W 3.1_Said Alamri _Cost Estimation for a Maintenance Project

1. Problem Recognition

In my company we encountered leak in fire water pond. Divers were hired for under water inspection to identify the source of leak. After each repair still the water level goes down which indicates the leak is persist. The fire water pond bottom material is rubber liner. It is proposed to do permanent solution to overcome the problem for ever. The solution is to make the bottom of the pond concrete instead of existent rubber liner. In this blog am going to do cost estimation for the project. The project will be executed in house and we have to make back up plan for fire water network system during the repair of the water pond. We have to arrange alternative arrangement by utilizing the adjacent storm water sump through installing rental pumps to make the system available in case of emergency.\

2. Development the Feasible Alternative

Many cost estimating methods/techniques are available on Cost Estimating Guide (by U.S. Department of Energy Washington, D.C. 20585) to facilitate the cost estimating process. Depending on project scope, estimate purpose, project maturity, and availability of cost estimating resources, the following techniques may be employed in developing cost estimates.

  • Detailed Estimating Method
  • Expert Opinion Method
  • Full-Time Equivalent Method

3. Development of the Outcome for Alternative

The job will be done in-house. The cost of the project can be divided into three parts:

Civil works will be done by company’s maintenance contractor .cost of civil works based on unit rate as per the contract in between the company and its maintenance contractor.

Cost of backup arrangement for fire water system by rental pumps and man hour cost for tiens with existent fire water network system. And cost of pipes and fittings.

4. Selection of Criteria

Since the cost of civil works is based on unit rate the method which is required to be used must be in details (based on WBS). Also the cost of rental pumps will be on daily rate plus cost of mob/demobilization of equipment, system tiens will be executed in house.

5. Analysis and Comparison of the Alternative

Detailed Estimating Method : Activity-based, detailed or unit cost estimates are typically the most definitive of the estimating techniques and use information down to the lowest level of detail available. They are also the most commonly understood and utilized estimating techniques. Each activity is further decomposed into detailed items so that labor hours, material costs, equipment costsareitemized and quantified.

Expert Opinion Method: As stated in the GAO Cost Estimating and Assessment Guide, “expert opinion, also known as engineering judgment, is commonly applied to fill gaps in a relatively detailed WBS when one or more experts are the only qualified source of information, particularly in matters of specific scientific technology”.

Full-Time Equivalent Method: The number of individuals anticipated to perform specific functions of a project forms the basis. The man-hour quantity is calculated and multiplied by the cost per labor hour and the duration of the project function to arrive at the cost.

6. Selection of the Preferred Alternative

The project is divided in three parts: Civil works, hiring pumps for backup arrangement for fire water system & man hours spent on pipes fabrication for the tiens with existent system. I will adapt all three methods previously explained to determine estimated cost for each phase. Then will be added all together.

Detailed Estimating Method will be used for estimating cost of civil works.

Expert Opinion Method will be used to estimate the cost of the rental pumps.

Full-Time Equivalent Method will be used for estimating the cost per labor hour and the duration of the project.

7. Performance Monitoring and the Post Evaluation of Result

These methods will be implemented and tested. The results and the steps will be posted in the next coming weekly blogs.

8. References:

  1. 4 Tools to Estimate Costs in the Project Management retrieved on June 18, 2014 http://pmstudycircle.com/2012/06/4-tools-to-estimate-costs-in-the-project-management/
  2. Top down and bottom-up unit cost estimation retrieved on June 18 http://data.gov.uk/sib_knowledge_box/top-down-and-bottom-unit-cost-estimation
  3. Create a Budget Estimate Using the Bottom-Up Approach retrieved on June 18 http://www.dummies.com/how-to/content/create-a-budget-estimate-using-the-bottomup-approa.html
  4. Cost Estimating Guide (by U.S. Department of Energy Washington D.C.20585) retrieved on June 26 https://www.directives.doe.gov/directives-documents/0413.3-EGuide-21/view



4 thoughts on “W 3.1_Said Alamri _Cost Estimation for a Maintenance Project

  1. GREAT case study Said, and you could have/should have gotten 5 stars but you missed one very important reference. You didn’t explain what the PURPOSE of the estimate was nor did you tell us what the scope definition was.

    Why is that important? Because the purpose of the estimate and the scope definition determine the appropriate level of ACCURACY that you can expect.

    Suggest for future blog postings, you review the following documents:
    1) My course handouts, Day 3, slides #14-#21
    2) Department of Energy Cost Estimating Guide https://www.directives.doe.gov/directives-documents/0413.3-EGuide-21/view
    3) AACE Cost Estimate Classification System- RP17R97 http://www.aacei.org/non/rps/17R-97.pdf
    4) AACE Cost Estimate Classification System- RP 18R-97 http://www.aacei.org/non/rps/18R-97.pdf

    These are all EXCELLENT references which are made available FREE OF CHARGE by AACE. (Which is one of the reasons I prefer AACE to PMI- not only is the quality of the technical standards much higher, but PMI charges for everything while AACE makes our knowledge base accessible to anyone, member or non-member alike at no cost or obligation.

    Keep up the good work and looking forward to seeing some 4 and 5 star postings in the coming weeks.

    Ramadhan Khareem!!!

    Dr. PDG, Jakarta

  2. Pingback: W 12_Said Alamri _Three point Estimation for a Maintenance Project | PMI-Oman 2014

  3. Pingback: W 12.1_Said Alamri _Three point Estimation for a Maintenance Project | PMI-Oman 2014

  4. Pingback: W 4_Salim Al Habsi _Three point Estimation for PW Pipe Replacement – pmioocep16

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s