Blogs to Explore and Discuss
Blog #1 Project Focus
A thought for Resource Owners and all those who say there is no profit in building during our current economic climate;
By extrapolation, the Aurora Train II project was based on $20.00 / barrel oil and had a budget of $650M, which was design and constructed on time... a true success.
Based on today's $48.00/barrel oil, the industry should be capable of building projects with values in the range of $1.5 B successfully!
Blog #2 Estimate Quality and Success
The quality of an estimate is a reflection of the company (client) requiring the project estimate. If one believes that estimates are a useful tool, then one has to believe that estimates are more than a compilation of data with various factors applied to the data.
An estimate must reflect the client’s and project’s strategic and tactical thought. The execution philosophy and alternate solutions for perceived potential risk issues.
The estimate must have a basis and employ historical data. I caution, Managers and Estimators at this point. Do not fixate on historical data at the expense of strategic and tactical thought, innovation. Creation solutions and strategies after viewing the project and its many components from different perspectives.
There are a few issues with estimates I will briefly mention, which are;
a) The basis of estimate in so far as it contains performance and impact escalation factors. It identifies all the project's parameters. There is a generally agreed upon engineering and construction schedules.
b) As seen with many projects, which have excessive cost overruns for a myriad of reasons, which I will address in a later post. EPCM firms generate estimates, which are not focussed (non-committal). They do not want to commit as a method of limiting perceived liability and revenue stream generation. Depending on the client’s level of sophistication, savvy and knowledge, their strategies can and be more focussed and specific. Both positions (Owner's and Engineers) are a very long way from being optimized for the greatest efficiency and lowest forecast total installed costs (TIC).
c) If you provide information to an estimator based on a strategy, then change the execution process, the result becomes millions, even billions of dollars in difference between final cost and estimate value. You cannot blame the estimator for your failure.
d) There are two types of estimators. The first have limited field experience and know how to place productivity values against raw data. The second type of estimator has real world construction experience, is analytical and create their estimate based on a strategy.
Great estimators possess the following attributes; experience, intelligence, confidence, knowledge, mechanically inclined, curious, skeptical, think outside the box, challenge personal thoughts and ideas, are an equal to the PM, CM and Client relative to characteristics, challenge concepts and is a measure of risk taken. When thinking outside the box and challenging concepts, the estimator must be able to explain and convince those above that the strategy is well worth the risk and better yet the rewards, which are lower project costs, shorter durations and fast return on ROI.
The greatest estimators take this a step further by asking themselves (self-analysis and evaluation of the estimate and project). Asking, when all is said and done, if we were awarded this project, how can I improve upon or change the estimate so the company earns great profit by reducing costs and other changes.
Blog #3 Industry Attitudes
An interesting construct of modern society and business. Everyone is using the same policies, procedures and methods, yet they expect different results.
If one wishes different results, one must break-out from the norm, be analytical, be visionary, challenge existing practices and policies, create a new comfort zone by shedding the old non-productive methods and realize leaders lead from the front.
FLCI believes in continuous improvement by analyzing industry shortfalls to develop superior and intelligent advancement of project management practices, thereby delivering to the client a superior project!
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Sharing ideas and changing how we do business in Alberta.
For years we've been hearing project costs are unsustainable and some of the worst. What is interesting and perplexing at the same time is, Everybody continues to do what they've always done while expecting a different result.
Where is the innovation, the application of lessons learned, the drive and desire to be leaner and more efficient?
Instead, what industry witnesses, are people and corporations inventing new methods of generating additional revenue streams, instead of focusing on that which they were contracted for in the first place, which is a product for the lowest cost, safely delivered and on time.
I know there are alternate methods, which product the desired result without jeopardizing safety, quality or individual wages for overall lower project TIC.
The question that needs to be asked, is how much do businesses want to challenge their existing belief system to achieve these better results.
Any thoughts or comments?
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Separate from my other SAGD post, by changing our perspectives. perceptions and challenging our corporate belief systems of facility construction, Owners can almost recoup their entire investment by the end of historical construction methodologies.
Roughly $230M in construction savings and $675M of missed ROI. FLCI welcomes the opportunity to assist Owners achieve these results.
Any thoughts or comments?