Project engineering and management work

For the economic analysis of engineering and management work, it is first necessary to recall the observations made in Chapter 5, The 

Project s Industrial Environment. In particular, that the work of the project engineering and management team (costed as indirect field costs or IFCs) may be segregated into a core of essential activities and a variable amount of work which can only be justified if the benefits of the work exceed the costs. 

By economic consideration, the optimum amount of review and re-work, and hence the optimum amount of engineering, has been performed when a trade-off is reached between the benefit of review and the associated costs. The benefit, for this purpose, is the added value in terms of improved plant design and reduced construction cost with reduced error rectification. 

Care needs to be exercised when making historical comparisons of the engineering costs of projects on what was the engineering workscope on the job in question. As we have previously seen, the engineering and management scope can be shifted between the project engineering team, the equipment suppliers, the fabrication and construction contractors. 

NOTE TOTAL COST (TC) = DIRECT FIELD COST (DFC) + ENGINEERING COST (EQ 

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In this chapter, we will further address and quantify some of the project environment issues raised in preceding chapters. They essentially relate to two aspects of project work, firstly plant capital and operating costs, and secondly the costs of project engineering and management work. 

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