Better Productivity

Weight Tables for Quick Piping Material Estimate

Vikas Khaitan1 Comment

In one of my previous blogs, Quick Piping Material Estimate, I provided indicative benchmark $/kg rates for various carbon steel piping items, and discussed how these rates could be used to quickly estimate piping material costs.

To be able to do that, the estimator would need access to the weight tabulations for various piping items, which I mentioned can be easily obtained from manufacturers of pipes, fittings, flanges and valves.

The file attached below has tabulations of different piping items which I have collected from various manufacturer catalogues. This is a free estimating resource for anybody who wishes to download and use.

Piping Weight Tables (Excel file) – Free Estimating Resource

The weight tables available are for below Carbon Steel piping items:

  • Pipes
  • Fittings
    • 45° Long Radius Elbows
    • 90° Long Radius Elbows
    • Caps
    • Tees
    • Reducers
  • Flanges
    • WN Flanges
    • Blind Flanges
    • Spectacle Blind Flanges
  • Valves
    • Globe Valves
    • Check valves
    • Gate Valves
    • Full Bore Ball Valves
    • Reduced Bore Ball Valves

Weight tabulation of additional piping items can be added to this file if required. Any missing weights for particular sizes can be prorated, from nearby weights, for estimating purposes.

The file also shows how these weight tabulations can be used in conjunction with Excel functions like HLOOKUP and VLOOKUP in order to quickly list out the weights of the various items. This is demonstrated in the “Piping Material Estimate Template” tab within the file.

The following inputs are required to auto-read the weights from the various tables:

  • Item description (pre-defined)
  • Sizes (in inches)
  • Schedule for pipes and fittings (e.g. 40, 80 etc.)
  • Pressure rating or piping class for flanges and valves (e.g. 150#, 300#, 600# etc.)

The file shows how the inputs should be tabulated and listed to make this work. The formulae can be repeated for thousands of rows of MTOs helping to get the weights within minutes. And using the $/kg rates, the whole piping estimate can be done within a few hours (or even minutes), rather than weeks.

In case of resource shortage, this tool can be used as an effective estimating method; it can also be used by the reviewers to check if the piping estimate done by other more time-consuming methods are in the right ball park. Moreover, a blank inputs table can be shared with the piping engineers to make sure that the inputs come in this prescribed format, thus reducing the time required for any re-formatting.

I have been successfully using this method for many years and would suggest that this is one of the ways the estimating community can increase the team’s productivity and provide better “value for money” by substantially reducing the time and cost for estimating.

Note: These are standard product weights from some manufacturers. Products from specific manufacturers could vary slightly in weight. If the same weight tables are used to calculate the $/kg rate than these slight variations will not make any difference.

Also note that if the design requires non-standard sizes, then the weight of those piping items would need to be calculated from first principles.

Quick Piping Material Estimate

Vikas Khaitan6 Comments

When estimating any oil & gas project, detailed piping estimate is one of the most time-consuming elements. Piping material take-offs can sometimes be in the form of several hundred or even thousands of line items, which an estimator takes weeks to estimate. Some companies have specific piping estimators for the job.

In all oil & gas projects, there are several pipes going in and out of the various equipment items helping the process and utility fluids to move around in the required direction and destination. This piping forms a major portion of the final plant and the cost estimate. There are several piping items such as: pipes, fittings of various kinds, flanges of various kinds, valves of various kinds, and the corresponding gaskets and fasteners. There could be several sizes and pressure ratings of the various piping items. And then there may also be various metallurgies involved. The material take-offs are generally done separately for various lines, which means, similar items could be repeated several times. The whole list is generally very long by the time it comes for estimating.

The piping estimator then tries to find the cost of individual line items from the in-house database and invariably takes a long time to find an exact match for the material, size and schedule of a specific piping item. If the company has previously used similar items in another recent project, then there might be a possibility of getting some in-house data, but even then, it might not be available for all items. The team might end up factoring those items from another nearby size and/or schedule. This whole process is very laborious. Even with databases and software, no company could have an exhaustive databank of prices of all possible piping items.

Depending on the budget and resources available, the team might decide to go out to the market to get recent prices for all the piping items, but even that takes a considerable amount of time.

Once this laborious process is completed, it becomes very difficult to review the overall estimated piping supply cost, as it is nearly impossible to go through each line item.

I am going to suggest a surprisingly simple method to help expedite the piping estimate and review process. For this, all piping items can be converted into weights and then multiplied with an average $/kg rate for the various types of piping items to arrive at a rough piping material supply estimate for comparison.

The table below offers indicative benchmark average $/kg rates for various carbon steel piping items (free estimating resource).

You can choose to use company specific rough $/kg rates for various piping items (instead of the above rates), which can be derived by using database information from past projects or previously obtained budget quotes. This is preparatory work, which can be done when there is less load on the estimating team. Similar rate tables can also be developed for other material such as stainless steel or duplex steel, or factors can be developed to modify the $/kg rates from carbon steel to the higher grades of material. (I will try to post indicative factors as a future blog.)

The weight tabulations for various piping items can be easily obtained from manufacturers of pipes, fittings, flanges and valves (I will share the piping weight tabulation in another post).

This method helps in quickly estimating a rough number for the material cost of all piping items. This can either be used when there is insufficient time or estimating resources to complete a more detailed estimate, or used by the reviewer of the estimate to cross-check the piping estimate done by others. If the weight tables are properly set up then this method can help arrive at a rough piping estimate within hours (or even minutes if the inputs are provided in specified formats), against weeks of work that is generally undertaken.

Note: The benchmark rates above are indicative only and intended to demonstrate how this method would work; they can help arrive at a reliable overall piping material estimate when time is short. 

Piling Costs: Rough Estimate Model for Benchmarking

Vikas Khaitan1 Comment

Once when trying to benchmark piling costs with available information from various in-house projects, the data showed an apparently inexplicable variation in the $/m rate for the piling works. In some cases, it showed 2-3 times the $/m rate for the same diameter, and in other cases, the data showed similar $/m rate even though the diameters varied between projects.

After the initial failed benchmarking exercise, I started considering the technicalities of piling and understood that there are different kinds of piling specified for various projects depending on different soil and project conditions. I realised that I was making the mistake of comparing the $/m rate of different piling types used in different projects. This wrong comparison had created the above-mentioned variations in the overall rate.  At this point, I separated the available data into the various types of pilings. That was a good start, but then I did not have enough data points for the individual piling types to be able to generate any sensible benchmarking curves.

But benchmarking was needed for the estimate approval process.

To meet this need, I developed a small estimate model to calculate the rough $/m cost for various types of piling and for various diameters. I assumed an indicative length of pile to generate the graph. I used indicative material and labour rates, norms and productivity factors to calculate the cost of the various types of piling. I included an indicative hiring cost of piling hammer or rig as required for a specific type of piling work. All these inputs and assumptions could be modified for specific project and location to help generate a customised benchmarking graph. I have also assumed a total number of pile for this specific example and would caution that the per meter rate could substantially vary if the total quantity is significantly different. But this still gives an idea and relative cost differences

The attached file shows the proposed working.

Piling Rough Estimate Model for Benchmarking-Rev0 (free resource)

This shows how the costs could possibly vary with diameter and piling type and can be used as an in-house estimated benchmarking graph. Any past project data (if available) could be superimposed on this graph for easy comparison. Any contractor bids can then be compared against this graph to demonstrate the reasonableness of market pricing. This can also help the engineers choose and compare more than one piling type, if technically suitable, to use in a project.

Estimating Time Management

Vikas KhaitanLeave a comment

Estimating time management has always been an issue in the all estimating departments which affects the quality of estimates being produced. I would like to discuss how an estimator generally plans his estimating work for a project and how we should be approaching it so as to avoid the last minute rush that is generally experienced in all estimating departments.

The following figure shows a typical estimating schedule

The important points to note in the above figure are:

  • There is a long waiting time by the estimating group between the start of the process and when they actually start getting inputs from the various disciplines.
  • Once the inputs come in there is very little time left before the estimate needs to be complete.
  • The management generally reviews the estimate before the last input has come in.
  • The final estimate needs to be submitted very soon after the last input has come in.

Most estimators deal with this typical situation in the following way:

  • The estimator does not start work before the first input starts coming in.
  • The accuracy of the estimate is compromised and reduced; the estimator blames this on the late receipt of inputs.
  • The late inputs, which arrive after the management reviews, are typically not incorporated into the estimate as there is “not enough time” to do so, or added as very high-level order of magnitude estimates in the form of late changes.

I will propose an alternative to this unsatisfactory approach, based on methods which I have been successfully using for the last several years while working as an estimator.

During the kick-off meeting at the start of the project / proposal effort, the estimator will get a fair idea of what the designers are going to design and typically how similar or dissimilar the new design will roughly be to something done by the company in the past. During the long waiting time, before even a single input has come from the disciplines, the estimator can actually complete a detailed estimate based on the available past project information and come up with the as-of-date estimate of the past project. As a lot of time is required by the estimator to gather typical prices from various sources to use in the estimate preparation, that work will have been done during this process. Another important thing, which takes a lot of the estimator’s time, is the formatting, presentation and management approval of the estimate. If based on an old but similar project / proposal information, the managers are usually quite happy to discuss the results of the as-of-date estimate of that old project, comment and advice on it, and review it. This helps in finalising the estimate even before any input has been provided. This brings forward the time generally spent on the activities at the end of the estimating process. Thus, when the inputs do come in, it takes very little time to update the estimate with the revised (or correct) quantities. The approval cycle is also faster as everybody is already familiar with the cost basis.

I have taken this approach even for projects where there was no historical data available, but people were able to give me a fair idea of what the final product would be like, so that I could assume dummy quantities for my format preparation and basic cost information search.

The following are the advantages of such an approach:

  • No last-minute-rush situation, as the work is evenly distributed during the actual time available for an estimate.
  • More time spent on cost database searches and approaching vendors (if required), thus making the cost basis more accurate.
  • More review time available by the managers.
  • More suitable for training new estimators as there is no pressure on the team to complete an estimate thus requiring some experienced estimator to quickly start and finish the estimate when the inputs come in.
  • Frees the experienced estimator’s time to perform a more supervisory role.
  • Gives better understanding of what kind of inputs are required to complete the estimate and could be used to guide the new discipline engineers on the job to formulate their outputs accordingly.
  • Last but not the least, it gives a clearer idea to the managers about the range of the final figure; this helps them to design their selling pitch accordingly.

I would like to argue that managing and utilising the total available time for any estimate is a more sensible approach, which produces accurate and more reliable estimates.

This article formed part of a larger opinion piece published in Nov-2015, in the Project Control Professional which is the journal of The Association of Cost Engineers.

Supplier Quotes for Estimating

Vikas Khaitan3 Comments

One of the important steps during any estimate preparation is obtaining supplier quotations. Some pricing is based on in-house data from past projects or previously obtained budget quotes, but there is generally a requirement to get latest market pricing for high value items to increase the accuracy of any estimate. The time to obtain these quotations is mostly built into the estimate preparation time. On many occasions, this time may appear inadequate and the team could be unsuccessful in obtaining any meaningful and usable quotations to be included in the estimates thus affecting the estimate accuracy.

In this blog, I will first discuss what tends to be the general approach for obtaining quotations at the estimating stage of any project, and then I will propose a method for making this process more efficient to fit with the available estimate preparation time.

One of the issues I have noticed as part of many teams is the format in which the request is sent out to the suppliers. The requirement, scope descriptions, specifications etc. are sent to the supplier without any pricing format / tabulation to be filled. Every supplier thus interprets the client’s requirement in a different way and submits a priced quotation in varying formats. It then takes a long time to understand the overall pricing being quoted by the suppliers, obtain clarifications if required and then normalise the scope to compare them on an equal footing. It is always a challenge to tabulate, compare, analyse and then suitably use the quotes, in the estimate.

I propose that the estimator should support the engineering/ procurement team in developing suitable tabulations of the required scope to be sent to the suppliers. If all the suppliers are given the same price schedule in an Excel format for example, when the prices come in, it would be an easy task for the team to tabulate the submissions from the various bids and compare them against one another. Any duplication of effort would be immediately removed from the system. No time would be wasted in trying to copy each line item and its quoted price into a spreadsheet. Any comparison and further analysis would become much easier. Any adjustment to the scope and quantities would be easy to make as well. It would reduce the time for any clarifications and bid evaluations, thus allowing the estimate preparation to be completed within time and with a high accuracy.

Case in point

Long ago, when I joined an estimating team of a company, I found that the very detailed quotes which we received from various contractors for fabrication of our equipment, varied widely in terms of the format in which they were quoted. This was partly down to us; we as a team were not very clear in our scope description, hence the quotes were also not very clear on what was included. Small things like painting was sometimes missed out from the bids, or it was not clear if the lifting lugs for transportation and site installation were included or not, or if anchor bolts were missed out. The small items when combined did make a difference to the bottom line and the estimates could end up either double dipping on those items or missing them out completely. We had to have several clarifications before we could compare the various bids and it sometimes took weeks or even months. I realised there was a problem and it affected our ability to produce effective estimates in a timely manner. I helped the team develop a simple excel format to go out to the contractors for pricing for any new enquiries and the template included all the information we needed all suitably tabulated. This then made it easy for the various bidders to quote their prices, quick and easy for us to check if everybody quoted all the items, and even easier to compare different bids and then suitably include the costs into the overall estimates. We reduced the overall time from weeks / months to nearly less than a day for the whole exercise once the contractors’ quotes came in.

I have now made it a practice to help any new team I work with, to develop suitable formats to obtain quotes so that it makes it efficient for everybody involved. If you do not do this already, I would highly recommend it.

Attached is a dummy format in excel for reference.

20161026-dummy-price-schedule (free resource)

80/20 Rule Applied to Estimating Effort

Vikas KhaitanLeave a comment

Estimating can easily become a tedious exercise and estimators can sometimes unknowingly spend a considerable amount of time on items or issues which might not add much value to the overall estimate. This could even compromise the accuracy & quality of an estimate. Even managers and reviewers could end up spending time and effort resolving issues which might be very important for project execution, but might not make much difference to the overall estimated number.

The natural tendency is to spend about equal amount of effort for each line item of the estimate. As shown by the blue bars in the below example. But looking closely will reveal that only about 20-25% of the items actually contribute to nearly 75-80% of the total estimated cost. Which is true for most estimates. Thus it would be illogical to spend so little effort on those high value items. It would be more logical to spend more effort on those high value items. I would recommend making the effort proportional to the cost of the individual items. See the black line in the below graph.

20160520 Effort Vs Cost

To correctly use the estimator’s and the rest of the team’s time and effort during any estimate preparation, I would suggest that the commonly known 80/20 rule (Pareto Principle) be applied as an approach in the estimate preparation. This can also be formalised in the estimate methodology if needed. This will help guide the team’s efforts in the right direction. Thus more effort should go into fine-tuning and making sure the estimates of the high value items of the estimate. Quantities, prices and allowances applied to those line items should be cross-checked and double checked as any errors in those will have a much bigger impact on the bottom line than those of the smaller value line items.

Case in point:

In a particular project, the team started concentrating in the type of access roads that were needed to be built to the construction site and spent a lot of time and effort trying to resolve the issue during the tendering stage. The access roads accounted for only less than 1% of the overall project cost. It no doubt was a major issue for the project manager, but did not help the tendering stage. A lot of resource was wasted in resolving the issue without affecting the estimate.

In the same project there were issues like the design pressure selection, corrosion allowances, etc. which considerably impacted the thickness of pressure parts thus directly impacting the high value cost items in the estimate. More effort on those items could have had a much bigger impact on the overall number.

In another project, the team spent a considerable amount of time trying to resolve the issue of whether the electrical cables where to be installed underground or over-ground. The cable installation cost on the project was a fraction of the overall cost.  In the same project the cost of the packaged gas turbines and compressors accounted for more than 20% of the overall project cost. The team could have spent a bit more time optimising the turbine package thus making a much bigger impact to the overall estimate.

After the first draft of the estimate is prepared, the high level estimate breakdown can be used to help plan the team’s effort. The suggestion is to spend more time on the high value items and not spend too much time resolving issues which do not make much difference to the estimate.

This approach will also allow the estimator to take a more active role in the engineering effort that goes into preparing the inputs for the estimate. This will lead to a true teamwork, guiding the whole estimating process and optimising the use of resources.

I have seen this mistake happening time and again and want to share the lesson learnt with anybody directly or indirectly involved in any estimate preparation.

Note:

In some instances, there might be a need to spend the technical team’s effort in issues which might make very little or no difference to the cost estimate, but does make a real difference to the execution strategy and thus the viability of the project itself.

This article was published as an opinion piece in Sep-2017, in the Project Control Professional which is the journal of The Association of Cost Engineers.