Level: Intermediate
TCM Section(s)
7.3. Cost Estimating and Budgeting
4.1. Project Implementation
Venue: 2024 AACE International Conference & Expo
Abstract: In this study, the author reviews the establishment of a cost engineering department (CED) in a national oil and gas exploration and production company. The company was faced with high cost of project delivery, largely attributed to poor estimating practices and lack of unified cost database. In a bid to optimize its project cost and derive the right value for funds invested on projects, the company`s management set up a team to establish and run a cost engineering department (CED).
This article reviews problems identified by the team and the short- and long-term strategies adopted to address the identified problems. An in-depth analysis of the established cost estimating process (a key aspect of the short-term strategy) is presented, highlighting the difference with the previous estimating practice and the value derived so far by the organization. A benchmark of the new estimating practice against United States Government Accountability Office (GAO) guidelines for cost estimation was conducted to reveal areas of possible improvements. This paper provides fundamental insights to other owner`s company willing to establish similar department in their organization.
TCM Section(s)
7.3. Cost Estimating and Budgeting
4.1. Project Implementation
Venue: 2024 AACE International Conference & Expo
Abstract: In this study, the author reviews the establishment of a cost engineering department (CED) in a national oil and gas exploration and production company. The company was faced with high cost of project delivery, largely attributed to poor estimating practices and lack of unified cost database. In a bid to optimize its project cost and derive the right value for funds invested on projects, the company`s management set up a team to establish and run a cost engineering department (CED).
This article reviews problems identified by the team and the short- and long-term strategies adopted to address the identified problems. An in-depth analysis of the established cost estimating process (a key aspect of the short-term strategy) is presented, highlighting the difference with the previous estimating practice and the value derived so far by the organization. A benchmark of the new estimating practice against United States Government Accountability Office (GAO) guidelines for cost estimation was conducted to reveal areas of possible improvements. This paper provides fundamental insights to other owner`s company willing to establish similar department in their organization.