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November November 2003 2003

The AACE International Journal of

Cost Estimation, Cost/Schedule Control, and Project Management
Our Vision: Advancement of Cost Engineering Through Total Cost Management


From the Cover SEL Relays Simplify Power System Protection

Certification Paper Measured Mile Process

Technical Article Improve Profitability through Effective PM and TCM

Cost Cost Engineering Engineering Focus: Focus: PROJECT PROJECT COST COST CONTROL CONTROL

Technical Article Progress and Performance Measurement

Executive Article The Outrageous Power of SelfEvaluation

The Ethics Corner Whistleblowers Checklist

Education Board
Education Board Direction

The 2003-2004 Membership Resource Guide and Directory CD-ROM -

Special Feature

The September Board Meeting

Promoting the Planning and Management of Cost and Schedules
Visit our website at

AACE International Board of Directors

President Ozzie F. Belcher Belstar, Inc., VA 703-645-0280/fax: 703-645-0286 e-mail: President-Elect Clive D. Francis, CCC, Black & Veatch, MI 734-622-8543/fax: 734-622-8700 e-mail: Past President Dr. James E. Rowings Jr., PE CCE Peter Kiewit & Sons, Inc., NE 402-943-1334/fax: 402-271-2989 e-mail: Vice President-Finance Robert B. Brown, PE PMA Consultants of Illinois, LLC, IL 312-920-0404/fax: 312-920-0405 e-mail: Vice President-Administration William E. Kraus, PE CCE B & C Project Services, CO 970-206-0947/fax: 970-226-1818 e-mail: Vice President-Regions Joseph Wallwork, PE CCE GREYHAWK North America, NY 516-921-1900/fax: 516-921-5649 e-mail: Vice President-TEC James G. Zack Jr. Fluor Daniel, CA 949-349-7905/fax: 949-349-7919 e-mail: Director-Region 1 Mahendra P. Bhatia SNC-Lavalin Inc., Calgary, Canada 403-294-2100x2421/fax: 403-294-2875 e-mail: Director-Region 2 Douglas W. Leo, CCC Eastman Kodak Co., NY 716-722-6466/fax: 716-722-1100 e-mail: Director-Region 3 Robert E. McCoy, CCC BWXT Y-12, LLC, TN 865-482-7658 e-mail: Director-Region 4 Marvin Woods, CCE Project Controls Group, Inc., MO 314-838-4987/fax: 314-389-8957 e-mail: Director-Region 5 Stephen W. Warhoe, PE CCE 303-740-2665 e-mail: Director-Region 6 Mark G. Grotefend, CCC 253-835-8081 e-mail: Executive Director Ex-officio Barry G. McMillan e-mail:

The AACE International Journal of

Cost Estimation, Cost/Schedule Control, and Project Management


Depar tments
Presidents Message ................................3 From the Cover ......................................5 Education Board News ........................10 The Ethics Corner................................13 For the Bookshelf..................................21 Executive Article ..................................30 Section Spotlight ..................................32 Professional Services Directory ..............34 AACE International Bulletin ..............35 Special Feature ......................................41 Article Reprints and Permissions ..........42 Calendar of Events ..............................43

Featured Ar ticles Measured Mile Process

Thomas W. Presnell, CCC
With increasing frequency, contractors are requesting equitable adjustment for cost and time that relate to production inefficiencies, claiming that production losses are a direct result of changes to the original scope of a project. There are many methods used by contracting parties to deal with production inefficiency issues, however, the "measured mile" method is the most credible and widely accepted method. This article will describe a process that has been used successfully on a number of projects to resolve production inefficiency issues using the "measured mile" method.


Improve Profitability Through Effective PM and TCM

Dr. Nick J. Lavingia, PE


This article is reprinted from the 2003 AACE International Transactions. This practical article focuses on how to improve profitability through effective project management and total cost management (TCM). Four key elements to success are a structured project management process, management's active involvement, application of value improving/best practices and total cost management. The formula for improving profitability through effective project management and TCM is simple, however, implementation of these concepts is a big challenge in the industry.

Progress and Performance Measurement

Aaron Buntrock, ICC


Progress measurement is a crucial component of effective project control. After all, if we don't measure how we are doing against the project plan, then the plan becomes obsolete. All projects deviate from the plan, and all schedules change. Unless we are aware of what is going on, then the project team will be in a continual reactive mode. Effective progress measurement helps to identify the variances to the plan early enough to either mitigate the impact, or cease the opportunity.

In This Issue
Board of Directors Contact List ........................1 2002-2003 AACE International Membership Directory Promotion ................8 AACE International Sections Online ..........33 Index to Advertisers ......................................34 In Memory Of ..............................................39

On the Cover: The Lake Pontchartrain causeway bridges in Louisiana were modernized by the replacement of the high-voltage electrical system. Article page 5. Photos courtesy of Power PR.
Vol. 45, No.11/November 2003

AACE International Headquarters

209 Prairie Avenue, Suite 100 Morgantown, WV 26501 ph: 800.858.COST fax: 304.291.5728

Managing Editor - Marvin Gelhausen e-mail:

Graphic Designer/Editor - Noah Kinderknecht e-mail:

Policy concerning published columns, features, and articles Viewpoints expressed in columns, features, and articles published in Cost Engineering journal are solely those of the authors and do not represent an official position of AACE International. AACE International is not endorsing or sponsoring the authors work. All content is presented solely for informational purposes. Columns, features, and articles not designated as Technical Articles are not subject to the peer-review process.

Cost Engineering (ISSN: 0274-9696) is published monthly by AACE International, Inc. Periodicals postage paid at Morgantown, WV, and at additional mailing office. Ride-along enclosed for Domestic mail and a Standard A enclosure for International mail. POSTMASTER: Send address changes to AACE International; 209 Prairie Ave., Suite 100, Morgantown, WV 26501 USA. Single copies: US$8 members/ US$12 nonmembers (both +shipping), excluding special inserts available to AACE members only. Subscription rates: United States, US$60/year; all other countries, US$76/year. Overseas airmail delivery is available at US$99. Subscriptions are accepted on an annual-year basis only. Copyright 2003 by AACE International, Inc. All rights reserved. This publication or any part thereof may not be reproduced in any form without written permission from the publisher. AACE assumes no responsibility for statements and opinions advanced by the contributors to its publications. Views expressed by them or the editor do not necessarily represent the official position of Cost Engineering, its staff, or AACE International, Inc. Printed in Pontiac, IL, USA. Cost Engineering is a refereed journal. All technical articles are subject to review by a minimum of three experts in the field. To submit a manuscript for peer review, please e-mail it to Cost Engineering is indexed regularly in the Engineering Index., Cambridge Scientific Abstracts, by EBSCO Publishing, and in the ABI/Inform database. Cost Engineering is available online, via the ProQuest information service; on microform; electronically on CD-ROM and/or magnetic tape from Bell & Howell Information and Learning, PO Box 1346, Ann Arbor, MI 48106. Photocopy permission : Authorization to photocopy articles herein for internal or personal use, or the internal or personal use of specific clients, is granted by AACE International, Inc., provided that the base fee of US$4.00 is paid directly to Copyright Clearance Center, 222 Rosewood Drive, Danvers, MA 01923 USA. Telephone: 978.750.8400. For those organizations that have been granted a photocopy license by CCC, a separate system of payment has been arranged. The fee code for users of the transactional reporting service is ISSN0274-9696/02 US$4.00. This permission to photocopy does not extend to any Cost Engineers Notebook, AACE Recommended Practices and Standards supplements, or membership directories published in this magazine and/or special inserts. Payment should be sent directly to CCC. Copying for other than personal or internal reference use without the express permission of AACE is prohibited. Address requests for permission on bulk orders to the editor. ADVERTISING COPY : Contact Network Publications Inc., Executive Plaza 1, 11350 McCormick Road, Suite 900; Hunt Valley, MD 21031. Telephone: 410.584.1998. E-mail: for rates. Advertisers and advertising agencies assume liability for all content (including text, representation, and illustrations) of advertisements printed and also assume responsibility for any claims arising therefrom made against the publisher. The publisher reserves the right to reject any advertising that is not considered in keeping with the publications mission and standards. The publisher reserves the right to place the word advertisement with copy which, in the publishers opinion, resembles editorial matter. All advertising accepted for publication in Cost Engineering is limited to subjects that directly relate to the cost management profession. Current rate card available on request. COST ENGINEERING DEADLINES : Submissions for Cost Engineering must be received at least 7 weeks in advance of the issue date. Send to: Editor, 209 Prairie Ave., Suite 100, Morgantown, WV 26501 USA. Deadlines do not apply to technical papers.

P residents P residents Message

Ozzie F. Belcher, President

Why Diversity Matters in a Global Economy

uring September, I attended a second summit at The National Academies. The first summit was in April of this year. The global corporate sponsors of the summit were Intel, Johnson & Johnson, and the General Electric Foundation. It was hosted by The Academies, which include, National Academy of Sciences, National Academy of Engineering, Institute of Medicine and National Research, and American Association of Engineering Societies (AAES). In addition, to the various engineering societies in attendance, there were attendees from various branches of government, universities, and various nonprofit related societies. The organizers of the summit had a goal of developing a policy statement on diversity and wanted the attendees to endorse the statement by signing. The organizers had further hoped that the various engineering societies, universities, private industry and government agencies, would incorporate the principals of the policy statement. The August Harvard Business Review article titled, "Abraham Lincoln and the Global Economy," authored by Robert D. Hormats, reminds us that the US has been committed to achieving diversity since its founding in 1776. The article further concluded that much of the US's phenomenal domestic and global economic success can be attributed to its commitment to diversity. The article pointed out that 140 years ago, President Lincoln's blueprint for the US was to reaffirm its commitment to diversity. His blueprint consisted of the following main points.






Americans, Native Americans, and African American descent and women. Education of Americans was an essential point which led to the US government's development of land grant colleges. (President Lincoln believed that the US's various immigrants had to have an education if the US was to ever develop a middle class). Policies that supported research were a way for the US to move from being a developing industrial nation into a global nation. (During the summit, Dr. Bordogna, Deputy Director of the National Science Foundation, stated, "diversity means accepting the thoughts, ideas and cultures of those that are different than ourselves." Policies that supported innovation were a way for the US to move from being a developing nation into a global nation. (Many of the US's greatest innovations were developed by US immigrants from every walk of life.) Government policies that promoted US and global interests over regional interests resulted in the development of policies that helped small business become some of today's largest global companies. A call for a realization that a period of turmoil, while potentially a barrier to change, can be a unique opportunity.


A belief that all Americans, of low and middle income groups, were entitled to upward mobility. In President Lincoln's day there essentially was no middle class in the US. The group of poor people that Lincoln's hoped to one day elevate to a middle class consisted of immigrants that were of Eastern European origin, Asian

Historians and economists attribute the success of the US in a global economy to 227 years of success in diversity. The reality is that the US global "diversity" business model is still a work in progress. History has shown us that any country that embraces diversity is using a proven blueprint for succeeding in a global economy. So why is diversity important to AACE International and to our associations role as a part of a global economy? The AACE International commitment to diversity is demonstrated in the association's strategic plan. This plan can be found online at, under the administrative link,

Cost Engineering Vol. 45/No. 11 NOVEMBER 2003

( As an international association with a commitment to global diversity, AACE International is committing its policies, budgets, education, training, internationally recognized certification program, international student outreach effort through its 70 international sections, international membership, and scholarships, to reaching its diversity goals. Perhaps that is why AACE International has a higher retention rate of its membership than other trade and professional associations. According to the American Association for Society Executives, authored by Brian Dunlop, the percentage of membership that has their society's certification is approximately 18 percent. At a September CMAA meeting in Washington DC, Charlie Bolyard, a twoterm past president of the AACE International National Capital Section and our Executive Director, Barry

McMillan, were told by the Executive Director of CMAA, that their organization's website received less than half of the hits that the AACE International website receives on a monthly basis. That tells me that AACE International has globally recognized value, that is also recognized as a part of any organizations successful blueprint for competing in a global economy. AACE International's global blueprint offers your organization a vital part of what it needs to succeed in a global economy. The management of cost and schedules is a vital part of what your organization needs to have as a blueprint for competing in a global economy. Whether you are researching international markets, international wage data, materials costs, equipment costs, labor productivity for various trades in other geographical areas, or considering international ventures, AACE International has the management of cost

and scheduling data content, membership expertise, and corporate sponsors with international experience, to help you and your organization succeed on a global level. The AACE International website now gets over 650,000 hits per month. Our 5,000 members, and countless site visitors, use the AACE International website for its many different offerings. I urge that you take the AACE International challenge and visit our website, on-line library, call our headquarters office, or contact AACE International to find out how AACE International can help your organization update or develop its blueprint for succeeding in today's global economy. x

Ozzie Belcher President AACE International President Belstar Inc.

AACE Internationals Approved Education Provider Program

Join the Ranks of AACE International's Continuing Education Providers

AACE International's Approved Education Provider (AEP) program is designed to provide cost and management professionals and their companies with a means of identifying suitable professional development courses and providers. AACE International's high standards for granting AEP status and its ongoing review of Providers activities, ensures quality AEP programming, which results in satisfied participants. AACE International's AEP Program offers: A provider approval system whose standards ensure quality continuing education programming Continuous quality improvement through course review and ongoing support from AACE International staff Recognition by AACE International of professional development hours (PDHs) A centralized, permanent database that maintains and issues provider reports and participant records Course promotion and organizational recognition on AACE International's website600,000 hits per month What This Means for You AACE International's AEP status is a win-win situation. You or your organization will benefit and so will your constituents. Why? The AACE International AEP program offers an established and proven process for conducting quality continuing education programs, networking opportunities with other continuing education providers, less paperwork, and broad appeal. Whether you are a consultant, professional trainer, AACE International Section, university instructor, or you are experienced in the field of educating others -- AACE International's AEP status will benefit you and your organization! Visit our website at E-mail for an application Call 1-800-858-2678 or ++304-296-8444
4 Cost Engineering Vol. 45/No. 11 NOVEMBER 2003

F the Co From rom the Cover

Sonny Bynum of Power PR

SEL Relays Simplify Power System Protection on Worlds Longest Overwater Application

ndustrial power systems operators are becoming increasingly sophisticated in their requirements for system protection. Engineers of industrial power installations are adopting the standards and practices similar to those of utilities, incorporating the technologies needed to gain added economies, reliability and safety through automation, enhanced communications and system integration. This indicated a trend toward more comprehensive power managementresulting not only in improved system protection, but also the ability to automatically and quickly reconfigure and restore electric power when outages occur. While not a typical industrial application, the recent modernizing of the Lake Pontchartrain Causeway, the world's longest overwater bridge, is a good example of a well conceived and implemented power system delivery, protection, and management scheme that will pay off for a long time to come. In a "system" sense, the requirements and implementation of this type of project could apply to underground environments such as an industrial park or municipal facilities. Spanning Louisiana's largest inland body of water, the 24mile Lake Pontchartrain Causeway was a breathtaking engineering feat when constructed in 1956. A vital link between New Orleans and communities to the north, the causeway also serves as a primary hurricane evacuation route for coastal areas. In 1969, the causeway was expanded to twin two-lane spans, and is now traversed by about 30,000 vehicles on the average workday. The Greater New Orleans Expressway Commission (GNOEC), which operates the causeway, initiated a $79 million

plan in 1995 to modernize the bridge's infrastructure. A major component of this project was the complete replacement of the high-voltage electrical system, which was inadequate in terms of power and nearing the end of its useful life. A new electrical system was needed to power drawbridge operation, cell phone towers, toll facilities, and a series of variable-message warning signs to be installed along the oftentimes fog-enshrouded causeway. For electrical consulting and project management, GNOEC hired Gulf Engineers and Consultants (GEC) of Baton Rouge, Louisiana. GEC proposed an automated distribution system capable of automatic fault detection, isolation and restoration, communicating over fiber optic cable. Eleven resettable faultinterrupting switches, rated 27kV, 600 ampere continuous, were designed into a loop system. The switches were to be placed at two-mile intervals along the bridge. A three-way switch, located at mid-span, would serve as the normally open tie point. Power sufficient to support the entire grid would continue to be provided from different utilities on each side of the bridge, in the event of an outage from either utility. In the event of a fault between a sectionalizing switch and a load, GEC's specifications called for an RFI (resettable fault interrupter) in the switch to automatically isolate the faulted cable section. If a fault occurred between two sectionalizing switches on the main cable, one of the shore-based switches would isolate the bridge from the main power source, and then reconfigure the system and restore power to the isolated segment by feeding from the alternate source. The system will also

Submitted photo

Submitted photo

The switchgear installed at the northshore of the Lake Pontchartrain Causeway. Each shore installation is equipped with a SF6 Puffer Loadbreak Switch with RFI for fault isolation and sectionalizing between the utilities and the bridge.

This is a simplified representation of the protection scheme for the updated electrical system installed and operating at the 24-mile Lake Pontchartrain Causeway in Louisiana.

Cost Engineering Vol. 45/No. 11 NOVEMBER 2003

automatically sense the restoration of power, and return the system to its normal status. The project was awarded to Fisk Corporation, Houston, TX in late 2000. Fisk, in turn, evaluated a number of suppliers and integrators, and with GEC's approval, chose Canada Power Products Corp., Mississauga, Ontario, to provide a fully integrated system solution including switchgear, switchgear controllers, protective relays, SCADA, automated restoration software, relay settings, and integration services. Canada Power Products switchgear packages would be installed in pre-fabricated control houses and "dropped in" onto concrete pedestals mounted atop pilings driven into the lakebed. Cable was run in trays suspended between the north-and southbound bridges, and routed to and from the control houses. At each shore, a Canada Power Products SF6 puffer loadbreak switch with RFI was installed to provide fault isolation and sectionalizing between the utilities and the bridge. Along the bridge, nine other switchgear installations provide fault isolation and restoration. Depending on the specific loading, one or three 3-phase taps protected by RFI's are provided. Each switchgear package is equipped with fiber-optic modem/transceiver, RFI control box, 3-Phase 100:0.5A current transformer per RFI ways, 3-Phase 600:5A current transformer (for relaying on way #1), internal 14,400:120V potential transformers, and an SEL-351S protection and breaker control relay from Schweitzer Engineering Laboratories (SEL). "We opted to go with SEL-351S relays primarily because of their flexibility and programmability," explains Canada Power Products Engineering Manager Mani Nassereddine. "The requirements of the project were such that we needed to program the relays with a data base to fit the application. We needed the data base spread across the whole bridge, locally, instead of being centralized to one location." Nassereddine says that SEL's Mirrored Bits technology was critical to the system's automation

relay, which was also very attractive." Don Drone of Power Control Systems in Baton Rouge performed programming of the system's transfer-trip scheme, in collaboration with Canada Power Products. While highly experienced at working with Mirrored Bits and related SEL software, this was a unique experience for Droneyet also familiar. "This project could apply to other kinds of distribution systems or a loop in a city," Drone explains. "The goal is the same: to sectionalize the system, detect and isolate faults, and reestablish as much of the loop as possible." Drone started writing the logic equations for the SEL351S bridge relays in mid-2001 using SEL's AcSELerator software. AcSELerator is used to program SELogic Control Equations, as well as to develop, view and change settings, and analyze fault records and relay element responses using oscillography with time-coordinated element assertion and phasor/sequence element diagrams for the SEL-351S and other SEL relays. "There were two primary functions for Mirrored Bits communications," explains Drone. "The spec called for power to be restored within 30 seconds. If, for some reason, one or the other utilities should go out, we had to open up the shore switch at that service and close the tie on the bridge to reestablish power from the other shore. Secondly, the system isolates a fault out on the bridge, whether it's in a CT (current transformer) bus, cable or switch. In the process of isolating and clearing a fault, the system is re-energized from the tie point back to where the fault has been isolated." The switches out on the bridge are load break switches, which do not open for fault conditions. This created some challenges to fault isolation and programming the transfer-trip scheme. "The system was engineered with a circuit breaker at each shore, and whenever a fault occurs on the bridge, a circuit breaker at the shore will open," explains Drone. "SEL-351S relays are located at each switch, alongside a CT. Using Mirrored Bits and

and transfer-trip scheme. Mirrored Bits is SEL's patented communications SELogic, we can identify a fault to the extent that we know it's technology for providing high-speed, point-to-point between the CTs in two adjacent switches. But we still wouldn't communications of relay contact-status bits, and high-speed bus know if the fault was in the switch or in the cable. protection sectionalizing, restoration, and interlock schemes. "To further isolate the fault, I wrote logic equations that open Although Mirrored Bits technology was decisive, the switches to isolate each component, beginning with the Nassereddine says there were other factors that influenced the component farthest from the CT (cable, and then switch) and selection of SEL protection and communications products. then reclose back at the shore. If the fault remained the next "Schweitzer factory support was also significant. We consulted component was isolated and the unfaulted component was put with Karl Zimmerman (SEL application engineer/service back in service until the fault was cleared. At the same time that manager), who helped us determine how the whole system would we are isolating the fault, we are also closing the tie in the middle go togetherwhat relays would be the best choice and how these of the bridge to re-energize back to the point where there's a fault. things would interface with our switches and so on," And that's basically what the whole logic was throughout the Nassereddine explains. system just a lot of logic statements in order to determine the "We also needed communication between the relays across exact location of the fault, and then open the proper switches to the entire bridge," says Nassereddine. "The SEL fiber optic isolate it." transceivers made that very simple, and fit together so that we Drone says that SEL's AcSELerator software was quite useful didn't have to worry about integration. It was simply a plug-and- in copying and editing logic statements used at each switch on the play setup." bridge, and later in testing the switchgear under various simulated Integration with Canada Power Products selection of controls fault conditions at Canada Power. was another benefit of the SEL-351S. "We use controls from Testing the switchgear entailed laying all the assembled gear Survalent Technology (Mississauga, Ontario) for the automation out on the factory floor at Canada Power Products, and then of our products. It was relatively easy to integrate the SEL-351S testing various fault scenarios to ensure restoration of power. because it was working as an RTU for us as well as a protection "The SEL relay events recorder was useful in the factory

Cost Engineering Vol. 45/No. 11 NOVEMBER 2003

acceptance testing," says Nassereddine. "We relied on the map of the different relay words to assist in tracking faults and the timing between reconfigurations, because timing was an issue." Factory testing and acceptance, including controllers, software and master station functions was completed in September of 2001. "The relay component of this project was very minor in terms of cost," says Randy Pylant, vice president and Louisiana sales engineer for Power Connection, LLC, Dothan AL, which provided the SEL products for the entire project. "At the same time, SEL Mirrored Bits and the various analytical functions of the SEL-351S relays were acutely important. "This was the first time anything like this has been done over water," Pylant adds. "But when you consider the project's requirements, I believe that it is a good example of what can be done for large industrial applications such as industrial complexes or municipal projects." Schweitzer Engineering Laboratories (SEL) has been making electric power safer, more reliable, and more economical since 1984. This ISO 9001-certified company serves the electric industry worldwide through the design, manufacture, supply and support of products and services for power system protection, control, and monitoring. For more information, locate the SEL representative nearest to you by visiting the companys website at, or contact the SEL Industrial Solutions Group by phone (615) 507-2184; fax (615) 507-2188; or mail to 130 Seaboard Lane, Suite A7, Franklin, TN, 37067.


olunteers are needed for the AACE Certification Board. It's fun, fulfilling, frustrating, satisfying, time-consuming, and rewarding - all of these adjectives describe what it is like to be a member or chair of the AACE International's Certification Board. The Certification Board meets twice a year. For those who do not have company support for the travel, this can be a rather expensive proposition, although one of the meetings is normally held at the Annual Meeting. Perhaps your foremost justification is the ability to have a direct influence on the content and direction of your Association's certification operations. Additionally, you will find that satisfaction of helping to produce new materials and directions for other cost/management professionals can be very rewarding personally. You simply need to contact the Certification Administrator at: AACE International Headquarters, (304) 296-8444, or e-mailing:

Cost Engineering Vol. 45/No. 11 NOVEMBER 2003

2003-2004 AACE International Membership Directory

Included in this issue on CD-ROM
William E. Kraus, PE CCE, VP-Administration

ACE International is proud to present the 2003-2004 AACE International Membership Directory. It is the third edition of the directory in CD format and I, like many, was initially dubious of the utility and convenience proclaimed for that format. However, I now find I can carry the directory anywhere and I sure didn't do that when it was in hard copy. I've also learned to use the "Find" feature of Acrobat Reader which is very convenient and circumvents the problems I thought I'd have with not having a hard copy of the directory. I also have found the summary hard copy of the directory that is downloadable from the "Library" section of the AACE International website very convenient when I just want the summary information. For those of you who don't already have Acrobat Reader on your computers, there is a copy on the CD. In addition to the directory, you will find a plethora of useful information on the CD. Refer to the "White Papers" section to find: information on how to recertify if you're in a remote location or otherwise unable to regularly attend section meetings; to make a pitch to your employer as to why they should consider financially supporting your AACE International membership; or about the AACE International competitive scholarships or other valuable information. Are you considering approaching your employer to suggest that the organization become a Corporate Sponsor? I hope you will or that you will consider organizing willing section members to approach some of the organizations in your area to become Corporate Sponsors. The CD contains complete information and application information for the Corporate Sponsorship Program. Are you considering joining a technical committee or special interest group (SIG)? There is a complete list and a directory with appropriate phone numbers. Do you need information on how to contact one of the section officers in a remote region? The contact information is included on the CD. The membership data on the CD is organized in a variety of ways for your convenience. Are you looking for information on how to contact me? Since you know my last name, the logical means would be to go to the AACE International Members Listed Alphabetically portion of the CD and enter my last name in the "Find What" field of the "Find" tool and let it find me. Are you trying to remember the name of someone you met at a recent section meeting? Try the "Members by Region/Section" area. Well, that's enough about the Directory. However, before moving on, don't forget to thank the sponsors of this CD and to patronize them if and when you're in a position to do so. It wouldn't be the quality membership benefit it is without their efforts. However, the CD is also a work in progress and we need your continuing input on how to improve it. Don't hesitate to let us know of any improvements you'd like to see. At the Association level, AACE International continues to work to maximize the value of your membership in the Association. The website ( or continues to be a dominant internet feature in our industry with over 650,000 hits/month

in August 2003. Like this Membership Directory, many of the Association's publications are now in CD format. This has resulted in much lower handling, storage, and postage costs for the Association and a more efficiently-run organization means lower costs and hence, reasonable dues for all of us. To see the latest offerings of AACE International publications, see the Mid-Year Bookstore Update on the CD or visit the on-line bookstore on the Association website. Visit the bookstore often as the Technical Board is busily readying a number of new publications in the areas of Recommended Practices, Professional Practice Guides, and new sections of the TCM Framework. As well, as I write this, the Education Board is working hard on the next edition of the Skills & Knowledge of Cost Engineering. The Association's success in the area of certification as evidenced by the Certified Cost Consultant/Certified Cost Engineer programs has now carried over into the Interim Cost Consultant program with a total of 57 ICCs compared to four in 2001. We know of two college degree classes that are using the ICC exam as a final exam for the course and we are gaining new, young members as a result of this program. We are now moving into the area of specialty certification, (See page 29) beginning with a certification in planning and scheduling for which the first exam is targeted for next year's annual meeting. Speaking of annual meetings, this year's meeting in Orlando, Florida was very successful, highlighted by an incredible array of presentations and enthusiastic participants. Mark your calendars now and begin planning to attend the 48th Annual Meeting of AACE International scheduled for June 13-16, 2004, in Washington, DC. See the website for additional details. If you attended the Orlando Annual Meeting, you saw changes. We rolled out -hour technical sessions and expanded the skills and knowledge sessions to 2-3 hours. We need your inputWhat did you think of these? It's clear to some of us that if we're going to make the -hour technical session work, we need to refine the scheduling to better interface with 1-hour sessions. Check out the array of courses available under the "Distance Learning" tab at the website. No matter who you are, or where you are, anywhere in the world, if you want state-of-the art distance learning products without travel, AACE International can be the source for your on-line learning needs. This is just the beginningthe list will continue to grow as we develop our own courses, work in partnership with other organizations, and offer courses owned by third parties. There are many additional benefits and services available to AACE International members. To find out more, visit the website, review a copy of Cost Engineering, or contact the Association office or any staff member, officer, or director. In closing, I'd like to remind you of something Jim Rowings wrote in his "Farewell Address" in the June 2003 issue of Cost Engineering. He

challenged us to make this next year "the best year ever" by "building an active membership base that is highly skilled and willing to share their expertise to bring others along to develop their careers." Each of us is a stakeholder in AACE International. The phrase "nothing ventured, nothing gained" applies here-none of us can expect to reap the benefits

without venturing to make them happen. I plan to take Jim's challenge and I urge each of you to do so as well. We can indeed make this next year "the best year ever" for AACE International. x

ere pleased to bring you the 2003-2004 edition of the AACE International Membership Resource Guide and Directory on CD-ROM. This fully searchable and portable directory is winning over converts from the former hard copy edition. We thank Charles J. Golde of ARES Corp and Joseph W. Wallwork, PE CCE, of Greyhawk North America, LLC, for sponsoring this years AACE International Membership Resource Guide and Directory on CD-ROM.Of added value, this year we have added to the CD-ROM, as special supplements, a number of technical resources, including The Total Cost Management Framework and selected Recommended Practices, including Cost Engineering Terminology, the Cost Estimate Classification System, the Cost Estimate Classification System As Applied in in Engineering, Procurement, and Construction for the Process Industries; the Project Code of Accounts, and the Project Code of Accounts As Applied in Engineering, Procurement, and Construction for the Process Industries. Please e-mail any corrections or updates to All information listed was pulled in late September and any new members, changes, or updates since then will not be reflected.

Special Thanks to the 2003 AACE Membership CD Co-Sponsors

North America, LCC Construction Managers & Consultants Ares Corporation is dedicated to making the best technology work with engineering and the project management process. PRISM Project Estimator and PRISM Project Manager are project-proven software products that assist clients in managing data related to capitol improvement projects. PRISM Enterprise Suite is the latest in ARES suite of products and is designed to assist clients in managing the internal cost, progress, performance, and profitability of a services-oriented enterprise. PRISM Project Estimator Capitol Cost Estimating PRISM Enterprise Suite Services Cost Management Time Management Expense Management Enterprise Reporting For additional information please contact Joe Wallwork at: Phone: 516-802-5707 Website: E-mail: with offices in: New York New Jersey Ohio Texas

GREYHAWK is a full service provider of comprehensive construction consulting services. The services are focused into the following Practice Areas: Construction Management Claims Consulting Surety Consulting Project Controls - Cost Estimating and Management - CPM Scheduling Project Rescue & Investigation Information Technology Construction Consulting

PRISM Project Manager Capitol Cost Management Engineering Management Contract/PO Administration For more information contact: Software Products Group Risk Management

925-385-1000 website: 2101 Webster Street, Suite 1560 e-mail: Oakland, CA 94612

Cost Engineering Vol. 45/No. 11 NOVEMBER 2003

E Education ducation Board News

Mark T. Chen, PE CCE, Education Board Chair

Education Board Direction

1. 2. 3. 4.

he Education Board (Ed Board) is one of the associate boards of AACE International, along with the Technical and Certification boards. These three associate boards comprise the entity known as TEC. Members of the Education Board come from a diverse background, including past AACE International presidents, university faculty, and professionals from owner, engineering, consulting and construction firms. This group of volunteers is dedicated to meet the changing demands of educational needs of our valuable Association members and the cost management professional community. The long-term goals of the Ed Board are: Provide value-added education for the business community, existing and prospective members. Continue the development of distance learning via internet, CD-based medium, etc. Become a center of excellence in cost engineering/management education. Proactively work with the Technical and Certification boards to enhance AACE Internationals value.

International website. Seek partners to develop DL, using existing AACE International publications. Convert Skills & Knowledge Annual Meeting presentations to a CD-based medium. Make DL easier and more accessible to more potential users.

Since the inception of the Education Board in 1982, under the leadership of the first chairman, Brian D. Dunfield, the Ed Board has actively pursued the following key areas: Publishing educational materials including Skills and Knowledge of Cost Engineering and the Certification Study Guide. Providing diverse seminars at the regional level and annual meetings. Delivering a series of focused topics in the Skills & Knowledge track at the Annual Meeting each year. Managing the various AACE International scholarship programs. Promoting distance learning.

Approved Education Provider ProgramTo help companies and individuals find the best continuing education seminars possible, we have launched the new Approved Education Provider (AEP) program. Before the prestigious AEP logo can be included in a seminar promotion, a prospective education service providers courses need to undergo a thorough review, including submittal of learning objectives, course content, instructor qualifications, etc. The successful providers will be granted the privilege of using the prestigious AEP logo in their literature, and will be listed on our website, and published in Cost Engineering journal. AEP approval is equivalent to an ISO certification to ensure the education quality standard for seminar participants. Continuing Education SeminarsCourses that are presented by AACE International, and that have gone through this review will be recognized as AEP courses in our seminar literature, as well. We expect that within two years, the majority of AACE International seminars will carry the AEP logo. In addition, some hot or latest topics will be included in future seminar programs. We also will pilot a different seminar delivery format at the 2004 Annual Meeting to enhance the value of the program to our attendees. PublicationsThe fundamentals of cost management/ engineering remain to be the core competency of our profession. We are working on a new S&K publication to further enhance this core competency. This new edition is expected to be available in 2004. We are also developing a plan to support the educational needs for candidates in the upcoming specialty certification for planning and scheduling. FundingBeyond the tireless volunteer effort, funding of all above initiatives demands financial resources. In addition to the members contribution to the Education Scholarship Fund, we have launched an Endowment Fund drive to seek contributions to support future education product development, special research, and new technology exploration. The ultimate goal of the Endowment Fund is using its proceeds to fund the value-added education initiatives while growing the Endowment

Education Board members are currently engaged in the following activities: Distance LearningAACE International members are engaged in the professional services that require them to be at the locations where they can make the most contributions to their employers. Many AACE International members work close to job sites or at remote locations. The need to continue to sharpen their skills remains. However, the ability to take time off to travel and attend a classroom seminar becomes more challenging. This is why distance learning (DL) has gained momentum. Our approach to distance learning is: Explore and select proven distance learning providers in cost management and offer their DL courses through the AACE


Cost Engineering Vol. 45/No. 11 NOVEMBER 2003

Fund principal for future needs. This is an exciting and challenging era. The Ed Board appreciates your support and contribution. Please join our journey to become a center of excellence in cost engineering/management education. x

Articles published in previous editions of the Cost Engineering journal may be purchased individually through the AACE International Online Bookstore at AACE Internationals website, The cost per article is US$7.50 for nonmembers and US$5.50 for members of AACE International. If you are interested in purchasing additional copies of articles appearing in this issue please refer to the Article Reprint and Permissions information on page 42.

The 2004 Dues Invoices are in the Mail!

Payments should be made on or before December 31, 2003. If you have any questions concerning your dues invoice you may contact AACE International Headquarters at: ph: 800.858.COST fax: 304.291.5728 e-mail:

The following individuals and members of AACE International have recently passed the Second Quarter (2Q) Certification Examination and have received the CCC/CCE or ICC designations:
Izhar Ahmad, CCC Muhammad Umer Ahmed, CCE Syed Zubair Ahmed, CCE Besher M. Al-Besher, CCE Muhammad Ali Al-Ghamdi, CCC Rana Wajid Ali, CCE Gayla M. Badillo, ICC Cameron Bryan Beard, CCE Hamad Muddather Behery, CCE Christopher P. Bengtson, ICC William R. Cain, CCC Mark Chostner, CCE John J. Ciccarelli, CCE Brian S. Clemishire, ICC Brian Coyne, CCC Sandip De Sarkar, CCE Ibrahim Ahmed El Sharif, CCC Stephen W. Essig, CCE Jennifer S. Faucher, CCE Valerie Beth Fine, ICC Margaret Fisher, CCC Craig R. Gee, CCC Hassan Ali Halepota, CCE Tufail Ahmed Halepota, ICC Derek M. Hall, CCC Julie A. Harkin, ICC David L. Harrison, CCC James C. Henbest, ICC Ronald R. Henderson, CCE Richard H. Hodges, ICC Javed Iqbal, CCE Tariq Omer Khan, CCE David J. Klepac, CCC Edward M. Kopp III, CCC Nihmathullah Kalanther Lebbe, CCE Robert A. Lee, CCC Michelle Xin Li, CCE Carol Sheila Lombard, ICC George M. Lozano Jr., CCC Kevin B. Madole, CCC Sashi A. Mahtani, ICC Luis Menendez, CCE Paul Michael Miller, CCE Leigh Mork, CCC Dannis Stanley Mroczek, ICC Ebere Sam Nwansi, CCC Greporio R. A. Odivilas, CCE Jason S. Pembleton, ICC Manuel R. Peraza, ICC Maruboyina Ramgopal, CCE Adil Bin Rauf, CCE Patrick S. Ray, CCC Luis E. Roman, CCE Pimchanoke Saisamorn, ICC Mark C. Sanders, CCE Fredrick J. Schneringer, CCC Magsalake Thalitha Pheladi Serage, ICC Reena V. Shah, ICC Charles Christopher Smith, CCE H. Lance Stephenson, CCC Andy Sugito CCC Werner L. Uys, ICC Jason Van Howell, ICC Sannette Viljoen, ICC Steven W. Wageman, CCC Susan B. Zimmerman, CCE

If you would like more information about the AACE International Certification Program, please contact AACE Headquarters at 800.858.COST or e-mail

Cost Engineering Vol. 45/No. 11 NOVEMBER 2003


The AACE International

AACE Member Plus Program

AACE International needs your help to recruit new members. If you help us, well pay you!1 The AACE Member +Plus program has been expanded - it runs annually from July 1 to May 1. Now the
maximum number of coupons a member can accrue in one year has been doubled to 10! (That's up to US$20 per member you recruit - up to US$200!)2 As an additional bonus, every member who recruits six or more new members will receive a special gift! If you recruit 11 or more new members, you will also be entered to win one of three prizes for being AACE International's Top Recruiter!3

What are the prizes for Top Recruiter?

Grand Prize - Free registration to the current years Annual Meeting and one continuing education seminar of your
choice! Approximate value US$1500.4 First Prize - Your choice of free registration to the current years Annual Meeting or your initial certification or recertification fees paid for the next cycle. Approximate value US$700. 2 Second Prizes - Complete set of AACE Professional Practice Guides. This instant reference library currently contains 14 CDs and has a member price retail value of over US$500.

3 Third Prizes - a US$100 gift certificate to the AACE Bookstore.5 What do you need to do to start taking advantage of this great offer? Recruit a new member or a reinstated member 6 for AACE - endorse the original Membership Application of the new member at the time it is submitted by clearly printing the following endorsement on the bottom of the first page of the Membership Application: New member recruited by your name, member number, and your signature. That's all it takes to start earning AACE Member +Plus coupons - and to start saving money!

1-5 new/reinstated members 6-10 new/reinstated members 11 or more new/reinstated members -

1 AACE Member +Plus coupon per new member 1 AACE Member +Plus coupon per member, and a special gift from AACE International! 10 New AACE Member +Plus coupons, a special gift from AACE International, and a chance to win prizes as a Top Recruiter per member recruited!

Program only open to AACE members in good standing. Coupons only good toward AACE products, gifts, and services. 2 The amount of the coupon will be prorated based on the annual dues rate for the member recruited, as determined using World Bank's income classifications, and listed on the AACE International membership application. For those recruiting members from Group A countries (annual dues US$115) the coupon issued will be redeemable for US$20; for Group B countries (annual dues US$83) the coupon issued will be redeemable for US$15; for Group C countries (annual dues US$65) each coupon issued will be redeemable for US$10; for US Student Members (annual dues US$25) the coupon issued will be redeemable for US$5. Corporate Sponsorships are excluded. 3 Top Recruiters will be selected May 1. 4 If the Grand Prize winner is unable to attend the current years Annual Meeting, this prize can be deferred to the following years Annual Meeting. 5 Certificate good for AACE products only. 6 A reinstated member is one who has not been a member of AACE International for at least one year.


Cost Engineering Vol. 45/No. 11 NOVEMBER 2003

T E thics C The he E thics Corner

Dr. Kenneth K. Humphreys, PE CCE

Ethics in International Project Work

n an earlier Ethics Corner article, I discussed the ethical implications of doing business in other countries and the practice of gift giving in order to enhance the ability to obtain contracts or to expedite permitting. If you work for a company which engages in these practices or which uses an agent to give gifts abroad, or if you are aware of a company which does this, you would do well to bring this discussion to their attention. Engineering Times June 1998 issue carried an editorial on international work which bears repeating [1]. It said in part:

arise in numerous countries. Development of an international code of ethics that could be accepted by the world community would be an unequivocal step toward preventing such policies. Unfortunately, there is no international code of ethics which might help curtail those practices abroad which US engineers see as being unethical. There is also no justification for doing as the Romans do. Engineers must obey their codes of ethics, no matter what custom prevails at the project location. That may mean that the job will be lost in some cases, but that is part of the price of practicing ethically. Engineers who do think it is acceptable to use an agent abroad to do the dirty work, thus acting like Pontius Pilate and washing ones hands of the problem also need to realize that they are committing a felony under US law and are subject to prosecution. At one seminar I conducted, a participant said the those who wish to engage in this practice have only one option, to give up their citizenship and become a citizen of the country in question. So long as they are US citizens, the Federal Corrupt Practices Act applies to them. His comment also applies to corporations. A US corporation is a citizen in the eyes of the law. Those companies engaging in bribery can avoid the law only by giving up their corporate charters and reincorporating abroad. Is your company willing to do that? x

Engineers involved in an international business situation that strains their professional code of ethics may wish that an interpreter of ethics abroad were at least as accessible as a translator of languages. In the current absence of a uniform international approach, a good sense of ethics may feel like a handicap to professionals trying to succeed within cultures that play by different rules. If engineers do as the Romans do in violation of their ethical code, they may make shortsighted economic gains, but in the long run, they can lose the respect of their peers and the international community---and break the law. Bribing public officials to influence the award of projects is just one example of an unethical practice encountered overseas. Outlawed by the Federal Corrupt Practices Act in the US, such situations nevertheless

AACE International Specialty Certification Update Planning and Scheduling Professional (PSP)
AACE International is developing the Planning and Scheduling Professional (PSP) certification designation to provide a method to credential professionals with knowledge and expertise in these disciplines. This unique program will distinguish professional planners and schedulers as having the abilities to pass a rigorous exam aimed to show their capabilities. The creation of this first-of-its-kind certification program was revealed in June, 2003. The first examination is scheduled in conjunction with the 2004 AACE International Annual Meeting, June 13-16, 2004, at the Omni Shoreham Hotel in Washington, DC. Michael C. Ray, PE CCE, President of Legis Consultancy Inc., of Atlanta, GA, is leading the task force by serving as Task Force Project Manager. Vera A. Lovejoy, CCC, is the co-chair; Other members of the PSP task force include: Abhimaynyu Basu PE; Jennifer Bates, CCE (Technical Board Representative); Ozzie F. Belcher (AACE International President); Thomas W. Burns Jr.; Ron. F. Cagle; Timothy T. Calvey, PE; Kymberli Coffman, CCE (Certification Board Representative); Edward E. Douglas III, CCC; Dr. John O. Evans III; Clive D. Francis, CCC (AACE International President-Elect); Lee J. Hobb; Kenji P. Hoshino; Marlene M. Hyde, CCE; Nicholas L. Kellar, CCC (Certification Board Representative); Gilbert A. Laterza; Paul E. Makris; Donald F. McDonald Jr., PE CCE (Education Board Representative); Barry G. McMillan (AACE International Executive Director); Michael R. Nosbisch, CCC; George H. Ostermayer III, CCE; Glen R. Palmer; Thomas F. Peters, PE; Zartab Z. Quraishi, PE CCE; Dr. Parviz F. Rad, PE CCE (Education Board Representative); Dr. James E. Rowings Jr., PE CCE (AACE International Past President); Robert Seals; Ian A. Street, CCE; Heath I. Suddleson; Stephen P. Warhoe, PE CCE (AACE International Director, Region 5); Anthony J. Werderitsch, PE CCE; Ronald M. Winter; James G. Zack Jr. (AACE International Vice President-TEC). For more information on PSP certification, see page 29. For more than a quarter of a century, AACE International has defined new levels of professionalism through rigorous certification programs for cost and management professionals providing the Certified Cost Consultant (CCC) and Certified Cost Engineer (CCE) professional designations. AACE International also has an Interim Cost Consultant (ICC) certification for those new to the profession. AACE's CCC, CCE, and ICC designations represent the standard of excellence in today's cost and management industry. For additional information on AACE International, its certification programs, or to participate in development of this work, please visit our website at or contact AACE International Headquarters at 800-858-COST or 304-296-8444.

Cost Engineering Vol. 45/No. 11 NOVEMBER 2003



Measured Mile Process

Project Controls to Support Equitable Recovery of Production Inefficiency Claims
Thomas W. Presnell, CCC
ABSTRACT: The claims process is not a new phenomenon in construction projects. In most cases, the claims process is the only avenue that contracting parties have to resolve differing opinions relating to the cause and effect of events that occur during the course of construction. With increasing frequency, contractors are requesting equitable adjustment for cost and time that relate to production inefficiencies, claiming that production losses are a direct result of changes to the original scope of a project. There are many methods used by contracting parties to deal with production inefficiency issues, however, the "measured mile" method is the most credible and widely accepted method. This article will describe a process that has been used successfully on a number of projects to resolve production inefficiency issues using the "measured mile" method. The first component necessary for successful implementation of this process is to design the process to be user friendly in the field where data will be generated. The next component, describes the estimating and scheduling procedures that are the foundation of the "measured mile" process. The final component will set forth the steps necessary for implementation of the process in the field, which will include the method for calculating interim progress and computing cost and schedule forecasts for a discreet work activity in the project scope. The "measured mile" process is designed to provide those charged with using it the absolute simplest format with which to generate the maximum amount of accurate data for project and corporate managers to use to avoid the crippling affects of prolonged disputes or litigation relating to production inefficiency disputes. KEY WORDS: Claims, measured mile, inefficiency, recovery and production

eliminates disputes over the validity of cost estimates, or factors that are not the fault of the owner, but still may have contributed to production inefficiencies. After segregating unimpacted and impacted periods of performance, labor productivity ratios are calculated. The method used to calculate productivity ratios is dividing the actual amount of hours by the actual quantities of work performed [5]. The productivity ratio during the unimpacted period is the standard, or the performance mile, by which productivity is measured. In the absence of project specific unimpacted production data, historical productivity data is acceptable, providing the contractor can validate that the work activity is similar to the work activity for which alleged production inefficiencies are being claimed [5]. LEARNING CURVE An important element of the measured mile method of computing production inefficiencies is accounting for work activity startup or learning curve. The learning curve validates that labor units tend to decrease with experience and practice. The effect of a learning curve is that each succeeding identical repetitive unit of work performed by the same crew requires fewer employee-hours of work than that of previous units. Eventually, productivity tapers off and becomes flat, primarily owing to a lack of supervisory attention and boredom [3]. Changes are a major cause of production inefficiencies, which cannot be accounted for at the beginning of a project or factored into learning curve calculations considered during the estimating and scheduling process. The amount of improvement will correlate with the degree of difficulty for a particular work activity and the dependence on equipment production limitations such as a tower crane. Work activities that are labor-intensive will improve more than work activities that are limited by equipment production capabilities. The learning curve rates of improvement for construction projects normally fall within a 70 to 90 percent range. Smaller values are possible, but only for more complex, labor-intensive, operations. For example, forming of

roving production inefficiency is a difficult task, however, it is an essential component to recover impact losses. More often than not, project records do not contain sufficient information to calculate productivity losses and project staff members may not know the best method of assembling accurate data to compute losses. There are a number of approaches used to demonstrate production inefficiencies. These methods include the total cost method, modified total cost method, expert opinion, or industry studies. These methods are considered inaccurate or inapplicable and this results in many inefficiency claims being significantly discounted or abandoned altogether. This is primarily because of the huge cost required to forensically assemble and compute losses that contracting agencies will believe and accept. The measured mile is the most credible and widely accepted method for computing production inefficiencies providing that entitlement criteria is accepted [5]. The measured mile method compares productivity of impacted periods with that of unimpacted periods.

The difference is the amount of the inefficiency component of the claim. The process was developed and implemented to accurately monitor production efficiency. This has resulted in an equitable resolution for a number of production inefficiency claims. The following sections of this article will describe a rational set of steps, beginning with the estimate, flowing through schedule/budget development, to implementation in the field. These are the building blocks of the measured mile process. An important component of the process is education of the project team to create a culture, at the project level, that encourages vigilant monitoring and maintenance of production data. THE MEASURED MILE METHOD The most important factor in preparing a production inefficiency claim, using the measured mile method, is to identify the unimpacted and impacted work activities, which must be identical. The measured mile calculation is favored because it only accounts for the actual effect of the alleged impacts. This


Cost Engineering Vol. 45/No. 11 NOVEMBER 2003

intricate concrete structures might experience a 70 percent ratio, while placing concrete is more likely to be in the 90 percent range [3]. It is important to note that the learning curve factor represents an approximation of reality and is merely a useful model in predicting and understanding productivity. Even though the concept is approximate, it provides for a reasonable accounting of human endeavors and is a credible approach in setting up a process to track productivity using the measured mile process. MEASURED MILE PROCESS The first step in setting up the measured mile process to track production efficiency is to understand its objective. The process is meant to provide project management teams with timely and accurate data relating to production efficiencies for discreet work activities. With accurate real time production information, project management teams are able to recognize negative production efficiency trends and implement measures to correct, or at a minimum mitigate, their overall effects to the project. Construction contracts contain specific terms regarding notice and submission of claims, that if not met by the contractor, can result in the claim being waived or at least becoming a prolonged dispute. The measured mile process is a tool that enables contractors to notify owners and other project participants of a potential problem, in accordance with contract notice requirements, allowing the contractor to identify cause and effect relationships at the time of an impact. By doing so, project participants can avoid prolonged disputes and expensive forensic production studies. These activities commonly devastate relationships, harm staff morale, and can undermine a successful project outcome. The most important factor in the measured mile process is field implementation. The end user of the process is typically the crew foreman responsible for actual construction of a discreet work activity. Field crews are production driven individuals and do not embrace tedious paperwork tasks, especially when problems arise that prevent them from achieving optimum production objectives. To overcome a foremans reluctance to be vigilant in

providing the management team with accurate daily production information, the process must be designed to provide adequate data in the briefest form possible. In other words, the daily input of information must be simple, easily assembled, and calculated. The categories of production information needed to effectively track production efficiencies and support the measured mile method include the following. defining the work activity or cost account for work performed; logging accurate worker-hours used to perform the work; logging accurate quantities of work completed for the period; and briefly defining any condition or event that prevented optimum production such as material deliveries, insufficient design information, field directives, or changes to the original work scope.

and field execution. The following information provides a brief description of these five steps [2]: 1. Conducting a thorough review of all contract documents, including addenda, to get a clear understanding of the project. This review will provide the estimator the opportunity to identify any deficiencies in the documents. The estimator will also be able to determine how the estimate should be prepared and how the project will be executed. 2. Generating an estimate preparation schedule to ensure that the estimate will be completed on time. The estimate preparation schedule will identify the estimating resources necessary to prepare an accurate and complete estimate. 3. Preparing the project summary of estimate. This will identify which work will be performed by the firms own forces and those elements that will be subcontracted out. The summary of estimate usually has three sectionsdirect costs, indirect costs, and a summary of alternates, if applicable. 4. Preparing a bid file. This step is of paramount importance to ensure that estimating data is assembled and stored in an organized fashion for use during performance of the work, or for reference in the preparation of future estimates. Many times during a projects life disputes arise regarding the validity of a contractors estimate and the information can be a valuable tool in substantiating the basis for the firms price to perform discreet elements of the work. 5. Preparing for the take-off. This involves the estimator making sure that all estimating forms and reference materials are available to the estimating staff. Confirming that bid solicitations have gone out to all subcontractors and suppliers. Finally, that the estimating staff has a comprehensive understanding of the contract documents, the construction plan, and the sequence contemplated for executing the work in the field. There is one additional step, which must be accomplished to ensure the estimate will support the implementation of the measured mile process in the field.

To simplify the type and amount of information required from the field crews, the setting up of the measured mile process must be accounted for during preparation of the project estimate and must flow through the schedule development phase. ESTIMATING PLAN The measured mile process requires that a definitive estimate be prepared. A definitive estimate is the most common estimating approach used for construction projects. The most widely-used method for preparing a definitive estimate is the unit or line-item cost method. The line-item content reflects the high degree of detail in the scope and design documents and the unit quantity is usually based upon drawing take-off [4]. The line-item method also provides the basis for setting up the measured mile process to track discrete work activities in the field. The definitive estimate approach involves five steps to ensure proper organization of the estimating effort. Following these five systematic steps will ensure that the estimate will follow the requirements set forth in the bid documents, be prepared timely, be broken down into an adequate level of cost elements, be backed up by sufficient cost data, and most importantly follow a logical sequence for use in schedule development

Cost Engineering Vol. 45/No. 11 NOVEMBER 2003


This step involves the estimator collaborating with the person responsible for developing the project schedule to establish a work breakdown structure or WBS. The WBS is a basic management tool that defines the project along activity levels that can be clearly identified, managed, and controlled. A carefully planned and effectively developed WBS provides the proper level of information to each individual involved in cost and schedule control [6]. This step is especially important for projects that have similar work activities being performed in phases or quadrants at different times during the course of construction. In some cases, this may be the estimator, however in most cases this task is performed by a project controls engineer or the project manager and superintendent assigned to the project. Having accomplished these steps to organize the estimate and determining the WBS structure, the estimator is now prepared to begin estimating discreet work items. At this point, the investment in careful planning and forethought become the foundation for the measured mile process. The estimator will delegate specific portions or sections of the project to the estimating staff for completing of take-offs for each particular work activity, before moving to the next activity in their assignment.

Light metal framing will be used as an example to demonstrate how the detailed estimate is prepared, keeping in mind the end user or field crews responsible to provide accurate cost data during the course of construction. Again, this will support the measured mile process. The estimator will break down and assign unit cost for the components of the light metal framing work activity in detail, to account for each degree of difficulty. For example, layout and installation of top track is more labor and equipment intensive than layout and installation of the bottom track. Blocking or backing is more labor intensive than installation of studs, and constructing door or window openings has its own production factors and material specifications. Figure 1 is an example of how an estimator would quantify and price a complete installation. The level of detail necessary for the estimator to accurately quantify and price the light metal framing work would be impractical, if not impossible, to track as discreet cost items in the field. This is because each discreet element of construction would be installed as the crew progressed each day. To avoid errors in reporting production progress in the field, minimizing quantity calculations is extremely important. For example, light metal framing is commonly estimated in lineal feet of material to be installed. Accurately reporting daily production ESTIMATE DETAIL UNIT Unit Lbr Mat'l Sub LF LF LF LF LF LF LF LS 0.65 1.23 0.95 0.78 2.25 1.95 2.56 0.00 0.02 0.78 0.78 0.56 0.56 0.56 0.65 1,500.00

would require field crews to keep track of each piece of material installed. To resolve this, the estimator develops work packages that can be summarized as one work activity, in the simplest unit of measure for field crews to quantify and report at the end of each workday. Figure 2 illustrates how the light metal framing activity would be simplified to support accurate measured mile reporting. The light metal framing work activity has been simplified so that the daily quantities can be recorded in lineal feet of wall framing installed. In most cases, the crew foreman would turn in a daily report that included a string of measurements to be calculated by a project controls engineer and input into the measured mile production worksheet. Because contractors usually apply unit prices from historical cost data accumulated on similar projects, the learning curve is a part of the unit pricing applied to discreet work activities. In addition, composite crew rates are applied that account for the historical crew mix to accomplish certain work activities. It is also important to note that mistakes are made during the estimating process. For this reason contractors routinely re-estimate work activities that are to be performed by their own forces. For the measured mile process to work properly and provide managers with credible and accurate information,

Cost Accnt 09150 09151 09152 09153 09154 09155 09156 09157

Description Layout Walls Upper Track 3 1/2" 20GA Lower Track 3 1/2" 20GA Studs 3 1/2" 20GA Frame Door Openings Bracing 3 1/2" 20GA Backing 3 1/2" 20GA Worker lift

Qnty 3875 3875 3875 29063 782 2422 388 1


EXTENSION Mat'l 77.50 3,022.50 3,022.50 16,275.00 437.92 1,356.25 251.88 1,500.00 25,943.55

Sub 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Total $ 2,596 $ 7,789 $ 6,704 $38,944 $ 2,197 $ 6,079 $ 1,244 $ 1,500 $67,052.70

0.00 2,518.75 0.00 4,766.25 0.00 3,681.25 0.00 22,668.75 0.00 1,759.50 0.00 4,722.66 0.00 992.00 0.00 0.00 TOTAL 41,109.16

Figure 1 Estimate Detail

Total Cost $ 67,052.70

Labor Cost 41,109.16

ESTIMATE WORK PACKAGE SUMMARY Wage Total Prop Prop Qnty Rate Work Hrs Crew Shift 3,875 $38.68 1,063 5 8 LF HR HRS EA HRS

Dur CD'S 27 CD'S

Prod Day 146 LF

Unit Cost $10.61

Figure 2 Work Package Consolidation

16 Cost Engineering Vol. 45/No. 11 NOVEMBER 2003

adjustments to quantities and worker-hours must be made that account for estimating errors. The contractor will adjust for these differences out of project buyout or out of the project buyout fee. SCHEDULE AND SCHEDULE OF VALUES Once the contractor has been successful in bidding and being awarded a contract for a project, refining the project plan and schedule is the next step. The project schedule forms the basis for which performance and earned value is measured and paid for by the owner as the project progresses. While estimates quantify material and worker-hours to perform the work, the schedule defines the number of workers and the durations for each discreet work activity that will result in project delivery within the time constraints required by the contract documents. The initial project schedule forms the baseline by which all progress will be measured and is commonly referred to as the baseline schedule. There are a number of methods by which progress can be measured, the units completed, incremental milestone, start/finish, supervisor opinion, cost ratio, and weighted or equivalent methods. Each method is designed to measure progress in terms of time and cost for different contract formats.

The measured mile process is designed for use with the units completed method [1]. This method is most commonly used in lump sum building construction contracts. The units completed method is applicable to tasks that involve repeated production of easily measured pieces of work, when each piece requires approximately the same level of effort. Setting up the WBS during the estimating phase makes collapsing the estimate detail into discreet schedule activities much easier. The development of the cost breakdown structure or CBS then flows from the estimate for cost loading the baseline schedule. It is during this phase of schedule development that crew or resource parameters are set to ensure that appropriate crew and equipment resource assignments are accounted for. For example, the estimate computes the cost and quantity of labor, material, and equipment required for discreet work activities, but does not necessarily take the next step to actually develop labor, material, and equipment sequencing and durations for each discreet element of work. From the estimate, the scheduler has the number of worker-hours and the quantities of material and equipment required to accomplish discreet elements of work such as light metal framing. The estimate includes more detail for each

element of work than would be reasonable to track accurately in the field, because the same crew would be installing the work as a system, performing many different tasks during each work period or day, as in the case of light metal framing By taking into consideration historical or industry production ratios the scheduler assigns an optimum leveled crew mix to perform the work. This is an important step because over-staffing or under-staffing a discreet work activity can result in less than optimum production efficiencies. Once the scheduler makes appropriate predecessor and successor logic ties for all work activities, the schedule forms the baseline plan for construction. The schedule not only defines the sequence and durations of work for critical and noncritical work activities, it also forms the original scheduled value for each work activity, which will be used to measure progress and production efficiencies during the course of construction. Figure 3 illustrates a sample schedule plot defining the light metal framing activity with predecessor and successor activities. The schedule of values will be used to determine the amount to be paid the contractor for a particular period of performance. Figure 4 illustrates a typical schedule of values used to determine earned value for specific periods of performance.

Figure 3 Sample Schedule Plot - Light Metal Framing

SCHEDULE OF VALUES Work Compl Previous Period(s) $ 35,000 $ 21,000 $ 5,000 $ $61,000 Work Compl This Period $6,500 $ $ $ $6,500 Balance To Compl Less Retainage $ 7,826 $ 25,703 $ 80,056 $ 93,579 $ 207,164

Act. ID 07-07100-01 09-09100-01 09-09250-01 09-09900-01

Activity Description 1st Flr Fireproofing 1st Flr Lt Mtl Framing 1st Flr Hang GWB 1st Flr Tape and Paint TOTALS

Sched Value $58,976 $67,053 $98,756 $93,579 $313,364

Mat'l Stored $ 5,000 $17,000 $12,000 $ $ 34,000

Percent Compl 79% 56% 17% 0%

Retain'g $ 4,650 $ 3,800 $ 1,700 $ $10,150

Figure 4 Sample Schedule of Values - Light Metal Framing

Cost Engineering Vol. 45/No. 11 NOVEMBER 2003 17

From the baseline schedule and schedule of values information, the measured mile process can now be set up for implementation during the construction process. FIELD IMPLEMENTATION The measured mile process is designed to provide an accurate tool for project and company managers to track and quickly recognize variances in planned production trends. The information must be distilled down to fundamental categories relating to production cost and time efficiencies. The source of the information will be generated by the crews performing each discreet work activity and therefore must be simplified to allow the majority of the crews efforts to remain focused on performing work at optimum levels. The information must also provide adequate data, in the simplest form, to compute progress and production efficiencies. What information does the measured mile process require to provide managers the ability to recognize production efficiency trends? The following information is required. LaborThe amount of labor hours expended in a specific work period. QuantityThe amount of work installed in a specific work period.

From these four categories of information, what can managers learn about a discreet work activity? The following can be learned. LaborMeasured against the original plan. Are crews working on a discreet work activity according to the original plan? Are crews able to work full shifts or not? QuantityMeasured against the original plan. Are as-built quantities meeting planned production objectives? TimeMeasured against the original plan. Is the work being performed continuously in the same time period(s) as originally planned? Cause and EffectWhen variances occur. Is there a causal event that is The four fundamental bits of affecting the crew from meeting information, provided by field crews, planned production efficiencies? generate the entire universe of information The measured mile process only that will enable managers to make critical requires that crews provide the above four decisions on a daily basis. Figure 5 is a categories of information at the end of each labor productivity comparison worksheet work period. From these categories of that has been successfully implemented on information, spreadsheets or databases can major construction projects in the past to generate comprehensive reports that track, manage, and resolve production inefficiency issues. Labor Productivity Worksheet Calculations Comparison

TimeThe number of specific work periods expended to perform the work. Cause and EffectA brief description, in real time, describing events, which affect the planned production ratio.

provide managers with the following information for a discreet work activity: as-planned vs. actual labor comparison; cumulative work hour-to-date totals; work hours to complete total; As-planned vs. actual quantity comparison; cumulative quantity to date installed totals; quantity to complete total; as-planned vs. actual unit cost comparison; cumulative cost to date total; planned duration; percent complete; projected activity duration; activity gain or loss computation; original scheduled value; cost to date; projected cost at completion; production ratio, in percent, compared to original plan; and events that are affecting production ratios (cause and effect).

Crew 1. RateThe burdened hourly wage rate for each crew member. Burdened rate includes all fringe benefits and employer contributions. 2. Composite crew rate burdened Equals the sum of all burdened hourly wage rates divided by the number of workers in a crew. Original Plan 1. Labor ValueEquals, the total work activity cost for labor. 2. QuantityEquals, the total number of units to be measured in square feet, lineal feet, etc.
Figure 5 Labor Productivity Comparison Sheet
18 Cost Engineering Vol. 45/No. 11 NOVEMBER 2003


4. 5. 6.

Worker HoursEquals, the scheduled value/composite crew rate burdened. Unit CostEquals, labor value/ quantity. Schedule DurationEquals, worker hours/daily as-planned crew hours. Average Daily ProductionEquals, quantity/schedule duration.

Schedule 1. Percent CompleteEquals, quantities completed to date/planned quantity. 2. Projected DurationEquals, to complete quantity/(quantity complete to date/worker hours)/(crew size x shift hours) + actual days worked. 3. VarianceEquals, projected duration minus planned duration. Budget Over/Under 1. Projected CostEquals, (planned quantity - actual daily cumulative quantity) x actual daily unit cost + cumulative daily cost to date. 2. ProdEquals, actual daily quantity/ planned daily quantity as a percentage.

Cost to DateEquals, the (actual should be able to understand the daily unit cost x actual daily quantity) importance of the information they provide + the cumulative cost-to-date from the and how the information is to be reported. A by-product of the worksheet is trend previous work period. charting, which updates each time new The labor productivity comparison work period data is entered and calculated. worksheet is set up for each discreet work The trend charts are powerful visual aids activity by project control engineers prior when explaining production inefficiencies to work commencing in the field. The to owners. These charts can be generated worksheet is updated daily by the project daily, weekly, or for entire work activity controls engineer from handwritten daily duration. Figure 6 illustrates the asforeman reports. While there is some planned vs. actual worker-hour comparison redundancy with input, it has been trends during the entire work activity designed to be minimal. Only four duration. Figure 7 illustrates the asfundamental bits of information is planned vs. actual quantity comparison required, including work hours, number of trends during the entire work activity days worked, quantity installed, and a brief duration. Figure 8 illustrates the asdescription of events for the work period or planned vs. actual unit cost comparison day. As with any process the key to its trends during the entire work activity success is education. The field crews duration. 4.

Worker Hour Totals 1. ActualEquals the sum of daily worker-hours. 2. As-PlannedEquals the leveled daily worker-hours as planned. 3. VarianceEquals, as-planned daily worker-hours - actual daily workerhours. 4. CumulativeEquals, cumulative worker-hours from previous work period + current work period actual Figure 6 As-Planned vs. Actual Worker-Hour Comparison Chart worker-hours. Quantity Totals 1. Quantity totals are calculated in the same manner as worker-hour totals above. Unit Costs 1. ActualEquals, (actual daily workerhours x composite crew rate burdened)/actual daily quantity. 2. As-PlannedEquals, the as-planned unit cost after adjusting for learning curve. In this case, a 90 percent factor has been applied through the eighth work period in the beginning and at the end of the work activity. 3. VarianceEquals, the as-planned unit cost - the actual unit cost.

Figure 7 As-Planned vs. Actual Quantity Comparison Chart

Cost Engineering Vol. 45/No. 11 NOVEMBER 2003 19

he measured mile process is simple to understand, yet it is a comprehensive tool for managers to use during the course of a project. The process is specifically designed to validate as-planned production ratios and demonstrate discreet impacts, which adversely affect production efficiency. As with any process the baseline data must be credible. A contractor cannot expect to be compensated for his or her errors. Estimating and scheduling errors need to be accounted for when implementing the measured mile process. To be successful, the process requires forethought on the part of contractors from the estimating phase of pursuing a project, to the point of implementation on the jobsite. It should be considered as an investment, which if used diligently will yield positive benefits throughout the life of a project in terms of resolving issues timely and preventing expensive prolonged disputes that often last for years after a project is completed. The measured mile process only requires project participants to perform the basic fundamentals of project management and control. There is nothing extraordinary about the way information is processed that would create a burden on the project management or project control staff, nor does the process require additional field management staff to properly maintain production data. The measured mile process was developed for use on fixed-price competitively bid contracts, however, it can be used effectively in any contractual arrangement. The key to success is the project teams commitment to the process. x

Figure 8 As-Planned vs. Actual Unit Cost Comparison Chart 6. Sweet, J. Legal Aspects of Architecture, Engineering and the Construction Process. Fifth edition, (1994).


REFERENCES 1. 2. Certification Study Guide, Second edition, AACE International, (1999). Humphreys, K. and L. English. Project and Cost Engineers Handbook, Third edition, revised and expanded, (1993). Pinnell, S. How to Get Paid for Construction Changes (1998): pgs. 421 423. Skills & Knowledge of Cost Engineering, AACE International, Fourth edition, (1999): pgs. 3-1,2 and 3-2,3; and 11-1. Schwartzkoph, W., and J. McNamara. Calculating Construction Damages, Second edition, Boston, MA, Aspen Law & Business, (2001) pg 64.

ABOUT THE AUTHOR Thomas Presnell has over 35 years of experience in the construction industry. He started as a carpenter in 1967. He became a licensed general contractor in 1974. He founded Presnell Construction Company and conducted business in California until 1987. After that, he performed in an executive management capacity for established construction corporations in California, the Pacific Northwest, and Alaska. From 1987-1999, he was responsible for overall management of more than $350 million dollars of construction projects in Alaska, California, Hawaii, Oregon, and Washington State. He attended Colorado University, with an emphasis on architecture and business. He became a member of AACE International in 2001 and became a Certified Cost Consultant in March 2002. He is a member of the Seattle Section where in 20022003, he served as Section Vice President and this year he is Section President.
Certification Papers - Each candidate seeking certification as a Certified Cost Consultant/ Certified Cost Engineer (CCC/CCE) is expected to write a professional paper of a minimum of 2,500 words on a cost engineering-related subject and it must be submitted before or at the time of the examination. Each month some of the top scoring entries are published as an example of what constitutes a good entry. Other members and readers will also gain insights on current industry trends and projects with the publication of these papers in the Cost Engineering journal.





This internet-based section can be reached by going to Groups at SBC Yahoo. Signing up to the CyberSection involves getting a Yahoo ID, and then joining the group. The SBC Yahoo service is free and allows AACE to take advantage of current and advancing online meeting technology. Members may also view previously downloaded presentations from the group site files and post messages. Be sure to stop by the CyberSection and say hello!


Cost Engineering Vol. 45/No. 11 NOVEMBER 2003

F or the Boo F or the Bookshelf

Mark C. Sanders, PE, CCE

Blueprint for Project Recovery - A Project Management Guide

There are no good rules, just good sense.

ow do you feel about that statement? Ronald Cagle, in traceability matrix; and the tracking of responsibility for the his book Blueprint for Project Recovery-A Project fulfillment of those requirements through a requirements Management Guide, says that it is half right-there are flowdown matrix. Cagle walks through the identification of good rules, but everything needs to be interpreted with good specific project problems through the use of those tools. The identification of a sense. Cagle is the principal of problem, such as the failure to Modern Management, Inc., a properly staff the project, does not management consulting firm, and solve the problem, however. The his book, subtitled, The remainder of the book focuses on Complete Process for Getting identifying the specific cause of Derailed Projects Back on the problem, developing possible Track, was published in 2003 by solutions, choosing the best AMACOM, a division of the solutions, and implementing American Management Associthem. Most of the techniques ation. presented will be familiar to those Cagles book presents a projwith a business management ect plan based on the consistent background, while they may be application of rules that can be tainew to many in the construction lored for a specific organization industry. and project type. The first sections So, are there good rules, or is of the book are organized in an good sense the only insurance outline format, based on two against project derailment? checklists, the programmatic Cagles answer appears to be that checklist and the technical checkour good sense should be applied list. Those lists provide an outline to the continual development of of items that constitute a wellbetter rules. Many of us are so organized plan from the developcaught up in our projects that we ment of an initial statement of never get around to improving our work through delivery of a final processes. We solve a problem product. The programmatic without ever going back and checklist focuses on contract, polidetermining the root cause and cy, and organizational issues, correcting it, so that the problem while the technical checklist is less likely to occur again. Cagle focuses on the architecture, outlines a set of steps whereby we design, and execution of the projcan change our organizations ect. Blueprint for Project Recovery - A Project Management processes in an official way so that In the first presentation of the Guide, by Ronald B. Cagle, 284 pages, 2003, AMACOM, over time, we benefit from our checklists, Cagle discusses ISBN 0-8144-0766-8 past mistakes. While that will not methods for identifying project performance problems. Then he presents the checklists again prevent problems, it will help to minimize them. In conjunction and discusses how to recover from those problems. Because with some good sense, the same problem will not recur. Cagles book includes numerous references to MIL Cagles checklist items are broad in scope, the recovery discussions are necessarily broad also. Thus, the method that standards, books, and software packages that can be used to Cagle outlines can be applied to the full gamut of project types, implement the techniques presented. The book also includes a CD of the forms and checklists presented. The checklists are but it must be tailored for a specific industry and organization. Several of the best ideas that Cagle presents include the hyperlinked to both Cagles items and numerous blank forms for comparison of standards between your industry, your the addition of customized items, providing a good starting point organization, and your clients organization through a standards for the development of a customized project management plan. x traceability matrix; the tracking of project requirements from the SOW through design and execution through a requirements

Cost Engineering Vol. 45/No. 11 NOVEMBER 2003




Improve Profitability Through Effective Project Management and Total Cost Management
Dr. Nick J. Lavingia, PE
ABSTRACT: A company that consistently selects the right projects and executes them with excellence can improve return on capital employed (ROCE) and ultimately total shareholder return (TSR). In today's competitive business environment this can mean a difference between a profitable company versus the one that becomes a takeover target. This practical article focuses on how to improve profitability through effective project management and total cost management (TCM). Four key elements to success are a structured project management process, management's active involvement, application of value improving/best practices and total cost management. The formula for improving profitability through effective project management and TCM is simple, however, implementation of these concepts is a big challenge in the industry. This article is reprinted from the 2003 AACE International Transactions. KEY WORDS: Total cost management, project management, and return on capital Business Case for Improvement

following the project management process, best practices, and sharing lessons learned. Value Improving/Best Practices Value improving/best practices in conjunction with a systematic project management process can help achieve worldclass performance. Implementation of these practices can optimize cost, schedule, performance, and safety aspects of any project. Figure 2 shows the timing of these value improving/best practices on a PMP roadmap. Decision and Risk Analysis (D&RA) D&RA is a process to compare and decide among various alternatives by quantifying risks and uncertainties inherent in financial outcomes of the alternatives (i.e., NPV, ROR, payout, etc.). Tools such as strengths, weaknesses, opportunities and threats (SWOT) analysis, decision hierarchy, strategy table, influence diagram, decision tree, and tornado diagram are used to communicate most likely, optimistic, and pessimistic outcomes of any decision.

ffective project management improves Return on capital employed (ROCE) by increasing revenues, decreasing expenses and reducing capital employed. ROCE is a common metric in the industry to measure capital efficiency. Projects are the vehicle by which business opportunities are turned into valued business assets. Successful projects are defined as the ones that are delivered on time, within budget, and meet established business objectives. If a company selects and builds good projects, it can increase its revenues, decrease life cycle costs, (operating and maintenance costs), and use less capital to achieve its business goals.

Phase 4 Execute (detail design, Project Execution Planning (PEP) procurement and construction). And, PEP is a tool for strategic planning whose Phase 5 Operate and evaluate. purpose is to maximize the probability of project The first three phases of PMP prior to the success. Once a good quality decision is made full funding step are referred to as front end using the D&RA process, the multifunctional loading (FEL) and are crucial in determining project team should kick off the project with a PEP workshop. The topics covered in PEP project success. The five-phase gated process provides a workshops are given below [2]. mechanism for effective communication between decision-makers, multifunctional project team members (business, technical, operations, maintenance, etc.) and stakeholders to achieve business success. Managements Role Management has a critical role to play in improving capital efficiency. Managements role can be summarized as follows: Part A: Defining the Vision of Success business goals; project objectives and drivers; and scope of work.

Project Management Process (PMP) In order for any project management system to be successful, it needs to follow a structured PMP. A PMP is a process that facilitates the optimal use of resources (people, money, and technology) over the life of a project to maximize value. The desired outcomes of this process are to select the right projects by improving decision-making and to improve project outcomes through excellence in execution. Figure 1 summarizes the deliverables of a structured five-phase project management process. The five phases of PMP include the following. Phase 1 Identify and assess business opportunity. Phase 2 Select from alternatives. Phase 3 Develop preferred alternative for full funding.

Part B: Defining the Strategy for Success management level plan; risk management plan; organization plan; contract plan; best practices implementation plan; and Accountabilitya business evaluation team performance management plan. should be conducted one to two years after project completion and the project sponsor should be held accountable for the Part C: Defining the Tools for Success financial outcome. time management plan; AccessibilityManagement should cost management plan; actively participate in gate keeping quality management plan; meetings at the end of each phase of the safety and environmental management project management process and plan; communicate frequently with the project materials management plan; and team. communications management plan. LeadershipManagement should establish clear expectations and objectives PEP is a living document that is kept for the project team. current throughout the life of the project. It ResourcesProvide resources of the right serves as an excellent source for communication people at the right time with the funding to between the project team, decision-makers, and support the project team. BehaviorsDemonstrate visible support stakeholders. and provide positive reinforcement for


Cost Engineering Vol. 45/No. 11 NOVEMBER 2003

Lessons Learned Project teams starting a new project should actively search for applicable lessons from past projects, and then proactively apply those lessons. At the end of the project, they should capture lessons learned from the project, including things that went well and opportunities to improve, and then share those lessons with other projects. Value Improving Practices (VIPs) Independent Project Analysis Inc., (IPA) [1] has statistically shown the benefits of implementing VIPs based on using a vast database of past completed projects in the industry. The optimum time for implementing these VIPs is during FEL (the first three phases of PMP), prior to full funding of the project. The VIPs that add value are classes of plant quality, constructability reviews, customized standards specifications, design-to-capacity, energy optimization, predictive maintenance, process reliability modeling, process simplification, technology selection, traditional value engineering, waste minimization and 3-D CAD. Peer Review The goal of a peer review is to constructively challenge the project teams assumptions, alternatives considered, decision logic and path forward. Participants in a peer review should include peers who are not associated with the current project. Peer reviews are also an excellent mechanism to share lessons learned across the corporation. Pre-Funding Assessment An assessment of project progress and quality performed at the end of phase three of PMP. It rates the project against a database of past similar projects and recommends cost contingency and schedule. Post Project Assessment This assessment compares end of project data to the AFE data that was approved at full funding at the end of phase three of PMP. This information is used to update the database, which in turn will help improve cost estimates and schedules for future projects. Business Evaluation Business evaluation is conducted one to two years after project completion to validate volumes, prices, margins, operating costs, and economic indicators. The project sponsor is responsible for this review. This practice brings accountability into the overall project management process.

which each activity will be performed. Critical path method (CPM) technique uses a network schedule to determine the activities that combine to make a critical path, such that if one activity on the critical path slips, the project end date will slip. A resource loaded critical path schedule should be developed prior to full funding of a project. The actual schedule, during the execution phase of the project, should be compared to the target schedule, and corrective actions should be taken on an ongoing basis. The required corrective actions may include changing resources or logic Economic Analysis Economic analysis compares NPV, ROR between the activities. and payout of projects and helps determine the portfolio of projects that will maximize value for Benchmarking Benchmarking is a forward-looking the corporation. quantitative approach based on the experience of thousands of past projects in the industry. Cost Estimating A cost estimate should reflect the best This information should help in determining numbers based on the scope definition at any what the competition would spend on a similar stage of project development. It should address project and how long they would take. It also the risks involved by clearly articulating the should assist the project team in setting contingency and accuracy of the estimate. challenging pacesetter project performance Estimates should be presented with the most targets. likely number (P50), the optimistic number (P90) and the pessimistic number (P10). These Contracting/Procurement Contracting and procurement comprise a numbers capture an 80 percent confidence interval for the estimate. The only time that the significant portion of many projects. final exact number will be known is at the end Contracting and procurement plans include process required to acquire goods and services of the project. from outside the performing organization. Typical processes include identifying bidders, Planning/Scheduling bidding, awarding, Planning defines all the project activities, pre-qualification, links the activities into a network structure to administration and close out. show interdependencies, and then assigns duration and resources to the activities. Performance Measurement Scheduling takes the plan and assigns dates on freeze the scope of the project prior to full funding. Application of value improving/best practices optimizes the scope of work. Total cost management converts this optimized scope into cost and schedule. TCM not only helps us in planning, scheduling, and estimating a well-defined project before full funding, it also helps us monitor progress through the execution phase of the project. Figure 3 shows the timing of these TCM tools on a PMP roadmap.

Total Cost Management The major reason for cost overruns and schedule delays on most projects is scope creep. A structured project management process with managements active participation helps us Figure 1 Project Management Process (PMP)
Cost Engineering Vol. 45/No. 11 NOVEMBER 2003 23

Performance measurement uses the earned-value concept to track physical progress based on pre-determined milestones. A plot of budget, earned and actual cost, is used to measure performance versus the plan. This information is proactively used to take corrective action on cost and schedule. Cost Control/Forecasting Cost control and forecasting uses tools and procedures to track budgets and report expenditures and commitments against a work breakdown structure (WBS). It uses a trending process to forecast final project cost.

keep accurate cost data in order to support a Progress Reporting A good progress report should include finance audit. current and accurate information on the status of the project-plan versus actual data on scope, ith the implementation of a cost, schedule, and safety incidents. structured project management process, upper managements Finance/Audit oversight/commitment, application of value All of the project cost data has ultimately improving/best practices and total cost got to be converted into asset accounting. management, a company can improve its Project costs are typically divided into two bottom line with better, cheaper, faster, and categories, namely capital and expense. Capital safer projects than the competition. x money has to be depreciated over the life of the asset, whereas expense money can be written off ACRONYMS in the year it is spent. The project team has to AFE = Appropriation for Expenditures CPM = Critical Path Method D&RA = Decision & Risk Analysis EPC = Engineer, Procure and Construct FEL = Front End Loading IPA = Independent Project Analysis, Inc. NPV = Net Present Value P&ID = Piping/Instrumentation Diagram PEP = Project Execution Planning PFD = Process Flow Diagram PMP = Project Management Process ROCE = Return On Capital Employed ROR = Rate of Return SWOT = Strengths, Weaknesses, Opportunities and Threats TCM = Total Cost Management TSR = Total Shareholder Return VIP = Value Improving Practices WBS = Work Breakdown Structure

REFERENCES 1. Figure 2 Value Improvement/Best Practices 2. Independent Project Analysis (IPA) Inc., Virginia. Westney, Richard E., 2000, The Strategic Project Planner, Marcel Dekker, Inc.

ABOUT THE AUTHOR Nick Lavingia has over 25 years of project engineering, management, consulting and training experience in the chemical, petroleum and air pollution control industry. He has a B.S. and M.S. in chemical and petroleumrefining engineering and a Ph.D. in engineering economics and management from the Colorado School of Mines. He is a registered Professional Chemical Engineer in the state of California. His experience ranges from large to small capital projects in the US and around the world. In his current position as a project management consultant at ChevronTexaco, he provides consultation and training to project professionals worldwide. He is a recipient of an industry award from Pathfinder for outstanding contribution to the advancement of project management technology and the Chevron Chairmans award for implementing value engineering throughout the corporation. Figure 3 Total Cost Management
24 Cost Engineering Vol. 45/No. 11 NOVEMBER 2003

Technical Articles - Each month, Cost Engineering journal publishes one or more peer-reviewed technical articles. These articles go through a blind peer review evaluation prior to publication. Experts in the subject area judge the technical accuracy of the articles. They advise the authors on the strengths and weaknesses of their submissions and what changes can be made to improve the article.

Important Announcement About Future Arranged AACE Certification Exams

The AACE International Certification Exam can now be arranged at any time during the year (as well as at AACE International Sections in June/July and December) as long as the following criteria are met: Headquarters Certification Administrator must receive a forty-day advance request for the exam date On-site exams require a minimum of five candidates The proctoring body must be approved by AACE Internationals Certification Board All participant's applications must be in to headquarters no later than 14 days in advance of the exam date.

Plan Now To Attend

A Continuing Education Seminar

When You Come To The 2004 Annual Meeting

For further information, contact Sandra Willard at: AACE International Headquarters, 209 Prairie Avenue, Suite 100, Morgantown, WV 26501 phone: 304-296-8444 fax: 304-291-5728

he following seminars and special panel discussions will be conducted before and after the 2004 Annual Meeting in Washington, DC. This is a great way to accumulate professional development hours and continuing education units. Watch the AACE International website for complete course descriptions. June 12-13, 2004 Foundations for Enhancing Competency In Cost Engineering Complete Skills of Estimating, Cost Control and Scheduling Planning and Scheduling, Basic to Advanced Risk Based Cost Control Project Execution Planning Capital and Operating Costs through the Project Life Cycle June 15-16, 2004 Interim Cost Consultant Review Course and Examination June 15-18, 2004 Certified Cost Engineer/Certified Cost Consultant Review Course and Examination June 16-17, 2004 Construction Claims 101 Scheduling for Construction Contracts Business Success through Excellence in Project Management and Total Cost Management Estimating A to Z What's New? What's Needed? A Contemporary Look at the State-of-the-Art of Construction

Cost Engineering Journal 2002 on CD-ROM!

The entire collection of Cost Engineering journals issued in 2002 - articles, columns, and features are now available in one convenient, portable, and searchable place!

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Cost Engineering Vol. 45/No. 11 NOVEMBER 2003




Progress and Performance Measurement

Aaron W. Buntrock, ICC
ABSTRACT: Progress measurement is a crucial component of effective project control. After all, if we don't measure how we are doing against the project plan, then the plan becomes obsolete. All projects deviate from the plan, and all schedules change. Unless we are aware of what is going on, then the project team will be in a continual reactive mode. Effective progress measurement helps to identify the variances to the plan early enough to either mitigate the impact, or cease the opportunity. Ineffective progress measurement is costly, provides no useful data, and can serve to cloud the real issues. For this reason, CMS needs to address its position on progress measurement. This article will serve as a guide to identify those methods that have been determined to be effective, and those that are deemed to be ineffective. KEY WORDS: Progress measurement, performance measurement, and project control

n order to measure the progress of a project several things must occur first. An estimate, a plan, execution schedules, and progress reporting formats must be in place in order to aid in the measurement of progress. The estimate holds your hours from which resource-loaded schedules can be built and gives you the basis for which measurement becomes possible. The plan allows you your baseline from which to measure progress against, and it will tell you if you are meeting your planned objectives. Execution schedules are loaded with the worker-hours from the estimate and these schedules are used as a monitoring tool from which curves are developed. The reporting formats must be clear and concise and set up to make navigation simple, with simple charts and progress curves. Measuring progress is very important for forecasting. Contractors have contractual obligations to meet cost and schedule, therefore measuring progress correctly is vital to keep the project on track, or identify what remedial actions are necessary. The most reliable and most accurate method of progress measurement is based on the number of actual worker-hours it took to complete the task at hand. Measuring worker-hours is an easier way to track commodities, because of the ability to convert worker-hours back into the estimate. However, some estimating professionals base their estimates on pricing commodities, rather than workerhours. Therefore, using worker-hours to

track commodities, may not be the method of progress measurement of choice for some. It still remains the common denominator in measuring performance. There are several problems that occur with progress measurement, including the following.

No one wants to hear or report unfavorable news. The people doing the measuring are usually measuring their own status. This leaves room for bias. Its just a natural instinct to make one look better than one actually is, especially if there is a benefit involved. Overstating progress will improve cash flow, so why not do it? Contracts can also be paid out based on the percent complete. For example, a contractor could be paid 25 percent of the contract dollars when he has finished 25 percent of the work. This would definitely have bearing in the reporting of progress by the contractor. Earned value techniques are not % complete piping = 350 / 1,000 = 35% correctly understood or practiced. Piping has earned 35% x 3,000 hrs. = 1,050 hrs. EARNED VALUE

completed is measured against the current control estimate (appropriation plus approved changes). This ensures that the work is measured and not the time, cost, or resources spent. Measurement is therefore based on quantities. This value earned toward the project forms the basis for communication and control. Earned value methods allow for gathering of objective information. By basing all analysis on what has been earned, the accuracy in forecasting end dates increases. This is because it allows current performance trends to be considered. Project fires can be seen ahead of time and corrective actions can be taken to put them out. Realistic goals can be set, and the owner has the information right in front of him, so that the facts are clear and concise. Combined with an effort driven schedule, the performance data derived from an earned value measurement system can quickly quantify the efforts necessary to mitigate schedule impacts. Poor performance in one area can impact another. By being able to translate performance trends to effort, cost and schedule impacts can be quickly assessed. Only when we have a complete assessment can a remediation plan be developed. Earned value can be based on a variety of commodities. Lending itself ideal to gathering data in a variety of methods, and converting it back to the plan. Earned value can be reported in terms of money, work hours, volume, weight, area, and length. Example: The piping portion of a project requires that 1000-feet of pipe be installed. Piping accounts for 3,000 worker-hours in the budget. Total budget is 10,000 worker-hours. 350-feet of pipe has been installed. What is the percentage complete of the pipe portion, and what is the overall percentage completion?

Earned value is defined as a method for measuring project performance. It compares the amount of work that was planned with what was actually accomplished to determine if cost and schedule performance is as planned. CMS Inc. uses an earned value measurement methodology. Simply put, all work

Project has earned 1,050 hrs. % complete project: 1,050/10,000 = 10.5% It is also important to realize that progress is not: percent money spent; percent work hours spent; and


Cost Engineering Vol. 45/No. 11 NOVEMBER 2003

percent time spent. The SPI can also be actual days/schedule days. A duration-based schedule will give you the SPI. Performance measured against budget is a comparison of what was done to what was paid for. This is done by earned work hours compared to actual work hours. The cost performance index (CPI) formula is: CPI = (earned work hrs. or $ to date)/ (actual work hrs. or $ to date) Project managers should always be interested in knowing how well actual productivity (work hrs./unit) compares with the figures used in planning and budgeting the work. A performance factor (PF) may be calculated for a single work package or a combination of work packages (or the total project) using this formula:

It is the actual percent of work that has physically been completed, based on original quantities. In other words, one must be able to physically see what work has actually been completed. PERFORMANCE To report performance, the simplest method is through schedule and tracking curves. Tracking a curve gauges performance by comparing what has actually been accomplished against what was supposed to be accomplished or planned. This is an effective method of communicating the current status. Tracking curves can be developed for a number of reporting activities like progress, cost, changes, and productivity. Each curve can be based on either actual (what has been spent), or on earned value (what has been performed against the plan). In many applicationsactual, earned, and scheduled will be identified on the same curve. With the aid of a resource-loaded schedule, which quickly spreads the hours to be earned, and progress curves, one can easily view progress status. (See attached curve #1). Performance measured against a schedule is a comparison of what was planned to what was done. We call this earned/burned. This is the earned hours divided by the actual hours spent. If the budgeted work hours were less than the earned work hours, this would mean that more work was done than planned. The schedule performance index (SPI) formula is: SPI = (earned work hrs. or $ to date)/ (budgeted work hrs. or $ to date) Project Totals Planned Earned Hours Earne Hours Actual Hours Performance Factor Feb 2/02 Feb 9/02

established base or norm, as determined from an area of great experience. Positive productivity will include less money spent, less time spent, less worker-hours spent, and more of a bang for the buck. There are many factors that effect productivity and several of them are individual worker skills, material and equipment availability, interruptions, engineer change control, safety/loss control, change management, and planning. The simplistic overall understanding for productivity would be the quantity units/work hours. DATA COLLECTION Progress can be gathered in many different ways. Whichever way is chosen, one should consider what the end objective of collecting data is and then use it effectively. If the information being collected is not being used, then there really is no value in collecting that information. Data must be reported because its meaningful and not because its available. To collect the actual worker data, one can rely on force reports, time sheets, or an actual physical head count done on site. Force reports and time sheets will contain the actual number of workers on site and will also contain the length of time they worked. One can also conduct a physical walk around the site and count the number of people working. When tracking actual lengths complete, one can rely on isometric drawings mark ups. The contractors foreman marks up these drawings at the end of the day. One can take these isometric drawing around the site and mark them off. Mar 16/02 Mar 23/02 Mar 30/02 April 6/02

PF =

sum of earned wor ker hours sum of actual work hours

An example of performance factors is shown in figure 1. To get the performance factor, divide the earned hours by the actual. Although numbers greater than one, or less than one can represent measures of good productivity, CMS Inc. will formulate data so that performance exceeding the base is greater than one. Although there may be some arithmetic advantage in a number less than one, CMS Inc. believes everyone understands the concept of giving 110 percent, and this allows the data to be clearly understood. Productivity is a relative measure of labor efficiency, either positive or negative, when compared to an Feb 16/02 Feb 23/02 Mar 2/02 Mar 9/02












4916 4915

67 70

444 435

350 345

375 500

400 375

590 600

690 700

700 690

600 550

700 650












Figure 1 An Example of Performance Factors

Cost Engineering Vol. 45/No. 11 NOVEMBER 2003 27

When monitoring engineering performance, the simplest way is to use a weighted milestone schedule for the deliverables. Each activity has been given an agreed upon weighted amount for each phase during the deliverable activity. Combined with curves and histograms, actual progress of engineering performance can be analyzed. When reporting progress, a picture is worth a thousand words. To plot the planned, actual progress, and actual expended worker totals on a chart accompanied by a curve, see figure 1. Instead of a person dealing with pages of numbers, which take time and effort, many would prefer a visual representation of the jobs current status, as well as its forecasted status. RESOURCE LOADED Vs. DURATION BASED SCHEDULES When using a schedule as a measuring tool for progress, only use a resource-loaded schedule compared to a duration-based schedule. The resourceloaded schedule contains all your hours and work force built into it. This gives a

more accurate picture of what is happening on site and what could happen if a contractor was late. Duration-based schedules are not reliable because an activity displayed could have a months duration with 75 percent of the worktaking place in the last week. With a resource-loaded schedule, it would identify that 75 percent of the work is to be done at the end of the job. Whereas, the duration-based schedules show that 75 percent of the job is complete, when really only 25 percent of the work may be complete, because 75 percent of the work is completed in the final week. Reporting should identify the good as well as the bad, allowing praise for the effective completion of planned goals and at the same time quickly identify potential future problems in order to plan a successful solution before that variance gets worse. n conclusion, progress measurement is a crucial component of effective project control. Effective progress measurement helps to identify the variances to the plan early enough to either mitigate the impact, or cease the

opportunity. There are many ways to measure progress, and I believe that the best way to measure this progress is through the common denominator worker hours. Everything really comes back to how many worker-hours were spent, compared to the actual worker hours planned. By measuring your performance, progress, and productivity, you can measure how far ahead or behind a project is going. It is the process of developing a proactive system compared to using a reactive system. x
ABOUT THE AUTHOR Aaron Buntrock, ICC is a Project Associate with CMS Inc., and may be contacted by email at

Technical Articles - Each month, Cost Engineering journal publishes one or more peerreviewed technical articles. These articles go through a blind peer review evaluation prior to publication. Experts in the subject area judge the technical accuracy of the articles. They advise the authors on the strengths and weaknesses of their submissions and what changes can be made to improve the article.

Figure 1 An Example of Performance Factors

28 Cost Engineering Vol. 45/No. 11 NOVEMBER 2003

This certification program offers specialty credentials for the professional who wants to validate his/her skills and be designated as a PSP . While many professionals do planning and scheduling, until now there was no way to effectively measure their capabilities - except through real-life performance. AACE's new PSP certification provides an exam and experience validation that lets industry and users identify those who are competent professionals. Earn your mark of distinction by becoming a PSP . AACE is pleased to announce that the first PSP exam will be held on Saturday, June 12, 2004, at the 48th Annual Meeting at the Omni Shoreham Hotel in Washington, DC.

What is the PSP?

Developed by a distinguished task force of industry experts assembled by AACE International, the PSP designation recognizes specialists who meet a demanding set of planning and scheduling criteria - a rigorous examination, experience, education and ethical requirements. The task force established the PSP requirements to reflect the sophistication of individuals in today's planning and scheduling industry and to fairly measure their knowledge, experience and best management practices.

PSP certification will distinguish you as a Planning and Scheduling Professional who has the knowledge and skills that impact the bottom line. With AACE Certification, you can be Ethics sure that you have met a high quality standard. All PSP applicants must sign an agreement stating that they AACE has considerable experience in offering specialty understand and agree to adhere certification programs. AACE has been testing for Certified Cost to the AACE Canon of Ethics. Consultants (CCC) and Certified Cost Engineers (CCE) since This criterion that says you will 1976, and has other programs accredited by the Council of practice in a manner that meets Engineering Specialty Boards (CESB) and the International fundamental ethical standards. Cost Engineering Council (ICEC). The full AACE Canon of Ethics can be found at : Summary of PSP Certification Requirements Candidates for the Planning and Scheduling Professional (PSP) designation must meet these minimum requirements: Study materials 1. Eligibility Recommended reading lists are At least 8 full years of professional experience, of which available from AACE and are up to 4 years may be substituted by college/university posted on the AACE website. degree. Related degrees include: engineering, building Primary references include books construction, construction technology, business, from the fundamental body of economics, accounting, construction management, knowledge for professionals in architecture, computer science, mathematics, etc. James G. Zack, Jr. planning and scheduling. Visit 2. Application and payment of fees to AACEVice President-TEC AACE Members US$345.00 review or order reference Non-Members US$425.00 materials. Submit the application, work/education verification and fees, at least 40 days before the next exam date to be As your career advances, PSP goes with you scheduled at an exam site. Additionally, you must submit The PSP designation is versatile. It is a mark of distinction. As with a signed AACE Canon of Ethics with your application. any specialty certification, a primary concern is to ensure that all 3. Verification of experience/education credentials are always up to date. That is why the program requires Applications are reviewed and verified. Please submit a you to recertify every 3 years by either professional credit plan or recopy of college degree(s) with your application, plus any testing. The recertification program is designed to ensure that you letters that could expedite the verification process. have maintained continued expertise through work experience, 4. Passing the examination continuing education, professional development, and active To become PSP certified, a passing grade must be involvement in the profession. achieved on the 7-hour exam as determined by the Cancellation/Refund policy Certification Board. The PSP certification program application fee is non-refundable. An applicant scheduled to take an examination who fails to appear at the The examination process scheduled time and place is required to pay a no-show fee of $60.00 The PSP examination consists of four parts. Part I is Basic Knowledge. It consists of multiple-choice before rescheduling to take the examination a later date. Exceptions questions concerning the basics of planning and should be requested in writing to the AACE Certification Board. scheduling.

Part II is Planning and Scheduling Applications. It consists of multiple-choice questions involving planning and scheduling scenarios. Part III is a Practical Exercise. This part entails solving one to three problems and answering a series of multiple-choice questions concerning the problem(s). Part IV is a real-time Communications Exercise. It requires the candidate drafting a one page (maximum) memorandum to simulate reporting a planning and scheduling analysis to the project manager explaining the issues and proposing solution(s) regarding a given problem scenario.

The key to good, competent scheduling is not software, but people. AACE International has a plan for doing exactly this and has formed a task force of nationallyrecognized experts who are committed to having the first specialty certification program and exam available in 2004.



E Executive xecutive Article

Barton Goldsmith, Ph.D., CEO, Goldsmith Consulting

The Outrageous Power of Self-Evaluation

firmly believe that if you want to grow personally and/or professionally you have to take an honest look at where you are before you can decide where you want to (or are able to) go. Doing a serious self-evaluation at least once a year is necessary to keep up your current pace, and if you want to grow at an accelerated rate, I suggest doing it twice a year. I have created 20 self-evaluation questions that can help create a positive dialogue and make the process more effective then a typical performance or 360 review. These questions will be great fuel for helping you understand how progress is being made and what course corrections are necessary. It also opens the door for some serious career mentoring. Most importantly, it will help you discover the skills that need to be developed in order to achieve your goals. These questions are not designed for quick answersthis is not a race. Take your time and feel as well as think about how you can most honestly answer these questions. Read the entire list before you begin your process and allow each question to digest slowly. Taking your time with this evaluation will give you the best insights. Personal 1. What are the most valuable things/goals I achieved in the past year? 2. How can I improve the way I am dealing with the current challenges in my life? 3. What are my most significant personal goals for the next year? 4. What do I need to keep doing more of? 5. What would I like to change about myself? 6. What are the most significant personal challenges for the next year? 7. How am I treating the most important people in my life? 8. How could I treat the most important people in my life better? 9. How will I add joy to my life in the next year? 10. What do I wish for the future? Business 11. What are my financial goals for the next year? 12. What are my desired business outcomes for the next year? 13. What are the most significant business challenges for the next year? 14. What are the most significant business opportunities for the next 3-5 years? 15. Who am I not working well with and how can I make it better? 16. What issues keep me up at night? 17. What have I learned about myself while working at my job? 18. What would I like to see my company modify? 19. What have I learned from my staff/co-workers and from

working here? 20. What I will commit to in order to make me better and to make those around me better? If you need to make changes in either your business or personal life, first write down exactly what it is you want to change. Having written goals gives you a 300 percent better chance of reaching them. Next, find someone to share the goals with and to help hold you accountable. Your mentor is the ideal choice, and if you dont have one, or are not a member of a Mastermind group, add find a mentor to your list. If you would like some more information on finding a mentor or creating a company mentoring program, send an e-mail to Barton@BartonGoldsmith with the word MENTOR in the subject box and the information will be sent to you. Lastly and most importantly, review your goals daily. I advise posting them near your computer (even on your screen saver), or on your desk so you see them often. This will serve as a subconscious reinforcement and will aid you in reaching your goals in less time. Making one significant change per month is appropriate for most people. Remember, if you try to eat the whole pie at once, youll make yourself sick. These self-evaluations are perhaps the most powerful tool you can use to boost your productivity at work and the enjoyment of both your life and career. If deeper questions or concerns arise talk with someone you trust and be proactive by taking the steps necessary to create balance where it is needed. Its your life, no one is going to make it better but you. x 2003 Barton Goldsmith, Ph.D.
ABOUT THE AUTHOR: For more than two decades Fortune 500 companies, educational institutions, and government organizations worldwide have relied on Dr. Barton Goldsmith to help them develop creative and balanced leadership. He is a highly sought after business consultant, executive coach, keynote speaker, and nationally syndicated columnist who writes for over 150 publications, including the Los Angeles Business Journal. He developed the Goldsmith Innovation/Implementation Index (g3i), which has been used by hundreds of companies and thousands of individuals to ascertain their creative abilities. The test can be found on his web site. Dr. Goldsmith has a unique understanding of entrepreneurs and those striving for success. Considered an expert on innovative leadership and business psychology, he has given over 2,000 professional presentations and worked extensively with The Executive Committee (TEC) and The Young Presidents Organization (YPO). He can be reached at (818) 879-9996 or visit


Cost Engineering Vol. 45/No. 11 NOVEMBER 2003

S ection Spot S ection Spotlight

Arthur Kowalchuk, P.Eng., Chinook-Calgary Section Emeritus Member

Chinook Calgary Section A 30 Year History - 1973 to 2003

n the 1970's there was a growing interest in cost estimating and construction scheduling in Alberta, because of the increasing number of major sour and sweet gas processing facilities being built and started up into operation. During September, 1973, Ed Sobstyl [then with Fluor Canada]carried around a petition to form the Chinook-Calgary Section of the American Association of Cost Engineers. David White of Ralph M. Parsons was Vice-President, Ray Schmaus of Fluor Canada was secretary and Bob Fritzler of Stearns-Rogers Canada was treasurer. In addition to the above, the petition was signed by Directors Arthur Kowalchuk of Gulf Oil Canada, Mel Hoffos of Stearns-Rogers Canada, Ozzie Miller of Imperial Oil and Dennis Easter of Mon-Max/HG Services. Other members signing the petition included Jan Julsing of C-E Crest, Joe Brown and D. Lancaster of Fluor Canada and three other Fluor Canada employees.

too great for members to travel to other centres to pick up extra points. Some members missed re-certification by a tenth of a percentage point. Incorporation After numerous cross Canada discussions, AACE Canada was incorporated on December 27, 1985 in Ottawa at the Roxborough Hotel. George Simmons represented ChinookCalgary on behalf of President Richard Tamkin[ChinookCalgary] who was unable to attend because of his work schedule. Gunther Doering represented the Ottawa Section at that meeting. The official date for AACE Canada Inc. is February 1, 1986, as sanctioned by AACE President Joseph Sexton. Significant Milestones In 1986, Ed Dobson, Chief Construction Engineer for the City of Calgary, gave Chinook-Calgary a presentation on the LRT Design and Construction Schedule. Also, in 1986, meeting notices of Chinook-Calgary Section were submitted for publication to APEGGA, as well as to the Calgary Herald, Calgary Sun and Oil- week. Membership in 1986 was about 100. ChinookCalgary's Cost Engineering Seminar in 1986 attracted 120 participants to an all day session. Upon retiring from Gulf Canada in 1986, Arthur Kowalchuk became Chinook-Calgary's first Emeritus member. On September 24-25, 1982, the AACE Directors held their Board Meeting in Calgary at the Sandman Inn. In 1984, Maurice Hunt was elected Director of Region 1[Maurice had been Chinook-Calgary's President in 1980/81]. By 1990 Chinook-Calgary's membership had grown to 116. Technical dinner meetings were now held at the International Hotel in the Riverview Room. There were now 35 Sections in the U.S.A. and in 34 years membership had grown to 550. In October, 1990, Chinook-Calgary assisted PMI in hosting the Annual PMI Seminar/Symposium, with Pal Bhatia acting as volunteer coordinator. March 13, 1991, Vice-President Wally Strutt received permission from Chinook-Calgary President Bob McCarthy to submit a presentation to Ken Humphreys to have the Year 2000 AACE Annual General Meeting held in Calgary. January 23, 1991, Steve Revay represented Chinook-Calgary on a committee with the Quantity Surveyors, launching a management certificate program in construction administration through the Faculty of Continuing Education at the University of Calgary. Although Selwyn Hope was elected President of Chinook-Calgary In May, 1992, he moved to Chicago in the summer, necessitating election of Vic Alby as 1992/93 President. In June 23-26, 1991 in Seattle, Washington, Chinook-Calgary won 2nd prize in Group A in the Outstanding Section Award Competition. Chinook-Calgary has continued that legacy, having won eleven Section Award competitions to date.

Getting More Organized Information on Chinook-Calgary in the early years of the organization is pretty sketchy. Initial meetings were usually convened in the Stampeder Hotel Lounge on MacLeod Trail South being approximately half way between Fluor Canada offices and downtown oil/gas company offices. Following Ed Sobstyl, Joe Brown of Fluor Canada was President of Chinook-Calgary until his transfer to Alaska. When Bob Corsair of Delta Projects became President of Chinook-Calgary, more formal type of meetings were convened in the new Holiday Inn on MacLeod Trail South. From 1979 to 1982 cost meetings were held in the Professional Club located above the Hudson Bay Store in downtown Calgary [those premises had been utilized by Gulf-British American until they moved into the Elvedin House Office complex on 7th Avenue West]. However, when Tony Hladun transferred to Edmonton, Chinook-Calgary meetings were held at the Sandman Inn, as no one else had a Professional Club membership. By 1978, AACE had formed a Council Board of Directors to improve communication between members and sections, as well as to represent interests of sections to the AACE Board of Directors. Tony Hladun[Nova] served as Chinook-Calgary's Director on the Council Board. In 1979 Chinook-Calgary had grown from the initial 15 members to 54. In comparison, Montreal had 113, Ottawa 22 and Toronto 110. Art Kowalchuk replaced Tony Hladun on the Council Board of Directors in 1981. With the improvements in technology, telephone conference calls were used by Chairman Ted Goodier of Ottawa Section[Goodier was a Bell Canada employee]. One of Chinook-Calgary's major complaints was in regard to certification. It was difficult for Chinook-Calgary members to get credit for meeting and seminar attendance, because the distance was


Cost Engineering Vol. 45/No. 11 NOVEMBER 2003

February, 1993, the U. of C. initiated a Project Management Program with assistance and participation by Chinook-Calgary members. Also, by 1993 Chinook-Calgary was able to get brochures printed with the six technical dinner meetings, seminars, skills and knowledge workshop dates listed for distribution to members. In 1994, Chinook-Calgary membership increased to 125. As well, in 1994, Wally Strutt was elected Regional Director of Region 1, succeeding Roger Mapp who had served in that position from 1990-1994. With mergers, cutbacks, lower oil and gas activity, ChinookCalgary membership dropped to 95 in 1995. It has since recovered to the 125 plus number. The original 1973 Chinook-Calgary constitution and bylaws were revised and updated in 1990. These were again revised and updated in 1997. In 1996, Vic Alby was elected Regional Director of Region 1. In 1998-99, Wally Strutt was elected Vice-President of Regions. In June, 2000, Chinook-Calgary hosted a successful AACE Annual General Meeting in Calgary at the Convention Centre and Palliser Hotel and continues its outstanding Section Award performances. The following is a partial list of Chinook-Calgary Presidents: 1980/81 1981/82 1982/83 1983/84 1984/85 1985/86 1986/87 1987/88 1988/89 1989/90 1990/91 1991/92 Maurice Hunt Ron Barrett Tony Hladun Bob Kaufman Geo. Simmons Richard Tamkin Paul Flanagan Tony Isaac Roger Mapp Nick Haar Bob McCarthy Wally Strutt 1992/93 1993/94 1994/95 1995/96 1996/97 1997/98 1998/99 1999/00 2000/01 2001/02 2002/03 2003/04 Vic Alby Fritz Ehrenreich-Hansen Steve Revay Mike Gordon Manny Kassam Les Smith Mike Gordon Pal Bhatia Steve Revay Ginette Basak Dave Williams Munstansir Raj



National Capital New Jersey Section

Atlanta Cascade North Florida Catawba Valley Norway Savannah River Area tryid=100 Chicago-Midwest

Oklahoma Chinook-Calgary Rattlesnake Mountain CyberSection Rocky Mountain Dallas-Fort Worth San Francisco Bay Area East Tennessee Southern California Genesee Valley Southwestern Ohio Houston-Gulf Coast ps/aaceiswohio Idaho Snake River

St. Louis Kuwait Tennessee Valley Montreal University of Tennessee

Recent Events In February 2003, Chinook-Calgary's membership reached 191.However, since the startup of the new Edmonton Section, Chinook-Calgary's membership has been reduced by the number returning to the Edmonton Section. At the May 14, 2003 AGM, Chinook-Calgary President Dave Williams, presented 25 year membership awards to Arthur Kowalchuk, Paul Rutter and Robert Young. Also honoured for their work for Chinook-Calgary were: Greg Sillak-Technical Excellance Award Ginette Basak-Honorary Life Member Award Wally Strutt was congratulated for being made a Fellow of AACE International [one of four Fellows in Canada]. Chinook-Calgary Section continues to build on our previous successes through technical dinner meetings, Skills & Knowledge workshops, technical seminars and scholarship program and are proud of all we have achieved.


Books For Review:

If you are interested in providing a detailed review of any of the following books, please contact AACE International. Current titles include: A Guide to Cost Engineering, Adek Apfelbaum, 2002, ISBN 1-4033-0328-22003 Identifying and Managing Project Risk, Tom Kendrick, 2003, ISBN 0-8144-0761-7
The first request in will have the item shipped to them. Reviewers are given a month or more to read the book and draft a review. All books are to be shipped back to headquarters for inclusion in the AACE International Technical Library.

Cost Engineering Vol. 45/No. 11 NOVEMBER 2003


P rofessional

S er vices D irector y
2004 Editorial Calendar
Cost Engineering journal is announcing its 2004 Editorial Calendar. Monthly themes are tentative and subject to change. However, the current schedule includes the following.
January Information Technology February Scheduling March Productivity April Project Controls May Project Management June Dispute Resolution July Economic and Financial Analysis August Project Management September International Projects October Cost and Schedule Control November Planning and Scheduling December Information Technology

Index to Adver tisers

ARES Corporation, back cover Building Systems Design, Inc., page31

Missing out?
Call 410.628.5766 today to reserve exhibit space at the next annual meeting, to place your ad in Cost Engineering, or to be a part of the AACE International website!

Computer Guidance Corp., page 2 OnTrack Engineering, Ltd., page 7 Primavera Systems, Inc., inside cover Quantum Group, page 44 Ron Winter Consulting, page 25

Join the . . . Professional

Placing your Services business card in Directory the hands of thousands of corporate leaders every month is an opportunity you shouldnt pass up! phone: 410.584.1998

U.S. Cost, page 45

For information about the advertisers above or about advertising with us, please phone Jeff Rhodes at Network Publications, (410) 584-1998, or e-mail him at

These themes primarily reflect the subject areas of papers that have been accepted for and passed the peer review process.

AACE International Provides Internet Learning Opportunities through

Are you looking for intensive training in communication skills? Contracts and construction law? Estimating and bidding? Check out the Distance Learning area of the AACE International website for 10-week internet courses on these topics and others to advance your skills and knowledge.

Course List Includes:

Introduction to Construction Estimating Supervisory Training Program On-Line (9 courses)

Classes - starting January 12, 2004

Construction Blueprint Reading Oral and Written Communications for Construction Supervisors Contract Documents and Construction Law Planning and Scheduling Estimating and Bidding 2

Want to give a new employee an introductory estimating course? Introduction to Construction Estimating is a self-paced course that can be started at any time. It covers such topics as types of estimates, elements of an estimate, quantity take-off techniques, pricing techniques, and more.

Classes - starting April 5, 2004

Construction Blueprint Reading Accident Prevention & Loss Control Project Management for Construction Supervisors Construction Productivity Improvement Estimating and Bidding 1

And thats not all! Courses in Planning and Scheduling, Contract Documents and Construction Law, and Oral and Written Communications for Supervisors will be held periodically, as will Construction Productivity Improvement, Project Management for Construction Supervisors, and Accident Prevention and Loss Control.

Complete information on all courses can be accessed at: http://w w


Cost Engineering Vol. 45/No. 11 NOVEMBER 2003

T he AACE I T he AACE International Bulletin

Aurora-Edmonton Section October's Aurora-Edmontons section meeting was an informative and educational presentation on the challenges faced and techniques used in managing extremely large and complex projects. The presentation was given by Anwar Siddiqi, a senior project manager at Syncrude Canada Limited. Presently, he is the area integration manager for the five billion dollar UE-1 project. Mr. Siddiqi has over 25 years experience in various aspects of project management. He obtained his masters degree in civil engineering from UCLA. He is registered as a professional engineer in Alberta, Ontario, and California. Mr. Siddiqi is the chair of the Construction Research Institute of Canada. Atlanta Section At the October Section meeting, members of the Atlanta Section congratulated the latest Atlanta Section AACE International Certified Cost Engineer, Mr. Gary Odivilas, of U.S. Cost, Inc. While not present to receive a "well done" from his fellow AACE International members, Mr. Luis Roman, of A.W. Hutcheson, was also certified at the Second Quarter 2003 Certification Exam. The October guest speaker was David Kimmel, PE, Heery International Vice President. Mr. Kimmel is currently overseeing the program management and owner's representative services for the new $200 million, 400,000-squarefoot Georgia Aquarium scheduled to open in 2005. Bluewater (Sarnia) Section In October, the Blue Water Section had an excellent tour of Specialty Machines. They are a machining and fabrication shop located in Sarnia, ON. The tour was given by partners Tim Peck and Randy Matheson. They provided an informative walk around, while discussing current projects that they were working on, which included the fabrication of a 40 ft KO drum. Mr. Peck and Mr. Matheson discussed how they got started, some of the difficulties in building clientele, getting jobs and on bid lists and they also touched on their future plans; which include a shop expansion within the next few years. Specialty Machine initially was primarily a machine shop, but the partners decided to venture out into the fabrication business as well, which now accounts for almost 50 percent of their business. Currently they are providing both fabrication and machining to clients. They also presented to the group a number of the different machines in their shop and their particular uses as well. Although the fabrication market is a new area for them, they have received nothing but good feedback from clients. This was a very informative tour, which is very much appreciated by the Blue Water Section. Cascade Section Mr. Gary Irwin, design manager for the City of Portland's West Side CSO Project, was the guest speaker for the fall kick-off meeting of the Cascade Section on Sept. 11. Mr. Irwin gave a comprehensive PowerPoint presentation on the West Side Big Pipe which includes tunnels and a pump station. This project is part of the 20-year, $1 billion dollar program to reduce combined sewer overflows (CSO's) in the Portland metropolitan area. The Cascade Section members and guests met at the project office for the tunnel operations located at the Nicolai Access Shaft. Mr. Irwin explained how two, 14' diameter tunnel boring machines (TBM's) will start work this fall on a four mile long, 120' deep tunnel extending along the west side of the Willamette River. The tunnel will cross under the river and continue along the east side to the Swan Island Pump Station. Cascade Section Director, Mike Kowalski of Jacobs Associates, who is part of the City's management team for this project, assisted with the presentation and fence tour. Mr. Kowalski also gave away some door prizes, much to the delight of the attendees. Chicago Midwest Section The Chicago Midwest Section met Sept. 4, with Philip D. Larson, CCE, as the speaker. He described the current capabilities of integrating CAD, cost estimating, scheduling, and accounting along with the tools available in the AEC market today. This not only illustrated best of breed software, but also any electronic tools with basic import/export capabilities. He demonstrated how the cost core can drive the project at higher efficiency. Using this process and specific tools, many hours of time can be saved in fundamental cost and schedule development. Thus, all project data can be brought into an accounting system for managing the project. Tangentially, document control, procurement, and many other project issues can feed off this coordinated process to streamline workflow and eliminate errors resulting in a higher quality project. Mr. Larson is vice president of estimating development for WinEstimator, Inc. of Kent Washington for their Windows based estimating software, WinEst. A cum laude graduate of Washington State University in architectural studies, he has over 22 years of experience in design and construction for commercial, residential, industrial, and institutional projects. Mr. Larson has prepared estimates for major universities, the US Navy, US Air Force and contractors. In 1995, he worked for KJM & Associates where he prepared the construction schedule for the William Gates III residence. He is also an instructor for the University of Washington Extension Certificate Program in Project Management, where he teaches cost management and scheduling. Chinook-Calgary Section The Chinook-Calgary Section met Sept. 17, with a record attendance of 50. The incoming section president welcomed the members and guests and expressed confidence to make this year outperform the previous year with active membership, a committed board of directors, and a supporting team. The section has its newsletter published. The section budget was prepared with the provision of providing matching funds and competitive scholarships. AACE International President Ozzie Belcher visited in mid October. There were visits to various corporations and meeting with project control managers in an effort to enhance corporate membership. The Sept. speaker was Glen Warren, P. Eng., of Ledcor

Cost Engineering Vol. 45/No. 11 NOVEMBER 2003


Industrial Ltd.. He discussed the open shop advantage. By hiring multicraft tradesmen, contractors are able to reduce the costs of labor, benefits, shift premiums, and apprentice costs. They are able to minimize jurisdictional disputes, camp costs, and allow for shift flexibility and permit workers to spend extra time with their families. For example, camp costs for union workers run approximately $145/day; whereas camp costs for non-union workers are about $120/day.

Submitted photo

The Chinook-Calgary Section received its 12th consecutive Outstanding Section Award at the Orlando AGM. Shown above from left to right are Steve Revay, Ginette Basak, Mustansir Raj, and Pal Bhatia. Thanks to all the directors and volunteers for their dedicated efforts in successfully hosting monthly dinner meetings, the annual seminar, and the annual Skills and Knowledge Workshop. Special mention also goes out to the board members who worked relentless hours on meeting minutes, newsletters, financials, membership, certification, scholarships, facilities, and publicity.

Pattonwood Drive and Thomas Avenue to the east. The $104 million project also includes rehabilitating the eastern end of the Lake Ontario State Parkway, replacing the Latta Road Bridge over the Parkway, replacing and relocating utility services in the area, and dealing with contaminated soil and unexpected underground conditions. This tour is an excellent opportunity to hear all the details of constructing a major crossing of the Genesee River. The speaker, Mr. Bo Mansouri, PE, County Bridge Engineer & Project Manager is from the Monroe County Department of Transportation. Mr. Mansouri holds a Bachelor and Master's degree in Civil-Structural Engineering from the University of Wisconsin and is a New York State licensed Professional Engineer. For the past fourteen years he has been head of the Bridge Division of the Monroe County Department of Transportation. As such, he is responsible for planning, engineering and maintenance of over 500 bridges and culverts in Monroe County, including the operation and maintenance of the Stutson Street Bridge and the Irondequoit Bay Outlet Bridge. He was recently involved in the design and managed the construction of the $4.8 million Irondequoit Bay Outlet Bridge and is currently involved, among other things, in the management and administration of the construction contract for the new O'Rorke Bridge Project. New Jersey Section John Ciccarelli of Nielsen-Wurster group was the speaker at the June New Jersey Section meeting. Many section members were recognized for their contributions to the section over the year, which resulted in another successful year of achievements. The new slate of officers was presented for the 2003-2004 season. Iftikhar Madni, CCE announced the sad passing of a dear friend of the section, Ramesh Shrivastav, and the attendees observed a few moments of silence. Mr. Ciccarelli talked about cost control and change orders. He emphasized the benefit of good record keeping to assist in documenting changes in a project, especially if any resolution of disputes is anticipated. Allen C.Hamilton, CCE, was recognized for his service as a mentor, guide, and friend during his 25 years as a member of AACE International. Walt Jazwa, who is relocating to the west coast, was recognized as an outstanding leader for his contributions to the section in many capacities, including president and NJ Section web site designer. Incoming President Iftikhar Madni, CCE, thanked and praised outgoing president Bob Mathur for his three years of leadership. Green architecture was the topic of the Sept. 17, meeting of the New Jersey Section with 15 in attendance. Bob Thomas, AIA, of Campbell Thomas & Co., was the speaker. He is an architect and author of Living and Designing Sustainably in Philadelphia Today. A questions and answer session followed the presentation. The next meeting was on Oct. 15 at the Lonestar Steakhouse in Bridgewater, NJ. The New Jersey Section will meet at 6:30 p.m. on Wednesday, Nov. 19, at the On the Border Mexican Cafe, 3567 US Highway 1, in Princeton, NY. The meeting topic, Estimating School Construction Project Cost" will be presented by Iftikhar Madni, CCE, president of the New Jersey Section and chief estimator for Promatech, Inc., a leading estimating firm in the region. Mr. Madni will evaluate the consistencies and inconsistencies of square foot pricing in school construction,

East Tennessee Section The East Tennessee Section wrapped up another successful year, culminating in an Outstanding Section Award, presented at the Annual Meeting in Orlando. During the summer, planning continued for the Sections 23rd Annual Fall Seminar, which was held in Knoxville Oct. 20-22. The keynote address was presented by Joel Koppelman, President of Primavera Systems, Inc. In addition to a day of technical paper presentations, two days of computer training and S&K workshops were offered. At the July social meeting, we bid a fond farewell to Bob Bakewell, CCC, who has accepted a position in Michigan. His active participation in the section during his years in East Tennessee has had a major impact on the successes the section has enjoyed over the years and he will be greatly missed. More than that, we will miss the man; his dedication to the profession, wise counsel, enthusiasm and wit. A commemorative photo from Bakewells Bombers was presented as a remembrance of his years in East Tennessee. Genesee Valley Section Genesee Valley's November meeting was about O'Rorke Bridge Construction that is scheduled to open in the summer of 2004. The O'Rorke Bridge will be replacing the Stutson St. Bridge over the Genesee River. When completed, the new bridge will be a four-lane double-leaf bascule rolling lift bridge with nearly twice the vertical clearance of the existing bridge. A number of buildings were demolished to align the bridge with the Lake Ontario State Parkway to the west and for realigning


Cost Engineering Vol. 45/No. 11 NOVEMBER 2003

show factors that drive costs, and demonstrate how his theories bare out in the market. This will be a very interesting and important topic for estimators in the region, since there has been much state funding allocated over the next few years for school construction. Architects, engineers, contractors, and cost consultants are encouraged to attend. North Florida Section The North Florida Section in June presented Past President Ernie Hani with its Cost Engineer of the Year award. Mr. Hani served two years as president of the section. He also serves on the AACE International technical board and was co-chair of the arrangements committee for the Orlando Annual Meeting in 2003. Robert Harbuck, PE, CCE, with Parsons Brinkerhoff was the guest speaker at the North Florida Sections monthly meeting on Sept. 16, at the Orlando Radisson Hotel. Mr. Harbucks discussion topic was, Light Rail in Central Florida. Mr. Harbuck is an experienced civil engineer with over 22 years of experience in the area of heavy civil and highway construction projects. For the past 12 years he has been involved with project controls, primarily in the areas of capital cost estimating, project scheduling, and constructability reviews for construction of highways, mass transit (both rail and bus transit), tunnels, bridges, and large structures. Most recently, Mr. Harbuck was lead estimator for the Westside Light Rail Project in Portland, Oregon, and the Central Florida Light Rail Project in Orlando, Florida. He presented an overview of the current status of highspeed rail projects in Florida and in particular the role Orlando has in these plans. Related to this discussion was a look at the technologies, both current and emerging, that are being considered for implementation including the emerging technology of Maglev. Monthly meetings are (usually) on the second Tuesday of each month, for more information contact Section President Bill Sheerin at 407-824-5390 or visit the North Florida Section website at Northern West Virginia Section The October meeting was a joint meeting of the Northern West Virginia Section of AACE International and the Morgantown Chapter of the West Virginia Society of Professional Engineers. The technical program was presented by James L. Green, PE, manager of the Morgantown Utility Board. Mr. Green recently returned from deployment in the Middle East where he worked in a number of countries, including Afghanistan, Pakistan, and others. He spoke about "Reconstruction Projects in Afghanistan and the Middle East" and accompanied his presentation with an interesting slide show. He was stationed in the Middle East Theater for approximately two years. His experiences on many varied projects were extremely insightful considering the special conditions of the local environment and the backdrop of events. In addition to being the manager of the Morgantown Utility Board, he is a Colonel in the US Army Reserves, and has an outstanding professional career that extends for three decades at the Morgantown Utility Board. The September dinner meeting of the Northern West Virginia Section of AACE International and the Morgantown Chapter of the West Virginia Society of Professional Engineers

was on Sept. 27. The meeting was a social gathering with representatives of the AACE International Education Board, the Technical Board, and the Certification Board, as well as the AACE International Task Force developing a new Planning and Scheduling Certification Program, the AACE International Board of Directors, and the Headquarters staff. San Francisco Bay Area Section The San Francisco Bay Area Sections May dinner meeting featured Dean Kashiwagi, PE, who spoke on maximizing performance in construction and other services. He is the author and creator of information measurement theory (IMT) and a proponent of performance information procurement system (PIPS). He presented case studies where IMT/PIPS was used to improve construction performance (on time, within budget, high quality).

Submitted photo

Dean Kashiwagi, shown above left, was May's speaker at the San Francisco Bay Area Section meeting. Ash Golani, shown above right, Section vice president, presented a certificate of appreciation to Mr. Kashiwagi. The speaker gave an informative presentation on methods of improving construction performance using information measurement theory. After the presentation, there was a lively question and answer session.

Submitted photo

Jim Warford, shown above left, scholarship chair for the San Francisco Bay Area Section, presents a certificate to scholarship recipient, Jesse Tull. He was one of two students awarded $750 from the Section. He is studying construction management at Cal State Chico.

Cost Engineering Vol. 45/No. 11 NOVEMBER 2003

Submitted photo

Submitted photo

Harry Jarnagan, PE CCE, shown above left, presents Igor MacKay, at right, with a pin recognizing his election to Fellow status in AACE International. Mr. Jarnagan read from the nominating letters highlighting a number of MacKay's contributions to the profession and to AACE International. A number of MacKay's colleagues and his wife, Donna, attended the San Francisco Bay Area Section meeting to recognize him on receiving this award.

The St. Louis Section on Sept. 9 took a walking tour of the AnheuserBusch brewery in St. Louis, MO. Shown above Section Director Dennis Pestka presents John Hegger, Anheuser-Busch project engineer and tour guide for the Section, with a certificate and a plaque from the Section. Shown below are the Section members inside the brewery during the tour.

Among the guests at the dinner meeting was Jesse Tull, one of the two scholarship recipients. Mr. Tull is studying construction management at Cal State Chico. The second scholarship winner, Jengyee Lian, who attends UC-Berkeley, was studying for finals. Each received $750 from the section. A highlight of the evening was the announcement by pastPresident Harry Jarnigan of the election of Igor MacKay as a Fellow in AACE International. Mr. MacKay was recognized for his contributions to the field of cost, scheduling, and estimating and his service to AACE International, both at the section level and international level. Elections were conducted for the 2003-2004 year and the new officers are Sam Messiah - president; Ash Golani - vice president; Jim Warford - treasurer; and John Haynes - secretary. On Sept. 20, the new section officers, board, and other volunteers conducted a planning session and barbeque at the home of Ash Golani in Fremont. Southern California Section The Southern California Section met Sept. 16, with Mike Rogers, resident design engineer for the Olivenhain Dam and Reservoir Project, as the speaker. Mr. Rogers is with Montgomery Watson Harza (MWH) and is the resident design engineer for the tallest roller compacted concrete (RCC) dam in North America. Located 27 miles north of San Diego, the 318-ft-tall, 2,552-ft-long concrete gravity dam project will finish on schedule at about $2 million below its $200-million budget. The projects owner, the San Diego County Water Authority (SDCWA), expected to start filling the reservoir in September, with the entire process projected to take almost a full year. St. Louis Section The St. Louis Section board conducted a planning meeting on Aug. 29. Meetings for the year were discussed as well as a possible certification study group for the fall. Other items discussed included scholarships and updating the sections website meetings list. In November, the Section is to tour the Laclede Gas Company.


JUNE, 2004


Cost Engineering Vol. 45/No. 11 NOVEMBER 2003

In Memory Of
Ingram C. "Inky" Myers Jr., (1922-2003) (Reprinted from the Akron Beacon Journal) AKRON, OhioIngram C. "Inky" Myers Jr., 73, died March 6, 2003. He was born and lived his life in Kenmore. He retired from B.F. Goodrich Co., with 30 years of service, where he worked in corporate engineering and began working for himself as an equipment broker and engineering consultant. He became a member of AACE International in Nov., 1962, and wasl a member at the time of his death. He supported the 1992 name change from American Association of Cost Engineers to AACE International. He had served on various committees and was a Silver Fox with the Association. In lieu of flowers, memorial contributions may be made to the Kenmore United Methodist Church. Ramesh C. Shrivastav Word has been received of the recent death of Ramesh C. Shrivastav, 65, of Little Silver, New Jersey. Mr. Shrivastav had been a member of the New Jersey Section and was an employee of Management Concepts Systems and Services of Tinton Falls, New Jersey. He became a member of AACE International in 1972. In 1960, he had obtained a diploma in electrical engineering from the University of Saugor in India. In 1970, he received a master of science degree in management science from the Stevens Institute of Technology, at Hoboken, NJ. He began his career in 1960 with Siemens India, Ltd. as an engineer in Bombay, India. In 1967, he went to work for Ebasco Services of New York, and later worked for Gibbs & Hill Inc., also of New York. In 1970, he took on duties in planning and scheduling with the Public Service Electric and Gas Company of Newark, New Jersey. Prentice Family Loses Our sympathy is extended to Jean-Paul Prentice, CCE, past president of AACE International, and his family. He learned of the deaths of not only his father, but also of an aunt and his wifes sister. Mr. Prentice is chair of the Editorial Advisory Committee.

Each Section of AACE International is encouraged each month to send bulletin items, photos of program presentations, section activities, and tours. Please also send news of individual section members who have excelled at work or have been honored or recognized for special accomplishments. How to submit to the Cost Engineering journal: All submissions should be e-mailed to the Administrator of Membership and Section Services, MaChal Stacher at Information may be included in the body of the e-mail or as an attachment. Microsoft Word files are the preferred format. All photos should be sent as PC tiff or jpg files at 300 dpi. If submitting at only 72 dpi, please send the photo as large as possible as conversion will reduce its size. Include the names and titles of each person shown in any photos. Note on Section identification in submissions: In the write ups submitted to AACE International for the Bulletin section of Cost Engineering journal, as well as in Section newsletters and website articles, many times AACE International Sections are referred to as chapters. The correct reference should always be to a Section. AACE International does not have chapters. Please do not refer to Sections as chapters. Note on the listing of dates: If an event is during the month of publication, it will be listed as an upcoming event even if members will not receive their journal in the mail until after the listed event. The journal goes to press about a month in advance of delivery, the issue date is always the first of each month, and the electronic version should be posted by that date. AACE International reserves the right to edit all submissions and to refuse to publish any submissions determined by the editor or executive director to not meet the standards of the journal. Anyone with questions on submitting copy or photos may contact Managing Editor Marvin Gelhausen at, Graphic Designer/Editor Noah Kinderknecht at, or the Administrator of membership and Section Services, MaChal Stacher at

New Distance Learning Course Available through AACE International

An Applied Framework for Project Management Distance Learning Course by Corpedia is now available on the AACE International website. This 20 hour training series carries 20 PDHs on completion. Topics include professional project managements five disciplined processes: Initiating; Planning; Executing; Controlling; and Closing. This course is recommended for anyone interested in the profession of project management. Visit our website for detailed information:

Cost Engineering Vol. 45/No. 11 NOVEMBER 2003


Osmund F . Belcher EXECUTIVE DIRECTOR Barry G. McMillan V.P.-REGIONS Joseph Wallwork, PE CCE SILVER FOX COMMITTEE John A. Foushi, CCE CONSTITUTION AND BYLAWS Dr. Kenneth K. Humphreys, PE CCE CERTIFICATION BOARD Nicholas L. Kellar, CCC CERTIFICATION EXAM ADVISORY GROUP Valerie Venters, CCC CESB REPRESENTATIVES Donald R. Boyken, CCC Ronald V. Penn, CCC ADMISSIONS Allen C. Hamilton, CCE EDITORIAL ADVISORY Jean-Paul Prentice, CCE MARKETING & PR Harry W. Jarnagan, PE CCE Katrina D. Knight V.P.-ADMINISTRATION William E. Kraus, PE CCE V.P.-FINANCE Robert B. Brown, PE V.P.-TEC James G. Zack, Jr. EDUCATION BOARD Mark T. Chen, PE CCE Dr. Scott J. Amos TECHNICAL BOARD Jennifer Bates, CCE Philip D. Larson, CCE DIRECTOR-REGION 1 Mahendra P . Bhatia Athabasca Aurora-Edmonton Bluewater (Sarnia, ON) British Columbia Chinook-Calgary Concordia University Montreal Toronto Baltimore Metro Central Pennsylvania Central Virginia Chornobyl Connecticut/Nutmeg Delaware Valley Genesee Valley Metropolitan New York Moscow National Capital New England-Boston New Jersey Niagara Frontier Norway DIRECTOR-REGION 2 Douglas W. Leo, CCC DIRECTOR-REGION 3 Robert E. McCoy, CCC Alabama Atlanta Area Caribbean Catawba Valley (Charlotte, NC) Central Savannah River Area East Tennessee Emerald Coast Greater Miami North Carolina (Raleigh-Durham) North Florida Puerto Rico Tennessee Valley University of FL DIRECTOR-REGION 4 Marvin Woods, CCE Arabian Gulf Chicago-Midwest Great Lakes Greater Cairo Kuwait Northeast Ohio Northern West Virginia Pittsburgh St. Louis Southern Africa Southwestern Ohio St. Louis Tri-States Wisconsin DIRECTOR-REGION 5 Stephen W. Warhoe, PE CCE Central Texas Dallas-Fort Worth Greater New Orleans Houston-Gulf Coast Japan Kansas City Malaysia New Mexico Oklahoma Rocky Mountain Valle Grande (NM) DIRECTOR-REGION 6 Mark G. Grotefend, CCC Alaska Arizona Australian Cascade Hawaii Idaho Snake River Nevada Rattlesnake Mountain San Francisco Bay Area Seattle Southern California Spokane University of WA

2003-2004 AACE International Organization Chart

PAST PRESIDENT Dr. James E. Rowings, Jr. PE CCE


AWARDS Dr. James E. Rowings, Jr. PE CCE

NOMINATIONS Dr. James E. Rowings, Jr. PE CCE

MEETINGS COMMITTEE Brian D. Dunfield Trevor X. Crawford, CCC


2004 WASHINGTON DC ANNUAL MEETING Robert Seals Michael A. Withers



ICEC REPRESENTATIVES Allen C. Hamilton, CCE Ginette B. Basak

Cost Engineering Vol. 45/No. 11 NOVEMBER 2003



S Feat Special pecial Feature

Marvin Gelhausen, Editor

Images from the September 2003 Board Meeting

Photo by Marvin Gelhausen

AACE International Education Board members met in Morgantown in September and heard a report from Certification Board Chairman Nicholas L. Kellar, CCC, on areas of common interest and involvement. Shown above left and right are Charla Miller, Staff Director-Education and Administration; Brian D. Dunfield; Franklin D. Postula, PE CCE; Nicholas Kellar, CCC; Rohit Singh, CCE; Mark T. Chen, PE CCE, Chair; and Dr. George Stukhart, PE. Not pictured are Dr. Sean T. Regan, CCE; and Michael B. Pritchett, CCE.

Photo by Marvin Gelhausen

Certification Board Chairman Nicholas L. Kellar, CCC, above left, talks to the AACE International Board. Looking on are Pal Bhatia, Director-Region 1; and Stephen W. Warhoe, PE CCE, Director-Region 5. At right, the Board was joined by Headquarters staff for dinner at the Glasshouse Grill.

Photo by Marvin Gelhausen

The Technical Board met with Vice-President-TEC, James G. Zack Jr. Members present included Kul B. Uppal, PE; James G. Zack Jr.; Jennifer Bates, CCE, Chair; Christian Heller, Staff Director-Technical Operations; and Richard A. Selg, CCE.

Cost Engineering Vol. 45/No. 11 NOVEMBER 2003


A r ticle

Reprints and Per missions

Cost Engineering Journal, Volume 45/Number 11, Nov. 2003

Pages 14-20

Pages 22-24

Measured Mile Process

Thomas W. Presnell, CCC
The claims process is not a new phenomenon in construction projects. In most cases, the claims process is the only avenue that contracting parties have to resolve differing opinions relating to the cause and effect of events that occur during the course of construction. With increasing frequency, contractors are requesting equitable adjustment for cost and time that relate to production inefficiencies, claiming that production losses are a direct result of changes to the original scope of a project. There are many methods used by contracting parties to deal with production inefficiency issues, however, the "measured mile" method is the most credible and widely accepted method. This article will describe a process that has been used successfully on a number of projects to resolve production inefficiency issues using the "measured mile" method. The first component necessary for successful implementation of this process is to design the process to be user friendly in the field where data will be generated. The next component, describes the estimating and scheduling procedures that are the foundation of the "measured mile" process. The final component will set forth the steps necessary for implementation of the process in the field, which will include the method for calculating interim progress and computing cost and schedule forecasts for a discreet work activity in the project scope. The "measured mile" process is designed to provide those charged with using it the absolute simplest format with which to generate the maximum amount of accurate data for project and corporate managers to use to avoid the crippling affects of prolonged disputes or litigation relating to production inefficiency disputes.

Improve Profitability Through Effective Project Management and Total Cost Management
By Dr. Nick J. Lavingia, PE
A company that consistently selects the right projects and executes them with excellence can improve return on capital employed (ROCE) and ultimately total shareholder return (TSR). In today's competitive business environment this can mean a difference between a profitable company versus the one that becomes a takeover target. This practical article focuses on how to improve profitability through effective project management and total cost management (TCM). Four key elements to success are a structured project management process, management's active involvement, application of value improving/best practices and total cost management. The formula for improving profitability through effective project management and TCM is simple, however, implementation is a big challenge in the industry. This article is reprinted from the 2003 AACE International Transactions.

Readers of the Cost Engineering journal can purchase copies of selected articles that are published with an AACE International reference number at the end of the article. Articles can be delivered in print form or in Adobe Acrobat (PDF) format. Please refer to the AACE International reference number when contacting our Publications Sales department. To Order Contact: Nancy Merrifield, Administrator, Publications Sales at Reprint Prices: Quantity Member/Non-Member 1-9 copies $5.00/$7.50 10-49 $4.50/$7.00 50-79 $4.00/$6.50 80-99 $3.50/$6.00 100-499 $3.00/$5.50 To Contact Us AACE International 209 Prairie Avenue, Suite 100 Morgantown, WV 26501 USA Phone: 304.296.8444 Fax: 304.291.5728 For Information On Other Reuse Requests If you are seeking permission to copy, quote, or translate into another language any material from any issue of the Cost Engineering journal, please contact our Managing Editor, Marvin Gelhausen at

Reprint 20790 Pages 26-28

Progress and Performance Measurement

By Aaron Buntrock, ICC
Progress measurement is a crucial component of effective project control. After all, if we don't measure how we are doing against the project plan, then the plan becomes obsolete. All projects deviate from the plan, and all schedules change. Unless we are aware of what is going on, then the project team will be in a continual reactive mode. Effective progress measurement helps to identify the variances to the plan early enough to either mitigate the impact, or cease the opportunity. Ineffective progress measurement is costly, provides no useful data, and can serve to cloud the real issues. This article will serve as a guide to identify those methods that have been determined to be effective, and those that are deemed to be ineffective.

Reprint 20789

Reprint 20791
42 Cost Engineering Vol. 45/No. 11 NOVEMBER 2003

C Calendar alendar of Events

November 2003 7 Submittal Deadline for the January 2004 issue of the Cost Engineering Journal. 16-18 2003 Light Rail Transit
Conference, The American Public Transportation Association (APTA), Transportation Research Board (TRB), Hilton Portland Hotel, Portland, OR
Contact: APTA 202-496-4800 TRB 202-334-2934

December 2003 1-2 Congrs Francophone du

Management de Projet 2003, Paris, France

Planning, Prevention, and Response: GIS and Homeland Security, Center for Geographic Information Sciences, Towson University, Towson University Campus,Towson, MD
Contact: Susan Wooden phone 410-704-5297

16-21 Optics and Photonics in Global

Homeland Security, The International Society for Optical Engineering, Renaissance Washington DC Hotel, Washington DC
Contact:phone 1.360.676.3290, fax 1.360.647.1445

April 2004 17-21 ICEC 4th World Congress 2004,

International Cost Engineering Council (ICEC), Cape Town, South Africa Contact:

16-21 2003 ASME International

Mechanical Engineering Conference, Research Development and Design Expo, and Defense Research and Engineering Conference and Exposition, American Society of Mechanical Engineers (ASME), Marriott Wardmen Park & Omni Shoreham Hotels, Washington DC
Contact: 1-800-THE ASME (843-2763)

June 2004 13-16 AACE Internationals 48th Annual Meeting, AACE International, Washington DC

6 The AACE International Second Quarter (3Q) 2003 Certification Exam, AACE International.
Contact: AACE International 304-296-8444,

January 2004 31 Deadline to Submit Technical

Papers for the 2004 AACE International Transactions

18-21 18th IPMA World Congress on Project Management, Budapest, Hungary

17-18 Indoor Environmental Hazard

Liability 2003, The Bureau of National Affairs, Building Owners and Managers Association, Washington Marriott, Washington DC
Contact: phone 631-368-2082, fax 631-368-2947,

November 2004 24-26 AICE Forum of the Society,

Associazione Italiana di Ingegneria Economica (AICE), Bocconi University, Milano, Italy Contact: phone 39-024982411, fax 39-024982593

February 2004 18-19 A/E/C Systems Annual

Tradeshow and Conference, A/E/C Systems- Technology for Design and Construction, Orange County Convention Center, Orlando, FL
Contact: Hanley-Woods Exhibitions phone 972-536-6380, fax 972-536-636,

18-20 The Chem Show Educational Conference, Chemical Engineering Magazine, Javitz Convention Center, New York, NY
Contact: 212-621-4874, fax 301-694-5124,

March 2004 22-26 TUgis Annual Geographic

Information Sciences Conference,

AACE International, 209 Prairie Avenue, Suite 100, Morgantown, WV 26501 USA phone: 304-296-8444 fax: 304-291-5728 e-mail: or website:
Cost Engineering Vol. 45/No. 11 NOVEMBER 2003 43

Distance Learning Courses Starting January 12, 2004

On-line courses are rapidly becoming one of the most popular ways for professionals to obtain professional development training. AACE International has courses to suit your needs, and is always looking for more. You can enroll now for one of the distance learning courses in our catalog. All classes in the following list consist of one class each week during the 10-week semester. Students are not required to attend class at specific times but can do the course work each week at their own convenience. Topics for the upcoming semester include: Construction Blueprint Reading Oral and Written Communications for Construction Supervisors Contract Documents and Construction Law Planning and Scheduling Estimating and Bidding 2 And remember, "Introduction to Construction Estimating" and "An Applied Framework for Project Management" can be started at any time. Find complete course outlines and registration forms on the AACE International website,