Make Your Estimate a True Strategic Weapon
I think most of us wish we had a crystal ball predicting the direction of the economy. Instead, we have mixed signals. Low oil prices are confounded by a large volume of floating inventory. High stock prices seem to be out of place considering low corporate earnings, and the run-up in housing prices doesn’t mirror the reality of flat wage growth. Companies bidding and building large capital projects are increasingly nervous as their decisions, based upon all of this confusing information, weigh heavily on bid profitability and feasibility.
Model-based estimating has become a strategic weapon in the bidding and estimating of capital projects. The model-based estimating software of choice for many operators and EPC's is Aspen Capital Cost Estimator (ACCE), proven to deliver results like:
- Cutting estimating time by 50% during FEED, as Technip did
- Lowering bid estimate variance by 20% as companies like PEMEX have done
- Evaluating more design alternatives to reduce anticipated CAPEX by 15-30% on debottlenecking projects, as demonstrated by Burns and McDonnell
While accuracy and speed are always important considerations, many people that I have spoken to also talk about the technology adoption process. They want to quickly create value by streamlining the way they train and on-board their organizations with new software. AspenTech has outlined three key steps to ensure a swift and successful adoption process.
Evaluate: The first step in the adoption process is to assess your company’s willingness to implement change. Mapping your current bidding and estimating workflow process and decision-making pathway, and understanding where you want your estimating software to make a positive impact, sets the stage for success.
“An assessment of current methods and how ACCE will be used, performed under the sponsorship of and presented to management, is essential to successful implementation. Getting started with a thorough understanding of a baseline allows for better decisions in the future.”
Mike Monteith, CEO, Strategic Estimating Systems
Optimize: Estimators and process engineers alike have found that ACCE is tunable both in customization and calibration. After setting your design basis, running a comparison against a completed bid will expose areas that need to be calibrated. For example, around 60% of installation costs are borne by piping; while around 60% of supply costs are borne by equipment. Knowing this helps you hunt for areas to calibrate.
Deploy: Running ACCE in parallel with your legacy system will do two things: Build confidence in its tuned output and expose areas where additional fine tuning calibration and indexing is needed. When your in-house estimators lead the way, they will expose outsourced estimators to the newly defined workflow, which will further fine-tune the data output.