In my world, I’m often asked for a list of “best practices” when estimating or managing a construction project. Here are some thoughts, based on personal experience and discussions I’ve had with other folks in the industry. The short answer is that there is no treasure trove of definitive answers to this question.
Best practices are aspirational, but don’t necessarily exist for any single industry or, for that matter, any single company. My experience is that these will vary based on a number of factors (e.g., by the size, scope and contract type of the project) and these “best” practices may even vary during the course of preparing for a project (i.e., as design and engineering progress from 30 to 60 to 90 percent complete).
Upstream Oil & Gas (O&G) projects are planned and managed much differently than downstream O&G projects, for good reason. One major oil company will likely have a different approach for preparing for their projects than other major producers will have for theirs. A planning and estimating approach for a project planned two years from now will likely be much different than the planning and estimating approach for the same project when it’s three months away from starting.
A mining contractor will look at a project differently than the mining owner/operator for whom they perform work. A mining owner/operator will approach a capital expansion project differently than the way that same owner/operator would manage the ongoing operation of an asset.
Undoubtedly, different organizations will approach the same project differently, based on each organization’s relative strengths, weaknesses, collective experience, business objectives and drivers.
One can’t (and shouldn’t) walk into an organization and suggest how they should run their business, or they’d get run out the door. A consultative approach would be to first understand a project stakeholder’s vision, and then compare their existing tools, experiences and processes to their desired future state. This leads to the final step, where you can help them see how specific solutions can add efficiencies, either by meeting those objectives (and implementing those solutions) or suggesting alternative approaches as those opportunities arise.
While there is no definitive list of what those suggestions and tweaks should be, several areas of discussion exist, which will help to determine the level of accuracy of a budget. These include:
- Specifications: Is there a clear description of the scope of the project? Or is the objective to create a preliminary budget based on partial information?
- Benchmarks: Does the organization have a history with these types of projects? If so, what has been learned from these projects in terms of costs, productivity and schedule adherence?
- Geography: Does the organization have assets and experience in the geographic area where the project will be performed?
- Risk Profile: How do the inherent risks on this project compare to the issues encountered on previous similar projects?
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Rick Deans is executive vice president, industry engagement, for InEight. Rick spends his time with InEight’s largest and most strategic customers, oversees InEight’s Industry Advisory Group and is constantly exploring innovative ways to provide accelerated value to clients. Rick has a 20-year background serving the Infrastructure, Power, Mining, Oil & Gas and Public Utility industries