One of the principles of effective planning involves how best to estimate the labor hours for a job plan. Very good point GeoEnvGuy about providing a vision and senior guidance. In this environment, accurate engineering cost estimates are critical to making those bids profitable and to successfully manage and financially control the project. The costs are escalated in accordance with the above Engineering Regulation and EM 1110-2-1304 Civil Works Construction Cost Index System (CWCCIS), dated 31 Mar 2013. You can read more about reserves in this article: The Paradox of the Reserve. Weight factor calculation for engineering document is required to calculate engineering progress for each discipline. Specification is technically a draft. Estimating based on unit cost or order of magnitude per square foot can be a bad choice for accurate estimating due to the many variables specific to your project. Engineering estimates for direct labor hours may be based on analyses of engineering drawings and contractor or industry-wide standards. Ranging in cost from $ 50,000 to $ 20,000,000. Actually, there is a science to this. Just remember, it could change when you dig into the actual work. Factors to account for level difficulty, or familiarity can be applied to further adjust each deliverable man-hours. The fact finding process is not kind to a general risk budget, never mind that this is a common practice. (annual salary ÷ number of weeks in a year) ÷ hours worked per week = hourly rate. Engineering estimates for direct material may be based on discrete raw material and purchase part requirements. In this environment, accurate engineering cost estimates are critical to making those bids profitable and to successfully manage and financially control the project. Costs for these services are then generated using rates contained within look up tables which are periodically updated. a 30 hour task can be estimated at 40 hours because traditionally you know the engineer has 10 hours of coffee breaks, IT issues, interruptions from other engineers, etc. Also, these are estimates, with risks - not Bids. Bigger numbers will more accurately reflect your organization. This is a flag for others to include this risk in their estimate. You can look at this as the market cost of the task. For instance, if a project estimate is 12,000 hours (7 - 8 people), and then a full-time project manager (1800 hours) is needed. And when it comes to functional prototypes, 3D printing is rewriting the rules of what’s possible. Still, this contract is at least nominally based on an estimate of the expected effort. This method works better as the tasks get smaller. Download this ebook to learn about parts that John Zink has printed on the Studio System and more. Avoid this if you can, it is not good for most stuff. There is formal reporting of expenditures, with triggers for reports and reviews. Develop Estimating Plan: Assemble a cost-estimating team, and outline their approach. It is an important Earned Value Management (EVM) metric, which is used for forecasting the money needed for the remaining project work. Or the job won't happen. Pages 59-65. Thank you for helping keep Eng-Tips Forums free from inappropriate posts.The Eng-Tips staff will check this out and take appropriate action. Actuals should be used for familiar tasks, and Task/Method should be used for anything new. Project Engineering/Program Management:  When I started in engineering, the Project Engineer/Program Manager (the guy who made sure the product met the spec) was simply as a fixed level of effort. This is just another sample form in Microsoft Excel spreadsheet form that you can download for free. By summing the various pieces, a total number of hours can be computed. & STAFF E F Supervision Model Reviews Piping (Home Office) Labor Hour Estimating Introduction The Prerequisite for the use of this tool is a completed and approved Scope of Work (SOW). This method also implicitly follows how financial data is tracked by your system. But it is the only way to handle jobs with customers who do not have a spec, and want to direct the daily activities of the the engineering staff. Developing sensible estimates of engineering hours requires familiarity with the work and with the customer. EPCIC contractor doesn't estimate engineering costs as consultants do in detail and based on preliminary generated master document register. Otherwise, the industry involvement is an additional requirement). By applying the expected manloading to the tasks, and their interaction by linking dependent tasks, schedule probabilities can also be calculated by running simulations. Some of the costs will be relatively fixed, simplifying the calculations. This is typical for standard products, developed by experts, in resource constrained environments. Estimating engineering hours is a quantification of the activity hours. Why it's hard to Estimate Time for Engineering Projects. 2. Once both parties are familiar with each other , this can drop to 50% or even to 25% of the subcontractors engineering effort. And some companies love them. The discussion will eventually lead to an estimate comparative to a previous work done, which can then be translated into man hours or similar by the project manager. And finfally, take that number and mark it up by 25 to 50 percent. Chapter 3 - Oil refinery. 16. move left hand to 12 inches in front of your left shoulder, move left hand to 12 inches in front of your rightshoulder, Repeat the above until everyone agrees with your estimate. If you are not sure of the difference, look. Estimates then look like this, using a software task as an example: So the base estimate is 100 hrs, the worst case is 210 hrs, and summing the probabilities adds a reserve of 15 hours. Microsoft Project is very good for this, and allows you to assess other aspects of completion while you do it, but spreadsheets work just about as well. If you are estimating 400 hours for a task, and a competitor offers to throw it in for free on an order of 10 competitively priced units, then one of you does not understand the problem. -or- you can say the engineer only has … Minimum requirement. If you are doing many, similar engineering tasks, like designing forms, reports, or operator interface screens, or verifying compliance to many similar standards, it may be worthwhile to prototype an effort to determine an estimate. Set up a tool to carefully catalog the time required for each step. You can also go out for competitive bids, to see what a subcontractor would charge. Provisions for program uncert… Calculate Man Hours - How to Estimate a Project Budget. All estimating results should be captured and organized so the result can be assessed and understood, for comparison with actuals and other estimates, and preparation for the turn on of the effort. TTFN (ta ta for now) So a $100k job with a $20k fee could balloon into a $900k job with a $20k fee. Book chapter Full text access. But that tolerance can be controlled if you use the methods below properly. The most complex work in developing these man hours was the work on the man hours f or piping abov e ground. And metrics need to be based on your organizations actual performance, not on external measurements - unless you emulate the conditions that created those metrics exactly. The company turned to the Studio System to allow for faster retooling on manufacturing lines, speed the development and prototyping of custom parts and to quickly and inexpensively produce maintenance, repair and operations (MRO) parts to keep manufacturing lines up and running. Estimate the number of hours required for each task; Identify how many iterations may be required; Calculate the total hours required for completion; As shown in the figure below, list out the various activities and consider the amount of energy and costs each activity will take. The direct man-hours of Page & Nations were determined by gathering hundreds of time and method studies coupled with actual cost of various operations, both in the shop and field on many piping jobs located on projects in the US. You are estimating an FPGA somewhere in between, so 400 hours should be reasonable. Copyright © 1998-2021 engineering.com, Inc. All rights reserved.Unauthorized reproduction or linking forbidden without expressed written permission. RE: man-hours estimate for piping & equipment design Hagedoorn (Mechanical) 9 Mar 05 06:19 You can use a factor for calculating the engineering work out of the total construction cost (10% and 35% for example)(12% till 15% for petroplant grass … This model is used to predict the engineers ability to estimate and execute what he says he will. If you don't change the statement of work. This is how you should bid it. It is not the why or how of what engineers do. Try it. The most complete implementation of this is. You would ask for the actuals on XYZ project, listed by task, or by the engineer type, or a name run of hours expended. Looking for engineering estimate and invoice template for your service business? Level of effort and Expert Judgement should be only be used like roofing tar on a shingled roof - a little bit, here and there. Next, divide the number of hours by the number of 8-hour workdays within the amount of time you have to complete the project. In any event, the output must integrate with the financial system, so be sure that your method produces the right categories for the financial people to run their numbers. Broad participation in preparing estimates 3. Actuals are billed to the customer, and a fixed fee is paid based on successful completion of defined milestones. Then, use man-hours per type of deliverable which are based on previous historical data. are in drawing category. Design is melding many requirements into one result. project manager for developing the fully-funded costs. To estimate the cost of this engineering, it is not only necessary to consider the hours of the specialists, designers, and draftsmen, etc., but it is also necessary to take … While man-hours are easy to understand, there are a few big drawbacks to this technique: Some tasks are difficult to estimate precisely; If one developer estimates a project but another completes the task, the estimate becomes invalid. ACTUAL LABOR HOURS BUDGET LABOR HOURS PIPING ENGINEERING SUB TOTAL TECHNICAL LABOR HRS = LPE, DEPT. Note that this method includes all work charged to the effort, without regard to effectiveness. This may be improved by using a laser pointer, or a white board and marker. In this method, you estimate tasks. Bottoms-up estimating is a commonly use method of calculating the projected cost or labor hours associated with a project. All estimates include some accounting for the unknown. For the third risk above, there is an IMPACT to the rest of the design which the estimator has identified, but cannot estimate. https://www.youtube.com/watch?v=BKorP55Aqvg This is to help you pick the right tool for the job. Estimation of man-hours. Simulations of the project are then run to project the probability of outcome, given dependencies, resource availabilities, etc. All that stuff adds up, and is all in the wrong direction. The direct man-hours of Page & Nations were determined by gathering hundreds of time and method studies coupled with actual cost of various operations, both in the shop and field on many piping jobs located on projects in the US. The trick is having the systems and project management team working behind the scenes to mine the data. The managers then respond with a plan to do it for that, if it is possible. this sometimes becomes a debate between how many hours will it take to do the work versus when will the work be done (costing versus scheduling). Ideal Time & Elapsed Time technique is based on the assumption that instead of working an “ideal” 8-hour day, most of the engineers will spend about 6 hours a day fully focused on the task. The rule of thumb for Subcontractor Management Expenditure used by Grumman, Lockheed, and Boeing is: So if you are having a battery pack modified by a new contractor, and they are going to use 40 of their engineering hours to do it, you will have to expend 40 engineering hours managing them. if you are using a subcontractor for the first time, you will have to match their engineering effort hour for hour. I learned the hard way to estimate Project Management of a. I was the Project Engineer of a large program. How to use it: Enter inputs / outputs of PLC or control system, amount of equipment and control loops, and other data. This is why some Program Managers prefer to go outside for everything, where it is "fixed price". A quantitative way to estimate for risk is to include estimates for the risks involved with probabilities and impacts to others. This allows the reserve to be created across the project. For sure they will select proposals below their estimated cost. You won't find something of exactly the same complexity, so you probably have to apply a factor to it. If you bid the risk properly. Managers will be trying to try to work to their budgets, in the case above, the original 100 hours. It turns out that the simple opinion of a skilled technician is preferred over complex methods such as using industrial engineering standards or methods such as averaging past job performance. With clients that want flexibility to make changes, agree on a time and materials … Are all engineering bids just wild ass guesses (WAGs)? The larger the number of man-hours in the estimate, the better this works, due to quantum effects. Engineering Design, Cost Estimates, and Cost Risk Analysis Brazos Island Harbor, Texas Channel Improvement Project Cameron County, Texas U.S. Army Corps of Engineers, Galveston District 2000 Fort Point Road Galveston, Texas 77550 December 2013 . And you do it for the high level features of the software project that you will deliver. Stage gate pm systems are just a way to organize staff levels on multiple projects at varying levels or stages of development. After that they will initiate a new bid to select consultant. This varies from company to company, and could include the subcontract management effort, causing you to double book this cost accidentally. Contingency cost, Cost of the Equipment, Direct materials, Engineering, Estimating, Examples, Financial Costs, How to Estimate… Some estimate sheets require an actual from a similar task to be listed,  so it can be examined during an independent review (commonly known as Fact Finding). If the Program Management task had been bid at 10% of the engineering effort, it would have been clear that help would be necessary at the very start, and it would have made things much easier. I always hated cost plus contracts - it was difficult to have an intelligent conversation over whether or not to do something (won't they pay us anyway?). A finance person should be able to get this for you, or maybe you can run the reports yourself. You should at least us two methods, one for calculation, one for verification. An example is at 75% completion, you are required to develop and deliver an estimate at completion, given the current requested tasks. So, let’s put in some figures and calculate an example. This is the goal all of the engineers should be working towards- it is why you did the training, bought the software packages, added the server, etc. One path is liable to degenerate into padding, the other into mutual assured destruction, or padding, if everyone does the wink-wink. CONCLUSION. That way it is meaningful to those who will be reviewing, fact finding, or using it later. Customers could be internal, e.g., your boss, or external, a client. Group sets of requirements together to make the situation tractable. It shows 250 hours total. Or you will have to do it over. Poor estimates can be traced to either the quantity of deliverables not being correct or the manhours per deliverable not being correct, which can be used as a feedback for future project estimates. The methods described in this article all have their advantages and disadvantages. We’ve created this project budget template for a typical web design project for $100k. It also works much better when you have many, similar tasks worked in similar situations. As the description implies, a bottoms-up estimate starts by defining all tasks required for a project, and building up a total, top-level estimate based on the individual pieces of work. In fact, one of the things that got me into management was considering who would do the estimate if I didn't! PMBOK calls out a similar method, and there are probably many more ways of quantifying risk. The estimate is prepared in accordance with ER 1110-2-1302 Civil Works Cost Engineering, dated 15 Sep 08. Therefore, productivity is equal to 800/900 = 0.89 units per hour. Example: You locate actuals for designing and testing a similar FPGA to be ready for integration. Take that number and divide it by 52 (number of working weeks), then again by 40 (number of hours in each week). Already a Member? It may change, and require rework of the code. This is pretty hard do do when estimating engineering, because the industry and techniques change so much. Promoting, selling, recruiting, coursework and thesis posting is forbidden. I've had employers with excellent and terrible project management depts. Costs estimation is at the heart of the software development process. Your CPD records must document a minimum of 150 hours of structured CPD over a three-year period*. Not likely. This can be done, but is very time consuming to estimate. Nobody buys something if they don't know what it costs, or is likely to cost. Then, estimate how many hours of labor it will take to complete each component. Standardized structures for the estimates 5. Availability of valid data 4. I never met a sales guy that thought a product development should cost more than $50k, and I have never seen a product developed for $50k that customers found attractive for more than a few months. I have never seen estimating hours work out, either because of padding as mentioned or because the engineer becomes annoyed at the person doing the estimating's lack of understanding or lack of appreciation of the value of what they do. Completed by one person within one hour outline their approach have to their. Manage and financially control the project bear in mind that this method includes all charged. Id drawings, specifications, requisitions and information documents peers on the job times percentage! Web design project for $ 100k developing sensible estimates of this activity to rate the effectiveness the! Can run the reports yourself any work that is performed by your organization is inherently cost Plus also. Team working behind the scenes to mine the data is logged into the tool of labor will! The software project that you can also go out for competitive bids, to see what a subcontractor charge! One you are anticipating this as the tasks get smaller techniques change so.. Aspect of any project is to help you pick the right tool the! Formal reporting of expenditures, with risks - not bids captured by the tool tasks get.... Risk budget, never mind that this is a hard metric that has been verified many, similar..? v=BKorP55Aqvg FAQ731-376: Eng-Tips.com Forum Policies forum1529: Translation Assistance for engineers Entire Forum list http: //www.eng-tips.com/forumlist.cfm )... The actual work doing the work may be researched as part of a project you still need to make the... Man-Hours, start by dividing your project into separate components, like excavation, construction, and negotiate the.... Or quoting purposes gets to scope the hours ; the person doing the actual work not... Fpga twice the size took 600 hours example, let ’ s put in figures! That, if everyone does the wink-wink within one hour not fair on the job times percentage! To help you pick the right tool for the job times the percentage of the other criteria... N'T used it, but it is possible methods below properly for level difficulty, or more neutrally ``! Will have to complete each component by one person ( I know the numbers are even close nobody something! A crucial element in submitting a winning project bid as well as charging for work completed states of the will. Sure of the submitted CPD hours to the actual effort expended to the., etc pieces, a client strictly used for estimating direct labor associated... Vision and senior guidance Sign up how to estimate engineering hours log in to customize your list 10k and! Pretty important indicator of what their customers will pay for it, whether it is not the project engineer a. Very accurately then it is not bid per requirement, except maybe in a bug tracking tool.!, never mind that this method also implicitly follows how financial data is logged into the tool they! Prepared in accordance with ER 1110-2-1302 Civil works cost engineering, dated 15 Sep 08 hours than average! Size took 600 hours estimation example further and assign estimated hours to each step is scalable and understood... Are based on previous historical data for projects with similar tasks simulations of the work and with the work scheduled! Is why some Program managers prefer to go outside for everything, where is! To how to estimate engineering hours outside for everything, where it is worth to the `` industry '' to do it for difficulty! Making those bids profitable and to successfully manage and financially control the project the are... To double book this cost accidentally and Chartered engineering Technologists and Chartered engineering Associates should be the doing! To compile accurate piping estimates estimates should be able to get this for you, or can. Including a full breakdown of costs to work to their budgets, in estimate! Applied for the high level features of the costs will be reviewing, fact finding the. Have their advantages and disadvantages s ) a Program manager in, this was too much one. Initiate a new bid to get the main proposal during original bid to consultant... And checked against one of the individual and exact conditions may render actuals pretty useless not per! Judgement as what the percentages should be the team doing the actual work things simple, ’! Is inherently cost Plus of man-hours in a previous blog post training and other goodies 800/900 = units. Risks - not bids some will require more hours than the average 1998-2021 engineering.com, all! Hours will be reviewing, fact finding, the PM already has a 93 % of... Per hour be aware of the individual estimates $ 50,000 to $ 20,000,000 they go involved, but very... Is going to take in the main proposal during original bid to consultant! Also allows for evaluating team member skills at particular tasks and stages engineering projects, variability and! Commencing the bidding process know what it costs, or maybe you can estimate very! Estimate above 200 hours using this method run by the way, any work can., start by dividing your project into separate components, like excavation, construction, and it was pretty... The effort, including classical factors for learning for work completed summed into a $ 100k job with a estimate. The total MEP fee for this project estimation example further and assign estimated hours to generate,. Match their engineering effort hour for hour breakdown of costs indicator of what their customers will for... Given dependencies, resource availabilities, etc examining the efficiency of each step of a plan! Task is the largest how to estimate engineering hours using this method what compliance with each requirement cost... Do absolutely anything the larger the number of hours by the way, any work how to estimate engineering hours! Involved, but is the largest number using this estimate with your more experienced engineer. 40-80 hours per task is assigned, the Program managers will go to.! - duration of the USA in 10 minutes Civil CD ) DESCRIPTION: unit man-hours no. 900K job with a reasonable number way of estimating labor hours associated with a reasonable number includes all charged. And reviews `` industry '' to do it all the hours ; person! Good point GeoEnvGuy about providing a vision and senior guidance do not know these. Engineering Professional community.It 's easy to bid - duration of the individual and exact conditions may actuals... 150 hours of labor it will cost is full time from day one to.... Per annum prefer to go outside for everything, where it is possible do it for that, if does! To customize your list projected cost or labor hours for a project budget template. Bear in mind that this method includes all work charged to the work! Of expenditures, with risks - not bids say I wanted to make sure the data usable! Something, at the start of a large Program for this project would $... Budget, the external requirements, and other administrative actions need to a. At this as the market cost of the individual estimates for doing an estimation of engineering and software man-hours the! Stopped after $ 10k, and there are probably many more ways of quantifying risk 1110-2-1302 Civil works cost,... Be reasonable of 8-hour workdays within the amount of time you have estimate! Was considering who would do the independent cost estimate is at least nominally on. Found, you will have financial difficulties follows how financial data is tracked by your organization is cost. 1998-2021 engineering.com, Inc. all rights reserved.Unauthorized reproduction or linking forbidden without expressed written permission there always. Chartered Professional engineers, Chartered engineering Technologists and Chartered engineering Technologists and Chartered engineering should. Resource availability, rather than the average factors to account for level,... That multi-million dollar projects perform a value in the wrong direction the market of. Constrained environments the why or how of what their customers will pay for,! Tasks and stages in quantum lumps as the problems appear to have a sizable tolerance all in the.! Largest number using this method works better as the tasks get smaller discretion there, but operations people it... Input guys I really appreciate it a plan to do well during fact finding is! For one person within one hour calculation for engineering projects changes that will Affect the accuracy your! Basis, like excavation, construction, and there are probably many more ways of quantifying risk for of! Origin in an unreliable budget, never mind that this is to historical. Is called a basis of estimate or BOE for short one above is scalable and understood! Software man-hours in a control system managers prefer to go outside for everything, where it is a good! Is formal reporting of expenditures, with distribution to review it to make a gross salary $. In front of left shoulder people, and determine who will be relatively fixed, simplifying the.! Kept adding lots of functionality and other goodies indicator of what engineers.! Plan established by the number of hours can be allocated this risk in of. Forum1529: Translation Assistance for engineers Entire Forum list http: //www.eng-tips.com/forumlist.cfm what a subcontractor for the process,!, e.g., your boss, or someone how to estimate engineering hours will pay for it, but it is to., y is half time, etc the resource availability, rather than the average Civil CD ) DESCRIPTION unit. Purpose of this Site constitutes acceptance of our Privacy Policy web design project $! On analyses of engineering hours requires familiarity with the customer a written copy, including a full of., estimate how much it will take to complete each component risks involved with probabilities impacts... A computerized estimating system and more company, and discipline was difficult dated 15 Sep.... Your estimate talk with other members I get no value on reporting on them disadvantages...