NOTE: Program Subject to Change
(EST-3184) Estimate Validation and Bias Assessment: Ratio-to-Driver Method
Author(s)/Presenters(s): John K. Hollmann, PE CCP CEP DRMP FAACE Hon. Life
Time/Room: MON 11:30-12:30/Rhythms 1
Cost estimate validation is often mentioned in AACE® International literature but not described in depth. This paper describes the practice of cost estimate validation including a method called ratio-to-driver. Validation starts with the business establishing an objective in terms of a cost strategy that is captured in the basis of estimate document. The cost strategy defines the estimating approach in respect to desired base estimate bias (and every estimate is biased). Achievement of the cost strategy is the quality being assured by validation. Then, reliable, normalized metrics (cost estimating relationships in ratio form) are developed from a comparison set of projects drawn from an historical database (or obtained from some other reliable source). Database systems often do double-duty as validation tools; a precursor to the future of analytics and machine learning. The ratio-to-driver method applies the metrics in a logical, stepped sequence of comparisons that seeks to pinpoint the cause of variations. Because base estimate bias is a systemic risk, and validation measures bias, validation is also a first step in quantitative risk analysis. While a long-established practice, estimate validation is not defined in AACE® cost engineering terminology (RP 10S-90) and is only superficially covered in other estimating RPs. As such, this paper is intended as a basis for an RP that will be aligned with others that include validation or benchmarking. The primary effected RPs (with abbreviated titles) are: 31R-03 (estimate review), 34R-05 (basis of estimate), 35R-09 (estimate planning), draft CE-81 (estimate requirements) and 42R-08 (parametric risk analysis).
(EST-3201) Predictive Analytics Can Improve Cost Estimating for Smart City Projects
Author(s)/Presenters(s): Anthony A. DeMarco; Richard Mabe; Grady Noll
Time/Room: MON 10:15-11:15/Rhythms 1
Smart city projects will dramatically improve urban living, if they succeed. Many cities and traditional infrastructure construction contractors are being challenged to understand, estimate, budget, propose and execute complex technology development and deployment projects. Failure to understand the internet of things (IoT) and other technologies, combined with typical contractor over-optimism, results in under estimates that may lead to disaster. Urban living will only improve if these projects start out with solid baseline cost and schedule estimates.
New research shows that credible estimates can be achieved by leveraging benchmarks and lessons learned from defense and security command, control, communications, computers, intelligence, surveillance and reconnaissance projects (C4ISR). New smart city statistical predictive cost and schedule models, along with proven C4ISR predictive models, are a critical resource for city governments and contractors undertaking these challenging projects. This paper will describe these models and illustrate the value of accurate estimating through a smart city project case study.
(EST-3252) Cost Estimating in Hyperinflation Economies
Author(s)/Presenters(s): Francis Lira Vargas
Time/Room: MON 4:00-5:00/Rhythms 1
Regardless of a project's complexity or magnitude, predicting its costs requires dealing with many factors such as uncertainties, escalation and inflation. In hyperinflationary economies, predicting the cost of a project with the highest possible accuracy is a particularly difficult task that requires the development of methodologies or procedures. It is of primary importance that the cost estimate should be traceable and all its elements should be easy to identify because constant updates will certainly be made. This paper discusses this subject and proposes some ways of dealing with hyperinflation in the context of cost estimation. The objective is to design a calculation procedure to enhance the accuracy of cost estimates by including the impact of hyperinflation. This impact would be added to the costs obtained with the traditional method for materials, construction equipment, labor, indirect costs. This proposed methodology is oriented to projects with a high level of definition or in the execution phase.
(EST-3302) (Presentation Only) Overview of New Estimating Recommended Practices
Author(s)/Presenters(s): Dave Kyle, CCP CEP
Time/Room: WED 9:15-10:15/Nottoway
This session provides an introduction to 3 new or revised Recommended Practices: CE-81 (Owner's Estimate Requirements Document - as Applied in Engineering, Procurement, and Construction for the Process Industries); 36R-08 (Development of Cost Estimate Plans - as Applied in Engineering, Procurement, and Construction for the Process Industries); CE-95 (Development of Cost Estimate Bases - as Applied in Engineering, Procurement, and Construction for the Process Industries).
The content and use of the documents will be explained, in particular the new sections on Class 4 and 5 estimates. The relationship between each will also be discussed. This session is also intended to provide an opportunity for attendees to openly discuss the use of the documents.