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proper methodology for implementing weight of the items in EPC projects

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Eslam El-Khoriby
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Hi, hope everything is going well. i am working as a planning engineer in electrical substation in Egypt. For a while, I have been searching for a proper methodology in order to sustain a real weight of the items comparing to all of the project.

Most of the companies use cost basis methodology which shows no impact of the critical path and some use time basis methodology which shows no impact of the cost of the items.

The construction works is estimated by 60% of the project duration and has a cost near by 10% of the project total cost, but on the other hand, the electrical times such as the power transformer is estimated by 30% of the total cost of the project and takes only 10% of the total time.

If we went by the cost methodology, it would be unfair for the construction phase and if we went by the time methodology, it would not be fair for the electrical items.

a way to implement the cost and the time factors for the same item in the percentage of the weight regarding the total project shall be more than needed taking into consideration the critical path activities.

An expert judgment to find a proper, real, fair methodology will be more than welcomed.

Thanks in advance for your time.

Replies

Tom Boyle
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Eslam,

As typically understood, weighting points are loaded onto a schedule as a surrogate for the "Budgeted Cost of Work Scheduled" (i.e. Planned Value) for subsequent earned value analysis, S-curve generation, and progress reporting.  This has absolutely nothing to do with activity durations or the critical path, and it would be wrong to increase the weight of an activity merely because it takes a long time or you currently perceive it to be on the critical path.  Fully-loaded budgeted cost/price/value - or a reasonable surrogate for it - is the only valid basis for weighting. "Fairness" one way or another doesn't come into play.

In many pure construction projects in developed countries, the total value of most activities is roughly proportional to the labor (manhours).  Then manhours can be used as a basis for weighting points as Zoltan suggests.

EPC projects typically involve site installation (using relatively few manhours) of high-value equipment that is purchased and/or fabricated off-site.  (Your power transformer seems to present a good example.)  In that case, site manhours may be a starting point (with suitable adjustments for rates that can vary by orders of magnitude in some countries) for weighting the site installation activities only.  In my experience with large EPC projects, the weighting value of the off-site fabrications and purchases are typically loaded to associated activities in the schedule - not the installation activities.  Consequently (and unlike typical construction projects), the value of the equipment is not solely concentrated on the site activities. 

 

 

 

Zoltan Palffy
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how about using manhours per activity (direct labor) as your measuring stick ? you can use a blended rate for cost per manhour ant it will multiply the manhours times the rate to give your your direct labor costs.