27/7/2016

AACEInternationalMeetings/ConferencesAnnualMeeting2016AnnualMeetingTechnicalProgramAbstractsESTIMATING(EST)
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ESTIMATING(EST)
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(EST2099)ATaleofTwoTails:ChaosinEstimatingPredictability
PrimaryAuthor:MrAlexanderOgilvieIndependentProjectAnalysis
Time/Location:MON10:0011:00/DominionBallroomNorth(2ndLevel)
Chaotic systems are defined as nonlinear dynamic systems that are deterministic, highly sensitive to initial conditions, and ultimately
unpredictable.Thispaperexplorestheconceptofprojectsaschaoticsystemsbyexaminingtheoutertailsofacostgrowthhistogramof
morethan1,700completedmanufacturingindustrycapitalprojects.Theresultsoftheanalysisdemonstratethatalthoughthelogistical
complexityofaprojectplaysaroleinthepredictabilityofoutcomes,muchofthisseeminglychaoticbehaviorisexplainedbyfailingsin
humanpracticesandbehaviors.Aprojectbaseddynamicmodelnecessarilydependsonthesensitivityoftheprojectsinitialconditions.
Inthemajorityofcaseswhereprojectsexperiencedextremeoutcomes, either high or low, the outcomes primary driver was that the
projectsinitialconditionswerenotcorrectlymeasured.Assuch,theprojectmanagementcommunitysfocusshouldfirstbeonusinga
meanstocorrectlyestablishinitialconditionsforanydynamicmodeltoberenderedrepresentativeoruseful.
(EST2131)ComparingandReconcilingJointVentureEstimates
PrimaryAuthor:MrPaulMartinHewittHewittEstimatingConsultants
CoAuthor(s):MrAdamStewartHewittHewittEstimatingConsultants
Time/Location:SUN2:453:45WillowCentre/West(MezzanineLevel)
On large infrastructure projects greater than $ 250500 million, it is common for contractors to form Joint Venture Companies when
submittingtheirbids.ThepurposeoftheJointVentureistosharerisk,poolthebondingcapacityofthepartners,combinetheexperience
of the partners during the prequalification phase and to prepare and compare more than one estimate for the project. This paper
describestheprocessesandformatsusedforcomparingmultipleestimatespreparedbythepartners.Itisalsoquitecommonthatthe
partnersusedifferentestimatingsoftware.Thispaperalsodescribesthemethodologyofimportingtheestimatesintoacommonformat,
reconcilingthepriceandclosingthebid.
(EST2148)TypeofEstimateandProjectCharacteristics
PrimaryAuthor:MrKulBUppalPECEPDRMPConquestConsultingGroup
Time/Location:TUE11:0012:00/DominionBallroomNorth(2ndLevel)
Estimatingisthekeytosuccessfullycompletinganyprojectfromconceptualstagethroughdetaileddesignandstartup.Thispaperwill
helpexplorevariouscharacteristicsthatcanbeusedtocategorizeprojectcostestimatetypes.Thispaperprovidesinsightintocertain
proceduresbeingfollowedattheownerandcontractingcompaniestoestablishaclassofratingbasedondeliverablesandthelevelof
project definition. In general, cost estimating is the predictive process used to quantify, cost and price the resources required by the
scopeofaninvestmentoption,activityorproject.Costestimatingisaprocessusedtopredictuncertainfuturecosts.Overallthegoal
ofcostestimatingistominimizetheuncertaintyoftheestimategiventhelevelandqualityofscopedefinition.
(EST2153)ImproveEstimateQualitywithTCM
PrimaryAuthor:MrDaveKyleCEPCanadianNaturalResourcesLtd
CoAuthor(s):MrFrankReinaldoPerezCEPCanadianNaturalResourcesLtd
Time/Location:SUN4:305:30/DominionBallroomSouth(2ndLevel)
Thecostestimatingprocessoftenhasaconsistentlackofqualitythathinderstheownersabilitytomakesoundbusinessdecisions,and
to properly support project controls in the management of a project. This paper examines several estimating difficulties and current
solutionsbeingimplementedtoimprovetheestimatingprocessinalargeoilandgasownerorganization.Anassessmentbytheauthors
acrossownerandcontractorfirmsidentifiedsignificantshortfallsinthefollowingareas:estimatorcompetency,effectiveestimatingtools,
and reliable historical cost data. This paper will discuss proposed solutions that incorporate an identified vision and objectives for
development, a multiyear development plan to close gaps and improve both the estimating process and tools, and detailed plans for
eachsignificantareaofdevelopment.
(EST2201)ParametricContingencyEstimatingonSmallProjects
PrimaryAuthor:MrMathewSchoenhardtMSConsulting
Time/Location:TUE9:4510:45/DominionBallroomNorth(2ndLevel)
Recommended practice 43R08, Risk Analysis and Contingency Determination using Parametric Estimating applies historical empirical
data to estimate contingency. This Parametric contingency method has clear advantages over other AACE recommended practices for

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megaprojectsincludingspeed,accuracyandcosteffectiveness.Whilemegaprojectscapturetheattentionofexecutives,shareholders,
mediaandresearchers,thesheerquantityofmanycompaniessmallprojectscaneclipsethecapitalspendofasinglemegaproject.
For most companies, small projects are the foundation of sustained and incremental profitability. The size of small projects often
precludes detailed contingency assessments by project managers while their puny stature renders them unattractive to academic
research.Asaresult,manyfirmssolvethisproblembysimplyapplying10%contingencyacrosstheboardtosmallprojects,regardless
of the projects actual risk profile. This paper outlines a pioneering solution: a smallproject systemic contingency tool. This paper will
reviewhowaCanadianmidstreamoilandgascompanysolvedtheproblemofsmallprojectcontingencyassessmentsusingaparametric
approachusinginhousedata.
(EST2215)AccuracyofFEL2EstimatesinProcessPlants
PrimaryAuthor:MsMelissaChristineMatthewsIPA
Time/Location:MON3:454:45/DominionBallroomNorth(2ndLevel)
Estimatorsuseavarietyofpracticestodeterminethecostofcapitalprojectsattheendoftheselectstagewhenonlyasmallportionof
engineeringiscomplete.Theexpectedaccuracyoftheseconceptualestimatesisusuallyquotedatplusorminus30percent.However,
many projects finish with costs outside that range. AACE International recommends that projects have a class 4 estimate when
upwardsof15percentofengineeringiscomplete,whichisapproximatelytheendoftheselectphase.Datafromactualprojectsinthe
processindustriesshowthatconceptualestimateslabeledasclass4arenotaspredictableasexpected.Infact,mostclass4estimates
resemblethepredictabilityofclass5estimates.Giventhis,thequestionthatfollowsis:Whatdrivesvarianceinperformancemeasured
fromtheFEL2estimates?UsingIndependentProjectAnalysiss(IPAs)extensivedatabase,theauthorlookedatprojectestimatesand
practicestoidentifyapproachesthatimprovetheaccuracyofFEL2estimates.
(EST2223)AssessingEstimateUncertaintyusingMonteCarloSimulations
PrimaryAuthor:MsMariePecheEDF
CoAuthor(s):MrJulienLoronEDF
Time/Location:MON5:006:00/DominionBallroomNorth(2ndLevel)
Assessingtheuncertaintyofacostestimatecanbeatrickyissue.TheAACEInternationalsclassificationofestimatesprovidesguidelines
to assess the relationship between the estimate accuracy and the level of project maturity, but provides no absolute standard range.
Indeed,accuracyrangesdifferdependingonthetypeofindustryconcernedevenwithinacompany,accuracystandardsmayvaryfrom
one department to another. Hence there is a clear need for an objective and analytical method to calculate the uncertainty of a cost
estimate.
ThispaperthereforeintroducesaprobabilisticapproachbasedonMonteCarlosimulationsappliedtotechnicalandeconomicinputdata,
providingaquantitativepictureoftheuncertaintyrangeofacostestimate.Themethodandconceptsareillustratedthroughtheexample
ofaprojectfromtheenergyproductionindustryandtheresultsarecomparedtotheexistingstandards.Themethoddevelopedinthis
papercanalsobeusedtoperformsensitivityanalysisonparameterswhichmayinfluencetheestimate.
(EST2258)LessonsLearnedinDevelopingCostEstimatingRelationships
PrimaryAuthor:MrHishamAbuAbedRBC
CoAuthor(s):DrXiuzhanGuoUniversityofCalgaryMrRobertKokRBCMrPhilLindsayMrJoelTousignantBarnesRBC
Time/Location:TUE8:009:00/DominionBallroomNorth(2ndLevel)
Typically, cost estimating models are probabilistic in nature as their objectives are to make statements about uncertain costs in the
future. The uncertain item in the estimate can be viewed as a random variable and it is desirable to estimate certain aspects of the
conditional distribution of the variable. A cost estimating relationship (CER) aims to describe the relationships between the dependent
variable and cost variables or drivers while a correlation coefficient between cost variables measures their dependence. CERs are
essentialtodevelopaprobabilisticcostestimatingmodel.ThispaperwillshowhowCERscanbedevelopedandvalidatedvisuallyand
interactivelybyusinglinearregressionanalysistechniquesfromcostdatasets.Inaddition,lessonslearnedinanalyzingcostdatasets
forcostestimatingrelationswillbeshared.
(EST2265)MobileCollectionTechnologytoDevelopAccurateCostReports
PrimaryAuthor:MrJaxKneppersJaxKneppersAssociates
CoAuthor(s):MrMatthewDickJaxKneppersAssociatesDrBorjaGarciadeSotoP.E.ETHZurich
Time/Location:MON2:003:00/DominionBallroomNorth(2ndLevel)
Collecting field data required to prepare accurate estimates has proven to be an inefficient and poorly organized process. Current
technologies allow users to transfer database cost models into mobile devices that enable users to collect data in an efficient and
organized manner. Applying mobile technology, estimators can organize their datacollection process to match their business needs
around familiar formats such as CSIs Masterformat and other forms. Formats can include other criteria such as spaces, trades, work
packages,andschedule activity IDs. This technology adds significant clarity and definition, translating into better communication from
field observations to estimates and project management. Advanced features like notes, dictations, and markups attached to specific
images add a higher degree of sophistication for data management. The confluence of mobile data and cloudbased data repositories
allowsforediting,sharingandtrackinghistoricalevents.Thisdataprovidesthebasisforreliabledevelopmentofcostreports.Thispaper
presentsthistechnologyasamajorgamechangerinthewayfielddataiscaptured,estimatesareprepared,andprojectsaremanaged.
(EST2328)StatisticalAnalysisofParametersInfluencingCapitalOverrunsonMiningProjects
PrimaryAuthor:MrMurrayPearsonP.Eng.Hatch
CoAuthor(s):MrConnorOughtredHatchMsKatherineWongCameronPEngHatchLtd.
Time/Location:MON11:1512:15/DominionBallroomNorth(2ndLevel)
Formorethan20years,theminingandmetallurgicalsectorhasbeenplaguedwithapoorrecordofestimatinginitialcapitalcosts.Capital
overrunshavebeenwelldocumentedbothinthemediaandminingspecificpublications.Inanefforttoimprovethequalityandmaturity
ofstudiesthroughouttheprojectlifecycle,thispaperexaminesfactorscontributingtoerrorandsystematicbiasinfeasibilitystudycost
estimates. Based on regression analysis of 98 mining projects completed from 19972015, project elements are identified to have a
statistically significant impact on capital overruns. The importance of sufficient execution planning and schedule risk mitigation in the
feasibility study will be highlighted, bridging the gap between cost estimation and execution. The proposed hypotheses and their
explanations envelop elements that are both dependant and independent of project location. By complementing the aforementioned

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AACEInternationalMeetings/ConferencesAnnualMeeting2016AnnualMeetingTechnicalProgramAbstractsESTIMATING(EST)

factorswithanacuteapproachtoexecutionplanningandscheduleriskmitigation,majorprojectparametersandtheirinfluencescanbe
betterunderstood,therebyflaggingseriousflaws,orweaknessesthatcanmitigatetheriskofcapitaloverruns.
(EST2332)EasilyEstimateProjectsUsingStatisticalPERT
PrimaryAuthor:MrWilliamWDavis
Time/Location:TUE2:003:00/DominionBallroomNorth(2ndLevel)
Wanttomakeconfidentestimates?Howconfidentdoyouwanttobe?Highlyconfidentestimatesmeanhigherprojectcostsandlonger
schedules.Lowerprojectcostsandshorterschedulesinvolvemoreriskandlesscertainty.Inthispaper,youwilluseMicrosoftExcel's
builtinstatisticalfunctionsandanew,simpleestimationtechniquecalledStatisticalPERT.StatisticalPERTletsestimatorseasilymake
probabilistic estimates for virtually any bellshaped uncertainty. And unlike other estimation techniques, Statistical PERT allows
estimatorstousesubjectiveopinionabouthowlikelythemostlikelyoutcomereallyistoinfluencetheresultingprobabilisticestimates.
(EST2343)(PanelDiscussion)EstimateReviewandValidation
PrimaryAuthor:MrAllenCHamiltonCCPProjectManagementAssocLLC
CoAuthor(s):MrDouglasWLeoFRICSCCPCEPDWLProjectSolutionsIncMrLarryRDysertCCPCEPDRMPConquestConsultingGroup
DaveKyleCEPCanadianNaturalResourcesLtd
Time/Location:TUE3:454:45/DominionBallroomNorth(2ndLevel)
A panel of subject matter experts will be invited for presentation, discussion and question and answer session with annual meeting
participants.Presentationareasanddiscussion:
Estimatereviewsandvalidations
Whyperformestimatereviews
Reviewsbythirdpartiesandinternalpersonnel
Estimatereviewbyestimateclassification
Reviewcriteria
Reviewpreparationandinterviews
RecommendedpracticeandTCMreferences

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