Advanced Benchmarking Methodology (ABM)

>>>>Advanced Benchmarking Methodology (ABM)
Advanced Benchmarking Methodology (ABM)2018-09-18T15:25:26+00:00
Gain Competitive Insights

Will you spend more or less capital than your competitors building your next project? Do you understand how much capital your peers would expend on a similar project? Is your cost estimate too aggressive? Or too conservative? Are you taking on more risk than you can handle, or spending more than you need? In the current industry landscape, competition is at an all-time high. To achieve project success, you need to set the right targets for your project. The Advanced Benchmarking Methodology (ABM) provides the insights necessary to set those targets, and lets you know where to make changes to gain a competitive advantage.

A Need for Change

Engineering and construction project performance has stagnated over the past decade. Some Industry owners and operators have responded to disappointing project performance by implementing more elaborate project assurance practices. The result has been more bureaucratic processes, rather than improved cost performance.

Project benchmarking practices have stagnated along with project performance. Cost benchmarks are used to compare estimated (or actual) capital project costs to industry norms. Historically, these project benchmarks have been calculated by relating project costs to the amount of equipment involved. Known as the Lang Factor Approach, this method assumes that equipment costs fully and accurately describe a project’s scope.

However, there is a large degree of variability—more than 100%—in the equipment to total cost relationship. Clearly, equipment costs alone do not fully explain total project cost. What’s more, this traditional approach to project cost benchmarking often provides results that are difficult to decipher. Is my project’s cost high because of inefficient engineering, or is the amount of engineering needed appropriate because of the amount of piping that must be designed?

A Modern Method for Project Benchmarking

To address these shortcomings, AP-Networks developed the Advanced Benchmarking Methodology (ABM). Once the scope of a project is selected, project costs are heavily dependent on two factors:

  • The amount and type of materials installed
  • The productivity of direct and indirect project labor

While pricing and contracting strategy are important factors, successful delivery of a competitive project requires understanding material quantities and labor productivity.

ABM is a scope-based methodology that looks at the amount of equipment, piping, steel, concrete, electrical, and instrumentation to be installed. Using these inputs, ABM delivers accurate, reliable benchmarks for indirect labor hour productivity and construction labor hour productivity, as well as total project costs.

ABM offers distinct advantages over other methodologies:

  • Fully accounts for project scope by considering the mix of material being installed
  • Focuses on indirect and direct labor
  • Delivers actionable insights to management
  • Provides transparent comparison of your project to other industry projects with similar scope
  • Uses advanced statistical methods to improve benchmark accuracy
  • Can be applied to a wide variety of projects
A Modern Method for Project Benchmarking

The Advanced Benchmarking Methodology is a step forward for the project industry, delivering a more reliable, more accurate approach to benchmarking. It provides a clear understanding of how construction labor productivity for specific construction disciplines, as well as project indirects, contributes to total project costs. This information helps project teams understand specific project risk areas, and gauge project cost relative to Industry peers. With these insights, firms can finally tailor their efforts to affect change and achieve tangible gains in project predictability and competitiveness.

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