Bidding

Strategies
and Theories
Why is a process critical?
A “structured estimating process” should produce:

• Quality Estimates
• Consistency – Checks & Balances
• Improve Accuracy/Confidence
• Improve Competency/On-boarding new staff
• Align all Parties
• Reduce uncertainty
• Reduce Costs
• Save Time
Capital Cost Estimating
Process
What
USD
How
Accuracy
When
Risk
Where
Project Cost Project
Preparation INPUT Estimating OUTPUT Evaluation

Sound technical basis Appropriate tools & data

Realistic execution plan Qualified Estimators
Proper project planning
Risks and opportunities
What makes a good Quality
Estimate
• Qualified and experienced estimator
• Good estimating method and data
• Proper planning of the process
• A realistic execution plan
• A sound finalised technical basis
• Understand the risks and opportunities
Input to the Estimating
Process
Scope Definition
WHAT • PDF/P&ID
• Equipment data
• Layout
• MTO’s
• Engineering Standards
Standard list of
Execution Strategy deliverables
HOW for each
• Project organisation type of estimates
• Contracting strategy
• Constraints

Schedule
WHEN • Market
• Escalation
• Currencies
Input to the Estimating
Process
Location (project) specifies

WHERE • Supply sources

• Import regulations
• Cost local supplies
• Productivity
Cost Engineering
• Engineering standards
activity
• Etc
supported by
Project Engineering
Estimating Process
Key Procedures:
• Overview total estimating process
• Review estimating requirements
• Planning the estimate
• Structuring the estimate
• Developing the estimate
• Analysing cost risk and contingency allocation
• Documenting
• Review and issue estimate
 Estimating Process
Estimating Process Tools
Request for
Cost Estimate

Estimating Agree effort Sign for

Package & timing Evidence

Delivery of
Estimating
Business Process
Package (Exceptions!!)
Clarify Sign for
Estimating Evidence
Package
No Package
complete
Yes
Yes Scope
Change or Additional
Inform
Estimating Procedures
No Tools/ Data
Prepare
Estimate
Estimating Process
Estimating Process Tools
Draft Estimate
Ready
Internal Procedure
Internal
Verification
(Competence!)
Acceptance Sign for
Customer Evidence

Sign for
Standard Report
Estimate Report
Evidence (Template)

Distribution
And
Filing
Structured
End Database
Quality System (Flow
Diagram)
1 Request Estimate/Agree timings

2 Delivery of estimating package

3 Assignment of Work

4 Clarify Estimating Package

No
5 Package Complete?
Yes
Quality System (Flow
Diagram)
6 Register Estimate

7 Prepare Input Data

8 Prepare Project Location Factor

9 Verification and Approval (R/V/A proposal)

10 Acceptance Check by the Activity Leader

Development of Norms

Essential Steps

• Data Management

• Standard methods and data

• Review / Reconciliation of discipline

Development of Norms

Critical Elements
• Documentation of design basis
• Documentation of execution basis
• Estimate documentation
• Standard methods and data
• Review discipline
• Filing practices

Without documentation, numbers are just numbers!

Development of Norms

Databank Features:
• Should meet site needs
• Norms should be normalised (to remove abnormalities)
• Establish a ‘single source’ (e.g. a data book)
• Develop cost coding structure (maintain kind of order)
• Feedback and maintenance system
Development of Norms

Criteria for an effective coding system:

• Reflect job execution approach

• Defines in- and exclusions

• Geared for project cost control

Development of Norms

Use consistent method:

• Standard format
• Use cost coding structure
• Define estimate input requirements
• Define validity
Development of Norms

Essential Steps

• Data Management

• Standard methods and data

• Review / Reconciliation of discipline

Estimate Validation
Structured Approach:
Quality supporting documents (accuracy)
Estimating process
Consistency of project scope
Estimating tools/data
Completeness of the estimate (exclusions)
Risks and contingency
Schedule and escalation