Engineering Hours Estimating System

Estimating engineering costs as a percentage of the direct project costs is a very common practice in conceptual and preliminary work. It is very simple but also very risky. The engineering hours related to any piece of equipment have very little relation to its cost. 

For instance, the engineering hours related to a small or medium sized carbon steel reactor are essentially equal to those related to a larger Hastelloy C reactor. However, the difference in cost can be a full order of magnitude. Engineering hours relate best to the type of equipment and conditions specific to each project. 

The estimating system presented here proposes a relatively simple but accurate method for estimating engineering hours based on the equipment list and a general knowledge of the project particulars. It was developed from published data and a thorough analysis of nine actual projects. The analysis of the data resulted in several adjustment and correction factors - some empirical, some theoretical that recognize, and try to compensate for, the effect of conditions specific to each project, such as  

In addition to the nine original study cases, the system has been repeatedly tested, sometimes against final project returns, other times against contractors estimates. The results, tabulated in Table 19.25, are very good. When tested against final returns, the estimates prepared with the system have invariably been more accurate than the contractors estimates prepared at the same stage of the project. 

NOTE OF CAUTION ALL THE ORIGINAL STUDY CASES PREDATE THE WIDESPREAD USE OF COMPUTER-AIDED DESIGN PROGRAMS. ALTHOUGH THE AUTHOR EXPECTED TO SEE A DRAMATIC REDUCTION IN ENGINEERING HOURS, THAT DID NOT MATERIALIZE FOR SEVERAL YEARS. HOWEVER, IN THE LAST YEAR OR SO, 

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Table 19.25 Engineering Hours Estimating System Performance...

For a small project of the right complexity, engineering can be most effectively done at the plant level, provided the proper resources are available. The hours required can be derived from the estimating system for contractors home office hours as follows ... 

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