A Beautiful Thing

beautiful china

For a cost geek, there may be nothing more beautiful than a Class II Estimate from Exxon’s Golden Years

How did this system come about? I don’t really know, but perhaps some commenters to this site may provide insight (hint, hint…).

I suspect it was something like this. A prescient executive foresaw the sort of environment that Exxon would describe to me in 1980: “we have enough profitable projects to engage every engineer in the world.” They knew that methods would be needed to select the best from among all of the opportunities. And the breakthrough idea was that the selection process would also provide the backbone to ensure successful delivery of the project.

There must have been some sort of “virtuoso team” involved (Exxon paid the best to hire the best, a story for another time). And this team must have been given quite a favorable time frame and budget.

In the end, these estimates didn’t come cheap. I recall being told that 2-3% of the entire project budget might be spent on the Class II (this seems ridiculously high, even if costs included funding a share of the data collection, quarterly vendor reviews and the cost methods team; perhaps I mis-remember…).

But oh, my – what a useful baseline! It was said that you could order bulk materials based on the Class II, and that some fast-track projects did (e.g. piping: sizes, materials and lengths; structural steel; foundation materials; electrical conduit and switchgear, maybe even control valves and instruments). It also included an estimate of all the engineering and direct construction manhours, with productivity per the likely schedule and at location. All this prior to contractor selection.

That’s right, best of all: the propitious timing of its results. The Class II was available before the engineering contractor had the time to do all of the design drawings and specifications and take-offs that usually precede such an estimate (and therefore, performs an otherwise unavailable check on those efforts). So, months ahead, you get a reliable baseline look.

So… how does it work?

Forrest Clark

Let me use Clark and Lorenzoni’s 1978 First Edition of “Applied Cost Engineering” for some background. (Note: I am still searching for a good copy of the 1985 Second Edition, but l also used the 1993 Third Edition in my post “PM 101: Scope and Cost”).

………………………………more to follow

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