AACE International’s 52nd Annual Meeting and ICEC’s 6th World Congress

on Cost Engineering, Project Management, and Quantity Surveying© 2008 AACE International

“What is the U.S. Gulf Coast Baseline when Estimating Site Productivity?”

By Bruce Bradley – Fluor

Re-counted by Habib Hajjar – SNC-Lavalin

AACE International’s 52nd Annual Meeting & ICEC’s 6th World Congress

© 2008 AACE International2

“What is the U.S. Gulf Coast Baseline when Estimating Site Productivity?”

• Introduction• Background• History• USGC Man-hour Development• Site Productivity Efficiency• Potential Conflicts• Alignment• References

AACE International’s 52nd Annual Meeting & ICEC’s 6th World Congress

© 2008 AACE International3

“What is the U.S. Gulf Coast Baseline when Estimating Site Productivity?”

Introduction

• Bruce Bradley, Manager of Estimating, Fluor, Houston, TX• 28+ years in the EPCM industry• Current department staff 70+• BBA in Business Management, Texas A&M University, 1979• Three primary employers during this timeframe, all of whom

believed their baselines were the baseline!• Two events during career stand out:

– Two simultaneous projects near Baytown, TX– JV arrangement for a Louisiana project

AACE International’s 52nd Annual Meeting & ICEC’s 6th World Congress

© 2008 AACE International4

“What is the U.S. Gulf Coast Baseline when Estimating Site Productivity?”

Background

• “USGC Manhours” an overused phrase• Most everyone nods affirmatively signifying

“agreement”• In reality, not a single, identifiable baseline• No one really knows what the “1.0” is• Not a deep, dark secret, but instead, a well known

misunderstanding!

AACE International’s 52nd Annual Meeting & ICEC’s 6th World Congress

© 2008 AACE International5

“What is the U.S. Gulf Coast Baseline when Estimating Site Productivity?”

History

• First significant oil discovery in Corsicana, TX, 1894• Well known Spindletop discovery near Beaumont, TX

1901• Oil discovery led to oil production, which led to oil

refining• First refineries located near coastal areas for port

access and shipping• Engineering & Construction companies for refineries

developed• Supply and manufacturing companies created

AACE International’s 52nd Annual Meeting & ICEC’s 6th World Congress

© 2008 AACE International6

“What is the U.S. Gulf Coast Baseline when Estimating Site Productivity?”

Texaco founder Joseph S. "Buckskin Joe" Cullinan

AACE International’s 52nd Annual Meeting & ICEC’s 6th World Congress

© 2008 AACE International7

“What is the U.S. Gulf Coast Baseline when Estimating Site Productivity?”

U.S. Gulf Coast

AACE International’s 52nd Annual Meeting & ICEC’s 6th World Congress

© 2008 AACE International8

“What is the U.S. Gulf Coast Baseline when Estimating Site Productivity?”

USGC Manhour Development – con’t.***Speculation***

• Construction labor data monitored and accumulated– Possibly by the world’s first “cost engineer”!

• Metrics probably included manhours to install primary refinery components:– A cubic yard of concrete– A ton of steel– A piece of equipment– A foot of pipe– A foot of wire/cable and conduit– A tagged instrument– Other items as required

AACE International’s 52nd Annual Meeting & ICEC’s 6th World Congress

© 2008 AACE International9

“What is the U.S. Gulf Coast Baseline when Estimating Site Productivity?”

USGC Manhour Development – con’t.***Speculation***

• New projects may have reviewed this data in their planning stage

• Individual tasked with this activity may have been the first “cost estimator”!

• As competing companies were developing, they may have performed their own “historical data analysis”, thus determining their own manhour “baselines”

• Construction workers undoubtedly migrated back and forth between projects

• New and improved construction methods and technology

AACE International’s 52nd Annual Meeting & ICEC’s 6th World Congress

© 2008 AACE International10

“What is the U.S. Gulf Coast Baseline when Estimating Site Productivity?”

USGC Manhour Development – con’t.***Speculation***

• New information and old probably mixed together• Data not easily “normalized”• Each company adopted their own data as “unique”

based on their management style and execution methods

• Results became each individual company’s standard reference point

• Each company believed their data to be the USGC baseline!

AACE International’s 52nd Annual Meeting & ICEC’s 6th World Congress

© 2008 AACE International11

“What is the U.S. Gulf Coast Baseline when Estimating Site Productivity?”

Site Productivity Efficiency

• As construction moved away from the gulf coast, a new problem arose

• Reliance on local construction workforces unfamiliar with refinery intricacies

• Determination may have been the need to make adjustments to their baselines

• Result would have become a “site productivity adjustment”

• Upon new project completion, actual effort hours may have been compared to their baseline

AACE International’s 52nd Annual Meeting & ICEC’s 6th World Congress

© 2008 AACE International12

“What is the U.S. Gulf Coast Baseline when Estimating Site Productivity?”

Potential Conflicts

• Larger, more complex projects not as “simple” as baseline history

• Companies working together in “Joint Venture” arrangements probably had different baselines

• JV projects may have been segregated among the partners by units or geographical boundaries

• Each developed their own baseline man-hours, agreeing to develop a site productivity adjustment together

AACE International’s 52nd Annual Meeting & ICEC’s 6th World Congress

© 2008 AACE International13

“What is the U.S. Gulf Coast Baseline when Estimating Site Productivity?”

Alignment

• More in-depth analysis began taking place• Focus into sub-categories became more prevalent

– Ex.: Instead of total CY of concrete, looked at:• Paving• Simple foundations• Complex foundations• Elevated structures

• JV efforts could analyze their respective baselines against one another by digging into more detail

AACE International’s 52nd Annual Meeting & ICEC’s 6th World Congress

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“What is the U.S. Gulf Coast Baseline when Estimating Site Productivity?”

Alignment – con’t.

• Further productivity analysis into:– availability of work force– skill of work force– work space congestion / area per worker– working at grade versus elevated work– weather conditions– work hours per week– single shifts versus double– turnaround versus non-turnaround– grass roots versus revamps

• Today’s common estimating software systems allows for easier collaboration

AACE International’s 52nd Annual Meeting & ICEC’s 6th World Congress

© 2008 AACE International15

“What is the U.S. Gulf Coast Baseline when Estimating Site Productivity?”

References

1. Brown, Stephen P. A. and Mine Yucel, “Do Higher Oil Prices Still Benefit Texas?,” Federal Reserve Bank of Dallas, www.dallasfed.org, OCT-05.

2. Koottungal, Leena, Survey Editor, “2007 Worldwide Refining Survey,” Oil & Gas Journal, 24-DEC-07.

3. Ramos, Mary G., “Oil and Texas: A Cultural History,” The Texas Almanac, www.texasalmanac.com, 2000- 2001 Edition.