W6 Benchmark Of Cost Estimate Process refer to US Government Accountability Office/GAO

1.Problem Definition

Referring to the suggestion given by Dr. Paul on previous blog posting, at this occasion a process of estimation will be made using US Government Accountability Office/GAO references against on current process on author company.

2.Identify The Possible Alternative

On this occasion a checklist of estimation stages will be performed at the company following the estimation phases that have been prepared by US Government Accountability Office/GAO and find strengths and weaknesses at each stage of the process.

3.Development of the Outcome for Alternative 

GAO Cost Estimating and Assessment Guide suggest 12 step of estimating process as shown on following figure-1,these 12 steps shown on above figure could be categorized into 4 main process,  these main process are Initiation and Research, Assessment, Analysis and Presentation :

Figure-1 : GAO Step Process

4.Selection Criteria

We will perform a checklist of each stage proposed by GAO approach in the estimation process. If it finds some difference and has the potential to improve and improve the procedure of the feeding estimation process it will greatly help improve the quality of the project estimation process.

5.Analysis and Comparison of Alternative

Based on check list assessment, below are the summary shown on Tabel-1

Table-1 : GAO Step Process Checklist on Author Current Estimate Process

Based on the stages of the approach made by the GAO can be seen that not all steps are done by the company, where from 12 steps there are 4 stages that are not implemented, namely Develop point estimate and compare it to an independent cost estimate, Conduct sensitivity analysis, Conduct risk and uncertainty analysis, Update the estimate to reflect actual costs and changes and 2 stages that sometimes implemented sometimes not is Define program characteristics and Document the estimate. Regarding to our previous blog posting on week-5 using  Humphrey Associations and related to GAO estimate process check list, we still founding a same thing that a estimate process not use a best practice guidelines such as GAO, and it can effect to project running behind schedule and over budget. An Unique founding on step-12 purposed by GAO “Update the estimate to reflect actual costs and changes” it will be helpful for us to get more lesson learn in future on estimate process, because it can controlling us on estimate.

6.Selection of the Preferred Alternative

Based on above assessment and analysis, company must consider unimplemented step as per a best practice guidelines such as GAO and or Humphreys, and a possible mixed step between GAO and Humphreys.

7.Performance Monitoring and The Post Evaluation of Result

Management should consider the use a best practice estimate process because it could help project running well and on budget.

 

REFERENCES :

  1. Ardiansyah (2017), W5_A_Benchmark Of Cost Estimate Process refer to Humphreys Association. Retrieved from : http://emeraldaace2017.com/2017/09/03/w5_a_benchmark-of-cost-estimate-process-refer-to-humphreys-association/
  2. United State Government Accountability Office (GAO) (2009), Cost Estimating and Assessment Guide, Chapter 1, pp.8-14
  3. Yushadi, Edi (2015), W9_EY_Estimating Process Benchmark. Retrieved from https://garudaaace2015.wordpress.com/2015/04/23/w9_ey_estimating-process-benchmark/
  4. Permana, Arif (2013), W16_APE_Comparison Cost Estimate Process, Retrieved From:  https://simatupangaace2014.wordpress.com/2013/11/12/w16_ape_comparison-cost-estimate-process/
 

W6_TH_ Standardized WBS Structures for Gas Station Project-Part 3

1. Problem Definition

After compare two best practice of standardized WBS on Blog W2 and W5, this week the Blog will determine and analyze which of the 15 elements Omniclass tables specially on Zone Breakdown Structure would be appropriate to use in creating a 3D WBS structure for a Gas Station Project.

2. Develop the Feasible Alternative

Moine (2013) has developed a 3D WBS model[5].

  • Product Breakdown Structure (PBS) is constructed by Systems, sub systems, products and sub products. Products are an extension of Systems. On Omni Class it is contain Table: 11, 12, 21, 23 and 36.
  • Activity Breakdown Structure (ABS) is constructed by phases, macro-activities, activities and sub activities. On Omni Class it is contain Table: 22, 31 and 32.
  • Zone Breakdown Structure (ZBS) are physico-functionnals, they are divided by Areas, Sections, for instance. ZBS can be a topographic view of the construction site of a project, it can be a notion of geography. ZBS can be also viewed as functional zones, like for design phase and commissioning phase for instance. On Omni Class it is contain Table: 13 and 14.

All of this three dimension projects can be integrated in comprehensive 3D models which visualized as figure 1 below[2]:

Fig 1. Project Cubes Concept of 3D WBS Model[2]

3. Develop of the Outcome for Alternative

In this week, author will be chosen what kind of GBS/ZBS element on Omniclass that applicable for GS Project. Author will use the Lexicography Non-Compensatory Models tool.

4. Selection Criteria

Two standardized WBS will be evaluated considering the following attributes:

  • WBS level detail completeness
  • Tables applicability/uses for oil & gas project
  • WBS that reflect function boundaries of gas station
  • WBS level description
5. Analysis & Comparison of Alternative

There are two elements on OmniClass that present ZBS element: Tables 13 and 14.

Fig 1. OmniClass Table 13

Table 13 content Spaces by Function that are basic units of the built environment delineated by physical or abstract boundaries and characterized by function.

Fig 2. OmniClass Table 14

Table 14 content Spaces by Form that are basic units of the built environment delineated by physical or abstract boundaries and characterized by physical form.

The ZBS Elements Table comparison of the attributes is expressed in Table 1 below:

Table 1. Comparison of ZBS Elements

Attributes in table 1 were ranked in order of importance by applying paired comparison between each attribute combination. Results are shown as follows:

Table 2. Ordinal Ranking of ZBS Elements

Following Table 2, the ranking is ordered as follows:

Table 3. Application of Lexicography

6. Selection of the Preferred Alternatives

The Table 13 was found the optimum selection, since it has the highest score. The Table 13 not only can reflect function boundaries of GS Project but also has the highest level details that include level description. Therefore, it could be adapted as a standardized ZBS element to enhance the project performance and cost control GS projects.

7. Performance Monitoring and The Post Evaluation Result

A standardized WBS structure is one success key for project team to the deliver project with OTOBOS. Next week, author will build up GS WBS from Table 13, to prove whether the conclusion above is correct and start evaluating the impact during phases of the project.

 

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/
 

W6_UDS_Tuckman Model Comparison between Division and Department Team Member

  1. Problem Evaluation

I work at Central Supply & Distribution Division in My Company. This division main responsibility is to distribute fuel all around Indonesia. This division has four departments that are Fuel Product Quality & Quantity, Fuel Terminal Infrastructure, Operation Supply Chain, and Performance & Evaluation.

Figure 1. Organization Structure

This division has a very high mutation frequency, in other words employee only stay for 1 up to 2 years in this division.  Beside mutation frequency, employee educational background variation and employee number also influence team stage. This time, I want to determine leadership skills and styles for My Division and Performance & Evaluation (P&E) Department by knowing the stage of them. Appropriate leadership skills and styles will give us more advantage to achieve our goal, distribute fuel all around Indonesia with operational & service excellent.

  1. Development of feasible alternatives

To fine appropriate leadership style there are some theory has been published, but the best one is Tuckman’s model. This model has five stages of team development and behavior that are Forming, Storming, Norming, Performing, and Adjourning. This model also explains how Team develops maturity and ability, relationships establish, and the leader changes leadership style. Beginning with a directing style, moving through coaching, then participating, finishing delegating and almost detached.

Figure 2. Team Development and Behavior Stage

  1. Development the outcome for each alternative

To know the current My Division and Department stage, sample employee fill Tuckman scoring template two times, first as a Division team member and the second as a P&E Department team member.

Table 1. Scoring template result as S&D Division team member

Table 2. Scoring template result as P&E Department team member

  1. Selection of criteria

Based on the individual’s scoring template result above, PERT analysis was performed to identify team behavior at P90 because most of these team member already join over long time (1-2 years).

  1. Analysis and comparison of the alternative

Summary result of the survey data using Delphi technique with P90 as follow:

Table 3. P.90 Delphi technique result for S&D Division Team Member

Table 4. P.90 Delphi technique result P&E Department Team Member

Based on Delphi technique calculation in Table 3 and 4, we can conclude S&D Division team is in Norming stage but in Department team is in Performing (indicated by the rank).

  1. Alternative selection

For S&D Division is in norming stage, team members often experience:

  • Agreement and consensus largely forms among the team;
  • Roles and responsibilities are clear and accepted;
  • Big decisions are made by group agreement;
  • Smaller decisions may be delegated to individuals or small teams within group.

Hints for Vice President as team leaders:

  • Step back and help team members take responsibility for progress towards the goal;
  • This is a good time to arrange a team-building event.

Style of leadership this stage is “TEAM BUILDING” mode where some leadership is to make team responsible for reaching the goal.

For P&E Department is in performing stage, team members often experience:

  • The team is more strategically aware;
  • the team knows clearly why it is doing what it is doing;
  • The team has a shared vision and is able to stand on its own feet with no interference or participation from the leader;
  • There is a focus on over-achieving goals

Hints for Manager as team leaders:

  • Delegate tasks and projects as far as you can;
  • Once the team is achieving well, you should aim to have as light a touch as possible;

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

The differences stage between Division and Department are most influenced by number of team member and frequency of working together (closeness team member). It is important for vice president to more flexible in changing his leadership style when He gives assignment to employee. Because it would be different atmosphere of Employee as Division team member or as Department team member.

  1. Performance monitoring & Post Evaluation Result

Tuckman model assessment should conduct periodically to capture team stage changing and give a clue to team leader to select appropriate style of leadership to improve coordination and productivity of the team. The Leader must have strategies to move the team through to the next stage in the team formation process

References

  1. (2017). Tuckman Forming Storming Norming Performing Model. Retrieved from http://www.businessballs.com/tuckmanformingstormingnormingperforming.htm
  2. (2017). Forming, Storming, Norming, and Performing – Understanding the Stages of Team Formation. Retrieved from http://www.mindtools.com/pages/article/newLDR_86.htm
  3. Hendarto, Tommy (2017). W4_TH_Tuckman Survey on Non Process Engineer Team |EMERALD AACE 2017. Retrieved from http://emeraldaace2017.com/2017/08/24/w4_th_tuckman-survey-on-non-process-engineer-team/
  4. 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/
  5. Saputra, Dhanu (2017). W1_Dhanu_Tuckman Analysis Assessment |EMERALD AACE 2017. Retrieved from http://emeraldaace2017.com/2017/08/01/w1_dhanu_tuckman-analysis-assessment/
 

W5.1_UDS_ Education Insurance Or Saving Or Other

  1. Problem Evaluation

I have two years old daughter, I want her to be a doctor. To become a good doctor she should study in the best university and it must be expensive. From Now I need to choose strategy to collect more money for her education especially in university.

  1. Development of feasible alternatives

There are some common alternatives to collect more money and you can still doing your job such as:

  • Purchasing gold
  • Investing in property
  • Investing in stock market
  • Education Insurance
  • Saving

In the first three alternatives need more initial investment/cash, so it would be hard for me. But I still analyze and compare all of the alternatives to get more option.

  1. Development the outcome for each alternative

To choose the best alternative I will use Interest Rate of Return (IRR) Method and External Rate of Return (ERR) to compare all the alternatives. I still use IRR Method because it more common economical parameter and usually use in my company. ERR Method is the new one and has two basic advantages over IRR:

  • It usually be solved for directly, without needing to resort to trial and error
  • It is not subject to the possibility of multiple rates of return.
  1. Selection of criteria

Decision rule of IRR and ERR method is Alternative will be feasible if IRR and ERR value greater than MARR 4.93% (in Indonesia we usually use BI Rate). So in this evaluation I will eliminate alternative with IRR and ERR value less than BI Rate, because it not economically feasible.

  1. Analysis and comparison of the alternative

This calculation using data as below (Data of Purchasing Gold, Investing in Property, and Investing in Stock Market using colleague’s experience):

Table 1. Alternatives Data

Figure 1. Formula

Each IRR and ERR of alternatives table comparison are show below:

Table 2. IRR Calculation

Table 3. ERR Calculation

IRR and ERR of alternative purchasing gold is less than MARR, so this alternative can be eliminated.

  1. Alternative selection

Base on calculation alternative investing in Property is preferred to choose because it gives the highest value in IRR and ERR Method. It would give me more option to choose the best university of my daughter.

  1. Performance monitoring & Post Evaluation Result

All the alternatives have some risk and also assumptions change so I must to identify and mitigate them, but I still believe in quote “High risk high return”.

References

  1. Sullivan, G. W., Wicks, M. E., & Koelling, C. P. (2014). Engineering economy 16th Edition. Chapter 5 – Evaluating a Single Project., pp.210-263.
  2. Mind Tools. (2017). Net Present Value (NPV) and Internal Rate of Return (IRR). Retrieved from https://www.mindtools.com/pages/article/newTED_74.htm
  3. Axa Mandiri. (2017). Asuransi Mandiri Sejahtera Cerdas. Retrieved from https://www.axa-mandiri.co.id/produk/asuransi-pendidikan/
  4. Bank of Indonesia. (2017). BI 7-day (Reverse) Repo Rate. Retrieved from  http://www.bi.go.id/en/moneter/bi-7day-RR/data/Contents/Default.aspx
 

W5.2_MFO_ OmniClass and 3D WBS on Gas Metering System Installation

1.      Problem Recognition, Definition and Evaluation

A company will install Ultrasonic Gas Metering Station for our project. Is the use of OmniClass or 3D WBS can be applied to this project? Which one is better?

2.      Development of the Feasible Alternatives

There are three (2) WBS alternatives to compare to answer the question above:

  1. OmniClass is a means of organizing and retrieving information specifically designed for the construction industry. It consists of 15 hierarchical tables, each of which represents a different facet of construction information or entries on it can be combined with entries on other tables to classify more complex subjects.

OmniClass Table 31 Phases: Table 31 – Phases, is the only OmniClass table that explains the stages (higher level of categorization than phases) of the project activity from conception until project closure.

  1. 3D WBS is based on three main dimensions: Zones Breakdown Structure (ZBS), Products Breakdown Structure (PBS) and Activity Breakdown Structure (ABS).

Fig 1. 3D WBS

3.      Development of the Outcomes for Each Alternative

a. Omniclass table 31 phases

Fig 2 – OmniClass Table 31 – Phases – WBS

b. 3D WBS Model

Fig 3. 3D WBS Model

We will compare both alternatives using Lexicography, one of non-compensatory models for multi attributes decision making technique.

4.      Selection of a Criteria

There are four (4) criteria that have been selected as parameters to analyze and compare the above alternatives:

  1. WBS level of details, this will explain how detail each alternative structures their WBS for design process.
  2. Number of design activity phase, is the number of engineering phase from the project scope development to the final design.
  3. Work flow of activities, is how the activities work together from the project scope development to the final design.
  4. Complexity of the WBS

5.      Analysis and Comparison of the Alternatives

Summary information for each alternative :

Table 1 Data Comparison

All attributes in table 1, be ranked in order of importance by doing paired comparison between each possible attribute combination. Result as shown on table 2:

Table 2 – Ordinal Ranking of Attributes

Based on table 2, the ranking is found to be WBS Level of details > Number of design activity phase  > Work flow of activities  > Complexity.

6.      Selection of the Preferred Alternative

Considering the above ranking, the 3D model was found the optimum selection as to be adapted to standardize the WBS.

7.      Performance Monitoring and Post Evaluation of Results

Monitoring and supervision should be conducted strictly during project to keep the project inline with the WBS.

Reference:

  1. Humpreys, G. C. (2011). Project Management Using Earned Value (2nd ed.). Humpreys & Associates, Inc.
  2. W16_GW_OmniClass and 3D WBS on Pipeline Installation. (2014, June 15). Retrieved from Kristal AACE 2014 : https://kristalaace2014.wordpress.com/2014/06/15/w16_gw_omniclass-and-3d-wbs-on-pipeline-installation/
  3. OmniClass. (2017). Retrieved from OmniClass: http://www.omniclass.org/
  4. Syafri, F. (2013, October 8). Managing Small Project: Omniclass 3D WBS. Retrieved from Simatupang AACE 2014: http://simatupangaace2014.wordpress.com/2013/10/08/w6_afs_-managing-small-project-omniclass-3d-wbs-2/
  1. Moine J-Y. 2013.3D Work Breakdown Structure Method, PM Word Journal Vol. II, Issue IV–April 2013
  2. Elrashid, M. (2013, January 2). W10_Mohammed_ Our Current WBS Vs OmniClass and 3D model. Retrieved from Mahakam preparation Class of AACE 2012: http://aacemahakam.blogspot.com/2013/01/w10mohammed-our-current-wbs-vs.html
 

W5_TH_ Standardized WBS Structures for Gas Station Project-Part 2

  1. Problem Definition

One of the leading causes of claims and disputes on a project comes because of poor or incomplete scope definition; leading to scope changes and variations[1]. Standardized WBS structures can help the project team to deliver project objective with OTOBOS (On Time, On Budget and On Schedule). What kind of standardized WBS can be adapted for Gas Station (GS) Project?

  1. Develop the Feasible Alternative

There are two best practice of standardized WBS[1]:

  • NORSOK Standard Z-014: Standard Cost Coding System (SCSS) rev 1, Oct 2002. NORSOK was developed on 1989 because the Norwegian government was unhappy with all their production sharing contractors reporting costs using different coding structures.
  • OmniClass: The concept for OmniClass is derived from internationally-accepted standards that have been developed by the International Organization for Standardization (ISO 12006-2) and the International Construction Information Society (ICIS) subcommittees and workgroups from the early-1990s to the present.

The author will compare both of them and choose one that most suitable for GS Project.

  1. Develop of the Outcome for Alternative

Two standardized WBS will be compare using the Lexicography Non-Compensatory Models.

  1. Selection Criteria

Two standardized WBS will be evaluated considering the following attributes:

  • Suitable for Onshore/Offshore
  • Managing Project Interface
  • No of Dimensions
  • Level of Work Package Details
  • Monitoring the Project
  • Zone Breakdown Structure
  1. Analysis & Comparison of Alternative

OmniClass consists of 15 hierarchical tables, each of which represents a different facet of construction information or entries on it can be combined with entries on other tables to classify more complex subjects[2].

Fig 1. Inter-related OmniClass[2]

Fig 2. OmniClass Table 21 (Elements) [3]

NORSOK standard describes a system for coding of cost and weight estimates and as-built/experience data. It comprises 3 sets of complementary sub-coding systems named:

  • PBS (Physical Breakdown Structure)
  • SAB (Standard Activity Breakdown)
  • COR (Code Of Resources)

Fig 3. Norsok SAB (Standard Activity Breakdown) Elements[4]

The WBS comparison of the attributes is expressed in Table 1 below:

Table 1. Comparison of WBS attributes

Attributes in table 1 were ranked in order of importance by applying paired comparison between each attribute combination. Results are shown as follows:

Table 2. Ordinal Ranking of WBS attributes

 

Table 3. Application of Lexicography

6. Selection of the Preferred Alternatives

Considering the above ranking results, the OmniClass WBS was found the optimum selection, since it has the highest score. The OmniClass is suited for the onshore projects and has the highest numbers of dimensions. Therefore, it could be adapted as a standardized WBS to enhance the project performance and cost control GS projects. The OmniClass as a multidimensional WBS is better defined and zoning the scope with in-depth level of details and ease/define the possible interface and facilitate monitoring the project comparing to the others. These advantages will contribute significantly in reducing the number of change orders as it will reduce the possible scope omissions or errors.

7. Performance Monitoring and The Post Evaluation Result

The next step will be to build up WBS for the Gas Station Project using top three elements of OmniClass, to prove whether the conclusion above is correct, and start evaluating the impact during phases of the project.

 

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
 

W5.1_MFO_ OmniClass and 3D WBS on Gas Metering System Installation

1.      Problem Recognition, Definition and Evaluation

A company will install Ultrasonic Gas Metering Station for our project. Is the use of OmniClass 3D WBS can be applied to this project?

2.      Development of the Feasible Alternatives

OmniClass is a means of organizing and retrieving information specifically designed for the construction industry. It consists of 15 hierarchical tables, each of which represents a different facet of construction information or entries on it can be combined with entries on other tables to classify more complex subjects. (OmniClass, 2014)

3D WBS is based on three main dimensions: Zones Breakdown Structure (ZBS), Products Breakdown Structure (PBS) and Activity Breakdown Structure (ABS).

Fig 1. 3D WBS

3.      Development of the Outcomes for Each Alternative

The 15 inter-related OmniClass tables are: (OmniClass, 2014)

  1. Table 11    : Construction Entities by Function
  2. Table 12    : Construction Entities by Form
  3. Table 13    : Spaces by Function
  4. Table 14    : Spaces by Form
  5. Table 21    : Elements (includes Designed Elements)
  6. Table 22    : Work Results
  7. Table 23    : Products
  8. Table 31    : Phases
  9. Table 32    : Services
  10. Table 33    : Disciplines
  11. Table 34    : Organizational Roles
  12. Table 35    : Tools
  13. Table 36    : Information
  14. Table 41    : Materials
  15. Table 49    : Properties

The tables above can be described in terms of the 3D WBS models as follows:

Fig 2. 3D WBS Cubes and Omniclass Table

4.      Selection of a Criterion

Characteristics of the WBS:

  1. WBS defines output
  2. WBS is hierarchical
  3. One WBS level’s output is an input to the next higher level.

5.      Analysis and Comparison of the Alternatives

By using Omniclass tables as reference, 3D WBS for the project is as follow:

    1. Zone Breakdown Structure (ZBS)
    2. Product Breakdown Structure (PBS)

3. Activity Breakdown Structure (ABS)

Based on the above, it appears that OmniClass and 3D WBS are compatible.

6.      Selection of the Preferred Alternative

OmniClass tables give a more detailed WBS and can be applied to this gas metering system installation project.

7.      Performance Monitoring and Post Evaluation of Results

Monitoring and supervision should be conducted strictly during project to keep the project inline with the WBS.

Reference:

  1. Humpreys, G. C. (2011). Project Management Using Earned Value (2nd ed.). Humpreys & Associates, Inc.
  2. W16_GW_OmniClass and 3D WBS on Pipeline Installation. (2014, June 15). Retrieved from Kristal AACE 2014 : https://kristalaace2014.wordpress.com/2014/06/15/w16_gw_omniclass-and-3d-wbs-on-pipeline-installation/
  3. OmniClass. (2017). Retrieved from OmniClass: http://www.omniclass.org/
  4. Syafri, F. (2013, October 8). Managing Small Project: Omniclass 3D WBS. Retrieved from Simatupang AACE 2014: http://simatupangaace2014.wordpress.com/2013/10/08/w6_afs_-managing-small-project-omniclass-3d-wbs-2/
  1. Moine J-Y. 2013.3D Work Breakdown Structure Method, PM Word Journal Vol. II, Issue IV–April 2013
 

W5_AI_Power Sizing Model and Index Value for Offshore Regasification Facility Project Cost Estimating

 

  1. Problem Definition

The gas supply scheme has been choose using decision making models (previous weeks) is Offshore Regasification Facility. Gas demand from customer is 100 MMSCFD, so the facility shall be designed 100 MMSCFD at minimum capacity. Company has indicative price from 3 (three) different contractor (all good performance contractor). Since the company will be using the price for calculate economic model (conceptual), then the optimum average price for 100 MMSCFD gas facility must be develop, in this stage power sizing-model would be applied.

 

  1. Identify the Possible Alternative

There are indicative historical price from 3 (three) different companies, as follow:

Table 1. Indicative Price

Table above shows the indicative price from PT.A, PT.B, and PT. C with various capacities. Furthermore to get the requirement capacity 100 MMSCFD, correlation exponent will be obtained by power sizing-model.

 

  1. Development of The Outcome for Alternative

Picture 1 below shows the formula of power sizing-model using correlation between price and capacity.

Picture 1. Power Sizing Model Formula

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 100 MMSCFD for each contractor could be calculated as follow:

Table 3. Estimate Cost 100 MMSCFD

  1. Selection Criteria

The optimum average price for 100 MMSCFD offshore gas facility will be defining using power sizing model.

 

  1. Analysis & Comparison of Alternative

Picture 2. Estimate Cost 100 MMSCFD

The calculation above show still using 2012 database and to get reflection new cost 2017 the data shall be adjusted by index value.

Picture 3. Index Value Formula

Table 4. Index Value Result

  1. Selection of the Preferred Alternative

The table (4) above shows the indicative price of offshore regasification facility, with the lowest price is 130.99 MMU$ from PT. A compare to PT. B (145.84 MMU$) and PT.C (183.55 MMU$). Based on analysis above, PT. A  indicative price will be chosen.

 

  1. Performance Monitoring and The Post Evaluation of 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.

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

  1. Sullivan, G. W. (2014). Engineering Economy 16th Chapter 3 – Cost-Estimation Techniques, pp. 99-110.
  2. Aziz, A. A. (2015). W12_AAA_Sizing Model and Economic of Scale (Gas Processing Facilities)

Retrieved from https://garudaaace2015.wordpress.com/2015/05/30/w12_aaa_sizing-model-and-economies-of-scale-gas-processing-facilities/

  1. Diary, C.A (2017). Cost Inflation Index – Capital Gain.

Retrieved from https://cadiary.org/cost-inflation-index-capital-gain/

 

W5_A_Benchmark Of Cost Estimate Process refer to Humphreys Association

1.Problem Definition

On this blog posting the author will demonstrate the process of estimation stages by referring to the Estimating Process in Humphreys Association, Project Management Using Earned Value by comparing the current estimation process in the Company authors and how closely the process is carried out according to the general guidelines.

2.Develop the Feasible Alternative

On this occasion a checklist of estimation stages will be performed at the company following the estimation phases that have been prepared by Humphreys Association, Project Management Using Earned Value and find strengths and weaknesses at each stage of the process.

3.Development of The Outcome for Alternative

Humphreys Association, Project Management Using Earned Value provides 15 step of estimating process as shown on following figure-1. We will do a step by step check list with our current process.

Figure-1 Humphreys Association The Estimating Process

4.Selection Criteria

We will perform a checklist of each stage proposed by Humphreys Association in the estimation process. If it finds some difference and has the potential to improve and improve the procedure of the feeding estimation process it will greatly help improve the quality of the project estimation process.

5.Analysis and Comparison of the Alternatives.

Based on check list assessment, below are the summary shown on Tabel-1

Table. 1. Checklist Comparison Result

Based on the stages of the approach made by the Humphreys Association can be seen that not all steps are done by the company, where from 15 steps there are 5 stages that are not implemented, namely Estimate Indirect Cost, Material and Equipment Escalation, Calculate Escalation on Indirect, Calculate Escalation on Indirect, risk assessment, Develop recommended cost risk allowance and 1 stages that sometimes implemented sometimes not the Contracting Strategy.

6.Selection of the Preferred Alternative

Based on above assessment and analysis, company must consider unimplemented step, because factually 80 % project running with over budget and behind schedule. But to improve the process that does not rule out the use of other references in addition.

7.Performance Monitoring and The Post Evaluation of Result

Management should consider the use of Humphrey Associations standards as part of the estimation stage process to avoid a Over Budget and Behind Schedule Project, and does not rule out the possibility to implement other standards such as United State Government Accountability Office (GAO) and AACEI Recommended Practice in the checklist comparison.

REFERENCES :

  1. Humphreys, C, G (2014), Project Management Using Earned Value 3rdEdition, Chapter 21, Estimating Development, pp.411-416
  2. Yushadi, Edi (2015), w18_ey_cost estimating process selection. Retrieved from : https://garudaaace2015.wordpress.com/2015/07/10/w18_ey_cost-estimating-process-selection/
  3. Hollman, John K. (2003), AACE International Recommended Practice No. 19R-97 Estimating Preparation Cost – As Applied for Process Industries.
  4. Permana, Arif (2013), W16_APE_Comparison Cost Estimate Process, Retrieved From:  https://simatupangaace2014.wordpress.com/2013/11/12/w16_ape_comparison-cost-estimate-process/
  5. Yushadi, Edi (2015), W9_EY_Estimating Process Benchmark. Retrieved from https://garudaaace2015.wordpress.com/2015/04/23/w9_ey_estimating-process-benchmark/
 

W5_UDS_ Education Insurance Or Saving

  1. Problem Evaluation

I have two years old daughter, I want her to be a doctor. To become a good doctor she should study in the best university and it must be expensive. From Now I need to choose strategy to collect more money for her education especially in university.

  1. Development of feasible alternatives

There are three alternative to collect more money for her study:

  • Saving
  • Education Insurance A (EI-A)
  • Education Insurance B (EI-B)
  1. Development the outcome for each alternative

To choose the best alternative I will use Interest Rate of Return (IRR) Method for compares two Education Insurance Alternatives. After that I will compare the selected Education Insurance with saving alternative using Net Present Value (NPV) Method. IRR Method is very use full and fair in comparing two alternative that have different condition such as period, premium, and benefit. NPV Method I use to compare value of money each alternative in present years.

  1. Selection of criteria

The Rule of thumb in IRR method is Alternative will be feasible if IRR value greater than bank interest (in Indonesia we usually use BI Rate). So in this evaluation I will eliminate alternative with IRR value less than BI Rate, because it not economically feasible.

  1. Analysis and comparison of the alternative

This calculation using data as below:

  • Interest rate (i) 4.93% (BI 7-Day Rate)
  • EI-A Period (n) 15 years
  • EI-B Period (n) 21 years
  • Annual insurance EI-A IDR 12,500,000
  • Annual insurance EI-B IDR 17,368,500
  • Benefit EI-A in 15th years IDR 465,400,000
  • Benefit EI-B
    • In 13th years IDR 75,000,000
    • In 16th years IDR 150,000,000
    • In 21st years IDR 75,000,000

Each IRR and PV of alternatives table comparison are show below:

Tabel 1. IRR Calculation

Tabel 2. PV Calculation

IRR of Education Insurance B is less than Bank interest, so this alternative can be eliminated.

  1. Alternative selection

Base on PV calculation Education Insurance A is preferred to choose because it gives the highest value of PV and it would give me more option to choose the best university of my daughter.

  1. Performance monitoring & Post Evaluation Result

The alternatives especially education insurance has a term and condition in some situation and assumption, so we need to look more detail and extra analysis to acquire a better conclusion.

References

  1. Sullivan, G. W., Wicks, M. E., & Koelling, C. P. (2014). Engineering economy 16th Edition. Chapter 5 – Evaluating a Single Project., pp.210-263.
  2. Mind Tools. (2017). Net Present Value (NPV) and Internal Rate of Return (IRR). Retrieved from https://www.mindtools.com/pages/article/newTED_74.htm
  3. Axa Mandiri. (2017). Asuransi Mandiri Sejahtera Cerdas. Retrieved from https://www.axa-mandiri.co.id/produk/asuransi-pendidikan/
  4. Panin Dai-ichi Life. (2017). Asuransi Pendidikan. Retrieved from https://www.panindai-ichilife.co.id/id/asuransi-pendidikan
  5. Bank of Indonesia. (2017). BI 7-day (Reverse) Repo Rate. Retrieved from http://www.bi.go.id/en/moneter/bi-7day-RR/data/Contents/Default.aspx