This is a particularly complex discipline because only when the level of uncertainty and risk is adequately quantified one can possibly ascertain whether a project is viable or may fail.  Therefore, deciding how much and in which way resources are allocated to engineering and related studies is key to determine the overall amount of the investment.  Particularly when investors or financing institutions are engaged.

That’s why Hytech has invested heavily in developing its own estimation strategy, based on our experiences as Owner Engineer and partners in EPCs, and by looking at the project globally from conceptualization, while staying within AACE principles and practices.

Consequently, we work with our client to establish estimation fundamentals, by taking into account the following:

• In-depth and detailed understanding of the business, investment amount relative to profitability, and financing strategy (self-financing, international banks, etc.)

• Applicable legislation and early engagement with government approval authorities.

• Site studies (soil, hydraulics, topographical, and land studies), access to site and logistics starting at early stages.

•  Agreed-on and defined basis of design: feedstock evolution forecast, intake conditions and composition, required vs. possible flexibility, etc.

• Market conditions and choice of workshop, vendor, and construction companies. Materials availability considering cost, delivery term and usage criticality.

• Early contract strategy and planning:  lump-sum, unit price, cost-plus, turnkey, EPC, and mixed strategy (LLI bought in advance by client) projects, depending on client’s capacity and experience to manage each type of project.

• Comprehensive engineering scope planned together with construction project to complement contract strategy.

• Early identification of items with highest impact on cost, uncertainty, and time frame; which, depending on the type of project, narrows potential estimation errors and allows to properly focus efforts.

• Overall vision integrating all engineering disciplines and continued evaluation of constructability and costs associated to the proposed solutions and designs.

 

Cost Estimate Methodology

• Updated price databases, including only equipment, materials and labor, instrumentation, electricity generation, packed equipment, utilities, buildings, etc.

• Characterization and simulations defined from conceptual engineering stage.

• Final plot plan defined with particular detail from early stages, taking into account constructability, logistics, erection and assembly, operations, and maintenance.

• Final key equipment design including preliminary mechanical design and in-house cost estimate based on real costs of materials, special parts, workshop man hours and labor cost, etc. In this way, we minimize set workshop prices while providing minimum preliminary information.

• Module pre-design, piping layout, etc., allowing reliable MTOs (bill of materials).

• Division of costs into client and contractor provision.

• Cost estimate errors discriminated by item, thus minimizing errors in items of larger weight by improving their level of definition.

• Segregated contingencies to improve their accuracy.

 

 

Finally

• Unit costs used for materials, manhours, and productivity by specialization, field or workshop, arise from data collected from construction experience and from inquiry to workshops and erection contractors, in addition to data provided and approved by our clients.

• We provide cost estimate spreadsheets in native format for clients to perform their own sensitivity analysis.