W7_A_Estimates the required duration for contractor prepare bidding document

  1. Problem Definition

On this blog posting author want to know what the reasonable duration needed on preparation bidding document by contractor, because in fact contractor always requesting more time to prepare bidding document and always found incomplete bidding document. Based on bidding stage in company regulation contractor can take bidding owner document for identify scope of work until submit the bidding is need 8 – 16 days, it divided into 3 stages :

  1. Stage-1 “Contractor Take Bidding Proposal from Owner” it take 1 – 2 days
  2. Stage-2 “Contractor get detail project explanation” it take 2 -4 days
  3. Stage-3 “Contractor submit bid proposal” it take 5-10 days

On authors works area, project divide to be 3 classification based on project value, it because of level management :

  1. Small Project with value less then US$ 37.000
  2. Medium Project with value US$ 37.000 – US$ 750.000
  3. Big Project with value less then US$ 2.251.000

 

  1. Develop the Feasible Alternative

Figure-1 provide the cost estimate classification for the Process Industries

Figure-1 Cost Estimate Classification System for Process Industries

3. Development of The Outcome for Alternative

Based on Figure-1, cost estimates can be described as follow :

  • Class 5 estimates are generally prepared based on a limited information on project.
  • Class 4 estimates are typically used for project on feasibility study or preliminary budget approval.
  • Class 3 estimates are used as the project budget until replaced by more detailed estimates.
  • Class 2 estimates are often used as the “bid” estimate to establish contract value for contractors.
  • Class 1 estimates are typically prepared to form a current control estimate to be used as the final control baseline.

4. Selection Criteria

On bidding process, contractor use Class 2 estimate in their proposal. Regarding to Figure-1 for class 2 estimates, the preparation effort ranges from 0,02% to 0,1% of project cost.

5.Analysis and Comparison of the Alternative

to obtain the ideal time required by the contractor in drafting the auction document, the supporting data is a rate engineer based on the INKINDO (Indonesian Consultant Firm) 2017 rate, assuming the working time per day is 8 hours, or US $ 17.23 per hour (for 10 years experience) and assume 75% productivity . Tabel-1 shown the calculation

Tabel-1 Bid Estimation Preparation Effort

6. Selection of the Preferred Alternative

Based on table-1, it shown for prepare bidding document contractor need 1 – 22 days depend on project scale of value, compare with company regulations, contractor only  have 8 – 16 days to prepare it. In this situation author has 2 recommendation in point of view for contractor it recommended to make strategic by learning owner’s bidding document on first stage, because it can save 1-2 days before second and third stage, because actually very less discrepancy on BoQ. For Owner point of view its recommended to consider add bidding time from 16 days to be 22 days (6 days added) for contractor prepare a complete and precise bidding document. Factually this finding same with contractor requesting, they need 5-7 days more than company regulation for bidding document submit.

7. Performance Monitoring and The Post Evaluation of Result

This analysis will greatly help estimate the costs incurred as well as the time it takes the contractor to prepare the auction document, and provide a reasonable view to the owner in providing the deadline for the contractor in preparing the documents fairly.

References:

  1. Milza, Rico. (2015). w20_rm_estimate preparation effort for a bi . Retrieved https://goldenaace2015.wordpress.com/2016/05/24/w20_rm_estimate-preparation-effort-for-a-bid/
  2. Guidelines Of Minimum Standards Indonesian In 2017 Direct Personnel and Direct Cost (2017) Retrieved. http://www.inkindo-dki.org/new/BR_2017.pdf
  3. Amos, S. J. (2012). Skills & Knowledge of Cost Engineering: A Continuing Project of the AACE International Education Board (5th ed.). Section 2, Chapter 9. Morgantown, WV: AACE International.
  4. Wibowo, Gideon. (2014). W8_GW_ Costs to Prepare a Bid for a Contractor. Retrieved from:  https://kristalaace2014.wordpress.com/2014/04/16/w8_gw_-costs-to-prepare-a-bid-for-a-contractor/
  5. Occupational Employment Handbook. (2016, May). Retrieved from: Bureau of Labor Statistics: http://www.bls.gov/ooh/business-and-financial/cost-estimators.htm

 

 

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/
 

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/
 

W4_A_Selection Oil Pump Using Present Worth Method

  1. Problem Definition

The decline in world oil prices resulted in the need for an efficiency program, one of which is efficiency in investing. In 2014 the price of oil is at USD 89 / barrel, but it has been more than 2 years the position of oil price has not moved from USD 47 / barrel, in 2015 the company conducts efficiency program in terms of investment by pressing Capital Expenditure, in Marketing Directorate one of routine investment on Oil Transfering Facility. High level management want to reduce cost by selection on Pump Investment.

  1. Develop the Feasible Alternative

Management purpose 2 alternative, among others:

1.Using API Pump

2.Using Non-API Pump.

Compare Value from Present Worth Method approaching will be use  will be use to select. 

  1. Development of The Outcome for Alternative

Calculate all variable including Capital Expenditure/Capex, net income, operating cost, maintenance cost, and salvage value from internal company data.

  1. Selection Criteria

The acceptance criteria when the present worth value or PV ≥ 0 or the large value.

5. Analysis & Comparison of Alternative

Regarding to company data, that we summarize on Tabel-1 which represent for using API Pump.

Tabel-1 API Pump Cash Flow (in IDR)

Refer to Bank Indonesia Rate at 2017 is 7%, now we can drag Future Value/FV from 10th year to zero (initial) to calculate Present Value/PV, a summarize calculation represent on Tabel-2.

Table-2 PV for all cash flow API Pump (in IDR)

Regarding to Tabel-1 and Tabel-2 now we can total Cash Flow in and out IDR. 2.133.894.555 + IDR. (900.000.000) = IDR. 1.233.894.555 (API Pump is economically justified because PW ≥ 0 ) but we not finished yet, we have to calculate for NON-API Pump.

next step we calculate for NON-API Pump, the cash flow show on tabel-3.

Tabel-3 NON API Pump Cash Flow (in IDR)

Regarding to tabel-3, now we can calculate PV for all year cash flow, it shown on tabel-4

Tabel-4. PV for all cash flow NON-API Pump (in IDR)

Regarding to Tabel-3 and Tabel-4 now we can total Cash Flow in and out IDR. 1.897.707.948 + IDR. (600.000.000) = IDR. 1.297.707.948 (NON-API Pump is economically justified because PW ≥ 0 )

Now we can compare each PW from API and NON-API Pump, it shown on tabel-5

Tabel-5 Comparasion API and NON-API Present Worth Value (in IDR)

6. Selection of the Preferred Alternative

Regarding to tabel-5 it shown that Non-API Pump has PW Value higher than API Pump, gap value between them is IDR.63.813.394, it can conclude that NON-API Pump in economically point of view can justified to selected. But we prefer select API Pump as our Pump Selection, the reason is API Pump a best practice use in Oil and Gas Industry and has high reliability record. If economy GAP only IDR.63.813.394 management can accept it as cost, cause PW ≥ 0 and investment decision can select API Pump.

7.Performance Monitoring and The Post Evaluation of Result

Management must monitor maintenance cost, because maintenance cost has give effect to select better decision.

Reference :

  1. Sullivan, G. W., Wicks, M. E., & Koelling, C. P.(2014). Engineering economy 16th Edition. Chapter 5 – Evaluating a Single Project., pp.213-215.
  2. BI Rate and Primary Reserve Requirement Lowered Again (February, 2016) Retrieved from http://www.bi.go.id/en/ruang-media/siaran-pers/Pages/sp_181416.aspx
  3. Module 06-5 – Acquiring Equipment for The Project (2016)
    Retrieved from http://www.planningplanet.com/guild/gpccar/acquiring-equipment-for-the-project
  4. Berrado, Abdelaziz Dr. Present Worth Analysis (2016) Retrieved from : www.aui.ma/personal/~A.Berrado/EGR2302/EGR2302_Ch05.pdf

 

 

 

 

 

 

 

 

 

 

 

 

W3_A_Using Multiattribute Decision Making with Compensatory and Non-Compensatory Model for Supply of Electricity Tanjung Uban

  1. Problem Definition

From my previous blog posting on Week-2, we using Compensatory Model for select the best choice for Tanjung Uban Electricity Supply. Dr. PDG suggest to use other technic to select a decision by using Non-Compensatory Model and compare which one is better and fit.

  1. Develop the Feasible Alternative

There are 3 alternatives in the supply of electricity at oil and gas storage facilities in Tanjung Uban, among others :

  1. Using direct electricity produced by PLN (State Own Electricity Company).
  2. Using gas turbine with feed from gas flare utilization.
  3. Using power generator with diesel fuel

Multiattribute Decision Making with Non-Compensatory Model will be made to choose the electricity supply option in Tanjung Uban. 

  1. Development of The Outcome for Alternative

Comparative analysis is conducted for each proposed alternative to see the impact of cost, reliability, efficiency, and environment.

Below on Tabel-1 is the comparison for alternative :

Tabel-1 Data Alternative

to summary information on table-1 and make a paired comparisons all attributes must be inspected, it shown and describe on tabel-2

Tabel-2 Checking Pairwise Comparisons of each attibuttes

After that we do satisficing for checking dominance among alternatives, it shown on tabel-3.

Tabel-3 Check for Dominance Among Alternatives

4. Selection Criteria

Alternative with highest dimensionless value will be selected

  1. Analysis and Comparison of the Alternative.

Next step is analyzing by orinal ranking of attibutes, it shown on tabel-4

Tabel-4 Ordinal Ranking of Attributes

By using Lexicography technic we can define which selection is the best and fit, it shown on Tabel-5.

Tabel-5 Application of Lexicography

Regarding to Tabel-5 it can explain alternative B (Using Gas Turbine for Electricity Generation) can be choose as the best option as Cost basis. if alternative A can reduce cost/tariff electricity per kWh it can be choosed because Reliability as basis.

Compare with my previous blog posting by using Compensatory Model it same result with Non-Compensatory Model because Alternative B or using Gas Turbine selected for the best and fit decision.

  1. Selection of the Preferred Alternative.

By using 2 technic Compensatory and Non-Compensatory Model it’s shown Alternative B or Using Gas Turbine is prefered to choose. But Compensatory Model more prefered to used, because it calculated with quantitative technic, it’s different with Non-compensatory using qualitative. People with high level management more comfortable to make a decission by using numbers because qualitative result it’s hard to explain and near to be subjective.

  1. Performance Monitoring and the Post Evaluation of Result.

For sharp the result, people with high experience on Electricity Generation must be involve to make more independece opinion put in this decission proses step by step.

References:

  1. Sullivan, G. W., Wicks, M. E., &Koelling, C. P.(2014). Engineering economy 16th Edition. Chapter 14 – Decision Making Considering Multiattributes., pp.559-608.
  2. W11_AL_Platform Decommissioning(2014, May). Retrieved from : https://kristalaace2014.wordpress.com/2014/05/06/w11_al_platform-decommissioning/#more-1340
  3. W3_HI_Decision Making Considering MultiAttributes (2015, March). Retrived from : https://garudaaace2015.wordpress.com/2015/03/10/w3_hi_decision-making-considering-multi-attributes/
  4. MODULE 10-3 – MANAGING CHANGE – THE OWNER’S PEREPCTIVE(2015, December). Retrieved from http://www.planningplanet.com/guild/gpccar/managing-change-the-owners-perspective

 

 

W2_A_Using Multiattribute Decision Making with Compensation Model for Supply of Electricity Tanjung Uban

  1. Problem Definition

Tanjung Uban Oil and Gas Storage Facility at the moment is planning the replacement of power source, originally the source of electricity obtained from generator, the replacement plan is based on the efficiency.

  1. Develop the Feasible Alternative

There are 3 alternatives in the supply of electricity at oil and gas storage facilities in Tanjung Uban, among others:

  1. Using direct electricity produced by PLN (State Own Electricity Company).
  2. Using gas turbine with feed from gas flare utilization.
  3. Using power generator with diesel fuel

Multiattribute Decision Making with Compensation Model will be made to choose the electricity supply option in Tanjung Uban. 

  1. Development of The Outcome for Alternative

Comparative analysis is conducted for each proposed alternative to see the impact of cost, reliability, efficiency, and environment.

Below on Tabel-1 is the comparison for alternative :

Tabel-1 Data Alternative

Relative Rank Scale 1 – 3, 3 for the best/High, 2 for Medium, 1 for Low, represent on tabel-2.

Tabel-2 Quantitative for Tabel-1

For compensatory Model, first time we define nondimensional scalling, it shown on Tabel-3 :

Tabel-3 : Nondimensional Scaling

Next step we generate Nondimensional Data, it shown on Tabel-4

Tabel-4 Nondimensional data for Electricity Supply

to calculate using additive weight technique we should determine Ordinal Ranking for Attribute, it shown on Tabel-5, where the greater number is meant greater important

Tabel-5 : Ordinal Attribute Ranking

4. Selection Criteria

Alternative with highest dimensionless value will be selected

5. Analysis & Comparison of Alternative

Regarding to Tabel-4 and Tabel-5, now we can calculated additive weighting for Tanjung Uban Electricity Supply, it shown on Table-6

Table-6 Additive Weighting Tanjung Uban Electricity Supply Selection

6. Analysis & Comparison of Alternative

Regarding to tabel-4 and tabel-6, the highest value of electricity supply by using electricity supplied by Gas Turbine or prefered to select, the result is on tabel-4 with 3 and tabel-6 with 0.67.

7. Performance Monitoring and The Post Evaluation of Result

Other attributes can be considered in sharpen the decision results, need to know Gas Turbine efficiency and other opportunity in advance technology of gas turbine.

References:

  1. Sullivan, G. W., Wicks, M. E., &Koelling, C. P.(2014). Engineering economy 16th Edition. Chapter 14 – Decision Making Considering Multiattributes., pp.559-608.
  2. W11_AL_Platform Decommissioning(2014, May). Retrieved from : https://kristalaace2014.wordpress.com/2014/05/06/w11_al_platform-decommissioning/#more-1340
  3. W3_HI_Decision Making Considering MultiAttributes (2015, March). Retrived from : https://garudaaace2015.wordpress.com/2015/03/10/w3_hi_decision-making-considering-multi-attributes/

 

 

 

 

 

 

 

 

 

W1_A_Tuckman Assessment

After face to face learning phase interact with Dr. Paul, now we on Distance Learning Mode/DLM, it is a part of develop self learning and catch up our objective pass the AACE Certification on first attempts and Generate Favourable Return on Training Investment (RoTI). At this moment we implement Tuckman Model for assessment our team look like. Tuckman Assessment is performed since it can be used to identify the team position jointly as well as define leadership style.

  1. Problem Definition

When create new team, we facing a problem because our team member from different working environment and job desk and even different years of working experience. To facing this situation, we need to mapping our current stage when creating groups or team.

  1. Identify The Possible Alternative

Regarding to Dr. Bruce Tuckman research, he develop model for forming team, it consist of 4 Phase :

  • Phase-1 : Forming

In this phase groups has been created, actually all member team work individually, and team member facing unclear purpose and objective, and less of involvement to achieve project goals.

  • Phase-2 : Stroming

On second phase conflict between team member arise, it trigger by all rule of game on team. Team member works but they tend to defend their own opinion, the simple things to identify this phase are the onset of anger, felling of annoyance.

  • Phase-3 : Norming

On Third phase, formed a close relationship between team member and set a rule to find the right away of communications. Sign of this phase is team member review and explanation of the team objective, hear each team opinion.

  • Phase-4 : Performing

On Fourth phase all team member able to work together, all member have togetherness, confidence, creativity, initiative and goals to success.

Combine with Hersey and Blanchard’s Situational Leadership model it shown every stage of Tuckman related to Leadership stage on team. It shown on figure-1.

Figure-1 Tuckman VS Hersey&Blanchard

3. Development of the Outcome for Alternative 

Accommodate all different in team member, a Delphi technique use to know phase of team stage.

4. Selection Criteria

A survey who developed by Barkema and Moran, 2013 use to analyze the team phase. The questioner consist of 32 question and fill by team member. The data will be use to determine a stage of Tuckman Model in our model on this time. The highest score represent out team Tuckman phase.

5. Analysis and Comparison of Alternative

Regarding to survey process on all team member, on the table-1 the result of survey shown and table-2 describe rank of team stage based on Pvalue 90.

Tabel-1 Team Survey Result

Tabel-2 Performing Phase on Distribution Selection

6. Selection of the Preferred Alternative

Refer to Table-2 it shown groups stage on Performing phase stage. Matching with figure-1 Tuckman vs Hersey leadership for Performing matching with Delegating. Its meant leader monitor progress and give a trusty to team member achieve goals

7. Performance Monitoring and the Post Evaluation of Result

Routine measurement of organizational conditions shall be  do to know organization stage, because the organization stage possibly change. And the task of a leader to make sure everything is running on what should be.

REFERENCE :

thecoachingtoolscompany.com. (2014). Tuckman’s Team & Group Development Model: What You Need To Know To Get Your New Group or Team Performing Beautifully! Retrieved from https://www.thecoachingtoolscompany.com/get-your-team-performing-beautifully-with-this-powerful-group-development-model/

businessballs.com. (2017). Bruce Tuckman’s 1965 Forming Storming Norming Performing team-development model Retrieved from http://www.businessballs.com/tuckmanformingstormingnormingperforming.htm

Tmandrianto. (2014). W1.2_TMA_Tuckman Assessment Retrived from https://kristalaace2014.wordpress.com/2014/02/28/w1-2_tma_tuckman-assessment/