against NASA’s Cost Estimating Handbook
FEATURED PAPER
By Mayapati
Balikpapan, Indonesia
ABSTRACT
The Cost Estimating Process plays a crucial role in successfully executing projects. Research indicates that only a small number of projects stay within budget, and poor estimation during the planning phase is a major reason for project failures. Therefore, having a reliable project budget estimate is essential for future projects. This study conducted a benchmarking analysis of various Cost Estimating Best Practices and Guidelines against NASA’s Cost Estimating Process using techniques like Dominance, Disjunctive Reasoning, and Additive Weighting from Multi-Attribute Decision Making. The results revealed that NASA’s Cost Estimating Process outperformed other practices. As a result, this effective approach will be adopted for future projects, focusing on three key areas for improvement: (1) Developing and incorporating a Cost Risk Assessment, (2) updating the cost estimate as needed, and (3) documenting the estimate thoroughly.
Keywords: Basis Estimation, Budget, Cost Estimates Classification, National Aeronautics and Space Administration (NASA), Estimating Methodologies, Ratio, Multi-Attributes Decision Making, Non Compensatory, Model Dominance Method, and Work Breakdown Structure (WBS).
INTRODUCTION
- Overcoming Conditional Challenges in the Balikpapan RDMP on A Path Towards OTOBOSOR Alignment
Indonesia is carefully managing energy trilemma to maintain economic development, with the current decline of oil production to ± 650 thousand barrels of oil per day (BOPD) and increasing of domestic consumption up to ± 1,5 million BOPD[1]this has led to a shift in Indonesia’s status from a net exporter of oil to a net importer of oil. To overcome these challenges and follow the net zero emission program, Indonesia plans to invest in green refinery expansion and grassroots refinery development.
Figure 1 Roadmap of Indonesia’s Refinery Development Project[2]
The Balikpapan RDMP project faces significant obstacles to meeting the OTOBOSOR target from stakeholders. This project is facing significant challenges because it is currently experiencing a delay of around 0.97 times from the original schedule[3]This delay has significant implications, especially related to the strategic objectives set by the Company. Although we have managed to keep the project cost relatively not lower than the budget, which is currently projected at around 0.979 times the budget, the potential to be over budget still seems large since the project is currently behind schedule. It may require additional funding to complete all planned tasks. This financial uncertainty and our schedule issues raise concerns about our overall performance and alignment with the Company’s objectives.
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Editor’s note: This paper was originally prepared during a 6-month long Graduate-Level Competency Development/Capacity Building Program developed by PT Mitrata Citragraha and led by Dr. Paul D. Giammalvo to prepare candidates for AACE CCP or other Certifications. https://build-project-management-competency.com/our-faqs/
How to cite this paper: Mayapati (2024). Benchmarking an Indonesian National Oil Company’s Cost Estimation against NASA’s Cost Estimating Handbook; PM World Journal, Vol. XIII, Issue XI, December. Available online at https://pmworldlibrary.net/wp-content/uploads/2024/12/pmwj147-Dec2024-Mayapati-Benchmarking-National-Oil-Companys-Cost-Estimation-against-NASA-Handbook.pdf
About the Author
Mayapati
Balikpapan, Indonesia
Mayapati is an engineer with more than ten years of professional experience in the mining sector and more than ten years in the oil and gas sector. She holds a bachelor’s degree in civil engineering from Brawijaya University (UB). Currently, she works as VP Project Control and Quality Assurance at Indonesia’s national oil company. She has been involved in several projects in the oil and gas sector, such as refinery expansion, pipelines, storage tanks, flare relocation, site preparation, Maintenance Project, and other downstream projects. She is attending a distance learning mentoring course, under the tutelage of Dr. Paul D. Giammalvo, CDT, CCE, MScPM, MRICS, GPM-m, Senior Technical Advisor at PT Mitrata Citragraha, to attain Certified Cost Professional (CCP) certification from AACE International.
Mayapati lives in Balikpapan, Indonesia, and can be contacted at mayahusni1001@gmail.com
[1] Ministry of Energy and Mineral Resources Republic of Indonesia. (2024). Green and energy security.
[2] Pertamina. (2022). Roadmap of Pertamina’s refinery development project.
[3] Internal Report PT. KPB. Progress Project RDMP Balikpapan & Lawe – lawe. W5 August 2024.
