This PowerPoint helps students to consider the concept of infinity.
Sample cost control training proposal
1. Cost Management
Training &
Certification
Catalogue 2013
Tailore-Made
Tailor-made Courses
Tailor-made courses are designed to meet the specific
requirements of your staff and organization. They can be
delivered at your preferred location and date(s), and are thus a
very cost effective solution if there is a large group of staff to
be trained.
They can take several forms:
A training course focusing on the specific situation,
challenges and opportunities facing your organization
Combining modules from our different standard courses
to meet your unique learning and development
requirements
Develop a completely new course to precisely address
your development requirements
for more information
Contact nodoc@nodoc.eu or visit www.nodoc.eu
Dione Oil Co.
2. Cost Management
Training &
Certification
Catalogue 2013
Tailore-Made
Course
Dione Oil Co.
1. An Introduction to Dione Oil Cost Management Model
In the project development cycle several engineering tasks
like design, procurement and construction have to be
executed. The execution of these tasks mainly involves
information processing and decision-making. Because costs
are an important factor in project management, adequate
information about costs is extremely valuable for all
engineering tasks. Therefore, a cost training programme for
the enhancing of cost knowledge for cost management and
cost control, integrated in the project development cycle, is
required.
The Oil & Gas Project Costing Reference Model developed
at Dione Oil Co., is based on the use of a central information
management kernel that facilitates both the availability and
the accessibility of meaningful representations of the
evolving project information. This reference model is
designed
especially for the
integration of practice,
knowledge, technology and art for the development of the
cost management system.
Within the Oil & Gas Project Costing Reference Model,
generic cost management architecture has been developed.
The architecture consists of six functional modules arranged
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3. Cost Management
Training &
Certification
Catalogue 2013
Tailore-Made
Course
Dione Oil Co.
around the information kernel of the model that are: Cost
Models, Cost Determination, Cost Control, Cost Monitoring,
Cost Reports, Risk Analysis, Data Analysis and Data Tuning.
The Cost Model module is used for the definition and the
management of cost models. Multiple cost models can be
defined in order to support all engineering tasks and to be
able to compare cost models.
Based on a cost model, the Cost Determination module
calculates the costs. A cost model can be selected based on a
specific cost model, or an integration of several cost models,
the required accuracy or the available information.
Cost Control, Cost Monitoring and Cost reports can be
created with the Cost Report module.
Information about the quality, the accuracy and the
sensitivity of the costs has to be provided by the Risk
Analysis module.
The analysis of (historic) data is a task for the Data Analysis
module, while the Data Tuning module has to tune data. A
new method for variant based cost estimation is proposed
and positioned in the architecture.
The cost models are defined based on the cost structure. With
the aid of the cost structure, costs can be defined for any
object causing costs. Because cost structures can be attached
to the information structures related to the Oil & Gas Project
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4. Cost Management
Training &
Certification
Catalogue 2013
Tailore-Made
Course
Dione Oil Co.
Costing Reference Model, the costs can be calculated for any
object at any aggregation level. Additionally, the cost
structure
enables
the
differentiated
storage
of
cost
information. Based on the information structures and the cost
structures, cost views can be constructed.
The cost models are defined based on the cost structure. With
the aid of the cost structure, costs can be defined for any
object causing costs. Because cost structures can be attached
to the information structures related to The Oil & Gas
Project Costing Reference Model, the costs can be calculated
for any object at any aggregation level. Additionally, the cost
structure
enables
the
differentiated
storage
of
cost
information. Based on the information structures and the cost
structures, cost views can be constructed. These cost views
visualize the differentiated costs for the user.
The cost architecture and the cost structure enable the use of
four cost control loops: the engineering and planning
feedback loop, the order acceptance feedback loop, the
production feedback loop and the accounting feedback loop.
Some parts of the cost architecture have been implemented
in a prototype system. The prototype system is demonstrated
by means of an example from the project development cycle
in the project domain. Generative and variant based cost
management is used to demonstrate cost support and cost
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5. Cost Management
Training &
Certification
Catalogue 2013
Tailore-Made
Course
Dione Oil Co.
control. For generative cost management two distinct cost
models, direct costing and activity based costing, are used.
2. The Cost Management Training Module (Tailor-made)
This module has been developed specifically for úú
based
on the requisition datedú ..
The training based is based on the Oil & Gas Project Costing
Reference Model. The programme is to be aimed at the
development of specific competencies of specialists engaged
in Cost Control.
The training module has the following specification:
2.1 Training Title:
Cost Engineering and Cost Control for oil & Gas Projects
2.2 Training Description:
The Oil & Gas projects Cost Management, what is it and
why should we follow it? This training will define costs and
identify its components to implementing management and
control process. Participants will gain skills, strategies,
techniques, and methods, by practice and knowledge
development to implementing cost control in his own
projects.
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6. Cost Management
Training &
Certification
Catalogue 2013
Tailore-Made
Course
Dione Oil Co.
2.3 Training Objectives
As a result of this training, participants will be able to:
Define Costs
Classify of Costs
Split Costs to its Components
Manage the Costs using various Techniques
Analyze Production Costs
Manage the Costs
Report the Cost for decision making
Doing Planning and Scheduling
Monitoring the Costs by Variances
Regular Achievement Analysis
2.4 Duration Of the training:
Five 5 days + 1 day for closing summary and evaluation
2.5 Training form
Workshop
Presentation
Project practice
Discussion
Brain Storm
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7. Cost Management
Training &
Certification
Catalogue 2013
Tailore-Made
Course
Dione Oil Co.
2.6 Assessment by result of the Training:
Knowledge test
Practical application
Project work
Reports on participants�progress will be issued after each
module
2.7 Number of participants in one group:
15 employees
2.8 Training time schedule:
Following table show the training time schedule that describes
what will teach during the training period.
2.9 Training Material
The participants will be provided by handouts, Dione oil & gas
projects Cost management handbook and a DVD including
sample projects.
2.10 Training place
The training is assumed to be placed in Kazakhstan however it
could be placed in UAE or UK.
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8. Cost Management
Training &
Certification
Catalogue 2013
Tailore-Made
Course
Dione Oil Co.
2.11 Course Trainers
Our expert trainers of this course have minimum 20 years
experience on cost engineering, cost management and cost
control field. They are graduated from well-known colleges and
had background on costing of the oil & gas projects in three
sectors: upstream, midstream and downstream both offshore and
onshore. They have 2,400 hours experience on training the
attendees of such courses for more than 400 oil & gas
organizations, entities and institutes.
2.12 Certification
Successful Participants will be granted valuable certificates at
the end of the training course after appraisal the customer.
2.13 Training Fee
For this special course the trainng fee is Euro ..... per
participant.
50 % of the fee should be paid to Dione Oil Co. account as
advanced payment.
The balance should be paid to that account at the end of
the training.
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9. Cost Management
Training &
Certification
Catalogue 2013
Day
Time
Tailore-Made
Course
Dione Oil Co.
Content Outline
Welcome and Introductions
Introduction of instructor and participants.
Review Training Objectives
Day 1
Presentation Methods
Introductions: Briefly introduce self,
training objectives for training session,
and training agenda.
Exercise: Large Group Discussion:
discuss the elements of costs that they
have faced before.
Exercise:
Small Group: Divide participants in
Give background information about Oil & Gas Project Cost
three-four groups. Each group will
9:00 - 10:30 Management and Cost Definition
select a project to complete handout 1
The Essence of Cost Management:
and share the results.
1. Cost Management means taking into account everything we
• Identify three attributes of project in
know about how project develop and learn and matching that to
their classrooms and explore the
the content and strategies planned for the executer.
teaching practices they think will
2. Cost Management means treating project as an individual, not as
support these attributes.
a cohort group.
3. Cost Management means treating project with respect—
Large Group: reporters share one
recognizing changing capabilities and having faith in project's
project attribute and the related costs
capacity to grow and produce the desired product.
and identified by the group.
10:30 – 11:00 Break
9
Handouts/Material
Presentation 1: definition
of Costs
Handout: project cost
definition
10. Cost Management
Training &
Certification
Catalogue 2013
Day
Time
11:00- 13:00
Tailore-Made
Course
Dione Oil Co.
Content Outline
Presentation Methods
Experiential learning. Cost Classifications:
according to the accountant standards: Capital Costs /
Operating Costs
according to Nature or elements: Material Cost/Labor
Cost/Expenses
according to Function: Production Cost/Selling &
Distribution Cost /Administration Cost /RD Cost
according to Identifiably: Direct Cost/Indirect Cost
according to Behavior: Fixed/Variable/semi, fixed Variable
according Association with products: Product Cost/Period
Cost
according to controllability: Controllable Cost/
Uncontrollable Cost
according to normality: Normal Cost/Abnormal Costs
Small Group: participants will consider
the practices they identified further.
Asking the following questions:
1. Is this practice in keeping with what
I know about Costs?
2. Does this practice take into account
project’s needs?
3. Does this practice demonstrate
project?
Large Group: facilitate a summary
discussion of the experience, focusing
on how much information and
understanding the group’s questioning
created.
13:00- 14:00 Lunch
Continue Classification of costs:
according to time: Historical Cost/Predetermined Cost
according To Relevance: Opportunity Cost/Relevant
14:00-16:00
Cost/Sunk Cost/Shut down Cost/Differential Cost/Imputed
Cost/Out of Pocket Cost / Marginal Cost and replacement
Costs
10
Handouts/Material
Presentation 2: costs
Classifications
Handout: sample project
cost classifications
11. Cost Management
Training &
Certification
Catalogue 2013
Day
Day 2
Time
Tailore-Made
Course
Dione Oil Co.
Content Outline
Presentation Methods
Experiential learning. Components of Costs
Components of costs or cost elements are a hierarchical of costs
that presents top-down (down- top) approach for budgeting,
costing and finally decision making process. The participants will
examine this topic in a real and live oil & gas project by gaining
following knowledge.
The four main components of costs are: (a) Prime Cost, (b) Works
Cost, (c) Office Cost and (d) Total Cost.
Prime Cost: It consists of costs of direct material, direct
labor and direct expense specifically attributable to the job.
9:00 – 10:30
This is also known as flat, direct or basic costs.
Works Cost: It comprises of prime cost and factory
overheads, (cost of indirect material, indirect labor and
indirect expenses related to factory works). This cost is also
known as factory cost, production or manufacturing cost.
Cost of Production (Office Cost): It is the sum total of works
cost and office and administrative overheads <Cost of
indirect material, indirect labor and indirect expenses
related to office works>. This cost is known as office cost.
Small Group: participants will identify
the costs of sample project by its
components. Asking the following
questions:
1. Is this practice in keeping with
what I know about Costs
components?
2. Does this practice take into
account project’s specifications?
3. Does this practice demonstrate
project's needs?
Large Group: facilitate a summary
discussion of the experience, focusing
on how much information and
understanding the group’s questioning
created.
10:30 – 11:00 Break
11
Handouts/Material
Presentation 3: costs
Classifications
Handout: sample project
cost Components
12. Cost Management
Training &
Certification
Catalogue 2013
Day
Time
Tailore-Made
Course
Dione Oil Co.
Content Outline
Project Cost Management and Techniques:
Project cost management includes the processes involved in
estimating, budgeting and controlling costs so that the project can
be completed within the approved budget.
Cost Estimation:
For estimating the cost of oil & gas EPCF projects we need to have
some data on hand such as:
o Enterprise environmental factors
o Organizational Process Assets
o Project scope statements
o Cost breakdown structure vs. Work Breakdown
Structure
11:00-13:00
o Project Cost management plan
Some of the Techniques that will be explain in the workshops are:
o Analogous estimating
o Determine recourse cost rates
o Bottom-up estimating
o Parametric estimating
o Project management Tools
o Vendor bid analysis
o Reserve analysis
o Cost of quality
12
Presentation Methods
Discussion: Participants will discuss
key components in the DVD that
displayed sample project techniques.
Identify key aspects of cost
management. Discuss any
misconceptions they may have about
cost management.
Handouts/Material
Presentation 4: cost
Management
Handouts :
1. Applying the
Essentials of Cost
Management
(Sample)
Exercise
Using the video segment and
2. Applying the
previously identified attributes as a
Essentials of Cost
reference, participants will identify a
Management
classroom problem or issue that needs
(Practice)
attention and develop a plan of action
to correct.
Ask for participants to share their
Materials:
problem/issue and plan of action to
DVD
correct understandings.
Pre-printed sample
projects Cost
management
13. Cost Management
Training &
Certification
Catalogue 2013
Day
Time
Tailore-Made
Course
Dione Oil Co.
Content Outline
Presentation Methods
13:00- 14:00 Lunch
Continue Cost Estimation:
Using the inputs and techniques, some other objects will obtain
that are used in the next step of cost management, cost budgeting.
Cost Estimation outputs are presented based on the method of
estimation. For example followings are the outcomes:
Activity based cost estimates
Resource based cost estimation
14:00-16:00
Parametric cost estimation
Analogy cost estimation
Activity cost estimate supporting detail
Requested changes
Cost management plan (updated)
13
Participants will estimate the cost of
sample oil & gas project and will
discuss in groups about the estimated
costs and will compare the results
estimated by different groups.
Handouts/Material
14. Cost Management
Training &
Certification
Catalogue 2013
Day
Tailore-Made
Course
Dione Oil Co.
Time
Content Outline
Cost budgeting
Cost budgeting involves aggregating the estimated costs of
individual cost elements in the cost centres or work packages
to establish a total cost baseline for measuring project
financial performance.
In this step with some input information obtain from previous
step (cost estimation) and applying the tools and techniques,
budgeting will be done.
For budgeting we need at least following Inputs:
Day 3 9:00 – 10:30
Project scope statement
Work breakdown structure
Cost Breakdown Structure
Activity cost estimate supporting detail
Project schedule
Recourse calendars
Contract
Cost management plan
Using following techniques:
14
Cost aggregation
Reverse analysis
Parametric estimating
Funding limit reconciliation
Presentation Methods
Handouts/Material
Presentation 5: cost
Participants will budget the cost of Budgeting
the sample oil & gas project and
will discuss in groups about the
project budget and will compare
the results budgeted by different
groups.
Handout: Review the
example to illustrate the
activity that is presented
in a DVD
15. Cost Management
Training &
Certification
Catalogue 2013
Day
Tailore-Made
Course
Dione Oil Co.
Time
Content Outline
Presentation Methods
10:30 – 11:00 Break
Continue Cost Budgeting
Using the input information and techniques, some other objects
will obtain that are used in the next step of cost management, i.e.
cost controlling.
11:00-13:00 Cost Budgeting outputs:
Cost baseline
Earned value
Project funding requirements
Cost management plan (updates)
Requested changes
13:00- 14:00 Lunch
15
Handouts/Material
16. Cost Management
Training &
Certification
Catalogue 2013
Day
Time
Tailore-Made
Course
Dione Oil Co.
Content Outline
Cost controlling
Cost controlling involves influencing the factors that create cost
variances and controlling changes to the project budget.
Cost controlling will also be done using some other input
information obtains from previous step (cost budgeting) and
applying the tools and techniques listed below:
Necessary Inputs Information:
Cost Baseline
14:00-16:00
Project funding requirements
Performance reports
Work performance information
Approved change requests
Project management plan
16
Presentation Methods
Handouts/Material
Presentation 6: cost
Controlling
Handout : Review the
example to illustrate the
activity
17. Cost Management
Training &
Certification
Catalogue 2013
Day
Day 4
Tailore-Made
Course
Dione Oil Co.
Time
Content Outline
Presentation Methods
Continue Cost Controlling
Techniques:
Cost change control system
Performance measurement analysis
Forecasting Project performance
Reviews Project management software
Variance management
Output information obtains from cost controlling step are listed
below:
9:00 – 10:30
Cost estimate (updates)
Cost baseline (updates)
Performance measurements
Forecasted completion
Requested changes
Recommended corrective actions
Organizational process assets (updates)
Presentation 7: Cost
Controlling
Participants will calculate the
variances between planned and actual
cost of the sample oil & gas project
Handouts: Comparing the
and will discuss in groups about the
outputs of a controlled
variances
cost project sample that is
delivered in DVD.
Project management plan (updates)
10:30-11:00 Break
17
Handouts/Material
18. Cost Management
Training &
Certification
Catalogue 2013
Day
Tailore-Made
Course
Dione Oil Co.
Time
Content Outline
Presentation Methods
Handouts/Material
Production Costs
Production costs can be divided into two categories:
Participants will separate the
production costs, split them to the
VARIABLE COSTS (direct) which are proportional to production. components of production cost of
For followings are the items that are proposed as variable the sample oil & gas filed and will
costs:
discuss in groups about the
production costs.
Raw Material
11:00-13:00
Direct Labor
Supervision
Maintenance
Utilities
Supplies
Royalties and Patents
Packaging & delivery
13:00-14:00 Lunch
18
Presentation 8:
Production Costs
Handouts: review DVD
of sample production
costs of the sample
production costs.
19. Cost Management
Training &
Certification
Catalogue 2013
Day
Tailore-Made
Course
Dione Oil Co.
Time
Content Outline
Continue Production Costs
FIXED COSTS which are independent of production such as:
14:00- 16:00
19
Depreciation
Property Taxes
Insurance
Credit (Financing)
Other Obligations
General Expenses
Research and Development
Public Relations
Accounting and Auditing
Legal Advice and Patents
Administration and management costs
Sale and distribution costs
Presentation Methods
Handouts/Material
20. Cost Management
Training &
Certification
Catalogue 2013
Day
Tailore-Made
Course
Dione Oil Co.
Time
Content Outline
Presentation Methods
Handouts/Material
Monitoring by Variances
Participants will monitor the cost
of the sample oil & gas project and
will calculate and will discuss in
groups about the variances and will
compare the results in different
Schedule Variance (SV): Schedule Variance tells us groups.
Variances tell us whether we are going in correct direction or
we in wrong direction. Two types of variances in cost
management are Schedule Variance (SV) and Cost Variance
(CV).
Day 5
9:00 – 10:30
that how much we are ahead of or behind the
schedule. Schedule Variance (SV) is a measure of
schedule performance on a project.
Cost Variance (CV): Cost Variance tells us that how
much we are over or under the budget. Cost
Variance (CV) is a measure of cost performance on
a project.
10:30-11:00
20
Presentation 9:
Monitoring by Variances
Handouts: preparation
of variances for the
sample project
submitted in a DVD
21. Cost Management
Training &
Certification
Catalogue 2013
Day
Tailore-Made
Course
Dione Oil Co.
Content Outline
10:30-13:00
21
Time
Understanding Planning and Scheduling
The project management team uses a planning process group to
plan and manage a successful project for the organization. The
planning processes develop the project management plan and also
identify, define and mature the project scope, project cost and
schedule the project activities. The planning process group
facilitate project planning across multiple processes. The following
list identifies the processes the project team should address
during the planning process to decide if they need to be done, and
if so, by whom. The planning processes are listed below:
Develop project management plan
Scope planning
Scope definition
Create WBS
Activity definition
Activity sequencing
Activity resource estimating
Activity duration estimating
Schedule development
Cost estimating
Cost budgeting
Quality planning
Human resource planning
Communication planning
Presentation Methods
Handouts/Material
Presentation 10:
Small groups will plan and schedule
Understanding Planning
the sample project activities and will
discuss if they have differences within and Scheduling
groups.
Handouts: Review the
planning and scheduling of
a sample project delivered
in a DVD
22. Cost Management
Training &
Certification
Catalogue 2013
Day
Tailore-Made
Course
Dione Oil Co.
Time
Content Outline
Presentation Methods
Risk management planning
Risk identification
Qualitative risk analysis
Quantitative risk analysis
Risk response planning
Plan purchases and acquisition
Handouts/Material
Plan Contracting
13:00- 14:00 Lunch
Cost reports and decision making
Reporting the cost of a project could be based on the project:
22
cost components
Cost types
Budget
Phase
Location
WBS
Cost Centers and elements
Risks
Resources
14:00- 16:00
Factors
The participants divide to groups and
prepare the reports for the sample oil
& gas project.
The reporter of each group presents
the project cost report and others
issue challenges to the reports.
Presentation 11: cost
reporting
Handouts: DVD that
contains sample reports
23. Cost Management
Training &
Certification
Catalogue 2013
Day
Tailore-Made
Course
Dione Oil Co.
Time
Content Outline
Presentation Methods
Closing Summary
Review the purpose and content of
Materials:
the training. Ask participants what
they learned as a result of the training Learning materials
and how they will be able to use what
they learned. Determine if there are
still areas of misunderstanding and
clarify where necessary.
9:00 – 10:30
Day 6
10:30 – 11:00 Break
Assessment:
Each participant will be given a written assessment and will be
expected to achieve 80% to receive training certificate.
Have participants complete the
Participant Evaluation Form. Collect
Materials
Learning Assessment
Materials
Participant
Form
11:00-12:00 Evaluation
Regular Achievement Analysis
Personal Effectiveness module
18:00-21:00 Goodbye Party
23
Handouts/Material
Evaluation