Return on Investment

/Return on Investment
Return on Investment 2017-10-07T19:50:23+00:00

Lets start with the cost of AWP:

Advanced Work Packaging | Return on Investment

Engineering: The true cost to Engineering for the application of AWP is that their delivery model changes from delivering drawing to delivering packages. Specifically, this means EWPs that meet the needs of the CWPs that are in the right sequence to satisfy the Path of Construction. My (non-scientific) estimate for this disruption is that it will increase the cost of Engineering by <2%. The volume of work remains the same but the process of delivering packages sub-optimizes the production process.

The addition of attributes to the model, the process of two siding isos and the weekly delivery of the 3D model can all be largely automated so there is no significant investment there.

Procurement: The management and delivery of Procurement Work Packages is just another way of tracking Required at Site dates (grouped into PWPs), which is a standard activity for Procurement. The biggest change for Procurement is the fabrication of pipe and steel in batches that support the requirements of CWPs. The expectation is that each PWP is fabricated and delivered as a batch. This will cause some retooling at the Fabricators as they will need to process a wide variety of pipe and steel sizes to satisfy the individual requirements of each CWP. With the largest part of the procurement costs being the actual materials and the equipment, the increased cost of fabrication is also insignificant in the global bucket of costs.

The development of modules in specific batches of <10 will cause some disruption at the mod yard, but then the reason that we use mod yards is because they are cheap, so it is much better to have this incremental disruption at the yard than at the site.

Construction: The application of Workface Planning in the field requires Workface Planners, computers, software and office space. While the software can cost up to $1 million depending on the size of the project, it is typically only a small percentage of the major cost which is the Workface Planners. At a ratio of 1 planner to 50 trades people the cost of Workface Planners is at least 2% of the cost of Direct Labor. At 40% of the overall cost of the project, you can expect the initial construction budget to increase by $8 Million for every $1 Billion of Total Installed Cost.

Administration: The Subject Matter Experts required to develop and support AWP for a project will average about 3 positions for every $1 Billion of TIC. This includes all of the functional requirements for AWP, IM and WFP.

Cost reduction: Before we get to the cost avoidance that is facilitated through productivity increases, let’s have a look at the efficiencies that AWP automation has on Document control, Project controls, Material Management and Construction Management. (all very expensive site positions)

With the document control database hosted on the cloud where the project stakeholders all have electronic access you can expect at least a 75% reduction in the need for document control personnel in both the Owner and Construction Contractor organizations.  As the Workface Planners utilize the WFP software to generate Planned and Earned value, the need for project controls personnel is also significantly reduced. The simplified AWP schedule is much easier to maintain so there is less need for schedule resources. The Workface Planning process mandates three week’s notice for material requisitions which means that the material team can level resources and avoid the extra staff required to cover peak periods. And finally, the process of IWPs entered into a believable three week look ahead and the predictable execution of scope dramatically reduces the need for trouble shooting so the construction management team can be more effective with less resources.

AWP | ROISo let’s just take a guess and say that the reduction of site indirects balances the cost of software, hardware office space, administration and any increase in the cost of engineering or fabrication  (which it does easily), then the only cost we are left with is the cost of Workface Planners., which is 2% of directs. The average productivity increase on AWP projects is 25% which means that it is 12.5 times more that the cost of the Workface Planners. = 1250% Return on Investment