Home Office Costs (HOC)

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Submitted By: bruce
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My inclination earlier in my career, after compiling an estimate, was to start taking it apart (which reminds me of my older sister’s stereo when I was 12 but I digress…..), analyzing ratios, relationships & components, of all bulk commodity accounts, mechanical equipment accounts, construction management, indirects, and all typical “below the line” costs. Home Office Costs were looked at as “it is what it is” and was glossed over. It was finally engrained in my head many years ago that “a” home office work hour was the “widget” that EPC companies “manufacture”. Many proposals these days focus on the price of those hours when comparing EPC contractor bids. In a way, those hours & their corresponding price are just about as important as the quantities & their price to build a facility. Can’t have one without the other. Successful – as well as invaluable – historical data of home office work hours is a key component of bidding future work. Care must be taken to evaluate what the original hours were before the inevitable changes that occur over the lifetime of project execution. You can’t win the next job using the final costs/hours expended on the last job – stringent analysis must be implemented to ensure the next bid is based on “normalized” data. Remember, while the DFC and IFC are critically important, you can’t get to the TIC without the HOC!

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