Project Cost Estimating Skills: Planning for Performance Excellence

Overview:

Introduction:

One of the most important phases in the success of project development is the planning phase. That’s why the management of a project begins at this critical phase where exceptionally realistic time and cost estimates are most needed to help the project manager realize the project’s deliverables. Good project planning not only saves time and money but also increases the overall earned project value (quality, reliability, safety, etc.) for the amount of funding expended.

Module 1 presents and examines the principles, tools, and techniques used to develop schedules for both time and resources; Module 2 covers basic and advanced cost estimation techniques as well as the impact of risks that need to be considered to ensure the plan predicted is valid; and Module 3 Module presents and examines the implementation of the Value Engineering (VE) concept for maximizing project functionality, reliability, and quality at the lowest possible cost.

Course Objectives:

At the end of this course the participants will be able to:

• Integrate scope, time, resources, and cost management into a dynamic, manageable plan.
• Develop project network diagrams for CPM and advanced PERT calculations to identify schedule and cost risks.
• Maintain continuous project performance and delivery control.
• Integrate all relevant project elements into a cohesive and comprehensive cost estimate.
• Prepare budget estimates that will enable the owner-organization to make informed decisions as to the feasibility of a potential project.
• Compare the costs of alternative strategies or technical approaches to ensure the most economical project at the desired level of quality.
• Structure of the contract compensation arrangement to provide the highest level of incentives to complete the project on schedule and within the determined budget.
• Keep accurate control of the progressive budgeting process based on the various stages of design.
• Prepare accurate budget estimates through the programming phase, the schematic design phase, and finally the design development phase.
• Manage the interface between many value-adding initiatives and senior management expectations.
• Apply systematic and innovative methodology with a multi-disciplinary approach to achieve better value and cost optimization for projects.
• Spread cost-consciousness among project team members.
• Focus on function and thereby develops creative thinking towards cost reduction.

Targeted Audience:

• Project or Program Sponsors
• Project Managers
• Cost Estimators
• Cost Controllers
• Engineers
• Designers and Project Staff
• Anyone Involved in Project Initiation, Engineering Design, and Critical Assessment of Projects

Course Outlines:

Unit 1: Project Scope Planning and Definition (Fundamentals):

• Scope Planning.
• Work Breakdown Structures (WBS).
• Work Packages.
• Statement of Work (SOW) - Technical Baseline.
• Scope Execution Plan.
• Triple Constraints - Time Cost, Scope.
• Project Quality Issues.
• Project Risk Analysis.
• Project Deliverables.
• Resource Requirements.

Unit 2: Project Schedule Planning and Critical Path Method:

• Precedence Network Diagramming.
• Job Logic Relationship Chart.
• Critical Path Analysis.
• Project Float Analysis.
• Lead and Lag Scheduling.
• Activity Duration Estimation.
• Milestone Charts.
• Gantt Chart - Schedule Baseline.
• Project Estimating Processes.
• Production and Productivity Planning.
• Resource and Cost Allocation.

Unit 3: Resource Allocation and Resource Levelling:

• Management of Resources.
• Planning and Scheduling Limited Resources.
• Resource Allocation Algorithms for Resource Prioritisation.
• Solving Resource Contention.
• Resource Levelling when Project Duration is Fixed.
• The Brooks Method of Resource Allocation.
• Increasing the Workforce.
• Solving Interruptions to the Schedule.
• Scheduling Overtime.

Unit 4: Accelerating the Project Schedule:

• Circumstances Requiring Project Acceleration.
• Time-Cost-Scope Trade-off.
• Project Time Reduction.
• Direct Project Costs.
• Indirect Project Costs.
• Options for Accelerating the Schedule.
• Crashing the Schedule - How?
• Pre-Accelerated Schedule.
• Developing a Crash Cost Table.
• Acceleration in Practice.
• The Optimal Acceleration Point.
• Gantt Chart for Accelerated Schedule.
• Network Activity Risk Profiles.
• Additional Considerations.
• Multiple Critical Paths.
• Project Cost Reduction.

Unit 5: Project Contingency Planning:

• Program Evaluation and Review Technique (PERT).
• Path Convergence Analysis.
• Solving the Path Convergence Problem.
• Network Risk Profile Types.
• Normal Distribution.
• PERT, Probability and Standard Deviation Formulae.
• Calculating the Standard Deviation.
• Standard Deviation for Critical Path:
  • Z-Values: The Probability of Project Completion at a Required Date.
• True Critical Path.
• Network Activity Risk Profiles.
• Application: Estimating Project Duration.

Unit 6: Line of Balance Scheduling - The Planning of Recurring Activities:

• Preparing a Line of Balance Schedule.
• Velocity Diagrams and Linear Scheduling.
• Velocity Diagram Production Rate Calculations.
• Linear Sequence of Activities as a Series of Velocity Diagrams.
• Balancing the Schedule.
• Calculations for a Line of Balance Schedule.
• Line of Balance Formulae:
  • Target Units per Week.
  • Determining Crew Size.
  • Actual Rate of Output.
  • Time to Complete One Activity.
  • Elapsed Time for Recurring Activity.
• The slope of Line from Activity Start to Activity Finish.
• Balanced Project Schedule without Buffers (Finish-Start).
• Inserting Buffers.
• Comparison of Unbalanced with Balanced Schedules.
• Measuring Planned Progress on Schedule.
• Velocity Diagram Reflecting Expected Conditions.
• Actual Progress and Work Conditions.
• Variable Conditions.

Unit 7: Project Execution Management, Control, and Reporting:

• Progress Tracking and Monitoring.
• Project Cost Management.
• Earned Value Control Process.
• Schedule Variances.
• Cost Variances.
• Progress Control Charts - Trend Analysis.
• Schedule and Cost Variance Forecasting.
• Labour Management and Cost Control.
• Materials Management and Cost Control.
• Earned Value Analysis.
• Earned Value Reporting.

Unit 8: Project Recovery Plan Development:

• Project Variance Analysis and Quantification.
• Schedule Performance Index (SPI).
• Cost Performance Index (CPI).
• Setting Schedule and Cost Control Limits.
• Project Recovery Data Assessment.
• Schedule and Cost Recovery Analysis.
• Schedule and Cost Recovery Plan.
• Project Recovery Baselines and Controls.

Unit 9: Cost Estimating Basics:

• The estimating life cycle.
• Phases of the Design Process:
  • Programming phase.
  • Schematic design.
  • Design development.
  • Construction documents.
• Estimating accuracy by phase.
• Conceptual Cost Estimates.
• Rough Order of Magnitude Estimates (Broad Scope Estimates).
• Assemblies cost estimates.
• Cost indices.
• Semi-detailed Estimates (Narrow Scope Estimates).
• Definitive Estimates (Detailed Scope Estimates).
• Basic procedures.
• Lump-sum contracts.
• Unit-price contracts.
• Cost-plus contracts.
• Cost-plus contract with a guaranteed maximum price (GMP).
• Time-and-materials contracts.
• Bid method.
• Negotiated method.
• Quantity take-off.
• Types of construction contracts.
• Procurement methods.
• Pre-construction services.
• Risk analysis and contingencies.

Unit 10: Broad Scope Cost Estimating Techniques:

• Adjustments to Project Cost for Broad Scope Estimates.
• PERT Project Cost Analysis:
  • PERT Unit Cost Estimates:
    • Formulae for Cost Estimating.
    • The Normal Distribution Curve.
    • Z-Value Table.
    • The Probability of Project Completion within Budget.
    • Estimating Project Unit Cost by Using the Standard Deviation.
    • Estimating the Project Unit Cost at a Required Probability.
    • The Probability of Completing the Project at a Required Cost.
    • PERT vs. Standard Deviation & Z-Values.
    • Adjustments to Estimates Based on Previous Projects.
  • Adjustments for Time.
  • Review: Future Value of Money.
  • Review: Present Value of Money.
  • Equivalent Annual Interest Rate.
  • Index to Adjust for Time.
  • Equivalent Compound Interest.
  • Location Index for Construction.
  • Adjustments for Location.
  • Adjustments for Size.
  • Combined Adjustments.
  • Economic Price Adjustment.
  • Estimating Durations based on the Learning Curve Effect.
  • Estimating Costs based on the Learning Curve Effect.
  • Unit-Cost Adjustments.
  • Learning Curves.

Unit 11: Budget Estimating Process:

• Estimating by design phase:
  • Programming budget estimates.
  • Schematic design budget estimates.
  • Design development budget estimates.
• Estimating pre-construction services.
• Request for a proposal.
• Development of pre-construction services estimate.
• Pre-construction services contract.
• Budget control log.