The Value of IPA’s Cost Engineering Committees
The capital-intensive industrial companies IPA regularly partners with are either members of or familiar with the Industry Benchmarking Consortium (IBC). The IBC and the Upstream IBC (UIBC)—for the oil and gas sector—are forums where companies can pursue the continuous improvement of capital processes. Less known are IPA’s Cost Engineering Committees (CECs).
The CEC and Upstream CEC (UCEC)—both IBC subcommittees—are designed to improve business results by strengthening the cost engineering function supporting owners’ capital project organizations. Using detailed capital project data contributed by IBC member companies, IPA develops industry cost and schedule metrics that CEC member companies can use in developing early project cost estimates and validating estimates. Tools for using the metrics, also developed by IPA, aid cost engineers in performing their work. New sets of metrics and updates to the metrics tools are released to member companies at annual meetings held in Northern Virginia (CEC) and the Houston area (UCEC).
Committee members also benefit from research IPA conducts in areas of interest to cost engineers, as recommended by CEC steering committees. Research findings and Best Practices are shared and discussed at the annual meetings.
Summary Cost Metrics
Summary Cost Metrics provide cost engineers with quick and easy metrics that are useful for high-level cost evaluations. The metrics themselves are based on IPA’s Level 1 (e.g., total construction labor cost) cost database and include only completed costs. The metrics are most commonly used for proportional checks (e.g., Engineering Cost to Total Cost or to validate equipment factored estimates). Equipment, office, and total field cost ratios are included. The Summary Cost Metrics Tool allows cost engineers to easily select summary metric sets (e.g., ratio to total) and subcategories (e.g., project size and location) to determine general project cost estimate figures.
Detailed and Unit Cost Metrics
Like the summary cost metrics, Detailed and Unit Cost Metrics support estimate development and review. However, these metrics provide many more levels of detail in the metrics, from discipline level cost ratios (e.g., Piping Engineering Cost / Piping Construction Cost) to labor rates to unit hours (e.g., Piping Labor Hours / Piping Feet). These metrics are used in early estimate development to provide factors for material and labor disciplines and for bottoms-up estimate validation for more defined estimates (e.g., Class 3). The Detailed Cost Metric Tool is able to highlight the differences between the cost and schedule metrics for a particular project against corresponding CEC cost and schedule metrics.
Conceptual Cost Metrics
IPA develops conceptual cost metrics for cost groups. These high-level metrics are used to support estimate development during the early stages of project definition. The metrics are also useful in supporting internal estimating database and tool development. This includes various summary-level metrics in subsets such as percentages of total project costs; percentages of total office costs (or soft costs); and, especially critical for projects using unit rates, percentages of total construction costs (construction labor, bulk materials, and lump-sum contracts).
For more information, visit IPA’s Consortia Membership page.