Project consultants way of estimating the cost

The project consultants/ detailed engineering contractors are selected by the owners setting up the plant based on the detailed engineering companies experience in their previous projects, the resources that company have to execute the project and their collaborators who can extend their support during execution of the project including the technical knowhow the project consultant they have of their own or with tie up with their collaborators. Even though the detailed Engineering consultant posses major above said qualities the cost element plays a vital role while selecting the project consultant by the owner. Hence it becomes very much necessary for the project consultant also to optimise their cost to secure the contract with the owner. In normal circumstances all the companies wants to save the cost of the project from day one which will help in completion of the project within the budgeted cost. .The owner starts control process  with floating of tenders to various project/detailed engineering consultants . The project consultants/ detailed engineering contractors starts working in their estimate  with basic inputs provided by the owner and develop the mass flow/ heat flow diagrams. The basic main important equipment details  are provided by owner or by the process licenciator. On development of the said drawings the detailed engineering contractors calculate the number of drawings which may be required to be designed and detailed by them during the execution of the project. The number of P&I diagrams required, the number of isometrics to be designed etc are calculated by the companies. If the owner further wants the contractor to carry out other services like monitoring of supply of equipments, supervision of civil, mechanical, electrical & instrumentation works .The consulting companies start calculating the man-hours required to be spend by the company for developing whole project drawings and number of man hours going to be spent on other activities. Based on market rates of Engineers/technicians and other category personals required  for that project the total cost of the consultants are calculated. In case of any tie up required from partners of other nations  the cost of that is also included. Finally considering the overheads and profit margin that particular company maintains are included to arrive at the final quotation cost by the project consultants

Starting of project-introduction

Staring of a project-Introduction”

The process through which the expected final product is achieved successfully in terms of time and finance with the co ordination and effect of group of resources can be called as the implementation of the project. The project can vary from product to product depending on the production of the final product. Whatever the product produced at the end it require a standard procedure which we call as project implementation procedures. To conceive a project the accurate estimation of the finance and resources are most essential. The final user of the product in the project is normally called as the owner of the project. The resources required for completion of the projects are deployed either by one company or group of companies are called as contractors of the project. The co ordination between the owner and the contractors during the implementation of the project including either in supply of technical knowhow required for the project or validating the technology supplied either by the contractors or themselves are called as project consultants. These three parties form important roles in the implementations of the project. To carry out the works of individual parties they sure require some mechanism through which their companies earn money. Hence all the companies make their own estimates in achieving their goals without slipping their responsibilities and make profit for the company. It is quite obvious the success of the project not only depends upon the accurate estimate of the owner but also the correctness of the estimates of their working partners like contractors and consultants.       

Owners Estimate: The cost estimates of owners/project consultants/and contractors varyfrom every ones point of view.. The cost estimate of the owner is of normally on a macro basis. Based on the previous experience of the cost incurred in other projects of the same nature and capacity, is considered as basic element for the cost estimates ,taking in to considerations of the escalation factor as per index , duration when the old project was implemented and the present one. Any project can be compared with the human body. Like we have different parts of the body even project have various elements starting from conception till production of the  end product. From inception the feasibility study whether the project is viable in terms of profit and run on long run. Followed by financial and check up of required inputs followed by rough estimate of the project. Many of the projects stops at this stage due to various reasons like UN availability of required in puts. Further progressing projects continue with project work like process engineering/design and engineering .Supply chain management group forms and construction in continuation with testing and commissioning. Even though there are many activities in a project the construction activity plays an important role since it falls on the tail end of the project .Whichever losses and finance for the company is to be managed by the construction group hence its role in project is most important

Even though many micro activities are involve in completion of a project it is worth it to list here the major activities which forms the prime part of a project. It may be an industrial project or others the following steps need to be full filled
1. Feasibility study

2. General estimation of the project

3. Financial tie ups

4. Development of HR and required team to carry out his project

5. Scheduling of the project

6.Tie up  with process engineering company

7.Tie up with design and detailed engineering company

8.Find out major eligible equipment manufacturers

9 Development of infra structure activities

10 To start on site work

11.Testing and commissioning

These are the major heads of activities required to complete the project in macro level. The details of which i shall explain in some other post While a company decided to go ahead with a product the location of the factory wherein the product is produced plays a very vital role. To start with the place must be easily approachable. Connected with near by cities by road/water or air. The infra structure facilities like electricity to operate the plant at competitive cost /one or few of the raw materials required to produce the end product is available either there itself or in the nearby locality. Ample empty space required for the construction of the factory including the place for future expansion. Availability of local force while construction of the factory and for further maintenance of the factory. Availability of construction hiring equipments in the nearby towns. Even though the above cite facilities are very much necessary  ,leading financial institutions and Banks for transaction on day to day basis throughout the starting and till completion of the project are also most important matter to be considered.

                                           To name a project is common for the procedure to identify the  production end products. But in industry it is differentiated by the name of the end product. For Example   power production industries call this project as Power plant project.  Production of chemicals are called chemical plants.  Manufacture of  petrochemicals are called as petro chemical project.  Like  wise other products like cement ,steel, textile, IT are named with their name as projects.

                                           Thermal power plants are most essential need in growing countries to fulfil their power requirements. Mostly Thermal power plants are constructed where sufficient quantities of coal are available in the place itself or in the nearby vicinity where from it can be easily transported. Depending upon the availability of other commodities and inputs the location of the Thermal power plant is decided. Even though there are other sources of power production Thermal power plants are widely used considering the cost of coal is cheaper. Except for few countries the coal cost is very much comparable with other fuels like Diesel/Naphtha etc. In countries like India wherein petrochemical fuels are of scarcity they wholly depend upon thermal power plants. Otherwise the construction cost and maintenance of Thermal power plants over a period of time works out to be most efficient compared to Diesel and other fuels. Countries like China  had already constructed and operating the power plants more than 1000 MW, countries like India still operate with 650 MW maximum . In recent past few 800 MW Thermal plants are under construction. Owing to the large requirement of power up to 30 million MW in future India has plenty of opportunities or the power companies from India and other countries to involve themselves in the development of India