Technical Program Abstracts

(TCM) Total Cost Management

(TCM-3049) Sensitivity Analysis of Discount Rates for Life-Cycle Costing of Pavements

Author(s)/Presenter(s): Dr. Robert L. Schmitt; Samuel Owusu-Ababio


Life-cycle cost analysis (LCCA) is an important tool for determining the total cost anticipated for the life of a facility.  Total costs may be converted to present values or future values, but a single time vantage point must be chosen for a meaningful analysis.  Net Present Value is a well-known technique for normalizing future cost and benefit streams in constant dollars and discounted to the present using a real discount rate. Although nominal dollars can be used with nominal discount rates, use of real/constant dollars and real discount rates eliminates the need to estimate and include an inflation premium.  The purpose of this paper is to perform a sensitivity analysis for a range of discount rates to understand their effect on NPV outcomes for pavement infrastructure.  Current discount rates used in professional practice are reviewed, then a range of discount rates are applied to an LCCA for concrete pavement alternatives.  The analysis finds that the discount rate has a minor impact on the LCCA outcome for concrete pavement alternatives.  First construction cost, as opposed to future maintenance and rehabilitation costs in the future, was the primary determinant in total life costs.  This finding is contrasted with other analyses where future costs are the primary determinant.

(TCM-3061) The Role of Innovation in Project Delivery – Disruptive Technologies

Author(s)/Presenter(s): H. Lance Stephenson, CCP FAACE


In the past 30 years, our society has moved from the PC to web-based applications, to mobile apps, to big data, to artificial intelligence, to augmented and virtual reality, all complimented with block-chain and IoT (internet of things). Who knows what is next?

We are no longer using a single system to push data through our hands. Therefore there is an even greater need and more compelling reason to ensure appropriate understanding and use of data warehousing, configuration and integration of our systems.  Furthermore, the solutions provided by big data, the cloud, and most recently block technology have created a whole new level of complexity. It is imperative that we address the needs of stakeholders and users alike.

Therefore, this paper will provide readers with:

• An understanding of the type of technologies that can be used to assist in efficient and effective delivery in project execution.

• Guidance for introducing specific technologies, complete with a road map for successful implementation of these specific technologies.

(TCM-3063) Strategic Portfolio Management: Supply Chain Methodologies

Author(s)/Presenter(s): H. Lance Stephenson, CCP FAACE; Bryan Payne, PE CCP CFCC


Almost all aspects of a portfolio of projects are procured or contracted to third party entities. While in some circumstances, organizations may develop a project-by-project supply chain management plan that supports the delivery of their single project(s), not many organizations take into consideration the requirements of a portfolio or program strategic supply chain approach. With this said, the authors of this paper provides some recommendations for the purpose of defining and implementing a methodology supporting, and therefore improving, portfolio supply chain development and implementation.

Specifically, this article will provide readers with:

• An understanding of the approaches to supply chain management requirements for the different type of project delivery models, master service agreements and task order for expedience, and bulk purchasing agreements for price reduction strategies, and finally, standardization that support the effective and efficient delivery of the portfolio.

• Real-time results of implementing a supply chain methodology that demonstrates a reduction in time to market as well as price reductions to overall portfolios.

• A review of the similarities and differences of the needs and methodologies of private sector projects and public works.

(TCM-3106) Accurate Quantity Update, A Key for Project Management Success

Author(s)/Presenter(s): Huimin Shi, CCP PSP


Accurate cost reports reflecting the true project status are critical to project success.  Why do Contractors and Owners continue to struggle with report accuracy despite so many tracking systems, software, applications readily available at their fingertips?  One of the key factors strongly hinges on the ability to provide a timely, effective and accurate quantity update.

This paper addresses quantity types, relationships to labor productivity, earned value, commitment and forecast.  The Author recommends proven solutions to combat common mistakes when updating quantities.  Practical guidelines to quantity update strategy, frequency and review process will also be presented.

(TCM-3180) (Presentation Only) How to Create Predictable Cost and Schedule Estimates?

Author(s)/Presenter(s): Dr. Nick J. Lavingia, PE


In spite of extensive use of sophisticated computer programs for cost estimating and planning/scheduling, industry benchmarking has shown major cost and schedule overruns on many projects. This practical presentation will discuss how decision & risk analysis, economic analysis, cost estimating and planning/scheduling concepts are used to come up with probabilistic outcomes for cost and schedule. Topics such as tornado diagram, decision tree, net present value, rate of return, payout, allowance, contingency, accuracy, etc. will be presented to illustrate how they are used on real projects in the industry to give confidence to management on the numbers to make informed decision.

(TCM-3189) An Integer Programming Model for Capital Project Portfolio Planning

Author(s)/Presenter(s): Michael Goggin; Michael Matosin


Capital Project portfolio planning is the process of selecting, from a large set of potential projects, some subset that best achieves organizational objectives and then scheduling these projects over some known time horizon so as to maximally leverage organizational resources. In general, both tasks -- project selection and scheduling -- are highly related and interdependent. Given limited resources (availability of funding, labor capacity, physical space, time, etc.), the selection of a particular project will have consequences for the scheduling of all others. Similarly, the scheduling of a single project has consequences as to which others can feasibly be selected. It is clear then that the capital project portfolio planning problem is simultaneous: project selection and scheduling must be determined in a single step. Ignoring the simultaneity of the problem (by, for example, first selecting then scheduling projects in a portfolio) can lead to outcomes that are far from optimal. This paper presents a novel formulation of a standard integer programming approach that returns the optimal portfolio plan from the collection of all feasible project selections and schedules.

(TCM-3190) A Practical Methodology in Integrated Cost and Schedule Control for Warehouse Building Project

Author(s)/Presenter(s): Daping Zhang


With the rapid expansion of the e-commerce, the market demands the logistics industry to provide more warehouses which is a critical part of the supply chain for the e-commerce companies within a short period. Under this content, a methodology has been used to integrate cost and schedule control in the warehouse construction; This paper demonstrates the methodology from the perspective of the project delivery method, the contract strategy, integrate  cost and schedule  control process,  the cost and schedule risk mitigation, and dispute avoidance. A case study will show the detail process regarding managing owner‘s requirements by BIM, controlling design and risk mitigation during the construction period to control cost and schedule integration. And the project’s cost and construction duration is lower 10% and shorter 10% respectively than that of the average industrial level.

(TCM-3245) Cost Engineering as a Driver of Capital Efficency - A Case Study of Opportunity Identification

Author(s)/Presenter(s): Anthony M. Bazzini


The need to deliver capital efficient project outcomes while being predictable is a paramount objective in today's highly competitive environment.  Simply put: We need to do more with less.  The question is "how do we do this?" ... in this case study, the impact of integrating cost and process design engineers utilizing a work process that quickly identifies facility options to reduce total project costs while maintaining operability objectives will be reviewed.  The results achieved through this work process reduced facility costs >25% vs typical processes.  Discussion of both the role of the cost engineer and the toolkit enabling such an outcome will also be discussed.

(TCM-3291) Why AACE International Needs a Recommended Practice for Project Procurement

Author(s)/Presenter(s): Bryan Payne, PE CCP CFCC; H. Lance Stephenson, CCP FAACE


Project procurement is a major cost factor in construction.  The method by which a project is procured and the strategy behind the selection of project delivery produce serious cost impacts through the project lifecycle.  This is especially true in public construction, which is generally subject to more onerous statutory, regulatory, and audit requirements than private-sector construction.  

Almost all projects are procured or contracted; however, AACE International addresses procurement of construction only obliquely in the TCM framework and in Recommended Practices 61R-10 and 88R-15. This is a major gap in understanding and managing the cost and schedule impacts of procurement on a project.

Specifically, this paper will provide:

• An understanding of the cost and schedule impacts of the procurement process on the project.

• A discussion of the need for a Recommended Practice to address these cost and schedule impacts by managing the procurement process.

• An outline of a potential Recommended Practice to manage procurement coordinated with the TCM Framework.

(TCM-3301) A Practical Guide to Project Controls Development

Author(s)/Presenter(s): Dave Kyle, CEP


The Project Controls process often has a consistent lack of quality that hinders the owner’s ability to properly manage a project. One key to improving a department is using a structured staged approach where the department is assessed against industry best practices, and gradually improved over time.

This interactive workshop consists of three sessions providing the attendee with an opportunity to be guided through the development of a first draft of a plan to improve their department guided by industry experts.

The attendees will be guided through the completion of templates that when finished will form the first draft of a plan including: creating an identified vision and objective for the department; a prioritized 5 year development plan to close gaps in the quality of project control processes and tools; preliminary plans for each significant area of development; and a draft of a corporate presentation. Topics will include: understanding senior managements perspective, presenting at the correct level of detail; setting realistic goals based on business objectives, establishing a sense of urgency, short term wins, and overcoming typical implementation challenges.

(TCM-3305) (Presentation Only) Project Controls in an OS 2.0 Environment

Author(s)/Presenter(s): Stephen L. Cabano; Stephen Mulva


The Construction Industry Institute (CII) and the Construction Users roundtable (CURT) are evaluating different delivery methodologies designed for capital projects. These delivery methods are focused around business value versus capital cost efficiency. This initiative is entitled Operating System 2.0. (OS 2.0) which is a standalone initiative sponsored by a number of organization including CII and CURT. Several of these methodologies address effective control of projects. Does the earned value system work? What are the best owner/contractor management techniques? This session will be a highly interactive panel discussion addressing the possible future of project control, with senior management from CII and other visionary leaders participating.

(TCM-3307) (Presentation Only) International Construction Measurement Standards (ICMS) for Cost Comparison and Benchmarking in the Construction Sector

Author(s)/Presenter(s): Alan Muse; Anil Sawhney

Abstract: The globalization of the construction business has increased the need to make a meaningful comparative analysis between projects, assets, and sectors in different countries, not least by international organizations such as the World Bank Group, the International Monetary Fund, various regional development banks, non-governmental organizations and the United Nations. Consistent practice in presenting construction costs will bring benefits to benchmarking and comparison to the construction sector that is deemed to be a comparison resistant sector by economists. International Construction Measurement Standards (ICMS) are a consistent method for presenting costs with one universal framework for defining, classifying, presenting, and analyzing construction costs. The first edition of ICMS standardizes reporting of construction costs and soon to be launched the second edition brings the same consistency to reporting life-cycle costs. ICMS applies to a project, regional, state, national or international level. It enables better comparisons of costs that eventually increase investor confidence. The standard harmonizes cost, classification and benchmarking definitions to enhance comparability and consistency of capital projects. The second edition of ICMS that is under preparation expands this consistent framework to the reporting of life cycle costing for built assets. ICMS, a process and practice standards, is complemented with a data standard that allows the use of data technologies and analytics in storing, retrieving, reporting, and mining of cost data.

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