It is mainly used in project environments of the Petroleum industry and is defined as the value of goods and services progressed, regardless of whether or not they have been paid for or received.
The primary purpose of determining VOWD is to get an accurate and comprehensive as possible estimate of cost for a project at a point in time.
Examples of tagged equipment include; a pump, a motor, a drive, some electrical wire, a control cabinet, some specific instrumentation, a gauge, transformers.
Examples of regular bulk materials include; –standard valves; such as small valves, with standard and published specifications, easily obtainable from alternative sources, comparable in nature, larger valves with the same characteristics also are regular bulk materials, more than one, a number in quantity, required for a number of applications and locations within/for a project –standard pipe and tubing; same as above –steel; same as above If there are significant quantities with financial and commercial obligations for such items en route, prior to receipt of such goods, these quantities should be included in the VOWD percent complete calculation for regular bulk materials.
The VOWD for procured non regular bulk materials is usually calculated based on estimate of percent complete basis.
Examples of non regular bulk materials include; -Non regular valves - those that require unique or specialized specification, testing or manufacturing or similar, something that makes them non routine, high or higher volume in total quantity -Non regular pipes, tubes - those that require a special mill run, a large separate order of steel, special testing to meet specification or special manufacturing to meet project requirements, more than one in quantity, usually many -Steel - materials that require unique configuration, design, manufacturing and similar, much material, not simply one piece Adjustments might include steel mill retooling upfront costs, specialized steps to manufacture, temper, role, test or certify the pipe going through the mill.
To get documentary evidence to support an estimate as to the value of these steps one might use the milestones as inputs, supplier reports, pictures, video, progress reports on KPI's, supplier surveillance, as well as interim costs of shipping, handling and transportation.
Examples of major equipment include; an off shore platform, a vessel, a barge, a steam turbine generator, a large mine hopper, or similar.
Examples of construction include; a building, a manufacturing plant, a complex, multifaceted industrial equipment or facility.