September 24, 2021 by In the current Industry landscape, competition is at an all-time high. To achieve project success, you need to set the right expectations for your project. This leads to important questions that need to be answered. 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? To achieve project success, you need to set the right targets for your project. Benchmarking your project will illuminate how your expected performance compares to what’s actually happening with capital project execution across industry. 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. Capital 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. Furthermore, 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 To Gain Competitive Insights To address these requirements, AP-Networks developed the Advanced Benchmarking Methodology (ABM). Our ABM process provides the insights necessary to set the right targets, and lets you know where to make changes to gain a competitive advantage in your capital projects. Once the scope of a project is selected, project costs are heavily dependent on two factors: Amount and type of materials installed Productivity of direct and indirect project labor ABM is a scope-based methodology that looks at your project’s specific material makeup: 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 direct and indirect 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 Step Forward In Capital Project Benchmarking The Advanced Benchmarking Methodology is a step forward, delivering a more reliable, accurate approach to project benchmarking. The information it provides helps your project teams understand project risk areas and gauge project costs 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.