Parametric estimating: save time and effort with the right cost data
During a project, a large amount of data is collected, assessed and reported by the different parties involved in planning and execution. When cost data like quotations and unit-rates are carefully stored in a database, including technical data, this information is useful for future projects. After thorough analysis often a pattern can be found between project design specifications and cost of new equipment and materials. These cost drivers, or Cost Estimate Relationships (CERs), are the basis of parametric estimating methods.
How to prepare the right cost data
While developing parametric estimating methods is a lot of fun, it can take a lot of time which you probably cannot afford. Let us help you with some tips:
Database with historical project data
Prepare a database with a consistent folder structure and categorization/labeling of cost data. The goal is here to set up a data set that is easily searchable and maintainable by different users.
When reporting an estimate, the costs of materials, services, personnel, etcetera are expressed in today’s money. The estimate was built up with data possibly gathered from many historical sources. Prices were indexed and escalated to current and future values to give the most reliable forecast of the project’s cost. Keep in mind that inflation, supply & demand and currency exchange rates continuously evolve. This can makes older cost unreliable. Don’t be afraid to cut in your data to keep it relevant.
Gather key quantities
Design standards allow engineers to work efficiently and make sure that all solutions carry some form of recognition and consistency. We as cost engineer can intelligently make use of this as well, by analyzing previous projects, thus to distil typical quantities from the design documents.
One example is the typical distance that exists between equipment on the site, which ensures that in advance a good estimation can be made for the length of pipeline between equipment. If the capacity and material type is known, this should give the estimator sufficient information to make a cost estimate that supports a more detailed budget.
A valuable part of cost management data covers information about location effects on projects. People work together world-wide to gather location and productivity factors in tables to be used in estimating and performance measurement against a frame of reference.
In order to facilitate all of the above, cost data needs to be structured with breakdown structures and logically categorized. Only then can you filter, tabulate or plot the correct subsets of data.
If you have a question, or want to know more about CESK data, please feel free to contact us.