Why You Shouldn’t Trust “Instant” Quotes for Process Systems

by | EPIC Modular Process

industrial distillation systemWhat causes people to look for an instant quote? Pressure from their superiors, easy website forms, fast-track timelines, budget deadlines, etc. the list goes on. Whatever the case is, instant quotes are a risky move with a plethora of issues.

Instant quotes can be beneficial in understanding a wide price range for a project but will be minimally useful in determining a fixed cost or an accurate system estimate. Unless you are buying a standard system with a product number that gets fabricated en masse, most process systems are unique. Even if the process design/build firm has experience with a system very similar to yours – for example, industrial distillation systems – there are still many details that will make quoting your system different than ones that they have done in the past.

What Happens When You Ask for an Instant Quote

An instant quote isn’t really an instant quote; it’s an instant guess based on limited information.  Some general guidelines based on Industry knowledge and data from past projects are used to help determine the price and lead time for your system with minimal engineering to develop that number. The number you get from an instant guess does not accurately reflect the full scope of your project, design assumptions, and desired operating conditions.

For example, it is fairly easy for an experienced engineering company to look at the high-level details of industrial distillation systems projects and say: “Okay, this project is going to be:

  • More than $500,000
  • But less than $1,000,000,
  • So why don’t we just call is roughly $750,000.”
  • But the system is just as likely to fall between $500,000 and $1,000,000,
  • This does not mean that it will turn out at $750,000.
    • It could be $600,000, or $900,000,

Without proper time and effort into detailed engineering, an instant quote will only provide a wide range that is risky to use for budgeting and no better than throwing a dart at a vaguely narrowed cost dartboard.

The Alternative: Accurate Front End Engineering Design Quotes

An alternative to an instant quote, or in many cases the subsequent act to an instant quote, is a Front-End Loading (FEL) or Front-End Engineering Design (FEED stage-gated approach. In this type of approach, substantial engineering effort is placed into different engineering stage-gates. As this process goes along, quotes continue to get more accurate as design assumptions are explored and system modeling is refined.

This is a “for cost” method that completes necessary design engineering up-front for relatively small fees. By paying small portions of money (in relation to the overall cost of a process system) at a time you will receive accurate engineering documentation and quotes along with a solid system design basis.

During FEED for an industrial distillation system engineers develop:

  • Detailed PFD’s and P&ID’s
  • Run basic simulations and develop mass and energy balances
  • Specify major equipment and instrumentation
  • Address any system unknowns
  • Create a process design basis that summarizes any remaining assumptions
  • Review the project to uncover any faults that may be hiding in the process or design

By doing this risk is minimized throughout the project because a clear scope, budget and timeline are established up-front.  Change orders will also be minimalized by using the FEED approach because the engineering team has taken the time to develop an understanding of what is needed on the project before an accurate quote is given.

Front End Engineering Design can be used to provide a ROM quote, a +15%/-5% bid, a fixed quote, or anything in between. The big takeaway from FEED is that by spending some money up front to develop a quote, the returned product will be accurate and honest. The engineering company will develop a quote that meets the spec for the project, and the will have had enough information going into the project to guarantee reduced risk and higher satisfaction.

When You Need Pricing NOW

Sometimes it is necessary for you to get a number immediately. Your boss comes in and says, “We are starting this project for a new process system, and I need a number by Friday.” Today is Friday, so you call the local design/build engineering firm and ask for a ballpark price estimate for your new industrial distillation system. They throw out that typically a system of that size with the particular production rate you are looking for costs $250,000-$750,000.

Remember to take that number with a grain of salt. That number is an estimate; no real engineering work was done here. Go ahead and present that number to your boss, but also consider pitching the need for a  Front-End Engineering Design (FEED) effort. Skipping FEED and going with that quick quote number can easily lead to 1,000 change orders and a lot of headaches moving forward. By utilizing a FEED effort, risk will be mitigated on the project, change orders will be minimalized, and the project will be quoted accurately. By spending a little money up front, you will be saving yourself a lot of money in the end.

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