Preliminary Estimate (Budget Authorization)

Factorise the total mechanical equipment costs to the all-in project cost

Factorise the total main equipment per discipline: From the mechanical equipment costs, ratios are used to arrive at the various discipline costs, as well as the costs of Engineering and Project Management.

Discipline As % of Total Field Costs As % of Mechanical Equipuipment
Mechanical Equipment 48% 100%
Civils 14% 29%
Structural Steel 2% 4%
Buildings 7% 15%
Piping 9% 19%
Electrical 5% 10%
Instrumentation 9% 19%
Painting & Insulation 1% 2%
Total Direct Field Cost 95%  
Indirect Field Cost 5%  
Total Field Cost 100%  
Engineering 20%  
Contingency 40%  
Taxes/ Levies    
Total Project Cost 160%  

The Quantity Ratio Method

Based on the number of pieces of main equipment, their complexity, the interrelation for the various categories of the main equipment, each commodity discipline can be quantified. The key items are

  1. Civil
    • - quantity of earthworks
    • - quantity of concrete
  2. Structures - tonnage/m2
  3. Piping
    • - total length
    • - average diameter
    • - total tonnage
  4. Electrical
    • - number of drives
    • - kW per drive
    • - total length of cable
  5. Instrumentation
    • - number of loops
    • - number of control valves.

After the main quantities of such commodities are established, the material cost and erection/field manhours and their associated cost can be calculated.

The advantage of the quantity ratio method is that the location of the project is less of a problem. Depending on the location, the quantities can be multiplied with unit material costs and erection/field manhour productivity ratios applicable for that specific location. This method requires some feedback analysis to be performed before introduction. However, this is a brief exercise, which will ultimately create a better defined OOM.