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Weight Factor Calculation Base: Man-hour or Cost

5 replies [Last post]
Wed, 2005-03-16 22:55
Fritzie Lou Lapin...
User offline. Last seen 12 years 14 weeks ago. Offline
Joined: 24 Feb 2004
Posts: 19
Groups: Petro-Chem / Oil & Gas
Now I’m preparing Progress Measurement Procedure, For Engineering, I planned to use estimated man-hour for discipline wise or (Level 3) calculation, i.e. process, mechanical, equipment,.etc. While I use cost for Level 2. For Procurement (Eq. & Matls) Phase, I’ll use equipment cost. On a separate category, i.e. Procurement Service, I’ll use man-hour for purchasing, expediting, & transportation.

Now, I’d like to ask your opinion especially for engineering, with the above method, will it compute/result for the actual progress of engineering? There are instances like for process this cost As we will usually have process engr which spend fews but cost a lot compare to drafters who usually spend a lot of hours but cost a little less than the process engineers.
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Replies

Mon, 2005-03-21 20:06
#1
Daniel Limson
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Joined: 13 Oct 2001
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Hi Fritsie,

The standard unit of measurement for engineering and design is manhours. I would suggest that you use manhours to get percent complete for engineering and design then convert this to cost to calculate a weighted factor for procurement. This is okay if your company is shouldering the cost, however, if you are just rendering a service then it is not applicable. It is better to use manhours all the way.

Regards,
Daniel
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Mon, 2005-03-21 18:05
#2
Chris Moffat
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Joined: 2 Nov 2004
Posts: 10
Groups: Petro-Chem / Oil & Gas
Hi Fritze,

I agree with Daniel, you do need a common unit for accurate percent complete reporting. In my experience cost is always thebetter as you will nodoubt have procurement activities which will have no man hours against them, but every activity will have a cost.

with your Engineeing, fabrication etc being resourced then you can add a man hour rate per resource, this will not only automatically give you cost per resource per activity, but the budget cost will give you a weighting.

You can then report by cost at every level.

Hope this helps

Chris
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Mon, 2005-03-21 11:24
#3
Rahmat Hidayat
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Joined: 30 Jul 2002
Posts: 82
Groups: Petro-Chem / Oil & Gas
I suggest you to use both of them (cost and mhrs) but separately. So any time you can compare their % complete. It’s very useful, for your invoice use % complete from cost basis, but for your internal controlling you use mhrs.

Rgds
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Fri, 2005-03-18 00:15
#4
Daniel Limson
User offline. Last seen 4 years 39 weeks ago. Offline
Joined: 13 Oct 2001
Posts: 318
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Hi Fritsie,

I think you need to have a common base if you want to have an accurate percent complete. It’s either manhours or cost, you can not combine the two. How can you calculate a weighted factor for manhours and cost unless you just guess the weight of the other.

Cheers,
Daniel
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Thu, 2005-03-17 02:14
#5
Jaco Stadler
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Joined: 9 Sep 2004
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Hi Fritze in my opnion this will not effect the progress (%)that much.

If you look at the work done by the team I would suggest you break it down by deliverable.

If you have a look at the time frame the work is completed you would notice an engineer start and finish with the draftperson time wise. Remember the Engineer will spend most of his time Rough Sketches / Review of DWG / Mass Balance / Specifications. etc while the Draftees do the Dwg.

Please note if you want to you can easaly ad the cost (Rate for the People) as well and do a cross check and see if the result is different. I dont Believe it is.

As to the Breakdown on high lvl I Would Suggest something like this.

1) P & G
2) Engineering
2.1) Basic Engineering
2.2) Package Engineering
2.3) Construction Engineering
3) Procurement
3.1) Tender
3.2) Placement of Order
3.3) Expiditing & Inspection
4) Fabrication
4.1) Fabrication
4.2) Delivery
5) Construction
6) Pre Commisioning
7) Commisioning
8) Close Out

Cheers
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