017, company will build new gas station project with capacity is 0.5 MMSCFD. Company has budgetary quotation data from three different compressor manufactures at 2015. Since the company will be using the price for calculate conceptual economic model, then the optimum price for 0.5 MMSCFD electric motor CNG compressor must be develop.

2. Develop the Feasible Alternative

There are budgetary quotation price from three different compressor manufactures, as follow:

Table 1. Budgetary Quotation Price

3. Develop of the Outcome for Alternative

Author will use formula of power sizing technique (correlation between price and capacity) and index to get cost estimation for 0.5 MMSCFD electric motor CNG compressor in 2017 project.

Fig 1. Power Sizing Model Formula

For index, author will use Chemical Engineering Plant Cost Index (CEPCI) because CEPCI is one of best bench-marking index since introduction in 1963.

Fig 2. Index Formula

Fig 3. CEPCI Index

4. Selection Criteria

Author will use P50 at PERT analysis to determine optimum price for 0.5 MMSCFD electric motor CNG compressor.

5. Analysis & Comparison of Alternative

Based on data and formulation above, here is the analysis and calculation for correlation exponent result:

Table 2. Correlation Exponent

Using correlation exponent (m), sizing model analysis for 0.5 MMSCFD for each budgetary quotation could be calculated as follow:

Table 3. Estimate Cost 0.5 MMSCFD CNG Compressor

The calculation above show still using 2015 database and to get reflection new cost 2017 the data shall be adjusted by CEPCI index value at March 2017 (Figure 3).

Table 4. CEPCI Index Value Result

6. Selection of the Preferred Alternatives

Author use PERT analysis on P50 to determine optimum price, the result as follow:

Table 5. P50 PERT Analysis Result

Based on analysis above, price for 0.5 MMSCFD CNG compressor with electric motor prime mover is $ 313,970.

7. Performance Monitoring and The Post Evaluation Result

Power Sizing Model and Index Value above is a good formula to estimate the indicative price for conceptual economic calculation. It can be using of any kind project, such as oil & gas, automotive, power plant, etc.

References:

  1. Planning Planet (2017). Creating The Owners Cost Estimate (Top Down). Retrieved from http://www.planningplanet.com/guild/gpccar/creating-the-owners-cost-estimate
  2. Sullivan, G. W. (2014). Engineering Economy 16th Chapter 3 – Cost-Estimation Techniques, pp. 99-110
  3. Irene, Audray. (2017). W5_AI_Power Sizing Model|Emerald AACE 2018. Retrieved from http://emeraldaace2017.com/2017/09/03/power-sizing-model-and-index-value-for-offshore-regasification-facility-project-cost-estimating/
  4. CEPCI June 2017 (2017), CEPCI June 2017. Retrieved from https://www.scribd.com/document/352561651/CEPCI-June-2017-Issue
 

W7_TH_ Standardized WBS Structures for Gas Station Project-Part 4

1. Problem Definition

Gas Station (GS) project is a construction project of gas pipeline treatment facility to compressed natural gas (CNG). CNG is used as motor vehicle fuel. Types of motor vehicles that currently dominate the use of CNG are public transportation such as bus, bajaj and taxi.

Fig 1. GS Project Lay Out

A GS area consists of several areas: commercial area, administrative area, main equipment area and utility equipment area. In this project each area is supported by some equipment or facilities

Commercial area is the area used for costumer consists of waiting room area, food court area, ATM area and minimarket area. The administrative area consists of gas station office space, workplace, worship room and toilet. The main equipment area generally contains equipment such as scrubbers, dryers, compressors, CNG storage and dispensers. While the utility equipment area consists of POS (point of sales), FACP (fire alarm control panel), CCTV (closed circuit television), ESDV, air instrument and panel room.

In the project, Engineering team is divided into several disciplines such as mechanical engineer, process engineer, civil engineer, instrumentation engineer, electrical engineer and pipeline-pipeline engineer.
Each engineer has the task in accordance with his expertise to oversee the project from the initial phase, design, construction, commissioning and subsequently submitted to the operations team

After compare 15 Omniclass Tables that applicable and relevant for GS Project WBS, in this week Author will build Standardized GS WBS from top three OmniClass Tables which are:

  1. Table 13-Spaces by Function
  2. Table 23-Products
  3. Table 31-Phases
2. Develop the Feasible Alternative
  • Table 13-Spaces by Function

Spaces by Function are basic units of the built environment delineated by physical or abstract boundaries and characterized by their function or primary use. Spaces have a purpose or use.  This is their function and the concern of this table.  Spaces can be occupied by people, things, and substances and serve as mediums for activities and movement.

  • Table 23-Products

Products are components or assemblies of components intended for permanent incorporation into construction entities. A product may be a single manufactured item, a manufactured assembly consisting of many parts, or a manufactured operational stand-alone system.

  • Table 31-Phases

A phase is a period of time in the duration of a construction project identified by the overall character of the construction processes which occur within it. This table provides the time and activity dimension for the process of creating and sustaining the built environment.  A “project” can be defined as a planned undertaking consisting of a process or set of procedures to accomplish a task.  Phases are portions of time and activity efforts within any project that provide necessary groupings of activities, and resultant milestones and expectations.

 3. Develop of the Outcome for Alternative

Moine (2013) has developed a 3D WBS model. All of this three dimension projects can be integrated in comprehensive 3D models which visualized as Figure 2 below[2]:

Figure 2. Project Cubes Concept of 3D WBS Model[2]

Author will combine Table 13-Spaces by Function as Zone Breakdown Structure (ZBS), Table 23-Products as Product Breakdown Structure (PBS) and Table 31-Phases as Activity Breakdown Structure (ABS) to become Standardized GS 3D WBS.

4. Selection Criteria

The criteria for choose OmniClass Number and combine to 3D WBS are:

  1. The WBS should represent zone, activity or phase for GS Project
  2. Deliverables should be decomposed to the level of detail needed to estimate the effort required to obtain them
  3. Ensure That each WBS element has a single point of accountability
  4. Support historical cost collection for future cost estimating purposes
5. Analysis & Comparison of Alternative
  • Table 13-Spaces by Function – Zone Breakdown Structure (ZBS).

Detail ZBS for GS projects can be extracted by OmniClass Table 13 (Space by Function) which noted spaces for decompose ZBS components, which detail shown:

Chart 1. GS OmniClass ZBS

Figure 3. GS Space by Function

  • Table 23-Products – Product Breakdown Structure (PBS).

Detail PBS for GS project can be extracted by OmniClass Table 23 (Product) which noted GS facilities for decomposes PBS components, which detail shown:

Chart 2. GS OmniClass PBS

Figure 4. GS Facilities

  • Table 31 – Activity Breakdown Structure (ABS).

Detail ABS for GS project can be extracted by OmniClass Table 31 (Phases) which noted project phase for decompose ABS components, which detail shown:

Chart 3. GS OmniClass ABS

6. Selection of the Preferred Alternatives

Three Tables are combine together to form dimensional cube where OmniClass PBS as x-axis, OmniClass ABS as y-axis and OmniClass ZBS as z-axis, which shown at 3D WBS below.

Figure 5. GS OmniClass 3D WBS

7. Performance Monitoring and The Post Evaluation Result

Standardized GS WBS can build from combining top three OmniClass Tables. It is necessary to keep update the WBS periodically during project phase. Project management team also needs to evaluate the impact during phases of the project so the project can smoothly deliver with on time, on budget and on scope.

References:

  1. Planning Planet (2017). Creating Work Breakdown Structure. Retrieved from http://www.planningplanet.com/guild/gpccar/creating-work-breakdown-structure
  2. Ardi, Satria. (2014). W14_SAS_Developing|Soroako AACE 2014. Retrieved from https://soroakoaace2014.wordpress.com/2014/12/12/w14_sas_developing-standardize-omniclass-3d-wbs-for-electric-furnace-rebuild-project/
  3. OmniClass (2017), OmniClass Table 21 – Elements (includes design elements). Retrieved from www.omniclass.org/tables/OmniClass_21_2012-05-16.zip
  4. Norsok Standard Z-014 (2017), Norsok Standard Z-014. Retrieved from http://www.standard.no/pagefiles/951/z-014.pdf
  5. Ardi, Satria. (2014). W12_SAS_Developing|Soroako AACE 2014. Retrieved from https://soroakoaace2014.wordpress.com/2014/11/28/w12_sas_developing-3d-wbs-for-electric-furnace-rebuild-project/
  6. El Rashid, M. (2016). The Influence of Non-Standard Work Breakdown Structure on Change Orders and Cost Estimation for Sudan Oil and Gas Projects, PM Word Journal Vol. V. Retrieved from http://pmworldlibrary.net/wp-content/uploads/2016/12/pmwj53-Dec2016-ElRashid-non-standard-work-breakdown-structure-sudan-featured-paper.pdf
  7. Gannasonggo, Gustaf. (2012). W3_GGS_OmniClass WBS|Casablanca AACE 2012. Retrieved from https://aacecasablanca.wordpress.com/2012/02/06/w3_ggs_omniclass-wbs-table-selection-using-additive-weighting-technique/
  8. Fahmi, Ahmad. (2014). W6_AFS-Managing Small Project |Simatupang AACE 2014. Retrieved from https://simatupangaace2014.wordpress.com/2013/10/08/w6_afs_-managing-small-project-omniclass-3d-wbs-2/comment-page-1/
 

W8_AI_Tuckman Survey for Process Engineering

  1. Problem Definition

Process Engineer Team has been actively working together for the past 4 years. The challenge of this team is the increasing and complexity of gas infrastructure projects that will be faced. We now want to determine the leadership skills and styles which the group may benefit from as it enters this next phase of the project. Then for this week Tuckman Survey will be applied.

  1. Identify the Possible Alternative

In 1965, Tuckman published his Forming Storming Norming Performing model and completed with the fifth stage, Adjourning in 1970s. This model explains that as the team develops maturity and ability, relationships establish, and the leader changes leadership style from Directing (Telling), Coaching, Participative, and Delegating up to Directing (Concluding).

Figure 1. Tuckman’s Team Development Model

Illustration graph of Tuckman Model Group Development Stages is shown in the next figure:

Fig 2. Tuckman Group Development Stages Model

  1. Development of The Outcome for Alternative

To determine current Process Engineer Team stage, each individual in team fill the excel format of Tuckman Survey Scoring Template.

Table.1 – Individual responses

  1. Selection Criteria

Based on the above individual’s response, PERT analysis was performed to identify team behavior at P90 because these team already join over long time (4 years)

Table 2. P90 Delphi Technique Result

  1. Analysis & Comparison of Alternative

Based on Table 2 above, we can conclude the team is in Performing stage (indicated by the rank). During this stage, team members often experience:

  • Constructive self-change;
  • Deep sense of belonging;
  • Understanding of each other’s strengths and weaknesses;
  • Self-organization of work;

Hints for team leaders:

  • Delegate all work that sensibly can;
  • Focus on developing team members;

Style of leadership this stage is “DELEGATING” mode where some leadership is shared by the team.

  1. Selection of the Preferred Alternative

Process Engineer team can achieve more than each team member individually. Being part of a high-performance team can be extremely rewarding, but it requires time and commitment to get to that stage. The team leader job is to help this team reach and sustain high-performance and leader has to adapt behavior and leadership style to the different challenges presented at each stage. The team leader responsibility is to be aware of the challenges the team will face and support the team to get aim together.

  1. Performance Monitoring and The Post Evaluation of Result

Team assessment should conduct periodically in six months ahead to capture team phase changing and select appropriate style of leadership, this evaluation can help the team to improve coordination and productivity.

 

References:

  1. Tuckman, B. (1965). Tuckman’s Team Developmental Model. Retrieved from http://www.focusadventure.com/team-building/gallery/tuckmans-team-developmental-model/
  2. Michell, Tony (2017). W2_ABM_Folow Up Tuckman|EMERALD AACE 2017. Retrieved from http://emeraldaace2017.com/2017/08/08/w2_abm_follow-up-tuckman-survey-on-spj-offshore-construction-team/
 

W8.1 – Sulphur Product Handling Jetty – Applying a standardised WBS (Part 2)

Problem Definition

Under my week 7 blog, we considered the use of a 3D WBS and the most suitable Omniclass table using the standard dimensions of ZONE (ZBS), ACTIVITY (ABS) and PRODUCT (PBS).

This is only 1 combination and can be expanded to include other aspects of a projects performance to enhance visibility. This expansion will take the form of additional breakdown structures as well as different combinations with each providing a unique and different perspective on the project.

And whilst there could be a large number of combinations available, the selection of the preferred combination(s) will largely depend on stakeholder requirements.

In this blog we will stay with the SPJ – package 12B project and use the EPCC Contractor as the Stakeholder and consider some typical requirements which an EPCC contractor may have when analysing their works and progress of the package 12B project.

We will establish which Combination of Breakdown structure should be considered to provide the EPCC with a clear view of those aspects which it considered important.

Once a determination of most relevant combination is made, we will select the most appropriate Omniclass table to support the Break down structure and filtering options.

Feasible Alternatives

We will consider the following breakdown structures in a 3 dimensional combination;

If we limit to only 3 dimensions, or fields, then the maximum number of permutation is as follows;

Development of the Alternatives

Each Breakdown Structure provides the EPCC with a unique set of information. This may be summarised as follows;

Selection Criteria

We will consider the following aspects as the basis for determining which are the relevant WBS combinations and dimensions;

Comparison of Alternatives

By considering the needs of each monitoring requirement and then relating these needs to the relevant breakdown structure, we can reduce the number of combinations to only 10.

Selection of the Alternatives

As determined under the week 7 blog posting, the relevant omniclass tables which would support the package 12B project scope were;

  • PRODUCT / SYSTEM- Table 23
  • PHASE – Table 31(2006)
  • AREA – Table 14
  • WORK ACTIVITIES – Table 22

The same tables could be used to establish the project ABS (Table 22&31), PRBS(table 23) and ZBS (Table 14) as noted above. The Omniclass table 35 & 33 would support the RSBS and definition of plant and labour.

Performance Monitoring

The development of Breakdown structures for elements such as CTBS/ CLBS and CHBS would require project specific formats and structures. Combining these formats with the Omniclass system would require further assessment and considerations

References

1. OmniClass. (2014). About OmniClass. Retrieved from OmniClass: http://www.omniclass.org/

2. Moine J-Y. 2013.3D Work Breakdown Structure Method, PM Word Journal Vol. II, Issue IV–April 2013

3.Combinatoric: Generator of Combinations. Retrieved from https://planetcalc.com/3757/

4. Chapter 3.4 creating the WBS – Guild of project controls compendium and reference (CaR) | Project Controls – planning, scheduling, cost management and forensic analysis (Planning Planet).  Retrieved from http://www.planningplanet.com

 

 

 

 

 

 

W7.1_AI_Developing Operation & Maintenance Model for Offshore Regasification Facility Project

 

  1. Problem Definition

Besides capital expenditure, one of the cost components which is needed in financial economic model is operation and maintenance cost. Still discuss about offshore regasification facility project, this week I will develop operation and maintenance model for the project, and this WBS would be applied for O&M activities provide by owner so it will be covered the asset of onshore receiving facilities and pipeline. As for the initial stages in building O&M model is determine cost structure. In making the cost structure of a project, the first thing to do is by determining work breakdown structure (WBS). In this week, I will choose WBS standardization between omni class and norsok to be applied.

Figure 1. Business Scheme

  1. Identify the Possible Alternative

There are two commonly used WBS standardization among others:

  1. OmniClass
  2. Norsok

Both of this standard would be compared and the optimum WBS standard would be chosen.

 

  1. Development of The Outcome for Alternative

Table 1. OmniClass Table

The table above is 15 hierarchical that is designed to provide a standardized basis for classifying information. Each of it represents a different phase of project information and every entity can be combined one and another, to build more complex structure.

Moine has developed a 3D WBS model. All of three dimension project can be integrated which visualized as figure below:

Figure 2. 3D WBS Model

 

Norsok Standard describe a system for cost coding and weight estimates and as-built or experience data. The following is coding system classification of Norsok standard:

Figure 3. Norsok Standard

 

  1. Selection Criteria

Cost structure which can be applied from OmniClass standard to O&M model of Offshore Regasification Facility Project consists of:

Table 2. WBS Matrix

The table above shows matrix from omniclass table to being an input for develop 3D WBS structure.  The 3D WBS is based on three main dimensions consist of Zone Breakdown Structure (ZBS), Product Breakdown Structure (PBS) and Activity Breakdown Structure (ABS).

While the applicable cost coding of Norsok Standard to O&M model of Offshore Regasification Facility Project consists of:

Figure 4. Operational Principles Norsok Standard

Using Norsok standard some parameter must be identified at the first place:

  1. Operating Concept
  • Operation objectives
  • Operating environment
  1. Operating Philosophy
  • Criticality
  • Complexity
  • Choice of technology
  • Training and sparing
  • Manning and personnel competence
  1. Production function requirements
  • Production operations (general, start-up, shut-down, isolation for maintenance, well testing, well intervention)
  1. Maintenance function requirements
  • Maintenance strategy
  • Maintenance engineering (design, organization, programs)
  1. Inspection strategy

 

  1. Analysis & Comparison of Alternative

Both standards can be applied in operation & maintenance model of offshore regasification project. But one of the most optimum methods must be chosen to be applied in this project. Considering that the methods used is top-down and from owner perspective, as well as on business scheme operation & maintenance facilities will be contracted to a third party (ship management) using the Long Term Service Agreement, so to coverage of O&M model consists of head quarter for office activity, along onshore receiving facilities and pipeline.

Considering it is then the most optimum standard used is OmniClass standard.

The developed WBS will be follow this criteria:

  • WBS Phase related to the asset
  • WBS Area related to the asset
  • WBS Service related to the asset
  • WBS Organization Role related to the asset
  • WBS Element related to the asset

Table 3. WBS Value Score

Table 4. WBS Weighted Score

  1. Selection of the Preferred Alternative

Based on above description, it shows that the combination of Omniclass table with 3D WBS is better than the single standard. As we can gain deliverables that can be view from many perspectives. Then OmniClass 3D WBS is considered to be applied for Offshore Regasification Facility Project. The rating of OmniClass 3D WBS as follow:

Table 5. OmniClass Table Rating

Rating no 1 up to no 6 will be develop as an input for 3D WBS of Offshore Regasification Facility Project.

 

  1. Performance Monitoring and The Post Evaluation of Result

This 3D WBS is very suitable with condition of current business scheme, so it will have a positive impact on the company for developing it. But also the company need to consider another standard like Norsok as a validation against third parties, or when the business scheme changes, such as the company responsible as a facility operator & maintenance.

Reference:

  1. Planning Planet (2017). Creating Work Breakdown Structure.

Retrieved from http://www.planningplanet.com/guild/gpccar/creating-work-breakdown-structure

  1. Sullivan, G. W. (2014). Engineering Economy 16th Chapter 3 – Cost-Estimation Techniques, pp. 96-98.
  2. Hendarto, T. (2017). W6.1_TH_ Standardized WBS Structures for Gas Station Project-Part 3

Retrieved from https://emeraldaace2017.com/2017/09/22/w6-1_th_-standardized-wbs-structures-for-gas-station-project-part-3/

  1. Norsok Standard. Retrieved from

http://www.standard.no/en/webshop/norsok/?gclid=CjwKCAjwuvjNBRBPEiwApYq0znFC82NEh-OnYem5gU6RHcLNKM-Gx94QdFJQCp_ljPWR14CyBKHaoRoC2r8QAvD_BwE#.Wb5XtdElHIU

  1. OmniClass Standard. Retrieved from

http://www.omniclass.org/

 

OAN_W8_Contingency Estimation in Fuel Terminal Project

  1. Problem Definition

Downstream Oil & Gas Business Unit in a company plan to make a new Fuel Terminal, The Project Management Division asked to make a cost estimation for the Project.

Most of our contract, has cost overrun. Therefore, it is necessary to prepare cost contingency for the Project to anticipate the additional cost.

  1. Development of Feasible Alternatives

There are 4 methods to estimate cost (also time) contingency:

  • Expert Judgment
  • Predetermined Guidelines
  • Simulation Analysis
    • Range Estimation
    • Expected Value
  • Parametric Modeling

For this case, Author uses Simulation Analysis with Range Estimation method.

Range estimating is a risk analysis technology that combines Monte Carlo sampling, a focus on the few critical items, and heuristics (rules of thumb) to rank critical risks and opportunities. This approach is used to establish the range of the total project estimate and to define how contingency should be allocated among the critical items.

 

  1. Possible Solution

The following steps will be used to determine cost contingency using range estimating:

  • Determines of ranges for each cost items.
  • Determines the probability that each item can be completed within the estimate.
  • Running Monte Carlo simulation for the cost range.
  • Determines of critical items based on result of Monte Carlo simulation.
  • Determine of contingency with reference to critical items only.

Following are base estimates for each cost items:

Table 1: Base Estimates for Fuel Terminal

Through a risk analysis and based on historical information, range of each cost items was determined, as shown on table 2. Table 2 also contains the desired probability for each item, which come from management policy.

Table 2: Range and Desired Probability

After determining range and desired probability of cost items, further step is to conduct Monte Carlo simulation with the result as shown on Table 3.

Table 3: Monte Carlo Simulation

  1. Selection Criteria

Determines of critical items are conducted by using the following criteria.

Table 4: Bottom Line Critical Variances

  1. Analysis and Comparison of the Alternatives

By using above criteria (for Classes 3, 4, 5), critical items were determined as shown in Table 5.

Table 5: Data

  1. Selection and Preferred Alternatives

The last step is to determine the cost contingency, as shown in table 6.

Table 6: Proposed Solution

  1. Performance Monitoring and the Post Evaluation of Result

It is necessary to conduct strict monitoring during implementation of the Project, to prevent the cost overrun exceed the cost contingency.

 

Refrences

  1. Sullivan, William G., Wicks, Elin M. & Koelling, C. Patrick. (2014). Engineering Economy 16th edition Chapter 12 page 546- 554, England: Pearson Education Limited.
  2. AACE International Recommended Practice No. 41R-08
    Retrieved from https://www.yumpu.com/en/document/view/50838191/41r-08-risk-analysis-and-contingency-determination-using-range-
  3. AACE International Recommended Practice No. 44R-08
    Retrieved from http://nebula.wsimg.com/ab1871cc797714d7bf4dc2bfc4f5c243?AccessKeyId=593FFA6B20F5002887D7&disposition=0&alloworigin=1
  4. W10_RM_Contingency Estimation in Gas Station Project
    Retrieved from https://goldenaace2015.wordpress.com/2016/03/08/w10_rm_contingency-estimation-in-gas-station-project/

 

 

W9_UDS_ Evaluation in Choosing Best Supply Pattern Part 2

  1. Problem Evaluation

Kediri is a city in east java; My Company has a Fuel Terminal in this city but was closed on 2009. Kediri consumes fuel almost 4% around east java region. And from the fuel consume forecast it will be growing up 3% each year.

Phenomena appear in Indonesia and Kediri also, which non subsidiary fuel consumption rise significantly and lead in the market. It is very different condition than few years ago. In this unpredictable situation, we need to prepare the facility of non-subsidiary fuel to catch the opportunity.

  1. Development of feasible alternatives

There are three alternative Fuel Terminals as supply point to supply Kediri area to catch the opportunity:

  • Existing pattern; Surabaya, Malang, and Madiun Fuel Terminal as supply point to supply Kediri area
  • Shortcut pattern; Tuban Fuel Terminal as supply point to supply Kediri area. Tuban regularly also supply to Fuel Terminal in Surabaya, Malang, and Madiun
  • New pattern; Kediri Fuel Terminal as supply point to supply Kediri area. In this alternative we will reopen the Kediri Fuel Terminal.

Multi Attribute Decision Making Method will use in choosing the best alternative pattern to supply Kediri area not only at economic aspect but also other aspect that influence customer satisfaction such as delivery time, transport loss,  operational flexibility, and etc.

  1. Development the outcome for each alternative

In this part (2st part) I will use method that tension not only on economic criteria but also other criteria that is AHP Method.

AHP is multi-objective decision analysis tool first proposes by Saaty. It is designed when either subjective or objective measures are being evaluated in terms of a set of alternatives based upon multiple criteria, organized in hierarchical structure. At the top level, the criteria are evaluated or weighted, and at the bottom level the alternatives are measured against each criterion. The decision maker assesses their evaluation by making pairwise comparisons in which every pair is subjectively or objectively compared. The subjective method involves a 9 point scale that we present later.

The AHP converts these evaluations to numerical values that can be processed and compared over the entire range of the problem. A numerical weight or priority is derived for each element of the hierarchy, allowing diverse and often incommensurable elements to be compared to one another in a rational and consistent way. This capability distinguishes the AHP from other decision making techniques.

  1. Selection of criteria

Decision rule of AHP method is grading the alternative based on AHP score. The higher score alternative is better alternative. So in this evaluation I will choose the alternative with highest score. Beside that In pairwise comparison step the most important is consistency ratio which should be 10% or less.

  1. Analysis and comparison of the alternative

First we must determine the criteria that can influence customer satisfaction and operational excellent. We determine that criteria using brainstorming technique among our expert to get better result. We got four criteria that are:

  • Delivery Time
  • Transport Loss
  • Operational Flexibility
  • Economical Factor

Economical factor contain two method B-C ratio and ERR. This is the advantage of AHP, we can compare not only on economic factor but also other factor that important to us or our customer.

Figure 1. AHP hierarchy in choosing best pattern in supply Kediri area

We also used brainstorming technique when make pairwise comparison for each criteria again alternative and between all criteria.

Table 1. Pairwise comparison for delivery time

Table 2. Pairwise comparison for transport loss

Table 3. Pairwise comparison for operational flexibility

Table 4. Pairwise comparison for economical factor

Table 5. Pairwise comparison for all criteria

Table 6. AHP result

All pairwise comparison in this model has consistency ratio no more than 10%, so all judgment is consistent and appropriate.

  1. Alternative selection

New Pattern alternative has biggest weighted score than the other so it preferred to be used.

  1. Performance monitoring & Post Evaluation Result

Different form the first part, the second part (AHP method) show new pattern alternative is preferred to be used. In this part we use not only economic but also operational and customer satisfaction, so it is more comprehensive and must be better advise to use.

References

  1. Planning Planet. (2017). Multi-Attribute Decision Making. Retrieved from http://www.planningplanet.com/guild/gpccar/managing-change-the-owners-perspective Figures 8-14
  2. Sullivan, G. W., Wicks, M. E., & Koelling, C. P.(2014). Engineering economy 16th Edition. Chapter 14 – Decision Making Considering Multiattributes., pp.559-608.
  3. Norris, G. A., & Marshall, H. E. (1995). Multiattribute decision analysis method for evaluating buildings and building systems. National Institute of Standards and Technology.
  4. Fox, P. William. (2016). Application and Modeling Using Multi-Attribute Decision Making to Rank Terrorist Threats. Journal of Socialomics. 5:2.
 

W7_MFO_ Price Forecasts using Best Fit Curves On Pipeline Project

  1. Problem Definition

In W6 blog posting comment, Dr Paul asked the author to take same case study for W7 blog posting using “Best Fit” curves to predict the 20 km pipeline project cost. So, the author want try to predict the cost of Polyethylene (PE) pipeline project in this W7 blog posting.

  1. Identify the Possible Alternative

Using last week indicative price, then the cost for PE Pipeline project, as follow:

Table 1. Indicative Price of PE Pipeline

From the table above, then to analyze price forecasts for 20 km pipeline will use:

  1. MS Excel “Best Fit” Linear Regression Analysis Curve
  2. MS Excel “Best Fit” Polynomial Regression Analysis Curve
  3. MS Excel “Best Fit” Logarithmic Regression Analysis Curve
  1. Development of The Outcome for Alternative

These are the following an initial data plotting in determining price forecast:

Figure 1. Input Data

Using these input data and MS Excel “Best Fit” Linear Regression Analysis Curve, then trendline and trending them out to 20 Km provide in figure 2 below. While the trendline use R2 = 0.9901.

Figure 2. Linear Trendline

Then still using data in table 1, now MS Excel “Best Fit” Polynomial Regression Analysis Curve with R2 = 0.9945 will be used in the second analysis. The result of the polynominal regression analysis can be seen in the figure 3 below.

Figure 3. Polynominal Trendline

The latest, on the third data input in table 1 analysis will use MS Excel “Best Fit” Logarithmic Regression Analysis Curve with R2 = 0.9063. The result of the logarithmic regression analysis can be seen in the figure 4 below.

Figure 4. Logarithmic Trendline

With the purpose to make it simple to see the results of the analysis, then bellow will be displayed plotting all three trendline in one chart.

Figure 5. All Trendline (Linear, Polynominal, Logarithmic)

  1. Selection Criteria

Further, value of all treadline for PE Pipeline 20 km length, will be used, ranked and analyzed using PERT calculation. As for the smallest value represents “best case”, middle value represents “most likely” and the highest value represents “worst case”.

  1. Analysis & Comparison of Alternative

The following is data to be used for PERT calculation

Table 2. Trendline Forecasts of PE Pipeline Project

From the table above, we can see

  1. Best case (optimistic) = $ 1,029.13
  2. Most Likely case = $ 1,417.30
  3. Worst case (pessimistic) = $ 2,069.59

Using PERT calculation, then the Mean, Sd, and variance:

Step 1 – PERT weighted Mean

= ((Optimistic)+(4 x Most Likely)+(pessimistic))/6

= $ ((1,029.13) + (4 x 1,417.30) + (2,069.59))/6

= $ 1,461.32

Step 2 – Standard Deviation

= (Largest Value – Smallest Value)/6

= $ (2,069.59 – 1,029.13)/6

= $ 173.41

Step 3 – Variance

= Sigma/Standard Deviation^2

= $ 173.41^2

= $ 30,070.65

The following figure 6 below shows normal distribution curve:

Figure 6. Normal Distribution Curve

The result from the step 3 reveals that the very large variance means that the number is risky, so a higher P number needs to be considered when selecting one, hence for this blog, author use P90 refer to figure 7.

Figure 7. P(90) Distribution Curve

The following above is P(90) cost estimate 20 Km PE Pipeline project with value $ 1,683.29

  1. Selection of the Preferred Alternative

This blog displays one of method in determining price forecast, on next blog another price forecast method will be applied. So in the last price forecast series, the best and optimum forecast method will be chosen to be applied in part of financial economic model for pipeline project.

  1. Performance Monitoring and The Post Evaluation of Result

Forecasting method very dependent on the amount of data used, so it will be better and optimal if forecasting calculations using updated and valid data. Therefore project character are dynamic and unique, preferably input data for price forecast is updated periodically as a continual process of checking, reviewing and monitoring.

Reference:

  1. Planning Planet (2017). Creating The Owners Cost Estimate (Top Down). Retrieved from http://www.planningplanet.com/guild/gpccar/creating-the-owners-cost-estimate
  2. Sullivan, G. W. (2014). Engineering Economy 16th Chapter 3 – Cost-Estimation Techniques, pp. 113-121.
  3. (2017). W11.1_SJP_Forecasts Part 3. Retrieved from https://js-pag-cert-2017.com/w11-1_sjp_forecasts-part-3/
  4. (2009). Excel Dynamic Chart #11: Dynamic Area Chart with IF Functioin – Normal Distribution Chart Statistics. Retrieved from https://www.youtube.com/watch?v=Fp1JV-ZVDZw
  5. (2017). W6_AI_Price Forecact for Offshore Regasification Facility Project. Retrieved from http://emeraldaace2017.com/2017/09/10/w6_ai_price-forecasts-for-offshore-regasification-facility-project/
  6. (2013). Normal curve using excel 2010. Retrieved from https://www.youtube.com/watch?v=hQHiG_cQiUE