Cost Estimating and Control Topics:
- Cost estimating and budgeting
- Cost forecasting and control
Note: Earned Value Management EVM has its own page.
Cost estimating and budgeting
The future of tendering is here: RPV, AI and the South Geelong to Waurn Ponds Duplication. 2023, Toby Buchanan.
The process of tendering for large-scale construction projects is broken. Contractors are incentivised to make overly optimistic assessments of timescales and capabilities, and are rarely given the time or incentives to develop rigorous schedules with a high percentage chance of success. Owner-operators have no effective way of:
• quantifying the feasibility of schedules submitted by bidders,
• effectively comparing schedules produced by competing bidders, and
• quantifying the risks inherent in the schedules they are presented with, in a human bias-free way.
The bidding process has not helped to build trust between owner-operator and contractor, nor set the winning bidder up for success. Until now. In this presentation, Toby Buchanan of tech company nPlan will tell the story of how Rail Projects Victoria have embraced AI to level up tender assessment and selection for the South Geelong to Waurn Ponds Duplication - creating a new paradigm for tender analysis in the process.
Estimation - creating the balance between precision and uncertainty. 2023 Webinar, Barbara Roberts.
Estimates need to be viewed from two sides, the requestor, and the creator. All too often there are misunderstandings or mismatched expectations between the two sides, resulting in estimates that do not meet the intended purpose. Building an understanding of how estimating works enables more constructive conversations between the two sides and naturally leads to better estimates. Using a mix of theory and real-life examples, the presentation will cover the following topics:
(1) Basic differences when estimating in an agile environment
(2) Choosing the right estimating style – why and when
(3) Dealing with uncertainty and risk
(4) How to present an estimate.
After viewing the webinar, participants will be better positioned to engage in developing and presenting quality estimates for their projects. Click through to view the webinar.
Standardisation and informed insights through effective collaboration. 2022 Keynote, Sirish Parekh.
An estimate will always vary due to its subjectivity and the variability of future outcomes. We are often distracted by attempting to wield variables outside of our control and it's about time to accept these limitations and focus on the ones we do have some measure of influence. Whilst high uncertainty is often considered high risk, we can embrace the variabilities to help make informed decisions. Starting with simplification, standardisation and collaboration, we are less likely to repeat mistakes, leaving more opportunities to innovate. A focus on developing People, Processes and Data, concertedly.
Storytelling for Cost Estimators. 2022 Webinar, Christina Snyder
As estimators, we advocate the importance of good data; but without context, estimates and analyses are just numbers. To give power to our work, we need to effectively pair good estimating with good communication. There is no existing best practice guidance for estimators on how to create a compelling narrative to accompany analysis. By leveraging a storytelling structure, we can inspire action, communicate our findings in a way that resonates, and ultimately become more effective.
Blackbox & Whitebox Estimating Techniques – Tips, Tricks & Pitfalls. 2022, Pyrros Radimissis.
During the Capability Life Cycle (CLC) we estimate using a mix of black-box and white-box techniques. The mix and balance of white-box/black-box technique is dependent on the knowns, unknowns, CLC phase and purpose of the estimate. On one side of the spectrum, the ultimate estimate utilises a complete white-box technique based on a known scope linked to validated requirements, verified quantities and contracts underpinned by a complete Project Documentation Suite that is supported by documented project information and objective quality evidence (OQE) records. On the other side of the spectrum is a complete black-box estimating technique based on concepts and system-solution-class description parameter thresholds. This presentation highlights some key tips, tricks and pitfalls and guidance on how to balance an appropriate mix for your estimating needs. The tips include problem space abstraction methods. The tricks include how to derive figures of merit to quantify systems and life cycle cost effectiveness differentiators. The pitfalls include lessons learnt through experience of applying each of these methods in practice.
Defence Cost Modelling - leveraging people and information to succeed. 2022, James Bancroft.
In a complex geopolitical world, the pace of strategic Defence Capability decision making is increasing. This places greater pressure on project cost analysts expected to develop reliable project cost estimates expeditiously in support of capability decision making processes. This stream seeks to provide an overview of the process for Defence cost analysts to quickly gain a thorough understanding of proposed Defence capability, focusing on the key project artefacts that educe the most important information required to develop reliable cost estimates. Further, it emphasises the importance of working with key stakeholders involved in the CLC process to consistently produce reliable whole of life costs.
Cost Estimation – Building Better Practice, 2019, Chloe Kempster.
First Principles Review (FPR) (1 April 2015) highlighted improvements required in Defence on how costs are estimated, contested and managed. Capability Acquisition and Sustainment Group (CASG) in the setup of Functions established the Project Controls Directorate under Program Management Function to improve all the disciplines of project controls (cost, schedule and risk).
*Assuring and enabling delivery of Defence Capability to the agreed scope, schedule, quality and cost.
*Providing competent skilled resources to enable ongoing Program, Project and Product delivery.
- Establishing standardised approach to lessons learned, Pre Gate 2, Program, Project and Product Management to improve capability delivery.
- Implementing standardised transparent Program, Project and Product performance management across the Capability Life Cycle to improve accountability, transparency and trust.
- Providing trusted internal independent assurance and compliance services to ensure Programs, Projects and Products have appropriate oversight and guidance throughout the Capability Life Cycle
In being able to deliver against each of these initiatives this talk will focus on cost estimation and the improvements that are currently being delivered and the roadmap for the future.
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Department of Infrastructure, Transport, Cities and Regional Development – Cost Estimation Policy and Implementation, 2019, Ben du Bois.
the public sector has three types of policy instruments at its disposal, which in practice means regulation, economic means, and information. It is important that these instruments, in policy form, are based on sound theory as well as be practical to implement. This presentation will discuss the key principles and implementation of the Department of Infrastructure, Transport, Cities and Regional Development's cost estimation policy. It will also provide a practical example through an explanation of development of the Department's escalation policy, the aim of which is to ensure that the Outturn costs of proposed projects being considered for Australian Government funding are defensible and estimated on a consistent basis.
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For more Cost Management resources see:
https://mosaicprojects.com.au/PMKI-PBK-025.php
Cost forecasting and control
2020 Webinar: BAE's Journey with professionalising the Estimating & Pricing function/capability.
Presentation outline:
- Journey to date including how this interfaces with the holistic approach to People, tools, strategy and process
- Lessons learnt
- Reach Back into Academia, Professional organisations & the global company networks
- Linkages to ASC Shipbuilding mobilisation & Long Term plan for Suitably Qualified and Experience Personnel (SQEP)
- Next Steps
Project Governance by Project Micro-Milestones: Location-Based Micro-Milestones and pre-registered payment distribution, 2018, Russell Kenley.
Options to effectively manage construction industry cash flows using project banks and payments based on achieving micro-milestones.
Download the presentation.
For more Cost Management resources see:
https://mosaicprojects.com.au/PMKI-PBK-025.php