scopeeconomics
Work with a factored model and test whether its inputs are comparable.
An estimating method is a way of connecting known information to a cost result. Detailed resource pricing needs quantities and assumptions that can support the build-up. A comparative or factored model depends on the suitability of its reference data. More rows do not make an unsupported method more reliable.
Before using a factor, identify its base. Does it apply to equipment purchase cost, installed equipment or a broader package? Establish the scope already inside the factor and the work outside it. Otherwise it is easy to multiply the wrong base or add the same cost twice.
A factor developed for one process facility may be unsuitable for a building or a different plant configuration. Location, capacity, specification, materials, price date and construction conditions can all affect comparability. Record any adjustment separately from the original reference.
AACE 59R-10 is specifically concerned with factored estimating in process-industry engineering, procurement and construction. Its public sample is a reference for that subject, not evidence that a single factor works across all sectors. The numerical factor in this lesson is invented for teaching and is not taken from the RP.
A factored result is useful when its scope and limitations are understood. Do not attach detailed certainty to it because the arithmetic produces an exact number. Identify the costs excluded from the model and the information needed to refine the estimate.
For exam preparation, write the equation before entering values. Label the units and explain whether the factor includes the base cost. Then ask whether any proposed addition is already represented. These checks are simple, but they prevent several common errors in a short calculation.
A fictional package model uses an equipment purchase cost of £250,000. A total installed-cost factor of 2.4 includes the equipment purchase cost. Land, tax and off-site infrastructure are excluded.
| Input or result | Value |
|---|---|
| Equipment purchase cost | £250,000 |
| Total installed-cost factor | 2.4, including equipment |
| Modelled installed package | £250,000 × 2.4 = £600,000 |
The factor is an original illustrative input. It is not an AACE factor or a market benchmark.