The following abstracts have been submitted for consideration for the 2014 Annual Meeting in New Orleans, LA. The final program will consist of approximately 100 tracks.
(CSC-1494) Proposal Review and Negotiation
Primary Author: Mr Dean G Stracuzza Malcolm Pirnie Inc
Abstract: When a proposal is received a review must be conducted to assess the submitted costs. This paper will discuss the methods for an effective review. The review of the proposal is a crucial first step to the negotiation process. The basic step by step process will result in the development of a common cost record that will serve as the basis for negotiations. The cost record will confirm quantities and the scope of work. This procedure will support a detailed negotiated cost. This systematic approach should eliminate randomly applied contingency costs and provide an organized work breakdown with associated costs. This paper will provide an overall process and plan for the review and negotiation of proposals.
(CSC-1533) The Cost Modelling Process from a Lean Perspective
Primary Author: Dr Ysolina Delgado Arvelo ISES Consultants Limited
Abstract: Lean Manufacturing focuses on the elimination of waste and the creation of flow through a process, business units or whole organisation. Lean principles are applicable not only to manufacturing processes but also to transactional activities. The Cost Model Development Process (CMDP) is, in essence, a transactional process, which greatly depends on human communication. Process and product data and cost information, which the cost model is built upon, represent the unit of work that travels along the different cost modelling activities. It is difficult to assign a value to a unit of work in the CMDP and to quantify the effect of missing information at each stage of the process. This paper looks into the factors, barriers and sources of waste that affect the CMDP using current studies and literature and the results and findings from the work conducted by the author. The work also describes a developing methodology (for Process Standardisation), as an attempt to improve the overall process for building leaner cost models.
(CSC-1557) CIS Methodology for Integrated Project Controls Reporting
Primary Author: Ms Elena Rybina PMSOFT, JSC.
Co-author(s): Ms Julie K Owen CCP PSP Los Angeles MetropolitanTransportation Authority; Mr Sean T. Regan CCP CEP Jacobs Engineering Group Inc
Abstract: The Commonwealth of Independent States (CIS) is an organization representing countries formerly part of the Soviet Republic with an objective in assisting the coordination of trade, finance, lawmaking, and security. The CIS works on behalf of member countries with major development banks and international corporations and aligns the accounting procedures with international systems.
This requirement is mandatory for firms wanting to work with CIS companies as such a new cost control system was designed and implemented to address the needs of this governmental client. Key processes were automated as follows:
Establish a multi-level scheduling process that follows the project lifecycle
Develop an activity based earned value costing system
Create an automated project financing plan to aid the client in visualizing cash requirements
Provide an automated invoicing method per the contract payment terms
Offer work-in-progress and commissioning plans based upon project schedule and performance data
Establish an integrated cost control system related to project budget, actual costs, and forecast costs
Deliver analytical consolidated cost reporting in S-curve format
(CSC-1563) Exploring Influence of Project Control Specialists on Successful Management of Multiple Projects: Preliminary Results Based on a Pilot Study
Primary Author: Ms Lipika Swarup Marathon Petroleum
Abstract: Multiple project management/Portfolio management refers to concurrent management of a set of projects that are independent in terms of goals and strategies. These projects are managed by the same team and are combined together due to tactical reasons such as locations, expertise, and resource synergies. Due to the complexity triggered by the varied nature of the projects and consequent increase in the stakeholders a new position of a project controls specialist (PCS) has emerged within the project management team. The PCS assists the project manager to maintain project controls data and also acts as a communication liaison between the different team members and stakeholders. The current project management literature primarily reports on project manager, owner, and, contractor competencies. It lacks information on role and competencies of the PCS. Also, it lists key success factors only for individual projects and does not comprehensively address portfolio management. To identify if truly a strong relationship exists between PCS and key success factors for portfolio management a pilot study was conducted at Marathon Petroleum Company. This paper presents the role and responsibilities of the PCS and the key success factors for portfolio management as determined by the company. It also analyses the relationship between the two and presents its findings.
(CSC-1575) A Study on Change Management Process In a Fast-Track Construction Project
Primary Author: Mr Aditya Kolapalli Collective Management Systems, Inc.
Abstract: During the project planning phase the organizations only estimate the potential change orders percentage to allocates allowances and contingency amounts to the project budget. However, due to the current fast track construction trends: the working days were reduced, either for an early completion dates or to increase their bottom-line, which in turn results in multiple changes to the project in high volume. There are no projects without potential change orders in fact a fast-track construction project the modifications occur every single day resulting in multiple bulletins, RFIs which were further transformed into change directives to the contractors. On the other hand, project Owner needs updated current status of cost for completion stakeholders need to understand the reason for project cost increase. Therefore, analysis is required to focus on change management process not only to understand and identify different change categories, but also to control the change costs in each stage of the construction to track the budget for an on-time project completion.
(CSC-1576) Improved Performance with the Use of Contract Reporting Procedures
Primary Author: Mr Robert D Walden Nexen Inc
Co-author(s): Mr Mike Petrie McFarlane MPM Engrg & Cost Consultants
Abstract: With more and more projects moving to a fully contracted approach, particularly within Owner Organizations, It is important that the project reporting requirements maintain a consistent approach in order to orchestrate the formation of overall progress reporting. This paper is intended to provide a common direction for the development of contractor reporting requirements as part of the Requisition for Proposal (RFP) for all contracts. It will address all the basic reporting needs from schedule through to cash flow.
Also, in recognizing that not all contracts are the same, this paper will also address the differences in reporting between reimbursable, lump sum and unit price contracts along with the developmental needs required to meet this type of execution. Proven Procedures along with real examples and results will be presented and discussed.
(CSC-1582) The Project Controls Managers Survival Guidebook
Primary Author: Mr Leslie E McMullan Rio Tinto
Abstract: Projects are increasingly complex with greater demands on project management and project controls. Qualified resources are often limited as projects grow in size and complexity. The stakes are high in cost and schedule performance on mega projects around the globe. The Project Controls Manager is considered the right hand of the Project Manager on all matters related to cost, schedule and risk management. What tools and skills does the Project Controls Manager need in this dynamic and challenging environment to not only survive but prosper? While procedures and processes exist in estimating, planning, cost control and other technical areas, the literature is light on Project Controls Management. This presentation discusses the role of the Project Controls Manager and includes insights, what to watch for, traps to avoid, and other essentials of Project Delivery.
(CSC-1609) Contributions of Engineering Performance to Utility Sector Projects
Primary Author: Mr Mark von Leffern EVP PSP Hill International
Abstract: Constructing major electrical grid systems to carry power from generator to consumer constitutes a complex effort that brings together several different facets of engineering (civil, structural, electrical, protection, apparatus, geotechnical and transmission engineering) as well as the other functional groups. Despite all of the upfront planning and scheduling, its not uncommon to face cost overruns and schedule delays throughout these projects. Constituting over half of a projects timeline yet roughly 4% of the budget, Engineering is a very important and influential contributor to project success. This article sets out to introduce the status of engineering activity on projects within the Utility Sector how engineering activity is monitored and controlled, engineering benchmarks and design activity, the transition from drawing submittal to bid process, impact of construction and design changes to the engineering process as well as influences that engineering productivity has on the project outcome.
(CSC-1610) Application of True Downtime Cost in oil and gas business
Primary Author: Mr Candra Nugraha CCP BPMIGAS
Abstract: When the oil price is maintaining at high level recently, reliability and availability of equipments are very critical. Oil and Gas Production facilities shall be maintained properly through predicitive and preventive efforts. The cost impact for non conformance becoming an issue if method and procedures are not established. True Downtime Cost (TDC) which commonly used in manufacturing industry is actually non conformance cost which described as Cost of Failure under Cost of Quality in TCM Framework section 6.1.
TDC calculation will be precise depending on following items:
(CSC-1661) Converting EVM and Schedule data into effective Program Management Information
Primary Author: Mr Brian A Lee EVP Tecolote
Abstract: In todays program management environment, of long duration and high value projects, we find ourselves with seemingly endless amounts of performance data. Program requirements and performance often result in hundreds of thousands of lines of Earned Value performance data and integrated schedules containing tens of thousands of activities. From public works to new space technologies, program managers across the board continue to find themselves overwhelmed with data and are left asking themselves what to do with this data and how can we effectively utilize it?
A picture is worth a thousand words, especially when it comes to analyzing tons of performance data. This presentation and tools demonstration will illustrate user friendly approaches, allowing graphical display of EVM Performance and Schedule Management metrics at all reported levels, enabling users to effectively review, manipulate, analyze, and report complex data sets through streamlined processes and root cause analysis. This provides the critical insight and understanding for both CMs and PMs in managing contracts by identifying issues early, minimizing potential cost and schedule impacts.
(CSC-1665) Cost of Shop Fabrication vs Site Fabrication
Primary Author: Mr Joseph Carson Fluor Corporation
Abstract: Today's construction philosophies (industry standards) suggest the most cost competitive method to preform construction work, is to shop fabrication as much as possible prior to components arriving at the job site. While this philosophy has reduced cost across the construction industry, the emphasis of this paper will evaluate the most cost competitive method to fabricate based on business case scenarios. By the completion of the paper the reader will understand which factors should be consider in the evaluation of the decision and relay that information to the project team. At which time the project team will need to make sure the cost results and/or any schedule impact is assessed prior to making a final decision on the fabrication location \ method for project components.
(CSC-1686) Operator/Owner Cost Engineer role in Project Close & Financial Closeout
Primary Author: Mr Chad Itagi PEng,PMP CCP CEP PSP Aramco
Co-author(s): Ms Nanda Itagi CCP Aramco
Abstract: BEGIN WITH THE END IN MIND is termed as ONE of the SEVEN HABITS of highly effective people by Mr. STEPHEN R.COVEY. The project management process includes the initiating, planning, executing, monitoring & controlling, and closing process. Project close & Financial closeout are part of Project closing process.Operator/Owner Cost Engineer play important role in initiating financial closeout. This paper highlights financial closeout activities under Project close out process and pitfalls to avoid in successful closing the projects.
When a capital project is believed mechanically complete, the project team begins the closeout activities. When closeout starts, many of the members of the project management team have been moved to other projects.The remaining activities include the collection of outstanding costs and the closing of all accounts in the financial master. Areas of closeout are broken down into four major categories in this paper.
Success of the project is depends on successful close out of the project. So Operator/Owner Cost Engineer must BEGIN WITH THE END IN MIND when initiating, planning, executing, monitoring & controlling, and closing process.
(CSC-1690) Cost Benefits Of Entity-Controlled Insurance Programs
Primary Author: Mr Neil D Opfer CCP CEP PSP Opfer Construction & Review Group
Co-author(s): Dr David R Shields PE University of Nevada, Las Vegas
Abstract: Entity-controlled insurance programs (ECIP) have come into wide utilization on construction projects in recent years. Construction insurance has historically been fragmented amongst the large number of contractors on a typical project. The only overall project policies have traditionally been for builder's risk. Entity-controlled insurance programs eliminate the fragmented nature of insurance on a project with coverage designed to provide protection for all entities on the project. For certain projects such as condominium construction, an overall policy for completed operations coverage may be the only solution due to potential liability for construction defects. Contractors on condominiums in specialty areas of excavation/grading, foundation work, roofing, and curtain wall construction have not been able to obtain completed operations coverage in many states. Therefore the ECIP is the only course of action. Besides the traditional builder's risk, these policies can include a number of general liability coverage areas and worker's compensation insurance. Key benefits of the entity-controlled program whether residing with the owner or overall general contractor are economies of scale, certainty of coverage, and administrative benefits.
(CSC-1701) New Cost Management Policy for Your Organization: An Integrated Approach
Primary Author: Mr Thomas Dauber Booz Allen Hamilton
Abstract: A Cost Management Policy is a key driver of success for any organization, regardless of size or industry. Policy ensures cost control measures are valid and effective, risks are mitigated, solutions are delivered on time, and profit/ROI are maximized. Instituting this new policy goes beyond identifying, collecting, measuring, and reporting information to decision-makers to determine the cost of programs, projects, products, facilities, services and/or systems. Managers are incentivized to identify, quantify, and manage risks, and are rewarded for cost containment, continuous improvement, and efficiency. This policy, incorporating the best lessons learned from government, industry, and commercial cost organizations, clearly defines the purpose, authority, procedures, and terminology, and includes an implementation road-map. Applying this policy early in the life cycle (and periodically throughout), integrates cost, schedule and risks linked to requirements, supports approaches with historical, statistically sound data, allows for sensitivity analysis, and institutes a data collection culture and process that ensures decision-makers contain costs, meet schedules, minimize risks, and understand the impact of near-term decisions in the long run.
(CSC-1707) Contingency and Management Reserve in South-East Asia Oil & Gas Projects
Primary Author: Ms Haslizawati Binti Sulaiman PETRONAS
Co-author(s): Mr Gary Wayne Legg Kebabangan Petroleum Operating Company
Abstract: Reserves or contingencies represent the additonal funding required to account the cost of risk. Contingency Reserve and Management Reserve are different kinds of reserves that serve the same purpose that is managing the risks. However, many South-East Asia oil & gas projects have different practices for managing such reserves. The purpose of this paper is to discuss on the application of Contingency Reserve and Management Reserve formally across the projects. In most oil & gas projects, there is considerable uncertainty with regards to the timing and magnitude of future difficulties. The amount of budget withheld either as contingency or Management Reserve provides the management with a capability to adjust for these uncertainties. Hence, it is crucial for the management of projects to establish the definition and usage of reserves or contingencies as a project standard.
(CSC-1710) Analytical Program Management: A Case Study of Large-Scale Program Integration
Primary Author: Graham Gilmer Booz Allen Hamilton
Co-author(s): Mr Eric Druker Booz Allen Hamilton
Abstract: One of the greatest challenges in managing costs on programs is the lack of cost, schedule, and risk integration. Despite the interconnection of these disciplines, it is rare when cost estimates/budgets, schedules, and risk registers are fully integrated artifacts. This lack of integration makes it impossible for leaders to make quick decisions to ensure programs are scoped properly to finish on-time and on-budget. Analytical Program Management (APM) is a methodology, pioneered on highly complex NASA programs, for completely integrating cost, schedule and risk. APM allows projects to immediately determine the cost impacts of schedule growth and vice versa. This paper will present a case study of NASAs Space Launch System, reviewing the process of establishing connected artifacts to yield powerful analytic insights for the project team. Through Monte Carlo simulation, the risk-adjusted cost estimate and schedule are generated to enable planning using statistical confidence levels. The APM methodology determines lead drivers of cost and schedule risk, as well as mechanisms for re-planning the program to ensure a more optimal outcome.
(CSC-1711) Project Cost Management in Multiple Currencies, A Case Study
Primary Author: Ms Natalia Wenger CCP ConocoPhillips
Co-author(s): Ms Jochun W Lai ConocoPhillips
Abstract: Execution of major capital projects in an international joint venture environment involving multiple stakeholders has become more of a norm in the past decade due to the global market conditions. While the traditional approach to project cost management and reporting entails converting all project cost incurred in multiple currencies to one chosen project currency, this rule may not fit the requirements of individual stakeholders. This paper discusses the cost management approach successfully implemented on a mega capital project executed by a Joint Venture of three international partners, across three different continents, with numerous contractors involved at each location. Cost management implementation challenges included managing the cost in multiple native currencies, tracking and reporting the foreign exchange impact, and selecting an appropriate cost management system that could be configured to handle these complexities. A hypothetical example (data) is used to demonstrate the effectiveness and efficiency of this approach.
(CSC-1714) Construction Jobsite of the Future
Primary Author: Mr Tristan Randall Autodesk
Abstract: The construction jobsite is changing rapidly due to the influence of technology. The impact of technology is significant to several areas of construction, including 1) construction equipment, 2) building materials, 3) personal productivity, and 4) progress monitoring. This paper will discuss each of these four areas of development and the various technology trends that will shape the transformation of jobsites in the next decade. Examples of specific technologies and the context of trends will be discussed, with a focus on how technology will enable improved cost and schedule control, as well as increasing worker safety and quality onsite.
(CSC-1718) Change Control Challenges During the Design Phase for Mega Transit Project
Primary Author: Mr Amgad Fahmy CCP PSP Gannett Fleming, Inc.
Abstract: Changes to any of the three main constrains (cost, schedule and scope) of a project are inevitable. During the design development of a mega transit project, changes could occur for many reasons and challenge, not only project progress, but it could also impact many other critical areas such as project budget, project schedule, environmental impact statement (EIS), property acquisition plan, funding complications etc. This paper intends to examine the challenges of the major impacts that may occur during the design development of a mega transit project. It will discuss the complications of changes in light of the standard project processes. It also will discuss some recommended practices for a change control procedure in order to effectively manage changes and respond to their impact.
(CSC-1723) Bottoms-up Forecast for Profitability
Primary Author: Mr Sanjay Kelkar P.Eng. URS Flint ΓΗτ Oil and Gas Division
Abstract: Every bid is an opportunity for the contractor to make money. Before landing a contract, the contractor is expected to have identified, assessed and allocated adequate contingency in the bid estimate for potential risks in its execution. Upon award, the risks identified during the bid stage may or may not materialize and/or some other unforeseen situations may pose threat to the "intended profit margin". The job set up in line with the contract is crucial in so far as reporting periodic Revenue generated and management of Cost is concerned. Whatever is going well needs to be maintained while corrective actions where necessary must be taken on other items. Bottoms-up Forecast at the lowest control account level every period (month) necessitates the analysis of value of work already done in terms of cost and schedule and assessing the remaining scope of work. This exercise identifies the inefficiencies and overspending as well as potential opportunities at the control account level thereby determining profitability.
(CSC-1735) Follow-up strategy for a tight scheduled mega project
Primary Author: Mr Gudmund Vigerust Statoil
Abstract: What is the major premises to succeed with an accelerated mega project, without overruns and delayed start-up.
The basis for the paper is oil/gas development projects on the Norwegian continental shelf. The paper is focused on mega projects and the execution strategy required for an accelerated development period. The scope will include all elements like topside/ substructure, subsea solution and drilling.
Elements that will be discussed: -Contract strategy, type of contracts and price format and schedule advantaged in that respect.
-Handling of major schedule interfaces between sub-projects/ contracts to secure an accelerated and limit consequences of schedule slippage.
-Schedule analysis and mitigation actions
Two specific factors will be discussed i) the differences between follow-up of a lump sum contract versus a provisional sum (reimbursable) contract, and ii) the cultural an industrial differences between Europe, Asia and USA when performing engineering and construction work. Conclusion will focus on progress follow-up to fulfill an ambitious scheduled project, and to identify main success factors to execute an accelerated schedule with limited risks.
(CSC-1742) Simplifying Cash Flow Analysis to be an Effective and Manageable Tool
Primary Author: Mr Jake Ortego PE CCP Commercial Cost Control
Co-author(s): Mr Antonio Fratangelo CCP Commercial Cost Control, Inc
Abstract: Due to perceived complexity, many construction projects often abandon tracking actual cash flow as a tool to monitor and trend progress. This is due to the belief that the initial cash flow curve ceases to represent an accurate model of the project as changes are made to scope and schedule. Many small to medium size projects may not have the technical resources to perform a detailed cash flow analysis and only use a basic S curve as their model.
This paper will discuss three simplified, yet dynamic, concepts of CF modeling that can be applied to construction projects to help make the CF tool more accurate and possibly more manageable including:
Discussion of dynamic equations to model CF curves for major cost categories
Stacking of major cost category CF curves to build the base curve
Adjusting the CF Curves to account for changes at the summary level
It is the intent that these approaches may allow cash flow analysis to be a useful and manageable for a wide range of construction projects.
(CSC-1758) Successful Project Controls in an Accounting Structured Organization
Primary Author: Mrs Michelle Lawrence PMP
Abstract: As businesses recover from the recent recession and capital spending resumes, business leaders are looking to identify areas of improvement. This will often lead them to find lack of proper controls of the project, more specifically the project costs as a large culprit to increased project costs. In turn more organizations are requiring additional project controls on their projects including those managed by contractors, subcontractors, vendors etc. resulting in increased costs as many organizations dont have the structure, knowledge, systems and personnel needed to meet these new demands.
This paper is designed to help the experienced project controller to be successful in an organization with an accounting based structure. It will also help the cost analyst track costs on a capital project by identifying the differences between project controls and accounting with focus on how they can work together to be successful.