Civil Engineering Magazine for Project Managers

Better Engineering
Begins With
Right Concepts

3
os
Customer Education Series
TIC
Issue-2 January 2016

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os3 TIC- Total Installed Cost

Because law of reason should prevail over magic of instincts

Project costing is a challenge and remains owners risk till project completion.
At times focus remains on choosing machinery based on user requirement
and price while the associated civil/electrical and infrastructure works are
calculated from rule of thumb or past experience for that particular equipment.
This can give inaccurate estimate in comparison to other equipment which is
although more expensive but requires less of civil/electrical and infrastructure
cost.
A TIC approach requires calculation of total costs for proposal evaluation. It
requires to compare different type of equipments and the associated costs for
comparative evaluation to make a decision. The total installed cost which
includes erected cost of equipment, civil/structural cost, electrical costs and
infrastructural cost and maintenance cost for a reasonable time . This cost
should also be compared with any similar existing benchmark.
This article is an effort to understand the topic specifically from construction
cost variation perspective.
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os3 TIC- Principles

In general projects conceptualization teams are led by one discipline

engineers and in case of absence of other discipline engineers other
discipline cost does not gets sufficient attention resulting into biases.
TIC requires enough attention to all disciplines. It is possible to obtain
pricing of equipments accurately from manufacturers. Civil and
infrastructure costs are case dependent and involvement of a civil
discipline is considered to ensure that this part of costing which can be
35 to 50% of project cost. An input from O&M team is essential to
estimate the impact on infrastructure requirement due to project
implementation. Further a comparison with similar projects is made to
avoid surprises.
Even in case of EPC mode of project execution it is required to obtain
bids for different types of systems to make a well informed system
selection.
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os3 TIC Template

A typical template will include following comparisons which can
be customized depending on project mandate.
Cost head

Alternative 1

Alternative 2

Existing Benchmark

Main Equipment cost

Cost of additional facility /capacity to take
care of maintenance period
Erection and Commissioning cost
Civil and Structural cost
Electrical & Automation cost
Infrastructure for O&M
Permits, Insurance, Taxes and duties
Maintenance cost for a period of 3/5 years
Spares/Maintenance equipment cost
Studies and Investigation cost
Engineering , Quality Assurance , Safety
and Management costs

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os3 Advantages of TIC

TIC helps an informed corporate decision on projects viability and

reduces chances of cost and schedule overruns and optimizes the
total cost of ownership(TCO). As top management has limited
opportunity for technical intervention a TIC based proposal helps make
a well informed financial decision.
This helps in proper system selection and ensures a realistic budget
with least surprises during execution stage.
As TIC requires comprehensive cost analysis for all options so the
schedule surprises are also eliminated as the time and efforts for all
activities are identified in the beginning itself and removes the effect of
bias of individuals.
TIC is particularly important in brown field projects where the
infrastructure is deemed to be available however as the projects are
implemented many new requirements for operation get added to the
project costs in case a study is not made in beginning.
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os3 TIC- Challenges

Non implementation of TIC primarily stems from following

Non availability of Engineering expertise of all discipline with project lead.
Limited time to Project lead for the purpose of costing in case of small
projects.
Hassles of engaging a outside consultant which is time consuming unless
the projects are large. At times particularly civil expertise is compromised in
costing due to this.
Operational wish of having 100% standby facilities for all works.
Unforeseen O&M requirement .
Lack of awareness of TIC advantages.
Biases of individuals for certain technologies.
Scepticism of project viability .

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os3

Common Biases And Facts About Civil

Works In Project Costing

Eurocodes are latest so they are safest and give most cost savings so they
should always be considered.
No study is available to prove the cost effectiveness or safety ( except
Silos) of one code over the other for all structures. Rather structures with all
codes are standing safe in many parts of world. Selection of Code should
be based on the proficiency of engineering company and prevalence of
testing facility at project location. Design criteria should be suitably modified
to take care of critical issues like loading and load combinations.
Pre stressing of all Silos is essential and cheap.
It is safe, economical and fast to build silos of less than10000 ton without
pre stressing.
Reinforced concrete is necessary for Retaining Wall.
Segmental Retaining walls are cheaper and faster to build
Compared to RC walls in many situations.

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os3

Common Biases And Facts About Civil

Works In Project Costing

Space frame from China will be always cheaper than any shed.
Pre Engineered buildings can be cheaper for linear storages than space
frames.
Steel structures are only marginally expensive for all types of buildings.
For buildings supporting heavy loads it is cheaper to build in concrete.
If building is changed from Concrete to steel at any stage it will save time.
In case of steel , Engineering and fabrication time can balance the
schedule advantage of erection time particularly in case of global sourcing.
In existing building it will be cheaper to retrofit it for new facility as it
requires lesser new construction.
In situ Concrete cutting, Steel retrofitting and required safety
for dismantling efforts to use existing building for new type of
equipments can lead to more costs in civil and structures and
compromises in equipment utilisation compared to building a
new facility. Rehabilitation of concrete may cost 10 to 20 times
of new concrete. A detailed estimate is essential in such cases.
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os3 Some TIC References.

A cheaper Vertical mill is found to be more expensive than another expensive mill
just because the foundation cost of of the cheaper mill was way more than the
foundation cost of expensive mill.
A Tipper conveyor in case was found cheaper than Stacker Re claimer equipment
but when the civil cost is included stacker Re claimer was found to be much cheaper.
A crane based material storage with parallel retaining walls is cheaper compared to
storage shed with dozer hopper feeding system but with civil cost and piling included
it will be much more expensive.
Typically two Silos are more attractive however one Silo for same capacity can be 15
to 20% cheaper.
At times soil replacement can be a better option than piling and make projects viable.
A dump hopper meant for emergency intake in case of failure of belt conveyor
required entire hopper feeder system and at the end it is found efficient to repair the
long belt conveyor rather than activate the feed hopper along with transport contract.
Hopper building is changed from foundation from concrete to steel to expedite the
works while casting foundation but it is realized that changes took 4 months extra to
bring material to site while the cost also doubled for the building.

For more details contact- rkp@ossspl.in

Next issue- Bolting.

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