191

Printed in The Netherlands

IMPROVED FACTOR ESTiMATlNG WITH QUANTITY AND MANHOUR RATIOS

B. Groen and K.D. Tan
Badger Lt. V., Primes Beatrixlaan 9. The Hague (The Netherlands)

Abstract
Present days cost estimating with multicurrencies becomes more and more complex
due to the wild and frequent fluctuations of exchange rates and different inflationary trends
of various countries. The preparation of quite
accurate preliminary cost estimates, based on
world-wide procurement, overseas constr.tct.on
and engineering, became a major problem fcr
companies, like Badger, with international activities. To maintain an acceptable accuracy, the
traditional way of cost factor estimating has to
be supplemented with a quantity and manhotir
ratio method.

Basically costs are related to quantities.

therefore cost ratios can be converted into
quantity ratios. Manhour-ratio
originate from
the existing relationship between quantities.
material cost and field manhours to install
these quantities.
In this article the value of the Quantity
Ratio Method as a tool in these unstable times
will be stressed,,as well as the added advantages it offers towards better cost
and communication.

INTRODUCTION
Today cost factor estimating is no longer a
novelty. The techniques, as developed by Lang,
Guthrie Miller, Hirsch & Glazier and others
have proven to be use%1 in generating Capital
Cost Estimates for Prc lcess plants. Preparing
preliminary cost estimates in this manner is
very effective and widely accepted within
certain accuracy limits. While there are various
types of factor estimates known by different
descriptions, this article refers only to the one
based on a detailed estimate of major equipment and implementing cost factors for the
bulk items such as piping, instruments, electrical work, civil work and for erection labor.
Standard Cost Factor Estimating Systems
presently used by many companies in Europe
are derived from the various techniques and
cost factors published in the U.S.A., this obvi-

ously after some adjustments and reconciliations required to comply with a companys
own design concepts, procedures, etc. and with
local requirements. When such a Cost Factor
Estimat,ng System has been developed, introdzlced and utilized in a company for probably
many years with satisfactory results, it almost
seems superfluous to aim for a second factor
estimating method. Why then introduce a
Quantity Ratio Method? There are two main
reasons for this: The primary objective is obviously to obtain a more accurate estimate,
particularly when confronted with multicurrency cost factor estimates. The second
motive is to change the image of cost factor
estimating systems, an image which in our experience is ill-defined by some people as an

m,

m,

.
)

m=zmj

.(f=30)

............

(rate = $13.50)

. . .

between brackets are for illustration only).

..

....

pq.:F
8.

[ 1

......

..........................

Fig. 1. Cost factor estimating scheme (fires

H Y all-in rate

........................

FIELD % HOME OFFICE + CONTINGENCY: by Factor c]f

TOTAL PLANT COST

alternatively
h,=,:

...

TOTAL INSTALLED COST

one factor m t ?!hm

TOTAL FIELD LABOR COST

milhi

ma/h,
)
q/h, )1

m&h,

MANHOURS

TOTAL FIELDCONSTRUCTION

-Piping
- Instrumentdon
- Electrical
etc .........

.............
.......

BULK ITEMS:

MAJOR f&tJIPMENT E f -hs

one factor m,
alternatively

. , . . . . . . . . . .

mi

JCTION MANHOURS by Factor 0 mlh

TOTAL MATERIAL COST

FIELD CONS

. . . . . . . m, )

.
-Instrumentation

-Electrical
etc. . .

-Piping.

BULK ITEMS by Cost Factors

MAJOR EQUIPMENT: material cost .

.

.......

120-42~

(= 6.8)

=0.8)

&M:,

.v c L

L = H x rate

(= 80)

(- 267)

ingenious manipulation of figures and factors.

In other words, the factor estimate should be
made more tangible for non-estimating experts
by means of quantities.
We will endeavour to outline the approach
and general procedures which should be applied
in developing a Quantity Ratio Method.
THE COST FACTOR ESTIMATING SYSTEM
The existence of a well defined and effective
Cost Factor Estimating System (CFE system) is
essential for the development of a Quantity
Ratio Method (QR method). A CFE system
should invariably form the basis for the QR
method because a QR method is in fact nothing

but a conversion of cost ratios into quantity

ratios. Not every CFE system, however, lends
itself successfully as a source for quantity
ratios. The one we have used and to which we
will refer is iliustrated in Fig. 1.
The essence of this system is that each cost
component, including field erected equipment
and items, is broken down into a material
portion and into a labor portion. This set-up is
most apparent from Table 10, for which the
figures will be discussed later. The material cost
in turn is subdivided into subtotals for major
equipment and for bulk materials, such as
piping, instrumentation
and electrical. The
labor cost is related to manhours by way of a
labor rate.
Total material cost of major equipment is
estimated in detail, based on information indicated on an equipment list and/or equipment
data sheets. In this scheme shown in Fig. 1the
material cost (E) is set as 100.
To obtain the material cost of the various
bulk items, such as piping, instrumentation,
electrical and civil work, a material cost factor
is applied to (E). This material cost factor (m/E)
normally ranges from 0.7 to 1.2 for various
liquid/gas type process plants and is attained
through feed back and experience. This (m/E)
cost factor can be implemented as one factor

or alternatively as the sum of the individual

material cost factors for each of the bulk items
i.e. for piping (m, /E), for instrumentation
(mz/E) etc. By using a material cost factor
(m/E) = 0.75 and (E) = 100, the total material
cost M = (E + m) = 100 + 75 = 175 is obtained.
To arrive at the field labor cost (L), the total
fielb! construction manhours (14) are required.
This (I?) is the sum of the equipment erection
manhours (hi) and the construction manhours
required to install the bulk materials (h,). H =
WE) + (h, ).
The field construction manhours are established by implementing a material over manhour factor, the (M/H) factor. To improve the
accuracy of the field construction manhours
estimated in this manner, the (M/H) factor is
subdivided in a material over manhour factor
for major equipment indicated as (Elh~) and
one for the bulk items indicated as (m/h, ). In
the cost factor estimating scheme illustrated in
Fig. 1,a material over manhour factor of 120 is
used for the major equipment portion, E/& =
120 and for the bulk items a material over manhour factor of 12.5 is utilized, m/hm = 12.5.
Similar to the material cost factors these
material over manhour factors are attained
through consistent feedback and experience.
The field construction manhours obtained
through these factors arc for the major equipment portion = 0.8 (E/h,- = 120 + hi = 0.8)
and for the bulk items portion = 6. (m/h, =
I 2.5 + h, = 6). The scheme clearly indicates
that alternatively the (h,,) could be derived
from the individual material over manhour
factors of each of the bulk items, (m,/ltl,
m,/h:) etc.
The above exercise provides the total field
construction .manhours (H = hE + h, = 6.8)
which, multiplied by an all-in subcontract labor
rate of $ 13.5O/MH gives a total field labor
cost (L) = 92 and thus (M + L) = 267
Indirect costs for field supervision, temporary construction facilities, Home Office services, Overhead and Contingencies can be added
by means of a factor (J; to arrive at the total

plant cost. In this example the factor u> = 30

means that 30% of (M + ~5) is added to allow
for all the indirects. By using this factor the
total plant cost works out to be 347 and the
plant cost factor 347/100 = 3.47.
The accuracy of the material cost factors
(m/E) and material over manhour factors (m/h)
and consequently the accuracy of the estimate,
obviously depends extensively on the stability
of (n!) and (E) and thus of material prices.
Any price changes in (m) and (E) do not affect the (m/E) factor, if the change in each
group of materials would be in the same percentage range, for instance 3%.
When price changes in (m) are minor and
regular in trend, for instance with annual increases around 8%, the influences on (m/k;or
(m,lh,)and Cm2/h2)etc. can be predicted and
accounted for.
Those conditions existed in the years before
1972. In that period, even with an open market
procurement policy (EEC-market or worldwide)
no great problems were encountered, due to
the fixed parity of the various currencies. The
various monies were converted into one
selected base currency, e.g. the US $ or Dutch
Guilder and summarized. This selected one currency system is also an absolute requirement
for effective cost data retrieval. monitoring and
processing.
The labor portion posed some more
problems. Various CFE systems employ (L/M)
labor over material factors. In multi-currency
estimates however, labor and material portions
may each originate in a different country and
hence are susceptible to different cost trends
and labor cost structures. This makes the (t/M)
factor more sensitive to fluctuations. By using
the (m/h)material over manhours factors at
least the manhours are not affected by inflation rates and parity fluctuations. It is true hcwever, that by implementing (m/h7ctors more
effort is required. Detailed feedbaLk on directfield construction manhours becomes mandatory for the various components or basic cost
codes. To acquire reliable (m/h)factors, these

manhours should be defined consistently for

the various crafts, i.e. mechanical, piping, electrical, civil, insulation, painting, etc. covering
unloading, handling, erection, testing, field inspection, preferably up to and including general
foreman ievel, burexcluding machine operators
for construction equipment.
Estimating the material and labor costs in
this way was quite accurate and satisfied the
requirements until 1972. In the course of the
following years however, many major changes
occurred. For one, the fixed parity rates were
abolished and exchange rates were left floating.
Also inflation started to rise beyond anticipated proportions due to the energy crisis
and other world problems. These events precipitated a situation where the reliability and
usefulness of the established cost factors became questionable.
The best way to illustrate this is to compare
the accuracies of a cost estimate prepared in accordance with the CFE system in 197 1 and in
1976. Table 1 shows a Total Plant Cost in 197 I
of a Battery Limits Process plant to be built in
Italy estimated from a similar plant constructed
in the Netherlands.
Starting from the materia! cost of major
equipment being one (1), the total installed
cost excluding construction supervision,
engineering, overhead and fee is for Holland
2.5 times (X) and for Italy 2.32 times (X) this
material value. This means that the total installed cost of a plant constructed in Holland
with a major equipment value of Dfl. 10 million
would be Dfl. 25 million.
The Dutch plant cost can be converted to an
Italian location in three (3) ways.
The first way is just exchanging the Dutch
guilder by the Italian Lire, which results in a
total installed cost of 4.350 billion Lira (one
Dutch guilder being equal to I74 Ital. Lira).
The second way is basing the value of major
equipment on Italian prices and app!ying the
Dutch cost factor. The outcome is 4.250 billion
Lira.
The third way and the only correct one, is

195
TABLE 1
Estimated plant cost of a batter) Limit~process plant (1971)o

Major equipment

1.00

1.00

Bulk items
Total materials

0.75
1.75

0.71
1.71

Labor
0.75
To&u installed
2.50
Engineering, overhead,
fee, etc.
Ratio

0.62
2.32

1700

1700

x 2.50

x 2.50

x 2.32

1
25

1
4250

1
3950

1.08

1.00

10

* 4350

Ital. = 0.98 x Dutch

equipm. cost
FItal. = 0.93 FHoWand

Not inchlded
1.10

1971: 1 Dfl. = 174 Lira.

using ltalian prices for major equipment and

by applying the Italian plant cost factor, a total
installed plant cost of 3.950 billion Lira is
obtained.
The discrepancy in the total installed plant
cost between the first and the third case is lo%,
which is high, but not alarming.
What happened since l971? For one, the exchange rates of various countries gradualf;
changed to a level indicated in Table 2. This
table provides a comparison between the parity
rates in 1972 and June 1976. Secondly, due to
the different inflation rates in equipment, bulk
item prices and labor costs, the cost factors
TABLE 2
Parity changes from 1972 to 1976
1 Dutch guilder = 1.00

Dutch Guilder
Belgian Frr.nk
French Frank
Italian Lie
English Pound
US Dollar
South African Rand
German Mark

1972

1976

1.00
13.89
1.53
174
0.116
0.278
0.198
1.017

1.00
14.44
1.74
322
0.204
0.372
0.333
0.943

Change
--___
+ 4%
+ 14%
+ 85%
+ 76%
+ 34%
+68%
- 8%

changed significantly. These changes resulted in

the transition of Table I into Table 3.
The cost factor for Holiand went up from
2.5 to 2.78, this means an increase of 1I%, and
the cost factof for Italy changed from 2.32 to
2.42, which is only plus 4%. The total installed
cost in Holland escalated by 72% since 1971
and in Italy by 170%.
The discrepancy between conversion number
one and three has increased from 10% to 30%
which is hardly acceptable. Presented in a form
like this, it all looks very simple and straightforward, but for the non-estimating experts. all
these cost developments and continuous
changes in factors and parities become too
much to understand and to comprehend. The
situation becomes even worse when more than
two countries are involved.
So to justify a cost factor estimate and to enable the Estimating, Project and Construction
Engineers to discuss and to review such an estimate, we at Badger realized that an alternative
method was indispensable. We believe WChave
found such a method to cope with this problem,
by shifting our thinking from material and
labor costs to material and manhour quantities.
To this end we established Quantity Ratios.

196
TABLE 3
Estimated plant cost of a battery limits process plant (1976)o
____.
-. - .

________

.___~

Actual
cost factors
____
Holland Italy

Plant cost
in Holland
in Dfl. x 10

Estimated plant cobc in Italy

inLirex lo6

__--Major equipmen:

1.00

1.00

15.5

4400

4400

Ital. = 0.88 x Dutcheqpt.

cost

Bulk items

0.83

0.66

rota1 materials

1.83

1.66

x 2.18

x 2.78

x 2.42

PItal. 5 0.87 PHoUand

Labor
0.95
rota! installed
2.78
Engineering, overhead,
fee, etc.
Ratio
Changes since 1971
1.11

0.76
2.42

I
43.1

J*
12.230

1
10.650

1.15

1.00
2.70

(1) Dutch
plantcost
converted

(2) Italian
eqpt. cost w.
Dutch factors
---

+ 13.870
Not included
1.30

1.04

1.72

Remarks

(3) Italian
eqpt. cost w.
Italian factors

1976: 1 Dfl. 322 Lira.

WHAT IS A QUANTITY

RATIO?

The Quantity Ratio (QR) method is derived

from the cost and the (L/J!) ratios between the
various cost components of a process plant.
Since costs are intrinsically related to quantities,
cost ratios can be translated into quantity
ratios.
For the QR method, like for any other type
of cost factor estimate, it is necessary to assess
primarily the quantity and value of the major
equipment in a process plant. But instead of
utilizing established cost factors for the various
bulk items and other direct costs, at first
quantity ratios should be applied. Implementation of these ratios results in various quantities
which are subsequently multiplied by the appropriate unit rates to arrive at the costs.
Major equipment
In developing quantity ratios it is imperative
to use strictly defined quantities for each of
the cost components. It is beyond the scope of

this article to elaborate on the various ways of

calculating major equipment quantities. It
should be noted that three types of quantities
are most important, i.e. weights, number of
equipment items and electrical power requirements. Quantity data required for main equipment is summarized in Table 4.
Moreover, it is essential to calculate these
quantities as accurately as possible to obtain
reliable results. On the other hand in counting
the number of pieces, small items such as inline strainers, portable items and all mobii
equipment should be disregarded. In addition
to the above it is useful to have a plot plan and
plot elevations available, even a simple layout
will be advantageous.
Piping

The parameter used for the piping account is

the total weight of all piping components, i.e.
pipes, fittings, flanges, valves, pipe supports,
steam tracing. To determine the total weight,
two quantity ratios are required and to arrive at
these quantity ratios it is essential to know:

TABLE 4
Typical quantity data required for major equipment
______________
~~____
Cost item

Pieces

Quantity

Weight in
tonne

Towers
Trays
Other internals
Drums and tanks
Pumps and drivers

X0

m3
xm

X
X

Compressors and drivers

x
X

Shell and tube heat

exchangers
Air coolers

m3

kW electrical
x kW non-electrical
x kW electrical
x kW non-electrical

Heaters and stacks

Other major equipment
not listed aboveb

xm
x kW electrical
x m2
X = Lapacity

x =

Total major equipment

kW electrical

x
x
x

x
X

X
X

_~___

= data required. blnch,ding agitators, dryers, centrifuges, filter% grinders,

cyclones, refrigerators, demineralizers, weighers, etc.

.- total number of major equipment (from

Table 4).
.- average pipe diameter.
The first item of information, the total
number of major equipment, is used to establish the number of isometrics for all large bore
piping of two inches and above. The quantity
ratios indicated in Table 5 can be used as a
guideline.
The second item, the average pipe diameter,
is utilized to determine the total piping weight
per isometric based on the quantity ratios
shown in Fig. 2. It is recognized that in dealing
with the average pipe diameter some experience
and judgement is required, but generally speakTABLE 5
Quantity ratios for number of isometrics
Plant type
Refinery
Chemical

No. of isometrics per

piece of equipment
3.3-3.5
U-4.0

198

Total

Pipin
a
Weigh
in kg/ IS0

2000

300
2
3
--*Average

156
pipe dia in inch

Fig. 2. Total piping weight in kg per isometric. Total piping

weight includes pipes, fittings, valves, supports, steam tracing,
etc. Average diameter of pipe includes small bore pipes.

Instrumentation
For all instrumentation work including
instrument wiring and instrument piping, the
parameter is the total number of control valves.
The quantity ratio between the number of
control valves and the total pieces of major
equipment is indicated in Table 8.

The all-in unit cost and manhour requirements per control valve for all instrumentation
work should not include special items, such as
computerized instrumentation, analyzers,
special safety systems, etc. A separate allowance
should be made for these items.
Electrical work

TABLE 8
Quantity ratios for control valves
Plant type

Control valves per

piece of equipment

Refinery
Chemical

0.9-1.2
0.4-0.5

-I_

For all electrical work, i.e. power distribution excluding transformers, communication
and plant lighting, the parameter used is the
average electric power requirement per user in
kW. This quantity ratio is obtained by dividing
the sum of all electrical power required, ex-

199
pressed in kW, by the total number of electric
users (see Table 4).
The parameter for plant lighting is the total
number of lighting fixtures. The median
quantity ratio to determine the number of
lighting fixtures is 2.5 fixtures per major piece
of equipment.
If transformers and communication systems
are required, a separate cost estimate of these
particular items must be added.
Civil work

During the project phase in which a factor

estimate is required, the information available
on civil work is normally very limited. The
minimum amount of data needed to prepare a
reasonable estimate for all civil work is:
- preliminary soil report;

- plot plan and plot elevation;

- basic design criteria, such as wind velocity,
rainfall, frost level, etc.;
- buildings; type and material of cc-nstructian.
Based on this information an estimate can hc
prepared by applying the quantity ratios and
parameters indicated below:
- equipment and pipe rack foundations : Fig. 3
indicates the relationship between the average
weight per piece of major equipment and the
volume concrete required for this equipment
and pipe rack foundations expressed in m
concrete per tonne weight. This quantity
ratio is based on an allowable soil pressure of
lo- 15 tonne/m*.
- paving: per type of paving, the pavingsurface
area is to be determined as a certain percentage of total process area.
- buildings: the parameter to estimate the
building cost is the building volume in m3 or

Fig. 3. Volume of concrete for equipment and piperack

foundatioaa in ma/ton Ew as a function of average equipment
weight (Ew). based on an allowable soil pressure of
lo-15 ton/m*.

alternatively the total floor area in m*.

- sewers: the parameter is the length in meters
per sewer system, i.e. contaminated, rainwater, chemical, etc. Sewer requirements are
very variable, but an acceptable quantity
ratio is ).5 m2 process plot area per linear
meter sewer.
- concrete piles: the parameter is the number
of piles. Eased on 50 tonnes piles, the
quantity ratio between the number of piles
and the pieces of major equipment ranges for
chemical type process plants from 2-2.5 piles
per piece and for refinery type p:ocess plants
from 2.5-3.5 piles per piece.
- other civil work: quantities for ac ,ess roads,
fireproofing, fire protection systems, concrete cabletrenches, etc. These requirements
should be determined on an individual basis,
even with a limited amount of information,
supplemented by experience and professional
judgement, an acceptable estimated ccst can
be produced.
Structures

In determining the quantities for this cost

component a classification into three categories
is recommended.
- pipe racks;
- supporting structures;
- platforms and ladders;
- pipe racks: the number of portals is calculated by dividing the total length in meters
of the pipe rack route by six and adding one
for the end portal; six <:.retersbeing the
average disrance between the portals. The
weigitt per steel portal with two layers and
6 m span is 1,200 kg. The same portal execuied in concrete requires 6 m3 of concrete.
Ar. allowance of 150 kg steel per linear
meter pipe rack route must be ad?
for
longitudinal and cross beams.
- supporting structures: the total weight of a
supporting steel structure is estimated by
using the quantity ratio of 35-40 kg steel

per m3 structure volume. For a supporting

concrete structure, that quantity ratio will be
0.1 m3 concrete per m3 structure volume.
- platforms and ladders: to obtain the total
weight of platforms and ladders, use a
quantity ratio of 5.5-7.5 tonne of steel per
tower.
Insulation and painting

For both cost components, the parameter is

the outer surface in m*. For the major equipment items the surface can easily be calculated
based on the various sizes. The piping insulation quantity is derived from the t&al length
of pipe. A certain percentage of this length is
considered as being insulated and the balance
painted.
The total length of pipe is back calculated
from the total estimated piping weight and the
average pipe diameter. For steel structures the
painted surface in mz is estimated by using
quantity ratios as indicated in Table 9.
TABLE 9
Quantity ratios for painting of steel structures
Categories
--__.
Steel pipe racks
Supporting struct.
Platforms and ladders

Field and home office services

The parameter for field and home office

costs are respectively the manhours required
for field supervision and administration and for
the home office engineering services. These
manhours are estimated by utilizing the following quantity ratios.
- field supervision and administration manhours: 10% to 15%
of direct-field construction manhours.
- home office engint :ring manhours: man-

hours per piece of major equipment. This

ratio relies heavily on the composition of the
type of major equipment, scope of work,
plant size, plant type and complexity and
may range between 400- 1000 manhours per
piece of major equipment.
WHY IMPLEMENT QUANTITY RATIOS!
As previously indicated the QR method
should not be considered as an isolated new
estimating technique, detached from the existing Cost Factor Estimating (CFE) system developed in the company. The QR method should
be grafted to the existing CFE system to
guarantee its successful introduction and
implementation.
The QR method has one disadvantage when
compared to the CFE system, this is the unit or
units in which one works. A CFE method
utilizes only one unit, money. This common
unit makes it possible to combine the various
components over one denominator,
which results in one cost factor only, viz. the well
known Lang factors. It is not possible to follow this procedure with the QR method.
In all, the QR method is actually more complicated than any CFE syctem, particularly in
attaining and verifying the various quantity
ratios. It also requires more effort and research.
So why implement quantity ratios? Because,
quite simply, the advantages far outweigh the
disadvantages and the effort will be paid off.
The benefits ir herent to the QR method are:
- Quantity ratios are constant with only slight
deviations, unless the design philosophy
changes drastically.
- Quantity ratios are not affected by inflation,
currency fluctuations, or any other external
economic conditions.
- Quantities are tangible units, which are more
easily comprehended and appraised by the
average engineer.
- By using quantities as the basis of the Cost
Factor estimate a new dimension is added to

the discussion during the estimate review.

Discrepancies in cost factors for similar
plants constructed in different locations or
countries can be more easily clarified.
- With a limited amount of extra time a mart:
accurate 1:stimate can be prepared.
- intrinsic within the QR method are various
possibilities and new aspects in connection
with cost control objectives.
Although the last item has no direct bearing
to the preparation of an accurate estimate. it
could be crucial in deciding whether or not to
introduce the QR method. To elucidate briefly,
each engineer working on a projcc! is confronted with an incorrect concept of cost
control, namely his ability to influence the unit
cost fundamentally. Unit costs are sutject to
economic laws and circumstances, such as:
- supply and demand;
- labor agreements;
- local market conditions and restrictions;
- procurement policies;
- government policies and requirements.
The expression be cost conscious really
means be quzntity and quality conscious.
With this statement an area is entered in which
the average engineer feels more comfortable.
Quantity and quality are concepts which he can
control, whereas costs frequently change and
gradually become vague.
With the QR method it is possible to determine the order of magnitude of various bulk
quantities in an early phase of the project. With
these quantities the work volume for procurement, manpower-allocation,
and planning can
be assessed more accurate!y. The quantities al\o
form a more realistic basis for cost trending.
It is beyond the scope of this article to discuss all the advantages following from the QR
method in relation to cost control. In the following example, which demonstrates the
preparation of a QR estimate, each engineer.
who has experienced the problems of predicting and trending the cost of bulk components,
will recognize the possibilities and benefits of
the QR method in this respect.

202
HOW TO IMPLEMENT QUANTITY

RATIOS

We will endeavour to demonstrate briefly the

application of the QR method in an example. It
concerns a large refinery type process plant,
plot plan area 105 X 100 m, total length pipe
rack route 280 m, allowable soil pressure 20 t/n?.
All unit costs and unit manhours are derived
from consistent cost data retrieval and field
construction manhour feedback. Figures used
in this example are valid for Dutch conditions
earlv 1976.
Illustration
Step 1: Major equipment. Estimate quantities,
manhours and material costs of all major equipment from the equipment list and specifications.
This results (see Table 10) in: 58,000 MH and
US $ 7.000,000.

Step2: Piping.
Determine the number of
isometrics per piece of equipment (see Table 5).
3.4 isos/pc x 170 pcs= 578 isometrics.
,(2b) Select average pipe diameter (see
Tables 6 and 7) being 6 inches.
(2~) Read total weight per isometric of all
piping components from Fig. 2. For an average
pipe diameter of 6 inches this is 1,800 kg/iso.
Total weight = 578 isos x 1.8 tonne/is0 = 1,040 tonne.

#:2d)Multiply total weight with an all-in knit

cost for materials including prefabrication.
Total material cost 1,040 t x $2,000/t = US $2.080,000
Tot31 field erection manhours 1,040 t x 160 MH/t = 166,400MH

step 3: Instrumentation.Select a quantity ratio

for the number of control valves per piece of
equipment, take 0.95 (see Table 8).
Total number of control valves is: 0.95 x 170 pcs = 161 pcs.
Total material cost 161 pcs x $8,07S/pc = US $1,300,000
Total erection manhours 161 pcs x 36OMff&
58,OOOMH

step 4: Electrical work. (4a) Calculate the

average kW/user from quantity data as indicated in Table 10.

Communication (talk-back system):

MateGalcos: one complete system = US $25,000
Erection manhours
= 1,300 MH

Electrical work summarized (steps 4a through

4c):
Total material cost
=us$841,000
Total erection manhours = 43,000MH
Step 5:

Civil work. (Sa) Determine

m3 concreta

for equipment and pipe rack foundations by

using quantity ratios as shown in Fig. 3.
2,830 t x 0.65 m/t = 1,840 m concrete.

(5b) Determine m3 concrete for building

foundations:
Control building
- floor area 475 m2
Substation
- floor area 100 mz
Total (475 + 100) m Y 0.3 m)/m = 175m3concrete.

(SC) Based on plot plan layout, 70% of total

area is paved.
0.7 x (100 x 105)ma = 5,350 m* concrete paving 6 inches
thick.

(Sd) Summarize quantities of (Sa) and (5b)

and estimate material cost and erection manhours.
Materialcost (1.840+ 175) ms Y $70/m = US $ 141,000
Materialcost
7,350mr x $6/m* = US $ 44,000
us $ :85,000

hours of quantities

calculated in items (Oa),

(6b), and (6~):

Structural steel (42 + 15 + 91)t x $900/t
steel (42 + 15 + 91)t x 6OMW
Concrete (288 + 250) m3 x $150/m
Concrete (288 + 250) m3 x 30 MHIm3
StNC,Urd

S&p 7. Insulation

and painting.

= US $133.000
8,90014f11
= US$ Sl.O@O
= 16,10O1W!

t=

(7a)

Calculate

to

surface area in rn; of major plant equipment

be insulated or painted.
Insulated: 3,900 m*
Painted:
14,400 mZ

(7b) Back calculate total length of pipe

based on total weight as estimated in item
1,040,OOOkg
xker-=

(Zd).

29,700 m.

To be insulated + 50% of 29,700 m = 15,000 m.

= 14,700 m.
To be painted

(7~) Determine surface area in m* of structural steel for painting.

Platforms and ladders, excluding grating is 70%
of total quantity.
0.7 x 91

t x40 m/t

= 2,550 mZ.

Cross and longitudinal beams; 65% to be

painted, other part is fireproofed.
0.65 x 57

t x30 m/t

= 1,110 m*.

(7d) Estimate material costs and erection

manhours for insulation and painting, respectively, based on quantities calculated in items (7a).
(7b), and (7~). Summarized:
= us $313.000
Insulation: Material costs
Field manhoars = 45,OOOMH
= US $ 60.000
n Painting:
Material costs
= 69,700 MH US $439.00~~
Field manhours = 15,OCtJMi-i

(Steps 5 a through 5g)

Step 6: Structures.
(6a) Pipe racks, calculate
number of concrete portals of pipe rack:
280
7
+ 1 = 48 pieces, two layers.

JB portals x 6 m3/portal = 288 m3 concrete

Steel required for cross and longitudinal

beams:

280 m x 150 kg/m = 42,000 kg.

(6b) Srlpporting

structures:

Volume of t,oncrete stntctures 2,500 m3

Concrete required 0.1 x 2,500 = 250 m3 coxrete.
Structural steel required 6 kg/m) x 2,500 m3 = 15,000 kg.

(6~) Platforms and ladders: steel for platforms en.3 ladders is:
13 towers x 7 t/tower = 91 tonne.

(6d) Estimate material cost and erection man-

The results of this exercise, including the detailed estimate of Major Equipment are summarized
in Table 10 and supplemented with
the various factors and overall average labor
costs.
For convenience a scheme outlining the
QR estimating procedure is shown in Fig. 4.
As a final remark we would like to emphasize
some basic rules, which should be adhered to in
developing quantity ratios and parameters.
-- Use your common sense and your professional judgement, dont be too academic.
- Be specific and above all be very consistent.
- Dare to make assumptions, these assump
tions can be discussed.

7s

30
19
12
6
2
I
4
1
12.4

12.5
22.4
19.6
6.3
14.9
5.0
7.0
4.0

121

422
129
267
800
82

133
325

m
ma/1075 kW
kW

kW
kW

538 m3
3900m+ 1Skm
17470 mr + 14.7 km

160 contr. vlv.

8175 kW, 425 fuct.
2015 ms concr.

91 McaL/h

6820
1060
-kW
- kW
12100
8070
280
-

3216 ma trays

Quantities

1.190

1.040
150

2,830

452
760
81
10
675

617
110
120
S

Weight
(tonne)

S247.000

422,100

12,247.OOO

2,080,OOO
1,300,000
841,000
439,000
133,000
81,000
313.000
60,000

7,000,000

1,160,OOO
1,420,OOO
240,000
40,000
1,230,OOO

___

1,570,ono
240,000
840,000
260,000

Materials
00mus.9

166,400
58,000
43,000
69,700
8,900
16,100
45,000
15,000

58,000

2,750
11,000
900
50
lS,OOO

18,800
2.400
6,300
800

Manhours
(H)

Total iustaUed
17s
25.5
4,020
480,100
__~
-cUti ra&s are valid for Dutch conditions, early 1976. bFor abbreviated items see Table 4.

Subtotal bulk items

Piping
Instruments
Electrical
Civil
Structures, steel
Structures, concr.
Insulation
Painting

output
__

100

Subtotal major eqpt.

84

(m/E)
22
3
12
4

_ _.(m/A)

Factors
__

!70

PCS

17
20
3
1
18

_-_pp

Towers and trays

13
Drums and tanks
28
Pumps and drivers, el.
63
Pumps and drivers, non-al.
3
Comer. and drivers, el.
Compr. and drivers, non-el. S & T heat exch.
42
Aircoolers (43 mot.)
16
4
Special eqpt., el.
Speci?l eqpt., non-cl.
1
Heaters and stacks

Input

Cost itemB

Estimate summa#

TABLE 10

6.481.000
-~-

Labor
(L)inUS$

18.728.000

Total
(T)ir.US$

205
Abbreviations:

mh

means calculation or selection results in

= erecticn manhours
material value in US $
$ : material and labcr cost in US $
= number of pieces of major equipment
= number of piping isometrics of large bore piping 2 inch and above
= number of Control Valves per piece
= appropriate unit cost and unit manhours obtained through consistent cost data retrieval and field construction manhour feedback

;$+I)
pc

is0
cv
CD

STEP 1
STEP 2

STEP 3
STEP4

STEP 5

. . .

. . . . . m$

and mh

. . . .
. . .
. m$andmh
.m$ and mh
. m$and mh

. . . m$
. . . . . m$

and mh

. . . .

= MAJOR EQUIPMENT: by detailed estimate

BULK ITEMS
= Piping: Table 5 -t iso/pc
Tables 6 and 7 -t average pipe diameter 1
Fig. 2 d
Total piping weighh:;this weight x CD +
= Instrumentation: Table 8 -+ CV;CV x pc x CD +
= Electrical: Table 10 - kW/user; kW x CD 4
Li8hting fiiturcs = 2.5 x pc; fixt. x CD +
Communication: individual estimate

.
.
.
.
.

= Civil: (a) Concrete: Fig. 3 +

volume
Buildings area x 0.3 me/m 1 msxCD
Paving=7O%oftotalareaxCD
+
(b) Building Cost = volume x CD - . .

. . .
. . . . .
. . .
. . . .

. . . .
. . . . . .
.

and mh

. m$ and mh

.m$andmh
.m$andmh
. m$ and mh

(c) Sewers = total area divided by 15-n: x number

. . . . . . .m$andmh
. . . , . . . . m$ and mh

ofsystemsxCD
(d) Fireproofing = individual estimate
STEP6

= Structures:
(a) Pipe racks: rack length divided by 6 plus 14 number of portals
Number cf portals X 6 m3/porLal* mr/concrete
Rack length X 150 kg/m + kg steel
(b) Supporting Structures: Structure volume X 0.1 m3/m*m3 concrete
structure volume X 6 kg/me -kg steel
tc) Platforms & Ladders:
Number of towers X 7 t/tower + kg steel
(d) TotalmcoscreteXCD
-+ .
TotalkgsteelXCD
+ 1.
= Insulation & Painting:
(a) Equipment sizes + m* insulated and -t m painted
(b) Piping weight from step 2, divided by total weight
at average pipe dia + m pipe, estimated y%
insulated, balance painted + m insulated and
-t m painted

. . . . . . . . . . . .
. . . . . . . . . . . . .

STEP 7

62)

. . . . m $ and mh

. . . . .
. . . . .

mS and mh
m$ and mh

x CD -+ . ..mS and mh

Structural Steel: Platforms & ladders weight in tonne

from step 6c: t x 0.7 x 40 m/t + mr

Cross & Longlt beams: . .. .. t from steps 6a and b:

t X 2% X 30 ma/t = . . .. . . . . . .. m
TOTALlNSTALLED
STEP 8
STEP9

FIELD SUPERVISION AND ADMINISTRATION

lOtolS%offieldmhXCD
+
= ENGINEERING
Enghmeringmh/pcXpcXCD
+ .

. . . . .

m$ and mh -

. . . . . . . . . . . . . . . . . m$aadmh
. . . . . . . . . . . . . . . . m$andmh

(in+l)S

+ (m+l)$
* (m+l)$

TOTAL DIRECT INVESTMENT . . . . . . . (m+l)S

Fig.4. Quantity
Ratioestimating scheme. (This example of a iypicat QR estimate is in no way to be construed as comprehensive or
representative for the average plant.)

206
- Adapt your cost data file to fit with the
established parameters.
.- Calculate or obtain ac::ual quantities most
accurately.
-- Obtain detailed field manhour expenditures
and productivities.
-- Do not create too many parameters per cost
component.
Conclusion

This article does not present a foolproof QR

method. The intention was merely to demonstrate the possibilities and advantages embodied in this new system. As well as the technical application, there are a few general principles which must be followed to achieve reliable results:
-- A well established CFE system.
_ Consistency in defining the quantities and
allocating material and labor cost (field manhours), even in cases of field erected equipment and field installed materials.
-- Keep it simple. Too many details do not
guarantee a greater accuracy. It is more time
consuming and even cumbersome.
-- The retrieval of technical and cost data must
be organized in a proper manner, i.e., against
each cost a specific quantity and an erection
manhours count must be allocated.
From a proper application of all points discussed in this paper, various ratio patterns
between the measured quantities will emerge.
Although such patterns are not applicable to all
plant types (or at least no attempt has yet been
made to prove they are), a family of quantity
ratio curves and tables can be developed,
specifically for each type of plant. As most
companies do tend to deal mainly with the
same type of p!ants, the time and effort taken
to develop a set of these curves ant? Yes will
be to the companys benefit.
We are of the opinion that the reorientation
of thinking from cost ratios to quantity relationships will eliminate much of the guesswork.
It will compensate for the lack of intuition of
less talented cost engineers and it shall provide

a medium for improved communication

between the cost estimating engineer and
others. Consequently, a more accurate and
rational cost estimate will eventually be
produced.
ACKNOWLEDGEMENT

This paper is based on, and has been devetoped from, a presentation by the authors at the
1976 Boston Meeting of the American Association of: Cost Engineers, which has appeared in
the AACE Transactions.

BlOGRAPHlCAL NOTE

Mr. Groen is Manager Cost Engineering for

Badger B.V., the Dutch subsidiary of Badger inc.
of Cambridge, Massachusetts. He ISa graduate
of the Technical College in Dordrecht, The
Netherlands, both in Chemical Technology
( 1954) and Applied Economics in Plant
Technology (1955). He is an active member of
WEBCI, the Dutch Cost Engineering Committee
and a member of N.I.R.I.A. (Institution of
Registered Professional Engineers and
Graduated Technical College Engineers).
Mr. Groen joined Badger in 1957 and has
since gained extensive experience in all aspects
of cost engineering work, such as manhour
requirements, productivities, cost reporting,
forecasting, quantity control, cost coding, cost
trending, variation calculations, and cost surveys in various countries.
Mr. Tan is Senior Cost Engineer for
Badger B.V. He received his Masters degree in
Mechanical Engineering from the University of
Technology in Delft 1954. He joined Badger in
1966 as an Estimating Engineer after extensive
experience in importing, sales and service of
equipment in the Far East. He is now in charge
of cost data and developing of estimating techniques. Mr. Tan is also an active member of
WEBCI and a member of K.I.v.1. (Royal
Institution of Graduated Engineers).