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Blended Rates

Blended Rates. Chris McKay Agrium. Situation. noob. owned. What I ’ ll Cover. Us and our Path What is a Blended Rate? How to calculate and use Analysis and follow up Key points to take home Questions. Us and Our Path. Us and Our Path. Similar Methods and Practices.

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Blended Rates

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  1. Blended Rates Chris McKay Agrium

  2. Situation noob owned

  3. What I’ll Cover • Us and our Path • What is a Blended Rate? • How to calculate and use • Analysis and follow up • Key points to take home • Questions

  4. Us and Our Path

  5. Us and Our Path Similar Methods and Practices Same Tools and Processes

  6. Why a blended rate? Under Budget On Budget :-) Over Budget >:-(

  7. What is a blended rate? Average $/hr

  8. At its most basic: Do Stuff? Do Stuff? Do Stuff? One Blended Rate

  9. Makeup of Blended Rates Out • Travel time • Subsistence/LOA • Supervision • Standby time • Productivity “Not directly attributable to the work” In • Straight, Over, and Double time • Journeymen only • Equipment used at an hourly rate • Escalation • Shift differential “Directly attributable to the work; preferably charged hourly.”

  10. Pipefitter Example Overhead • Travel time • Subsistence/LOA • Supervision • Standby time • Blended Rate • Use Journeyman RT & OT rates only • 5% escalation/year • 30% on nights ($x/hr premium)

  11. Exchanger Wash Example • Blended Rate • 3 Journeymen per crew • HP Pump • Lances • Widgets for lances • 5% escalation / year • 50% on nights ($y/hr premium) Overhead • Travel time • Subsistence/LOA • Supervision • Standby time • Radios • Chemical charges

  12. The Blended Rate Table

  13. Examples in use

  14. Keep it Simple!

  15. Gut Check • Example: Vendor X (support vendor) • Planned: • 1,500 planned MH’s • $50/hr blended rate • $75,000 expected • Requested: • 2,240 MH’s • $108,000 • We added about $10k to O/H WO for Stand-by • The rest is found work related (we could cut manpower levels early if no found work)

  16. Examples after use

  17. Analysis Planned: • Blended Rate • Hours • Cost • Planned: • $50/ hr • 10,000 • $500,000 • Actual: • Blended Rate • Hours • Cost • Actual: • $40/hr • 12,000 • 480,000

  18. Analysis • Used mix of Jman and apprentices in blended rate: we got all JMAN! • 100% JMAN would have resulted in an $80/hr blended rate. • More work was done pre-TA than expected on straight time. • Hours were fine. Will still do pre-TA review with trade.

  19. Overwhelmed by Details? Too Little Too Much Simple and Repeatable!

  20. Keep in mind…. There are different ways to do this: • Develop a system that works for you. • Document it. • Analyze and adjust. • Update documents.

  21. Where we ended up: • Started with basic knowledge, but no focus • Realized deficiencies • Rolled topic into our community of practice • Recognized similarities • Understood requirements & differences • Documented method and templates • Successful use • Iterative improvement

  22. Key Points to Take Home • Create a blended rate for planning & budgeting. • Carefully choose what is in the blended rate. • Benefit from post-TA analysis. • Don’t underestimate the value of documenting your knowledge!

  23. Double Click on the icons to view a draft document describing blended rates, and an Excel template to calculate them.

  24. Chris McKay Agrium Chris.McKay@agrium.com

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