As 2020 comes to a close, one thing all industries can agree on is the importance of digital transformation and the necessity to embrace it. Until recently, the shift to digital was still in the early discussion stages for most companies, that is until March 2020, when COVID-19 forced many businesses to abruptly integrate digital technology, workflows and tools sooner than they had anticipated in order to establish remote workforces. Overall, companies that started this transformation before the onset of the pandemic are ahead of the game and have been able to remain competitive, while businesses that hesitated or lagged have suffered financially and had to play catch up.
What has been the impact of an accelerated digital transformation on EPC capital projects, and specifically on project estimating? Adopting new technologies raises a number of important questions for project estimation, such as:
- Are you doing enough to embrace digitalization?
- Are you reluctant to embrace new technologies?
- Are you leveraging all areas of a company to deliver the best, most predictable estimate possible?
- Is there anything you can do to optimize workflows to avoid self-imposed silos?
- How do you make the best use of remaining resources (after personnel cuts and corporate reorganizations)?
Technology changes, the shift to a remote working environment for many companies, and a year filled with much uncertainty have stress-tested paradigms of conventional estimate generation. At the same time, these factors have also become a major catalyst toward improving project estimation best practices.
To be ahead of the curve in these uncertain times, it’s more important than ever to be extremely deliberate and set clear yet ambitious goals. A successful digitalization strategy will enable you to increase the quality of your estimates, while reducing your production costs and the amount of time to deliver them.
There are significant opportunities being created by new technologies, but you need to recognize and pursue transformation in a multi-dimensional way, so you don’t miss out on them. So, what are these opportunities?
Global Standardization of Estimating Practices
Often, I find myself talking to different people from the same company scattered around the globe. I notice the different levels of estimate practice maturity. Some teams will be using tools with a high level of expertise while some other will be using different tools achieving underperforming or unreconciled results.
Regional silos can be reduced or eliminated in a global company. Individuals may have unique workflows or preferences, however, for a company to thrive and be the best they can be, team members must be consistent. Working towards global cohesion saves time in the long run. Digitalization enables clear communication, collaboration and data transfer between various groups to the benefit of the entire company.
How does this translate into transforming capital estimating? Archaic factored approaches just don’t cut it today. Companies need efficient, robust, flexible and reliable tools to turn technical scope and execution strategy into dollars, bulk material quantities, construction hours, indirect costs and everything else that makes up a capital estimate.
Increase Transparency of a Developing Estimate
It’s all about alignment. Align your leadership and your cross functional teams with better communication and insights into your project estimates. Gathering 10+ people in a meeting room to review and greenlight an estimate or estimate phase is time-consuming, expensive and unnecessary. If anything has been proven this year, it’s that you must find ways to analyze review, agree and approve projects with workflows and processes that allow remote communication and remote review. Cloud technology enables that.
Cloud technology has come a long way the last couple of years and connecting interfaces to a remote hosted secure database is no longer a thing of the future, it’s readily and easily available right now.
The advantages of dealing with data in an easily digestible and accessible interface are clear. You eliminate the need to pour over pages of printed reports and notes to extract the data you need. It’s all available for you, easily and quickly.
Establish Data Centric Workflows
Continuing with the topic of working with databases to increase transparency with the cross functional teams and upper management, another thing that has to be leveraged is the capability to automate and speed up the process of entering data into your estimate.
All that useful data—transparent and available and ready for analysis and review—has to get into the system somehow, but you can’t keep wasting scarce time manually entering and often re-entering it. Data from previous projects can be used for benchmarking and evaluating current projects, but only if that information is easily accessible in a central location.
Ask any estimator how much time is wasted manually entering data, searching for comparative information and making changes prior to being issued and you’ll understand the stress and frustration. Then ask how much time is actually spent on cost analysis and the tone turns wistful.
Estimates change as the many factors involved in creating the estimate do. Here are just some of the variables you’re dealing with: project scope, the overall markets vendor prices, construction productivity and local requirements to name a few. As the estimator or estimating manager you need to keep on top of all these moving parts and be able to credibly defend your estimate against two commonly-asked questions, “What has happened since the last estimate?” and “Why has the project cost gone up?”
There’s no need for you to spend a lot of time pouring over datasheets, manually reviewing reports to understand the overall scope of a project. Only an extremely seasoned estimator would be able to do this and even so, the typical time involved would be so great that it would likely create a massive bottleneck in producing the estimate.
You should adopt a workflow in which the data remains consistent and traceable across the whole lifespan of a project. This liberates you to focus on the big decisions that must be taken and understand why a project has changed, and provides you with historical repositories that may be used in the future with little to no effort to quickly develop estimates. In the end, this makes EPCs far more competitive and helps Owners better understand how a decision may impact a project. Leveraging process, design, layout and historical data enables you to create a better estimate with each new project.
On behalf of everyone at AspenTech, we are here for you, whether you’re starting in your digital journey to get a better estimate, or you are looking to deploy innovative solutions to stay at the edge of the competition, we have a solution for you.
To learn about new innovations in estimation tools and workflows, register today for a free Webinar on January 12, 2021 with experts from AspenTech.