5 Biggest Mistakes when Estimating Production

The production of a dredger greatly dictates the total cost of a project. Whenever a new project is up for tendering a cost estimate and production estimate are required for the best result.

But estimating production is not easy and many mistakes are made in this area. So below are the 5 Biggest Mistakes when Estimating Production.

1. Not estimating at all

Some companies, especially when pressed for time, decide not to make any production estimate. The financial risks of this approach are enormous, as the production is so variable depending on the soil, vessel and project parameters.

Not having a production estimate means you are taking a lucky guess on the cost of the project. On one side this could lead to losing a project as you miss judge the market rate and quote too high. You could also quote too low. This could lead to a significant financial loss. So even when pressed for time, make a production estimate, even if it is a very rough one.

2. Using only manufacturers input

Most dredger manufacturers can provide you input on the production capacity of their dredger. However, firstly the manufacturers do not have the practical experience to make accurate estimates. Secondly, they tend to be optimistic with their estimate, as they want to show that their dredger is superior to that of their competitors.

So always make your own estimate. Of course you can and should use the input from the manufacturer, but always check this and only use it as input to your own estimate, not as the end result.

3. Lack of defined soil parameters

The more soil information you have the more accurate you can make the estimate. Often the soil data is incomplete or sometimes completely missing.

In those cases write down the expected soil parameters as best as you can, define them. Then base the estimate on them.

At least you have a basis for your estimate instead of flying blind. But you can also try to put these parameters in your bid as conditions. For example: This bid is only valid for sand up to SPT 20. When the client accepts your condition and you encounter rock you have a strong basis for re-negotiating the price.

4. Estimating by hand

When estimating by hand you will have to redo the whole estimate every time a single input value changes. That would be very time consuming and is prone to errors, as even a small typo on the calculator will produce different results.

So always make an excel sheet with automated calculations. That way you can quickly make changes when the input changes. It also allows you to play around with the input to see how sensitive the estimate is when the situation in practice is a bit different from what you expect.

When making the excel sheet, make it so that you can also use it for future project estimates. That way you will save yourself a lot of time in the future.

5. Not taking downtime into account

Downtime has a big impact on the production, so it should definitely be taken into account. The most obvious downtimes such as weather, traffic, bunkering, etc, are almost never missed. What is often missed is the time for anchoring, changing spuds, changing teeth, in short delays caused by the dredging process.

Most of these delays are influenced by the production during swinging, the bulk production. If you have more bulk production the teeth wear more, so you need to change them more often. If you dredge small layers you will advance quicker, meaning you have to change spuds and anchors more often, resulting in more downtime.

These kind of delays have a significant impact on the production, so always account for them.

 

These are the 5 Biggest Mistakes when Estimating Production. As you can see there are many things that could go wrong. If you would like an expert estimate for your project, contact us via this link or send an e-mail to Info@StrategicDredging.com

The first step in avoiding mistakes is being aware of them. What kind of estimating mistakes have you encountered? Let us know in the below comment box.

 

To your long term success,
Timon Vinke

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