Indirect Cost Savings

Cost control can seem at times as an oxymoron—a contradiction of sorts. How can you control costs when there is legitimate work to be performed within a condensed time frame in an uncertain, dynamic and risky environment?

Despite the challenges, there are two major opportunities to control costs on a STO event 1) control scope of work and 2) manage indirect costs. The first is limited due to the nature of asset and process integrity compliance, i.e., the work needs to be done to maintain an operating permit, but the second is completely doable given that indirect support on a STO event is generally quite high, and without controls in place it can get out of hand.

Contractors stand to make more on indirects, with less risk, than they do on direct workers. Therefore, they will lean toward providing more indirects…

STOworx-large-transparent-finalWithout a doubt, there is no better place to save money on your STO event than on indirects. Why? Well, for one, indirect costs are typically more than 300% direct wrench-hour cost. Consider this: PPE, Security, Transportation, Trailers, Tools, Administration, Orientation, Non-productive Time, Environment, Materials, Consumables, Per Diem, Consulting, Vendors, Overtime, Planning, and Logistics amount to a high percentage of your STO budget, all of which is proportional to the number of workers and the amount of direct wrench-time required to earn, resulting in a high burn/low earn environment.

Indirect cost savings is your greatest opportunity on a STO project, guaranteed…

Would it not make sense, then, that if you could increase direct wrench-time and reduce the number of workers that your indirect costs would be reduced? Take a look at DSM (Dynamic Scheduling Methodology) for Primavera™ P6 to enhance worker wrench-time, and consider how you track your indirect cost. Check out www.stoworx.com for our Project / Cost Control Module…