Technical Program Abstracts

(TCM) Total Cost Management

(TCM-2771) Industrial Engineering, Management Science, and the Future of Project Controls

Author(s)/Presenter(s): Dr. Alexia A. Nalewaik, CCP FAACE
Time/Location: Monday, June 25 from 10:15am to 11:15am / Coronado B (4th Floor)


[Level: Basic] A correlation can be seen between the historic evolution of management science and production engineering, and subsequent changes in approaches to financial management and project management, resulting in a strengthening of controls and analytical techniques. These trends can also be seen to impact approaches to procurement, resulting in project contracting styles that ebb and flow in popularity and use. This research considers the history of management science and industrial engineering, and traces changes in approaches to organizational management, contracting & procurement, and project controls. The influence of management theory and engineering on project controls can then be considered when forecasting future developments and identifying potential new value-added techniques and client expectations in Total Cost Management.

(TCM-2830) Cost Control of Crude Oil Production Costs – NOC’s Perspectives

Author(s)/Presenter(s): Johnson O. Awoyomi, CCP CEP
Time/Location: Wednesday, June 27 from 10:30am to 11:30am / Coronado B (4th Floor)


[Level: Basic] An African National Oil Company (NOC) is producing over 2million barrels of crude oil per day but is bedeviled with very high cost of crude oil production. Blessed with abundant oil resources, the current national government of the NOC is very concerned with this phenomenon of high production cost of over $30.00 per barrel and is desirous to bring the price down to $15.00 per barrel or less. The author of this paper is given the herculean task to diagnose the cause of the high production cost and then propose ways to reduce the cost to under $15.00 per barrel. The approach deployed during the diagnosis phase included having stakeholders’ engagement covering the International Oil Companies (IOCs), the Independent Producers Group, Industry Regulators, and the contracting community. This paper is a summary of the diagnosis of the so called ‘NOC Cost Premium Factors’ and as well as the cost reduction recommendations currently being implemented, which can be of benefit to other NOCs having similar issues and industry in general.

(TCM-2885) Benchmarking Cost Performance of Heavy Industrial Construction Projects

Author(s)/Presenter(s): Mihai Robu; Dr. George F. Jergeas, P.Eng.; Dr. Farnaz Sadeghpour
Time/Location: Monday, June 25 from 4:00pm to 5:00pm / Coronado B (4th Floor)


[Level: Basic] Benchmarking has long been regarded as an effective process for continuous improvement. The process consists of measuring key performance indicators and comparing the measurements to industry averages in order to identify performance gaps. In the project-driven construction industry, preventing cost overruns on projects is an essential part of organizational success. This paper will benchmark the cost performance of a pool of 1,011 heavy industrial construction projects from Canada and the United States. This includes an investigation into the allocation of cost between project phases, as well as the cost performance in each phase. Raw data is provided by the Construction Industry Institute (CII) based in the University of Texas at Austin. Descriptive statistics is used to analyze and summarize project cost performance. Outliers, counts and averages, and project size will be discussed in relation to their impact on analyzing and presenting cost performance. This study provides practitioners with cost benchmarks for heavy industrial projects and identifies the top project phases requiring improvement in cost performance. Factors to be considered when analyzing and presenting cost data are also discussed.

(TCM-2925) Program and Project Assesment for Effective Execution In the Public Utility Market

Author(s)/Presenter(s): Valeria Tyndall; Isis Murillo; Matthias H. Naderi
Time/Location: Wednesday, June 27 from 9:15am to 10:15am / Coronado B (4th Floor)


[Level: Basic] The purpose of this paper is to provide general guidelines for performing program and project assessments to determine the most effective program and project execution methods that yield optimal program and project outcomes. Each major element of the assessment framework is described including inputs, outputs, and techniques for evaluation.

An assessment framework was developed by the research team for their public utility client with the ultimate goal to improve total cost and schedule management.  This paper examines three specific case studies and illustrates how past program assessments served to establish new programs and streamline existing programs.

(TCM-2952) Life-Cycle Cost Analysis for Concrete Pavement Structures

Author(s)/Presenter(s): Dr. Robert L. Schmitt, PE; Dr. Samuel Owusu-Ababio, PE
Time/Location: Wednesday, June 27 from 8:00am to 9:00am / Coronado B (4th Floor)


[Level: Intermediate] Costs to construct pavements for building or infrastructure projects present challenges to the cost engineer and designer when selecting the lower cost alternative. Concrete pavements traditionally have a higher initial cost than asphalt pavements, however, concrete usually has a longer life and lower long-term maintenance costs. Concrete pavements may have different base structures to enhance their useful life and minimize long-term maintenance. The purpose of this paper is to present a comparative analysis of concrete pavements having different base structures to assist cost engineers and designers in linking total life-cycle costs with actual performance. Different pavement base structures used in the analysis consist of a standard aggregate base and a modified high-performance aggregate base. The life-cycle cost analysis found that a plain dense-graded aggregate base provided the lower cost alternative than modified base alternatives for concrete pavement. A modified base having drainable aggregate had a lower surface roughness, but was 10% more expensive when total life cycle costs were considered. A better performing asphalt-treated base was estimated to be 29% more expensive than a standard plain base.

(TCM-2957) Optimization of Team Mix to Reduce Cost and Increase Profitability in Projects and Bids

Author(s)/Presenter(s): Dr. Kamran Hazini, P.Eng. CCP PSP
Time/Location: Monday, June 25 from 5:15pm to 6:15pm / Coronado B (4th Floor)


[Level: Intermediate] Labor cost is a major component of total project cost, especially in service contracts such as design, engineering, and construction. Labor average rate is an indicator for projecting the final labor cost. Optimizing crew mix to increase labor profitability has always been a challenge for projects and bids: project managers require a reasonable degree of skills and expertise in a project when combining senior, intermediate, and junior resources. Having too many senior resources increases the average rate through higher pay rates, while having too many junior resources reduces the average rate but results in poor direction and low quality outputs ultimately resulting in delays, rework, and scraped materials. Teams need a certain level of senior resources to provide leadership, and intermediate and junior resources for less complex tasks. Suitability of labor resources should be analyzed based on the compensation terms of each contract, to make sure assigned resources are profitable.

The purpose of this paper is to introduce a heuristic algorithm identifying the main contributors to a project's labor profitability, and optimizing crew mix to increase gross margin in cost reimbursable or fixed price contracts. The optimization process aims to reduce average labor cost while keeping the revenue amount constant, and uses an algorithm applicable to both projects and bids. A flow diagram of the method and implementation of a simple hypothetical case study are also presented, along with recommendations.

(TCM-3003) (Panel Discussion) Contractor Best Practices Forum

Author(s)/Presenter(s): Phil Peterson, PSP; Adam T. Althoff, PSP; Kenneth A. McBroom, PSP; Janet Bradford, PSP
Time/Location: Monday, June 25 from 11:30am to 12:30pm / Coronado B (4th Floor)


[Level: Basic] This panel with discuss the current best practices being utilized on construction sites today. We will discuss new technologies and how they are being integrated into existing project controls environments as well as how jobsite challenges are addressed and resolved. Last, the panel will discuss AACE's role in forming best practices across the industry and how to better sync these standards for owners and contractors.

(TCM-3004) (Panel Discussion) Owner Best Practices Forum

Author(s)/Presenter(s): Larry R. Dysert, CCP CEP DRMP FAACE Hon. Life
Time/Location: Monday, June 25 from 2:15pm to 3:15pm / Coronado B (4th Floor)


[Level: Basic]

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