Estimating as a Career

8/3/2019 Estimating as a Career

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Promoting the Planning & Management of Cost & Schedules

AACEAACEInternationalInternationalTh e Associa t ion f o r t h e Th e Associa t ion f o r t h e

Advan cem ent o f Cost En g in eer ing Advan cem ent o f Cost En g in eer ing

Estimating as a CareerBy Jeff Borow icz, CPC, CCC, PSP

January 28, 2009




AgendaAgenda IntroductionIntroduction

EstimatingEstimating

Conceptual EstimatesConceptual Estimates Budget Level EstimatesBudget Level Estimates

Definitive EstimatesDefinitive Estimates

Value EngineeringValue Engineering

Change OrdersChange Orders

ClaimsClaims

Salary SurveySalary Survey

Estimate BasicsEstimate Basics




Jeff Borowicz, CPC, CCC, PSPJeff Borowicz, CPC, CCC, PSP TitlesTitles

Work ManagementWork Management

SpecialistSpecialist Chief EstimatorChief Estimator

Senior EstimatorSenior Estimator

Software TechnologistSoftware Technologist

Project ManagerProject Manager

PlannerPlanner

Program ManagerProgram Manager

EngineerEngineer

Cost EngineerCost Engineer

SchedulerScheduler

Cost ControlCost Control

Change AgentChange Agent

Field Order ReviewerField Order Reviewer

InspectorInspector

DatabaseDatabase

AdministratorAdministrator

Junior EstimatorJunior Estimator

Contract ManagerContract Manager Expert WitnessExpert Witness




Jeff Borowicz, CPC, CCC, PSPJeff Borowicz, CPC, CCC, PSP EducationEducation Ferris State UniversityFerris State University

•• BSBS –– ConstructionConstruction

ManagementManagement

•• AASAAS –– ArchitectureArchitecture

Ellis UniversityEllis University

•• MBA (6MBA (6--12 Classes12 Classes –– 4.0 GPA)4.0 GPA)

EmployersEmployers•• CH2M HillCH2M Hill

•• PMA ConsultantsPMA Consultants

•• IMSI (Ford)IMSI (Ford)•• General MotorsGeneral Motors -- WFGWFG

•• DTE EnergyDTE Energy

SocietiesSocieties AACE (Since 1989)AACE (Since 1989)

•• Capital SectionCapital Section -- MemberMember•• FL Section (Orlando)FL Section (Orlando) -- VPVP

•• GL SectionGL Section –– VP, BoardVP, Board

•• BIM CommitteeBIM Committee –– CoCo--ChairChair

•• Cert. Paper ReviewerCert. Paper Reviewer

•• AACE Journal ArticlesAACE Journal Articles

AICAIC

•• Eastern / FerrisEastern / Ferris –– CPC DiscussCPC Discuss

•• MI ChapterMI Chapter –– President, BoardPresident, Board




The many Hats of EstimatingThe many Hats of Estimating “ “EstimatorEstimator” ”

LawyerLawyer

ContractsContracts

FinanceFinance

Software ITSoftware IT NegotiatorNegotiator

Social WorkerSocial Worker ExecutiveExecutive

SuperintendentSuperintendent

ActorActor

Team PlayerTeam Player

Role PlayerRole Player

AcademicAcademic RealistRealist

AccountantAccountant Banker, etc.Banker, etc.




Definition of EstimatingDefinition of EstimatingESTIMATEESTIMATE –– AACE 10SAACE 10S--9090

(1) A prediction or forecast of the resources (i.e.,(1) A prediction or forecast of the resources (i.e.,

time, cost, materials, etc) required to achieve ortime, cost, materials, etc) required to achieve orobtain an agreed upon scope (i.e., for anobtain an agreed upon scope (i.e., for an

investment, activity, project, etc.).investment, activity, project, etc.).

(2) In cost estimating, a compilation of all the(2) In cost estimating, a compilation of all theprobable costs of the elements of a project or effortprobable costs of the elements of a project or effort

included within an agreed upon scope.included within an agreed upon scope.




Estimating as a CareerEstimating as a Career

ContractorContractor


Architect /Architect /

EngineerEngineerEstimatingEstimating

OwnerOwner


SubcontractorSubcontractor


VendorVendor





Estimating Markets & DisciplinesEstimating Markets & Disciplines Civil, Structural,Civil, Structural,

Architectural,Architectural,Mechanical,Mechanical,

Electrical TradesElectrical Trades

arketsarkets

nergynergy

anufacturinganufacturing

ommercialommercial

overnmentovernment

Union vs. OpenUnion vs. OpenShopShop

Domestic vs.Domestic vs.

InternationalInternational




Owner EstimatingOwner Estimating• Portfolio Planning (one market)

• Conceptual, Budget and Definitive

Estimating

• Estimating Services (for hire)

• Value Engineering• Change Orders

• Risk Management

• Project Controls• Claims




A/ E EstimatingA/ E Estimating• Multi-Market Estimating

• Conceptual, Budget and Definitive

Estimating

• Value Engineering

• Change Orders• Risk Management

• Project Controls

• Claims




Contractor & SubContractor & Sub’ ’ s Estimatings Estimating• Multi- or Single-Market

• Hard Bid Estimating

• Subcontractor Contract

Management

• Risk Management

• Value Engineering

• Change Order Control• Project Controls

• Claims




Vendor EstimatingVendor Estimating

• Package Systems (Air Handling

Units, Kitchen Cabinets, etc.)

• Supply House Estimating

(Structural Steel Commodities,

Concrete P lant, P ipe Manufacturer,

Electrical Supply, etc.)




Contractual RelationshipsContractual RelationshipsOwner

Architect Engineer

Subcontractor

Vendor

PrimeContractor

Subcontractor

EngineerEngineer

VendorVendorVendor

Types:

• Lump Sum

• Design-Bid-Build

• Design-Bid-Build-Own- Operate

• GMP

• Multi-Prime

• T&M• Others




Owner/AE Estimating Life CycleOwner/AE Estimating Life CycleConceptual – Level 4/5

(Project Studies)

0-30% Engineering

Appropriation – Level 2(Project Implementation)

60% Design

Change OrderProcessing

Life Cycle Analysis

30%, 60%, 90% Design -

Value Engineering

Contractor LaborRate Check

Claims Evaluation

Low Bidder

Evaluations

Construction Audits

Construction ProjectCost "Actual"Feedback

Budget – Level 3

(Project Implementation)

30% Design

Bid Estimate – Level 1

((Contractor Hard Bid)

90-100% Design

Bid Estimate – Level 1

((Contractor Hard Bid)

90-100% Design




Contractor Estimating Life CycleContractor Estimating Life CycleLow BidderEvaluations

Change OrderProcessing

Life Cycle Analysis

Claim Assessment

Value Engineeringor Bid Alternates

Construction Profit(Loss) Evaluation

Construction Project Cost"Actual" Feedback intoEstimating

Competitive HardBid - Level 1

Competitive HardBid - Level 1

Select Subcontractors &write SubcontractAgreements

(Un)Balancing the Bid /

Schedule of Values




Conceptual EstimatesConceptual Estimates CONCEPTUAL ESTIMATECONCEPTUAL ESTIMATE –– An estimate made in theAn estimate made in the

concept phase without the benefit of detailedconcept phase without the benefit of detailed

engineering data.engineering data. (This term is superceded by(This term is superceded by

Recommended Practice No. 17RRecommended Practice No. 17R--9797 “ “Cost EstimateCost EstimateClassification SystemClassification System” ” .).)

+100%/-50%

+50%/-30%




Budget EstimatesBudget Estimates BUDGET ESTIMATEBUDGET ESTIMATE –– A budget estimate is preparedA budget estimate is prepared

with the use of flow sheets, layouts, and equipmentwith the use of flow sheets, layouts, and equipment

details.details. (This term is superceded by Recommended(This term is superceded by Recommended

Practice No. 17RPractice No. 17R--9797 “ “Cost Estimate ClassificationCost Estimate ClassificationSystemSystem” ” .).)

+30%/-15%




Definitive EstimatesDefinitive Estimates DEFINITIVE ESTIMATEDEFINITIVE ESTIMATE --

(1) In estimating practice, describes estimating algorithms or c(1) In estimating practice, describes estimating algorithms or cost estimating relationshipsost estimating relationships

that are not highly probabilistic in nature (i.e., the parameterthat are not highly probabilistic in nature (i.e., the parameters or quantification inputs to thes or quantification inputs to the

algorithm tend to be conclusive or definitive representations of algorithm tend to be conclusive or definitive representations of the scope). Typical definitivethe scope). Typical definitive

estimate algorithms include, but are not limited to,estimate algorithms include, but are not limited to, detailed unit and linedetailed unit and line--item costitem cost

techniques (i.e., each specific quantified item is listed and cotechniques (i.e., each specific quantified item is listed and costed separatelysted separately).).

(2) An estimate prepared from very defined engineering data. For(2) An estimate prepared from very defined engineering data. For construction, theconstruction, the

engineering data includes as a minimum, nearly complete plot plaengineering data includes as a minimum, nearly complete plot plans and elevations, pipingns and elevations, piping

and instrument diagrams, online electrical diagrams, equipment dand instrument diagrams, online electrical diagrams, equipment data sheets and quotations,ata sheets and quotations,

structural sketches, soil data and sketches of major foundationsstructural sketches, soil data and sketches of major foundations, building sketches and a, building sketches and a

complete set of specifications. This category of estimate coverscomplete set of specifications. This category of estimate covers all types, from the minimumall types, from the minimum

described above, to the maximum definitive type, which would bedescribed above, to the maximum definitive type, which would be made frommade from “ “approved forapproved for

constructionconstruction” ” drawings and specifications. (This term is superseded by Recommdrawings and specifications. (This term is superseded by Recommendedended

Practice No. 17RPractice No. 17R--9797 “ “Cost Estimate Classification SystemCost Estimate Classification System” ” .).)

+15%/-5%

Change Order




Hard Bid / Control Check EstimatesHard Bid / Control Check Estimates HARD BID / CONTROL CHECK ESTIMATEHARD BID / CONTROL CHECK ESTIMATE--

(1) Hard Bid(1) Hard Bid –– Bid Estimate or Baseline Contractual EstimateBid Estimate or Baseline Contractual Estimate between owner and Contractorbetween owner and Contractor

or Contractor and Subcontractors.or Contractor and Subcontractors.

(2)(2) Control CheckControl Check happens during Construction and usuallyhappens during Construction and usually included additional Changeincluded additional Change

Orders and potential/agreed to Claims.Orders and potential/agreed to Claims.

Bid Price

Change Order




Value EngineeringValue Engineering Society for Advancement of ValueSociety for Advancement of Value

Engineering (SAVE)Engineering (SAVE)

VALUE ENGINEERINGVALUE ENGINEERING –– AA practice functionpractice function

targeted at the design itself targeted at the design itself , which has as its, which has as its

objective the development of design of aobjective the development of design of afacility or item that willfacility or item that will yield least lifeyield least life--cyclecycle

costs or provide greatest value whilecosts or provide greatest value while

satisfying all performance and other criteriasatisfying all performance and other criteria

establishedestablished for it.for it. Do not confuse withDo not confuse with “ “Scope ReductionScope Reduction” ” ..




VE StudyVE Study

Value Methodology Standard

James A. Rains Jr., 1999 JOINTCOST MANAGEMENT SOCIETIESPROCEEDINGS

ValueManagementValue

Analysis

Value

Engineering




Value ManagementValue Management




Change OrderChange Order CHANGE ORDERCHANGE ORDER –– AA document requesting and/ordocument requesting and/or

authorizing a scope and/or baseline change orauthorizing a scope and/or baseline change or

correction.correction.

1) From the1) From the ownerowner’ ’ s perspectives perspective, it is an agreement, it is an agreement

between the project team and higher authoritybetween the project team and higher authority

approving a change in the project control baseline.approving a change in the project control baseline.

2) From a2) From a contractorcontractor’ ’ s perspectives perspective, it is an, it is an agreementagreement

between the owner and the contractor to compensatebetween the owner and the contractor to compensate

for a change in scopefor a change in scope or other conditions of a contract.or other conditions of a contract.It must be approved by both the client and theIt must be approved by both the client and the

contractor before it becomes a legal change to thecontractor before it becomes a legal change to the

contract.contract.




Change Order ProcessChange Order ProcessOWNER

• Contractual Change Order(CO) Process

• Forms to create anEstimate

• Instructions forContractors to submit CO’s

• Owner Review of Estimates

• Contractual Negotiationof CO’s

CONTRACTOR

• Change Order (CO)Process

• Acquire Owner forms tocreate an Estimates

• Follow Companyprotocols for submitting

CO’s• Get SubcontractorQuotations

• Submit CO Quote

• Revise Owner Comments• Negotiate CO Value




Change OrdersChange Orders

Example




Claim DefinitionClaim Definition

CLAIMCLAIM –– A demand or assertion of A demand or assertion of

rights by one party againstrights by one party against

another for damages sustainedanother for damages sustainedunder the terms of a legallyunder the terms of a legally

binding contract. Damages mightbinding contract. Damages might

include money, time, or otherinclude money, time, or othercompensation to make thecompensation to make the

claimant whole.claimant whole.




ClaimsClaims

Between Owner and ContractorBetween Owner and Contractor

Between Contractor & SubcontractorBetween Contractor & Subcontractor

Lawyers retrieve Cost DocumentsLawyers retrieve Cost Documents

from other parties (DISCOVERY)from other parties (DISCOVERY)

Both parties build a case on factsBoth parties build a case on facts

and details around their positionsand details around their positions




ClaimsClaims

Owner EstimatorOwner Estimator

•• Has details toHas details to

form opinion of form opinion of

claimed workclaimed work

Contract EstimatorContract Estimator

•• Owner hires toOwner hires torere--create thecreate the

estimate valueestimate value

based on detailsbased on details

provided fromprovided fromDISCOVERYDISCOVERY

ProcessProcess

ContractorContractor

EstimatorEstimator

Builds their caseBuilds their case

based on theirbased on their

opinion of opinion of

claimed workclaimed work




ClaimsClaims

Settle out of CourtSettle out of Court

MitigationMitigation

•• Both Parties hire an IndependentBoth Parties hire an Independent

party to rule on the outcomeparty to rule on the outcome

ArbitrationArbitration•• BindingBinding

•• NonNon--BindingBinding

LitigationLitigation•• Called as an Expert WitnessCalled as an Expert Witness




So you want to be an EstimatorSo you want to be an Estimator……

AACEi Annual Salary SurveyAACEi Annual Salary Survey




Estimating BasicsEstimating Basics




Market SourcesMarket Sources

CAM (CAM (www.camwww.cam--online.comonline.com))

Owner InvitationsOwner Invitations

Contractor Bid ListsContractor Bid Lists Subcontractor Bid ListsSubcontractor Bid Lists




Builders ExchangesBuilders Exchanges




Standard Estimate FormatsStandard Estimate Formats

Pencil & Paper FormsPencil & Paper Forms

Excel (Spreadsheets)Excel (Spreadsheets)

Databases SystemsDatabases Systems

•• Sage (Timberline)Sage (Timberline)

•• Win EstimatorWin Estimator•• U.S. Costs (Success)U.S. Costs (Success)

•• OthersOthers




Estimating Policies &Estimating Policies &

ProceduresProcedures

PoliciesPolicies

•• Rules of Rules of

EngagementEngagement

(Estimating(Estimating

Department)Department)

•• EstimatingEstimating

PoliciesPolicies

ProceduresProcedures

•• Basis of Basis of

EstimateEstimate

•• Scope of Scope of WorkWork

•• AssumptionsAssumptions

•• CaveatsCaveats

•• ExclusionsExclusions




Scope of WorkScope of Work

DrawingsDrawings

SpecificationsSpecifications SketchesSketches

P&IDP&ID’ ’ ss

Scope DocumentScope Document

ContractContract

Statement of Statement of Work (SOW)Work (SOW)




Estimating Accuracy (AACEi)Estimating Accuracy (AACEi)

+50%/-30%

+30%/-15%

+15%/-5%




Work Breakdown Schedule (WBS)Work Breakdown Schedule (WBS)




Construction SpecificationConstruction Specification

Institute (CSI) BreakdownInstitute (CSI) Breakdown

Master FormatMaster Format

(1995 Edition)(1995 Edition)

16 Divisions16 Divisions

Division 01 — General Requirements

Division 02 — Sitework

Division 03 — ConcreteDivision 04 — Masonry

Division 05 — Metals

Division 06 — Wood and Plastics

Division 07 — Thermal and Moisture Protection

Division 08 — Doors and Windows

Division 09 — FinishesDivision 10 — Specialties

Division 11 — Equipment

Division 12 — Furnishings

Division 13 — Special Construction

Division 14 — Conveying Systems

Division 15 — Mechanical

Division 16 — Electrical






Master FormatMaster Format

(2004 Edition)(2004 Edition)

50 Divisions50 Divisions






UniformatUniformat




Cost CodingCost Coding




Takeoff ToolsTakeoff Tools

EngineersEngineersScaleScale

ArchitecturalArchitectural

ScaleScale ScaleScale--MasterMaster

Tape MeasureTape Measure CalculatorCalculator

PDAPDA




Quantity TakeoffQuantity Takeoff SketchesSketches

Schematic DrawingsSchematic Drawings

WriteWrite--upup’ ’ ss

PhotographsPhotographs

Construction DrawingsConstruction Drawings

Product InformationProduct Information

Technical DataTechnical Data




Estimating ResourcesEstimating Resources – –

Owner/ContractorsOwner/Contractors

Vendor QuotationsVendor Quotations Historical Project DataHistorical Project Data

Lump Sum QuotationsLump Sum Quotations

Unit Price BidsUnit Price Bids

Subcontractor Unit PricesSubcontractor Unit Prices




Other Industry ResourcesOther Industry ResourcesArchitecturalArchitectural RS MeansRS Means

WalkerWalker

Blue Book / AEDBlue Book / AED AGC / UAW Local WageAGC / UAW Local Wage

RatesRates

ENRENR

MechanicalMechanical HarrisonHarrison

RichardsonRichardson’ ’ ss

MCAAMCAA

SMACNASMACNA

ElectricalElectrical Trade ServiceTrade Service

NECANECA




(Non(Non--US) Metric ResourcesUS) Metric Resources

Get familiarGet familiarwithwith

ResourcesResources

available if available if ConstructingConstructing

a Project nota Project not

in the USA.in the USA.

C




Typical Estimate ContentTypical Estimate Content

MaterialMaterial

LaborLabor

Const EquipmentConst Equipment

MarkMark--upup’ ’ ss

ContingencyContingency RiskRisk

Summary of CostsSummary of Costs

M i l (N i l)




Material (National)Material (National)ENR - Monthly

Week 1 – Concrete

Week 2 – Pipe

Week 3 – SteelWeek 4 – Lumber

Week 5 - Index

M i l (L ll )M i l (L ll )




Material (Locally)Material (Locally)

Data DIGest

Ken SimonsonAGC of America

Chief Economist

Weekly one-page e-mails

Economic News relevant toConstruction

N SN S




News SourcesNews Sources

E ti ti S ftE ti ti S ft




Estimating SoftwareEstimating Software

Cost I tems

L bL b




LaborLabor AFLAFL--CIO (Union)CIO (Union)

Davis BaconDavis Bacon

Prevailing WagePrevailing Wage –– State/FederalState/Federal NonNon--Union (Open Shop)Union (Open Shop)

Skilled Trades (UAW)Skilled Trades (UAW) Fully BurdenedFully Burdened

AllAll--In RateIn Rate

NMA or Presidents AgreementNMA or Presidents Agreement

Local Contract Terms and ConditionsLocal Contract Terms and Conditions




Local Contract Terms and ConditionsLocal Contract Terms and Conditions

LaborLabor




LaborLabor

LaborLabor




LaborLabor

Crew RateCrew Rate Unit Price DevelopmentUnit Price Development




Crew RateCrew Rate -- Unit Price DevelopmentUnit Price DevelopmentEarthwork Crew (BEarthwork Crew (B--12A)12A)

Excavation, Bulk Bank MeasureExcavation, Bulk Bank Measure

Backhoe, Hydraulic, crawler mtd.,1 CY cap. = 75 CY/hr or 600 CY/Backhoe, Hydraulic, crawler mtd.,1 CY cap. = 75 CY/hr or 600 CY/dayday

Bare CostsBare Costs Incl. SubIncl. SubOH&POH&P

Crew B12Crew B12--AA Hr.Hr. DailyDaily | Hr.| Hr. DailyDaily

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

1 Equipment Operator (Crane)1 Equipment Operator (Crane)$31.15$31.15 $249.20$249.20 |$49.25|$49.25 $394.80$394.80

1 Equipment Oiler1 Equipment Oiler 25.7525.75 206.00206.00 | 40.80| 40.80 326.00326.00

Hydraulic Excavator, 1 CYHydraulic Excavator, 1 CY 490.80490.80 || 539.90539.90

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

600 CY / day600 CY / day Cost per DayCost per Day $946.00$946.00 || $1261.10$1261.10

-------------------- ----------------------

600 CY600 CY 600 CY600 CY

$1.58/CY$1.58/CY $2.11/CY$2.11/CY

Which do I use?Which do I use?




EquipmentEquipment Resources: Blue Book, Dataquest, AEDResources: Blue Book, Dataquest, AED

Green/Red Book, R.S. Means, Web ServicesGreen/Red Book, R.S. Means, Web Services

Web Services: Iron Planet, Nations Rent,Web Services: Iron Planet, Nations Rent,

Rentmaker, Michigan CAT, etc.Rentmaker, Michigan CAT, etc.

Purchased EquipmentPurchased Equipment

Rental EquipmentRental Equipment

Contractor OwnedContractor Owned

Monthly, Weekly, Daily, Hourly RentalsMonthly, Weekly, Daily, Hourly Rentals

Equipment Rate BuildEquipment Rate Build-upup




Equipment Rate BuildEquipment Rate Build--upup CATERPILLAR 436C, DIESEL (2000)CATERPILLAR 436C, DIESEL (2000)

4WD, 1.40 CY Bucket, Extendable, 93HP4WD, 1.40 CY Bucket, Extendable, 93HP

TractorTractor--LoaderLoader--BackhoeBackhoe

MonthlyMonthly Weekly Daily Hourly Operating CostsWeekly Daily Hourly Operating Costs (Est.)(Est.)$3,550 $995 $250 $38$3,550 $995 $250 $38 $14.65/hr$14.65/hr

----------------------------------------------------------------------------------------------------------------

Hours per Unit:Hours per Unit:

173173 4040 88 11

----------------------------------------------------------------------------------------------------------------$20.52/hr $24.87/hr $31.25/hr $38.00/hr$20.52/hr $24.87/hr $31.25/hr $38.00/hr

Add $14.65 per hour to ratesAdd $14.65 per hour to rates

==================================================================

Total Bare Cost of EquipmentTotal Bare Cost of Equipment

$6,085$6,085 $1,581$1,581 $367$367 $52.65$52.65per monthper month per weekper week per dayper day per hourper hour

==================================================================Reference: 2001 Blue Book Rental Rate GuideReference: 2001 Blue Book Rental Rate Guide

MarkMark upup’’ss




MarkMark--upup ss Sales Tax (MI = 6%) (By State)Sales Tax (MI = 6%) (By State)

Country Taxes (ProvincialCountry Taxes (Provincial ––

Canada = PST/GST)Canada = PST/GST) State of MI Taxes (SBT / MBT)State of MI Taxes (SBT / MBT)

City Taxes (Pontiac/Detroit = 1%)City Taxes (Pontiac/Detroit = 1%) ConsumablesConsumables

OverheadOverhead

ProfitProfit

Building Blocks of an EstimateBuilding Blocks of an Estimate




gg

Total Construction CostTotal Construction Cost

--------------------------------------------------------

(+) Engineering(+) Engineering(+) Environmental Testing,(+) Environmental Testing,

Certification, specialCertification, special

PermittingPermitting

(+) Construction Manager(+) Construction Manager

(+) Field Representation(+) Field Representation

------------------------------------------------------

Total Project CostsTotal Project Costs

Initial Costs

-------------------------

Material Costs

Productivity (MH’s)

Labor Rate

Equipment Costs

--------------------------

Unit Price

Unit Price w/ Mark-up’s

-------------------------

Material CostsProductivity (MH’s)

Labor Rate

Equipment Costs

--------------------------

Unit Price

--------------------------

(x) OH&P(x) GC’s

(x) Escalation

--------------------------

“All-In” Unit Price

“All-In” Unit Price (x)Quantity = Defined Work Cost

-----------------------------

(+) Direct Job Costs (i.e. –Large Equipment, BuildingPermits, Mobilization,Demobilization, Bonds,Insurance)

(+) Contingency-------------------------------

Total Construction Cost



ContingencyContingency




ContingencyContingency Definition: Unforeseen Work thatDefinition: Unforeseen Work that

cannot be properly identified but knowcannot be properly identified but knowshould be accounted for in the Projectshould be accounted for in the Project

Estimate.Estimate.

How to Apply ContingencyHow to Apply Contingency

Myths on ContingencyMyths on Contingency……Slush Fund?Slush Fund?NO!NO!

Design, Construction and Change OrderDesign, Construction and Change OrderContingencyContingency ------ YES!YES!

RiskRisk




RiskRisk

2006 AACE International Transactions

- RISK.01- Dr. Flynn L. Auchey PE and Dr. Gloria J. Auchey

AACE Technical article

Management of Project Contingency and Allowance

Jan Terje Karlsen and Jon Lereim, Cost Engineering, Sep 2005

TypicalTypical




TypicalTypical

CapitalCapital

EstimateEstimate

Bid Tabulations / ReconcileBid Tabulations / Reconcile




Bid Tabulations / ReconcileBid Tabulations / Reconcile

Note: Examples ONLY

Historical DataHistorical Data




Historical DataHistorical Data

U S Cost Indexes




U.S. Cost IndexesU.S. Cost Indexes

Definition of an IndexDefinition of an Index

The ENR indexes measure how much it cost toThe ENR indexes measure how much it cost topurchase this hypothetical package of goods andpurchase this hypothetical package of goods and

services compared to what is was in the base year.services compared to what is was in the base year.

Different IndexesDifferent Indexes

ENR Construction Cost Index (CCI)ENR Construction Cost Index (CCI)

ENRENR Building Cost Index (BCI)Building Cost Index (BCI)

R.S. MeansR.S. Means

Marshall & SwiftMarshall & Swift

Smith Group IndexSmith Group Index & More& More……

ENR IndexesENR Indexes




International Cost InfoInternational Cost Info




International Cost Info

www.icoste.orgwww.icoste.org

Cost Parity IndexesCost Parity Indexes




yy

4D (Cost) Building Information4D (Cost) Building Information




( ) g( ) g

Modeling (BIM)Modeling (BIM)

AACE International CertificationAACE International Certification




Estimating Related Certifications:Estimating Related Certifications:

AACE has certified thousands of professionals as:AACE has certified thousands of professionals as:

•• Certified Cost Consultants (CCC)Certified Cost Consultants (CCC)

•• Certified Cost Engineers (CCE)Certified Cost Engineers (CCE)

AACE has certified Estimator professionals as:AACE has certified Estimator professionals as:

•• Certified Estimating Professional(CEP)Certified Estimating Professional(CEP)

ASPE has certified Estimator professionals as:ASPE has certified Estimator professionals as:•• Certified Professional Estimator(CPE)Certified Professional Estimator(CPE)