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59R-10: Development of Factored Cost Estimates - As Applied in Engineering, Procurement, and Construction for the Process Industries

59R-10: Development of Factored Cost Estimates - As Applied in Engineering, Procurement, and Construction for the Process Industries
AACE International, June 18, 2011

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As identified in the AACE International Recommended Practice No. 18R-97 Cost Estimate Classification System – As Applied in Engineering, Procurement, and Construction for the Process Industries, the estimating methodology tends to progress from stochastic or factored to deterministic methods with increase in the level of project definition.

Factored estimating techniques are proven to be reliable methods in the preparation of conceptual estimates (Class 5 or 4 based on block flow diagrams (BFDs) or process flow diagrams (PFDs)) during the feasibility stage in the process industries, and generally involves simple or complex modeling (or factoring) based on inferred or statistical relationships between costs and other, usually design related, parameters. The process industry being equipment-centric and process equipment being the cost driver serves as the key independent variable in applicable cost estimating relationships.

This recommended practice outlines the common methodologies, techniques and data used to prepare factored capital cost estimates in the process industries using estimating techniques such as: capacity factored estimates (CFE), equipment factored estimates (EFE), and parametric cost estimates. However, it does not cover the development of cost data and cost estimating relationships used in the estimating process.

All data presented in this document is only for illustrative purposes to demonstrate principles. Although the data has been derived from industry sources, it is not intended to be used for commercial purposes. The user of this document should use current data derived from other commercial data subscription services or their own project data.

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