EDS 512 Basic Capital Cost Estimating PDF

Topic: Basic Capital Cost Estimating EDS 512  Importance of Capital Cost Estimating - Determines project feasibility - Aids budgeting and planning - Facilitates decision-making - Identifies financial risks - Provides baseline for cost contro...

Topic: Basic Capital Cost Estimating EDS 512  Importance of Capital Cost Estimating - Determines project feasibility - Aids budgeting and planning - Facilitates decision-making - Identifies financial risks - Provides baseline for cost control  Components of Capital Cost Estimating 1. Direct Costs: - Construction, procurement, installation 2. Indirect Costs: - Engineering fees, permitting, management 3. Contingency: Allowance for unforeseen expenses 4. Escalation: Adjustments for inflation 5. Taxes and Financing Costs  Types of Capital Cost Estimates 1. Order-of-Magnitude (±50%): Early phases 2. Preliminary (±30%): Conceptual design 3. Definitive (±10%): Final design 4. Control (±5%): During construction  Steps in Capital Cost Estimating 1. Define project scope 2. Collect data on materials, labor, and equipment 3. Break down costs (direct, indirect, etc.) 4. Apply costing methods 5. Plan for contingencies 6. Document and review estimates Methods of Capital Cost Estimation 1. Unit Cost Estimation: Cost per unit of work 2. Parametric Estimation: Statistical models 3. Detailed Estimation: Item-by-item breakdown 4. Analogous Estimation: Past project comparison  Factors Affecting Estimates - Project complexity - Location and logistics - Market conditions - Regulatory requirements - Technology advancements  Challenges in Cost Estimating - Incomplete project definitions - Limited or outdated data - Market price volatility - Regulatory changes  Conclusion Capital cost estimating is essential for project planning and execution. It equips engineers with the tools to develop accurate estimates, mitigate risks, and ensure project success.  CANON OF ETHICS FOR COST ENGINEERS Ethics Defined Ethics is a concept or study of morality within a context established by cultural values, professional values, social norms, and accepted standards of behavior. Definitions Values B e l i e f s wh i c h g u i d e , d i r e c t a n d m o t i v a t e o p i n i o n s , a t t i t u d e s , a n d mo r a l obligations Ethics The study of good and bad, of moral duty and of moral obligation Ethical Standards Principles of conduct, how people ought to behave in a certain situation. Why Study Ethics? I n c r e a s e d a wa r e n e s s o f i mp o r t a n c e d u e t o p u b l i c i ty s u r r o u n d i n g h i g h p r o f i l e engineering failures Engineering decisions can impact public health, safety, business practices and politics Engineers should be aware of moral implications as they make decisions in the workplace Study of ethics helps engineers develop a moral autonomy: Ability to think critically and independently about moral issues Ability to apply this moral thinking to situations that arise in the course of professional engineering practice. Ethical problems in engineering are often complex and involve conflicting ethical principles. En g i n e e r s mu s t b e a b l e t o i n t e l l i g e n t l y r e s o l v e t h e s e c o n f l i c t s a n d r e a c h a d e f e n s i b l e decision. Ethics and the Law Following the requirements of the law provides protection from prosecution Since engineering work utilizes new technology before experience and laws can catch up, ethics seeks to go beyond the dictates of current law. Ethical behavior provides protection from civil suits, from damage to reputation or from loss of professional licensure and encompasses ways engineers should conduct themselves in their practice. Legal acts are not necessarily ethical; Acts which are ethical are not necessarily legal. Not legally binding – an engineer cannot be arrested for violating an ethical code, but may be expelled from or censured by the engineering society. ETHICAL VALUES Integrity Honesty Fidelity Responsibility Fundamental Principles Engineers uphold and advance the integrity, honor and d i g n i t y o f t h e profession by: u s i n g t h e i r k n o wl e d g e a n d s k i l l f o r t h e e n h a n c e me n t o f h u ma n w e l f a r e a n d t h e environment; being honest and impartial and serving with fidelity the public, their employers and clients; striving to increase the competence and prestige o f t h e c i v i l e n g i n e e r i n g profession; and supporting the professional and technical societies of their disciplines. FUNDAMENTAL CANON OF ETHICS Canon  from the Greek word kanōn, meaning “rule” an accepted principle or rule a body of principles, rules, standards, or norms CANON 1 E n g i n e e r s s h a l l h o l d p a r a mo u n t t h e s a f e t y , h e a l t h a n d w e l f a r e o f t h e public and shall strive to comply with the principles of sustainable development in the performance of their professional duties. a. E n g i n e e r s shall recognize that the lives, safety, health and welfare of the g e n e r a l p u b l i c a r e d e p e n d e n t u p o n e n g i n e e r i n g j u d g m e n t s , d e c i s i o n s a n d practices incorporated into structures, machines, products, processes and devices. b. Engineers shall approve or seal only those documents, reviewed or prepared by them, which are determined to be safe for public health and welfare in conformity with accepted engineering standards. c. E n g i n e e r s whose professional judgment is overruled under circumstances where the safety, health and welfare of the public are endangered, or the principles of sustainable development ignored, shall i n f o r m t h e i r c l i e n t s o r employers of the possible consequences. d. Engineers who have knowledge or reason to believe that another person or f i r m ma y b e i n v i o l a t i o n o f a n y o f t h e p r o v i s i o n s o f c a n o n 1 s h a l l p r e s e n t s u c h information to the proper authority in writing and shall cooperate with the proper authority in furnishing such further information or assistance as may be required. e. E n g i n e e r s should seek opportunities to be of constructive service in civic affairs and work for the advancement of the safety, health and well-being of their c o mmu n i t i e s , a n d t h e p r o t e c t i o n o f t h e e n v i r o n me n t t h r o u g h t h e p r a c t i c e o f t h e sustainable development. f. Engineers should be committed to improving the environment by adherence to the principles of sustainable development so as to enhance the quality of life of the general public CANON 2 Engineers shall perform services only in areas of their competence. a. Engineers shall undertake to perform engineering a s s i g n m e n t s o n l y w h e n qualified by education or experience in the technical field of engineering involved. b. Engineers may accept an a s s i g n m e n t r e q u i r i n g e d u c a t i o n o r e x p e r i e n c e outside of their own fields of competence, provided their services are restricted to those phases of the project in which they are qualified. All other phases of such project shall be performed by qualified associates, consultants, or employees. c. Engineers shall not affix their signatures or seals to any e n g i n e e r i n g document dealing with subject matter in which they lack competence by virtue o f e d u c a t i o n o r e x p e r i e n c e o r t o a n y s u c h d o c u me n t n o t r e v i e we d o r prepared under their supervision and control. d. E n g i n e e r s s h a l l n o t u s e t h e En g i n e e r i n g Ti t l e without the registration. CANON 3 E n g i n e e r s s h a l l i s s u e p u b l i c s t a t e me n t s o n l y i n a n o b je c t i v e a nd t r u t h f u l manner. a.Engineers should endeavor to extend the public k n o w l e d g e o f engineering and sustainable development, and shall not participate in the dissemination o f u n t r u e , u n f a i r o r e x a g g e r a t e d s t a t e m e n t s r e g a r d i n g enginee ring. b. En g i n e e r s s h a l l b e o b je c t i v e a n d t r u t h f u l i n p r o f e s s i o n a l r e p o r t s , s t a t e me n t s , o r t e s t i mo n y. Th e y s h a l l i n c l u d e a l l r e l e v a n t a n d p e r t i n e n t i n f o r ma t i o n i n s u c h reports, statements, or testimony. c. En g i n e e r s , wh e n s e r v i n g a s e x p e r t wi t n e s s e s , s h a l l e x p r e s s e n g i n e e r i n g o p in i o n o n l y wh e n i t i s f o u n d e d u p o n a d e q u a t e k n o wl e d g e o f t h e f a c t s , u p o n a background of technical competence, and upon honest conviction. d.Engineers shall issue no statements, criticisms, or a r g u m e n t s o n e n g i n e e r i n g ma t t e r s wh i c h a r e i n s p i r e d o r p a i d f or b y i n t e r e s t e d p a r t i e s , u n l e s s they indicate on whose behalf the statements will be. e. En g i n e e r s s h a l l b e d i g n i f i e d a n d mo d e s t i n e x p l a i n i n g t h e i r wo r k a n d me r i t , and will avoid any act tending to promote their own interests at the expense of the integrity, honor and dignity of the engineering profession and/or other related professions. CANON 4 Engineers shall act in professional matters for each employer or clients as faithful agents or trustees, and shall avoid conflict of interest. a. Engineers shall avoid all known or potential conflicts of i n t e r e s t w i t h t h e i r employers or clients. b. Engineers shall not accept compensation from more t h a n o n e p a r t y o r services on the same project. c. En g i n e e r s s ha l l n o t s o l i c i t o r a c c e p t g r a t u i t i e s d i r e c t l y o r i n d i r e c t l y f r o m t h e i r clients or other parties in connection with work. d. En g i n e e r s i n p u b l i c s e r v i c e s a s me mb e r o f a g o v e r n me n t a l d e p a r t me n t s h a l l not participate in consideration with respect to services provided by them in private or public engineering practice. e. En g i n e e r s h a l l a d v i s e t h e i r c l i e n t s o r e mp l o ye r s wh e n t h e y b e l i e v e a p r o je c t will not be successful. f. En g i n e e r s s h a l l n o t u s e c o n f i d e n t i a l i n f o r ma t i o n c o mi n g t o t h e m a s a me a n s of making personal profit if such action is adverse to the interests of their clients, employers or the public. g. En g i n e e r s s h a l l n o t a c c e p t p r o f e s s i o n a l e mp l o yme n t o u t s i d e o f t h e i r r e g u l a r work. CANON 5 E n g i n e e r s s h a l l a d v i s e t h e i r p r o f e s s i o n a l r e p u t a t i on o n t h e me r i t o f t h e i r services and shall not compete unfairly with others. a. Engineers shall not give, solicit or receive either d i r e c t l y o r i n d i r e c t l y , a n y political contribution, gratuity o u n l a wf u l c o n s i d er a t i o n i n o r d e r t o s e c u r e wo r k , exclusive of securing salaried positions through employment agencies. b. Engineers shall not satisfy or permit misinterpretation of their academic o r professional qualifications or experience. c. Engineers shall give proper credit for engineering work t o t h o s e t o w h o m c r e d i t i s d u e , a n d s h a l l r e c o g n iz e t h e p r o p r i e t y i n t e r e s t s o f o t h e r s. Wh e n e v e r p o s si b l e , t h e y s h a l l n a me t h e p e r s o n o r p e r s o n s wh o ma y b e r e s p o n s ib l e f o r designs, inventions, writing or others accomplishments. d.Engineers may advertise professional services that d o e s n o t c o n t a i n mi s l e a d i n g l a n g u a g e o r i s i n a n y o t h e r ma n n e r d e r o g a t o r y t o t h e d i g n i t y o f t h e profession e. Engineers shall not maliciously or falsely, directly or indirectly, injure the professional reputation, prospects, practice or employment of another engineer or indiscriminately criticize another’s work. f. Engineers shall not use equipment, supplies, l a b o r a t o r y o r o f f i c e o f t h e i r employers to carry on outside private practice without the consent of their employers. CANON 6 Engineers shall act in such a manner as to uphold and enhance the honor, integrity, and dignity of the engineering profession.  a. E n g i n e e r s s h a l l n o t k n o wi n g l y a c t i n a ma n n e r wh ic h wi l l b e d e r o g a t o r y t o t h e honor, integrity, or dignity of the engineering profession or knowingly engage i n b u s i n e s s o r p r o f e s s i o n a l p r a c t ic e s o f t h e f r a u d ul e n t , d i s h o n e s t o r u n e t h i c a l nature. CANON 7 E n g i n e e r s s h a l l c o n t i n u e t h e i r p r o f e s s i o n a l d e v e l o p me n t t h r o u g h o u t t h e i r careers, and shall provide opportunities for the professional development of those Engineers under their supervision. a. Engineers should keep current in their specialty fields by engaging in professional practice, participating in continuing education courses, reading in the technical literature, and attending professional meetings and seminars. b. Engineers should encourage their engineering e m p l o y e e s t o b e c o m e registered at the earliest possible date. c. E n g i n e e r s s h o u l d e n c o u r a g e e n g i n e e r i n g e mp l o ye e s t o a t t e nd a n d p r e s e n t papers at professional and technical society meetings. d. E n g i n e e r s s h a l l u p h o l d t h e principle o f m u t u a l l y s a t i s f y i n g r e l a t i o n s h i p s between employers and employees with respect to terms of employment including professional grade descriptions, salary ranges, and fringe benefits. Sample Cases Case 1: The client plans a project and hires Engineer A to furnish complete engineering services for the project. Because of the potentially dangerous nature of implementing the design during the construction phase, Engineer A recommends to the client that a full-time, on-site project representative be hired for the project. After reviewing the completed project plans and costs, the client indicates to Engineer A that the project would be too costly if such a representative were hired. Engineer A proceeds with his work on the project. Question: Was it ethical for Engineer A to proceed with his work on the project knowing that the client would not agree to hire a full-time project representative? Code of Ethics: “Engineers shall at all times recognize that their primary obligation is to protect the safety, health, property, and welfare of the public. If their p r o f e s s i o n a l j u d g m e n t i s overruled under circumstances where the safety, health, property, or welfare of the public are endangered, they shall notify their employer or client and such other authority as may be appropriate.” “Engineers shall advise their clients or employers when they believe a project will not be successful.” Case 2 Engineer B submitted a proposal to a county council f o l l o w i n g a n i n t e r v i e w concerning a project. The proposal included technical information and data that the council r e q u e s t e d a s a b a s i s f o r the selection. Smith, a staff member of the council, made Engineer B’s proposal available to Engineer A. Engineer A used Engineer B’s proposal without Engineer B’s consent in developing another proposal, which was subsequently submitted to the council. The extent to which Engineer A used Engineer B’s information and data is in dispute between the parties. Question: Was it unethical for Engineer A to use Engineer B’s proposal without Engineer B’s consent in order for Engineer A to develop a proposal which Engineer A subsequently submitted to the council? Code of Ethics: “Engineers shall not compete unfairly with other engineers by attempting to obtain e mp l o yme n t o r a d v a n c e me n t o r p r o f e s s i o n a l e n g a g e me n t s b y taking advantage of a salaried p o s i t i o n , b y c r i t i c i z i n g o t h e r e n g i n e e r s , o r b y o t h e r i mp r o p e r o r q u e s t i o n a b l e methods.” “Engineers shall give credit for engineering work to those to whom credit is due, and will recognize the proprietary interests of others”. “Engineers shall, whenever possible, name the person or persons who may be individually responsible for designs, inventions, writings, or other accomplishments.”