March

March 2009
2009

The AACE International Journal of

Cost Estimation, Cost/Schedule Control, and Project Management

Promoting the Planning and

Management of
Cost and Schedules

IN
IN THIS
THIS ISSUE
ISSUE
• Certification Paper -
SAP — An Effective
Tool for Managing
Multiple Small
Projects

• Technical Article -
Programs and
Projects Driven by
Asbestos
Regulations

• Technical Article -
Soft Skill
Quantification (SSQ):
Human Performance
vs. Metric

• President’s Message -
Establish Business
Management
Practices Early
• Women in
Project Controls -
Erin Dunavant

• Executive Article -
Emotional Fitness at
Work

COST
COST ENGINEERING
ENGINEERING FOCUS:
FOCUS: • Special Feature -
The CPI and the TCPI
PEOPLE
PEOPLE PERFORMANCE
PERFORMANCE
• Special Focus -
MANAGEMENT
MANAGEMENT Cost Management
Drives National
Economies

The Association for the Advancement of

Cost Engineering International
Visit our website at www.aacei.org
 AACE International
Board of Directors The AACE International Journal of
Cost Estimation, Cost/Schedule Control, and Project Management
President
Stephen P. Warhoe, PE CCE CFCC
WSDOT, WA
206-464-1292
e-mail: president@aacei.org
ESTABLISHED 1958
President-Elect
Mark G. Grotefend, CCC
CH2M Hill Inc., WA
206-988-5503 Depar tments
e-mail: preselect@aacei.org
President’s Message ................................3 For the Bookshelf..................................34
Past President Women in Project Controls ..................5 Professional Services Directory ............35
William E. (Bill) Kraus, PE CCE
Executive Article ....................................7 AACE International Bulletin................36
International Aviation Consult., GA
615-828-2037
Special Focus ........................................15 Article Reprints and Permissions ..........43
e-mail: pastpres@aacei.org Special Feature ....................................22 Calendar of Events ..............................44
AACE International Bookstore ............32
Vice President-Administration
Kerri J. Hunsaker Stannard
BWXT Y-12, LLC, TN Featured Ar ticles
865-241-3262
e-mail: vpadmin@aacei.org
SAP — An Effective Tool for Managing Multiple Small Projects 9
Vice President-Finance
Sidney J. Hymes, CFCC Betty A. Poettcker, CCC
Chesterfield, MO SAP can be used as an effective tool to assist in the management of cost, schedule, and resources for a single
314-825-7885 project, as well as, for a portfolio of small projects. Using this method for small projects allows project man-
e-mail: vpfinance@aacei.org agers to analyze a group of projects and make timely decisions. This article will explore the use of SAP in each
Vice President-TEC of the three areas of project costs, milestone schedules and resources. Each section will describe the setup in
Vera A. Lovejoy, CCE PSP SAP, the analysis of the data for management and project controls, and the benefits of using SAP as a tool for
626-440-6241 project management. A standardized approach for each project in the portfolio provides consistent informa-
e-mail: vptec@aacei.org tion that can be analyzed across the entire portfolio of projects. The key to using SAP successfully is to be con-
Vice President-Regions sistent and to update the information regularly. SAP can be an effective tool for managing and controlling mul-
Michael R. Nosbisch, CCC PSP tiple small projects.
626-440-2000
e-mail: vpregions@aacei.org
Director-Region 1
Programs and Projects Driven by Asbestos Regulations 16
Peter W. Ripley, CCC Paul Stanford Kupakuwana
Fluor Canada Ltd, Canada Asbestos’ ability to resist high temperatures resulted in its extensive use as a fireproofing and insulation materi-
403-537-4042 al from the 1950s through to the mid 1980s. But today, asbestos is equally viewed as a beast. This arises main-
e-mail: dirregion1@aacei.org ly from a consideration of the dire consequences of deaths from asbestos-related cancers that have resulted from
Director-Region 2 past exposure. Asbestos litigation has given rise to claims against some former producers, sellers, distributors,
John J. Ciccarelli, PE CCE PSP and installers. Some were forced out of businesses, or into diversification and bankruptcy. This article analyses
Deloitte, PA the implications of new asbestos regulations in determining program and project directions at the London
215-246-2401 Borough of Hillingdon. That analyses showed a significant impact.
e-mail: dirregion2@aacei.org
Director-Region 3
Michael B. Pritchett, CCE Soft Skill Quantification (SSQ): Human Performance vs. Metric 26
Faithful+Gould, GA Edward Muzio and Dr. Deborah Fisher
770-957-8070
In this follow-on study to a successful initial pilot study by the authors, the Soft Skill Quantification (SSQ) tool
e-mail: dirregion3@aacei.org
was evaluated for its ability to accurately detect high-performers as a function of SSQ metrics. The SSQ model
Director-Region 4 has demonstrated for a second time the ability to distinguish between performance levels based upon measur-
James E. Krebs, PE CCE able constructs. Furthermore, seven emotional intelligence metrics were identified as being correlated with
734-207-1457 high performance, but it was more moderate values of these metrics that corresponded with the highest per-
e-mail: dirregion4@aacei.org
formers. Contrary to intuition, "more" is not always "better" when it comes to SSQ metrics.
Director-Region 5
Andy Padilla, CCC
505-362-2633 In This Issue
e-mail: dirregion5@aacei.org
Director-Region 6
Board of Directors Contact List ........................1 How to Submit to the Cost Engineering Journal ..40
Alexia A. Nalewaik, CCE MRICS The 2nd Quarter (2Q) Certification Exams ..6 The AACE International CyberSection................41
Moss Adams LLP, CA News from AACE International Region 8 ....14 The 2009 Western Winter Workshop ..........42
213-399-1373 Index to Advertisers..............................................35
e-mail: dirregion6@aacei.org
Director-Region 7 On the Cover: Scenes of the Seattle Sheraton Hotel, location for AACE International’s 53 Annual Meeting,
Madhu P Pillai, CCC June 28-July 1. Additional information/reservations available at www. aacei.org or www.sheraton.com/seattle/.
S A Kent Company Ltd, Saudi Arabia
+966.50.0179621 COST ENGINEERING AACE International Headquarters
e-mail: dirregion7@aacei.org Vol. 51, No.3/March 2009
209 Prairie Avenue, Suite 100
Director-Region 8 Managing Editor - Marvin Gelhausen - mgelhausen@aacei.org
Morgantown, WV 26501
Tetsuya Yonezawa, CCE Graphic Designer/Editor - Noah Kinderknecht - nkinderknecht@aacei.org
Toyo Engineering Corporation, Japan ph: 800.858.COST
IT/IM/Graphics Specialist - Robin Donley - rdonley@aacei.org
+81.47.4541582 fax: 304.291.5728
e-mail: dirregion8@aacei.org
Policy concerning published columns, features, and articles -
Executive Director
Viewpoints expressed in columns, features, and articles published in Cost Engineering journal are solely those of the authors and do not represent an official position of AACE
Andrew S. Dowd, Jr., PSP
International. AACE International is not endorsing or sponsoring the author’s work. All content is presented solely for informational purposes. Columns, features, and articles not
304.296.8444
designated as Technical Articles are not subject to the peer-review process.
e-mail: adowd@aacei.org
Cost Engineering (ISSN: 0274-9696/08) is
published monthly by AACE International,
Inc, 209 Prairie Ave., Suite 100, Morgantown,
WV 26501 USA. Periodicals postage paid at
P resident’s
P resident’s Message
Morgantown, WV, and at additional mailing
office. POSTMASTER: Send address
changes to AACE International; 209 Prairie Stephen P. Warhoe, PE CCE CFCC
Ave., Suite 100, Morgantown, WV 26501 USA. President
Customer #7012359 (APC), Publications Mail
Agreement No 40624074, Return
undeliverable Canadian addresses to PO Box
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ON L4B 4R6. Single copies: US$8 members/
US$12 nonmembers (both +shipping),
Establish Business Management Practices Early
excluding special inserts available to AACE
members only. Subscription rates: United
or just about anyone who is involved should first ensure that its in-house project

F
States, US$65/year; all other countries,
US$82/year. Overseas airmail delivery is
available at US$99. Subscriptions are with the execution of a project, the management infrastructure has been estab-
accepted on an annual-year basis only. projects that end poorly are typically lished. This infrastructure includes the
Copyright © 2009 by AACE International, Inc.
All rights reserved. This publication or any because they either complete later than establishment of business processes, proce-
part thereof may not be reproduced in any expected, are over budget, or both. From my dures, and management structure; appropri-
form without written permission from the
publisher. AACE assumes no responsibility experience in the claims and disputes busi- ate to the size of the project. Oftentimes,
for statements and opinions advanced by the
contributors to its publications. Views
ness, failed projects, for the most part, arise as owners hire some of the best project manage-
expressed by them or the editor do not a result of poor communications somewhere ment staff and consultants to successfully
necessarily represent the official position of
Cost Engineering, its staff, or AACE
in the intricate network of communication manage their complex projects, but once the
International, Inc. Printed in York, PA, USA. chains that comprise a project. These com- project has progressed along, it becomes evi-
Cost Engineering is a refereed journal. All
technical articles are subject to review by a
munication deficiencies can usually be attrib- dent to these bright people that the owner's
minimum of three experts in the field. To uted to the relationship between the owner project management infrastructure can be
submit a manuscript for peer review, please
e-mail it to editor@aacei.org. Cost and contractor. However, communication the biggest obstacle to accomplishing the
Engineering is indexed regularly in the problems internal to the owner's or contrac- project management objectives. The owner's
Engineering Index., Cambridge Scientific
Abstracts, by EBSCO Publishing, and in the tor's own project teams can also be attributa- project management infrastructure can, and
ABI/Inform database. Cost Engineering is ble to the cause of a claim or dispute. Failure sometimes does, inhibit the success of a proj-
available online, via the ProQuest information
service; on microform; electronically on CD- to communicate via phone calls, e-mails or ect. The problems are often attributable to
ROM and/or magnetic tape from Bell & letters might be the most prevalent reasons any or a combination of the following infra-
Howell Information and Learning, PO Box
1346, Ann Arbor, MI 48106. Photocopy why communications fail on a project. structure components:
permission: Authorization to photocopy However, there is another avenue of commu-
articles herein for internal or personal use, or
the internal or personal use of specific nication that if inadequately addressed will • Project Business Processes—
clients, is granted by AACE International,
Inc., provided that the base fee of US$4.00 is
lead to project problems; a poorly developed Consistency in the way projects are man-
paid directly to Copyright Clearance Center, design or an internal review process that sim- aged is one of the most important keys to
222 Rosewood Drive, Danvers, MA 01923
USA. Telephone: 978.750.8400. For those
ply does not work correctly. successfully managing a project.
organizations that have been granted a For example, projects that fall behind Developing and implementing ‘best
photocopy license by CCC, a separate system
of payment has been arranged. The fee code schedule or end up over budget can be avoid- project management practices,’ that are
for users of the transactional reporting ed if the owner and the contractor know and defined well before the project starts,
service is ISSN-0274-9696/02 US$4.00. This
permission to photocopy does not extend to use a few basic principles of good project and helps the owner’s project team. This
any Cost Engineers’ Notebook, AACE business management practice. Since the helps the team better understand and
Recommended Practices supplements, or
membership directories published in this owner has the advantage of prescribing how execute what is expected of them and
magazine and/or special inserts. Payment certain processes and procedures of the proj- other team members. It helps with
should be sent directly to CCC. Copying for
other than personal or internal reference use ect will be followed, the owner can help respect to performing roles and accom-
without the express permission of AACE is influence the success (or failure) of the proj- plishing objectives on the project.
prohibited. Address requests for permission
on bulk orders to the editor. ADVERTISING ect well before the contract is executed. These business processes should inte-
COPY: Contact Network Media Partners.,
Executive Plaza 1, 11350 McCormick Road,
An excellent example of a project man- grate the company's overall business mis-
Suite 900; Hunt Valley, MD 21031. Telephone: agement process that the owner can influ- sion, vision, and practices.
410.584.1966. E-mail: aace@networkmedia-
partners.com for rates. Advertisers and
ence is with project specifications.
advertising agencies assume liability for all Specifications help the owner and/or the Examples of some of the project business
content (including text, representation, and
illustrations) of advertisements printed and
designer communicate to the contractor how processes that should be in place within the
also assume responsibility for any claims they want certain activities to be completed. owner’s project management organization
arising therefrom made against the publisher.
The publisher reserves the right to reject any One such specification, known as the sched- include, but are not limited to, the following.
advertising that is not considered in keeping ule specification, describes how the contrac-
with the publication’s mission and standards.
The publisher reserves the right to place the tor will develop, manage, and report on proj- • procurement; consultants, contractors,
word advertisement with copy which, in the ect time and resource usage. For more dis- materials and supplies;
publisher’s opinion, resembles editorial
matter. All advertising accepted for cussion on scheduling specifications, please • invoice processing;
publication in Cost Engineering is limited to refer to my messages found in the January • content management, including docu-
subjects that directly relate to the cost
management profession. Current rate card and February 2009 issues of the Cost ment control;
available on request. COST ENGINEERING Engineering journal. • real estate acquisition;
DEADLINES: Submissions for Cost
Engineering must be received at least 7 Before the owner endeavors to take on a • project controls;
weeks in advance of the issue date. Send to:
Editor, 209 Prairie Ave., Suite 100,
project, no matter how large or complex, it • risk management;
Morgantown, WV 26501 USA. Deadlines do
not apply to technical papers.
Cost Engineering Vol. 51/No. 3 MARCH 2009 3
 • change management;
• design quality assurance and review; Recognizing and working to develop each of these three
• construction quality assurance, oversight and management; areas will ensure a positive step towards a successful project.
and, Failure in any one of these areas can easily lead to a project that
• disputes management. completes much later, costs much more than expected, or both;
and may even create a situation in which project team morale is
There are no universally accepted standard processes for any low. The poor performance of these components should not be
of the above categories. However, there are many templates and reasons that a project fails for an owner, but, unfortunately, they
forms developed and implemented, some better than others, that often are.
I have seen within owner organizations for various types of build- The success of a project, regardless of which side of the con-
ing programs. For many organizations, their versions of these tract we are on, depends on our preparation. For the owner,
processes are constantly being scrutinized and further refined as whether it intends to execute a one-time project or procure for
the company becomes more experienced with design and con- several projects, it is essential to establish its project management
struction project management. For other organizations that have infrastructure well before the contractor procurement phase. ◆
processes and procedures which are inefficient, they don’t seem
to either care or have the expertise to make a positive change.
The key point to using business processes on a project is that Register Now for the 48th Annual
they create consistency on how business is performed. Although Western Winter Workshop
business processes may vary from owner to owner, or project to
project, they are a valuable tool for project teams to operate as a March 13-15, 2009
unit; and operating as a unit is the goal for all project teams. Portola Hotel and Spa
• Tools—In order for any of us to adequately perform just Monterey, CA
about any function, whether for our jobs, yard work, or even Join us and continue to grow this
sailing a boat, having the best and most advanced tools avail- young west coast tradition!
able will make everything we do more productive and less
burdensome on our minds and our backs. We need to have Visit www.aaceisf.org
these ‘best tools’ to accomplish our goals in a productive and for more information
timely manner. The field of project management is no Contact: John Haynes 925-570-4647
exception, including the areas of schedule and cost manage-
jhaynes@trsconsultants.com
ment. The primary tools necessary to adequately develop
cost and schedule systems are: software, hardware, and access
to resources such as books, and databases. Since the early
1980’s, after the personal computer was introduced to the
world, along with the project management software that fol-
lowed, there has been a boom in project management pro-
ductivity. These tools are what help execute the processes;
that is, with the appropriate team members who are skilled
and knowledgeable, armed with reliable scheduling and cost
management packages, the project team has what it takes to
be as productive as possible.

• The Human Element—Avoiding any claims or disputed

changes, whether schedule, cost, scope or quality related,
becomes futile if members of the owner's project team either
cannot or will not use the business processes or tools
designed to help manage the project for a successful out-
come. Whether it is because of a lack of training, compla-
cency, or unwillingness to change previous working behav-
iors, the project manager is faced with a challenge if any or
all of these factors exist within his/her team. Overcoming or
mitigating these factors takes experience working with a
diverse set of people with varying education, skills, and expe-
rience levels. It sometimes takes a project manager who not
only understands the technical aspects of the project but is
also a person who understands how to work a myriad of per-
sonalities, and can motivate or convince team members to
change their mindsets or paradigms in order to move the
entire team in the same direction.

4 Cost Engineering Vol. 51/No. 3 MARCH 2009

W omen
Women in Project
in Project Controls
Julie Owen, PSP CCC

Spotlight on Women in Project Controls —

Erin Dunavant
Editor’s Note: This series of articles from the AACE International Women in Project Controls Task Force will highlight the accomplishments and contributions of AACE
International women who work in project controls. The series will be one component in accomplishing the mission of the Women in Project Controls Task Force which is,
“to encourage women to actively participate in program/project management and project controls, and to identify avenues for the recruitment, mentoring, and recognition of
women in AACE International.
The WPC Task Force includes: Valerie Venters, CCC, chair; Julie Owen, CCC, PSP, vice-chair; Kathy Garza, CCC, secretary; Jennie Amos, Headquarters
representative; and Ginette Basak, P.Eng; Clive Francis, CCC; Marlene Hyde, CCE; Vera Lovejoy, CCE PSP; Alexia Nalewaik, CCE and Carole Venters, CCC, as advisors.

rin Dunavant was born and the Southern California section recent history. Erin realized the

E raised in Southern California

and will tell you that she "epito-
mizes what can be accomplished in
fruit of her efforts when she was awarded last year's AACE
International Southern California Section Service Award.
Erin says AACE International membership has helped her
your career through dedication and career and given her access to an incredible network of project
hard work". She began her career in controls professionals and critical technical resources. She regu-
project controls in the eighties at E&L larly takes advantage of the many opportunities listed on the
Associates, a small engineering compa- AACE International website, like distance learning, technical
Erin Dunavant ny, where she initially worked in committees, and forums. She appreciates having access to the
accounts payable, payroll, and accounts receivables. technical articles, recommended practices, as well as the profes-
At E&L, she quickly established herself as a company asset sional practice guides.
and was promoted into the project controls department as an Erin says, “getting involved in AACE International is truly
associate cost engineer. This experience sparked Erin's passion rewarding and the opportunities are endless.” Erin had the
for communication and intrigued her to learn more and more opportunity to go to the 2008 Western Winter Workshop in
about project controls. She loved the experience of working in Monterey, California. She says, “The networking opportunities
her new role and worked hard to continually increase her experi- were remarkable. I even met the AACE International President,
ence by taking advantage of the new opportunities. These oppor- Bill Kraus, and had dinner with him!”
tunities offered a variety of excellent learning experiences in cost Erin's current employer, Brinderson Engineering and
engineering and scheduling. Constructors, sent her to the AACE International Annual
Erin is currently the planning and scheduling manager at Meeting in Toronto, Canada, where she continued to network
Brinderson Engineers and Constructors in Costa Mesa, and met more amazing professionals. She comments, “these
California. Remembering the words from her first boss, “to suc- kinds of events are fantastic and I was thrilled by the training
ceed in project controls, you need to be a very hard worker; it's opportunities and people I met.”
not easy!”—Erin took those words to heart and the rest is history.
She was introduced to AACE International in 2006, when What Does Erin's Future Hold?
invited to attend a local Southern California section dinner meet- Since Erin accepted the challenge with Brinderson
ing. Erin could tell the Association was right up her alley and Engineering and Constructors, there have been many opportuni-
jumped in head first. She immediately joined the local Board of ties for growth and advancement. She firmly believes the oppor-
Directors and took responsibility for event planning. Serving as tunity came her way because of her desire to succeed and help
Events Director, Erin met many people, introduced speakers at mentor others to achieve their career goals.
meetings, learned valuable information from technical presenta- As the planning and scheduling manager at Brinderson
tions, and shared this information with her managers and col- Engineers & Constructors, Erin has the desire to mentor her staff.
leagues. She is taking steps to ensure her staff is properly trained, men-
She became the AACE International "cheerleader"— talk- tored, and has opportunities to reach their career goals. Her goal
ing to colleagues, getting them involved, helping them succeed, for the coming year is to get all of her project controls staff certi-
and improving project controls within her company. Through fied through AACE International and active in the Southern
this process, Erin was given the opportunity to announce associa- California Section.
tion events at her department meetings each month.
She had a vision that all project controls people in her com- Erin's Advice for Other Women in Project Controls
pany should be certified and spearheaded an effort to have 30 “I encourage everyone to get involved in AACE International
people from her company sit for the certification exam at one because this will help your career growth and provide you with
time. This resulted in the highest certification exam turnout in many wonderful resources and opportunities along the way. Set

Cost Engineering Vol. 51/No. 3 MARCH 2009 5

 career goals, get training and education,
believe in yourself, move forward with con-
fidence, step outside your comfort zone,
take advantage of opportunities you are
given, seek mentors, and plow straight
ahead with enthusiasm and you will get
there.” ◆

AACE International now

has a new online
Certification Directory
where you can search a daily
updated list of those who have
been certified.
Just visit
www.accei.org/certification/directory/

AACE International Certification Exams

The Second Quarter (2Q) 2009 Nevada Seattle (AACE Annual Meeting)
CCC/CCE, EVP, PSP, and New Jersey Saturday, June 20, 2009
CCT Certification Exams will New Mexico North India - Delhi/NCR
be given at the following AACE North Florida
International sites: Oklahoma Arabian Gulf Locations
Pittsburgh Tuesday, June 11, 2009
Saturday, June 13, 2009
Rattlesnake Mountain Al-Khobar
The Early deadline to sign up
Rocky Mountain Wednesday, June 12, 2009
for this exam is March 23, 2009.
South Africa Dubai
The Final deadline is April 6,
Southwest Ohio Thursday, June 13, 2009
2009. Visit www.aacei.org for
(Cincinnati and Doha, Qatar
additional exam information.
Columbus)
Atlanta Other Scheduled Exams and
Cascade Sites. Visit www.aacei.org for
Central Savannah River additional exam information.
Connecticut Saturday, June 6, 2009
Great Lakes Kuwait
Houston Gulf Coast
Montreal Saturday, June 27, 2009
National Capital

The Final Deadline for the Second Quarter Exam is April 6, 2009.

6 Cost Engineering Vol. 51/No. 3 MARCH 2009

 EExecutive Ar ticle
xecutive Article
Barton Goldsmith, Ph.D.

Emotional Fitness at Work — Speed Bumps at Work

has occurred. It could be the moment that prevents your com-

I
believe that any disagreement can be turned into a positive
experience. I call these moments “Speed-bumps” because pany’s from becoming a tragedy and turns it into a triumph. ◆
they require us to slow down and look at the circumstances
and behaviors that surround our issues at work. Slowing down is ABOUT THE AUTHOR
important because if you don’t, the speed-bump is going to rattle
you and you won’t be able to respond appropriately. Dr. Goldsmith’s new book “Emotional Fitness at
For most, these uncomfortable moments are really opportu- Work” (Career Press) will be released this fall. For more
nities for growth. If they are overlooked you are left with the than two decades Fortune 500 companies, educational
same behaviors that caused the upset. If you use the moment to institutions, and government organizations worldwide
focus on resolving the issue appropriately, without raised voices have relied on Dr. Barton Goldsmith to help them
or saying things that will anger one another, everyone involved develop creative and balanced leadership. He is a high-
and the business will grow. Furthermore, you will not have to go ly sought-after keynote speaker, business consultant and
through the same difficult dance time and time again. author. His columns appear in over 500 publications,
Learning to slow down and look at your actions, take cor- including the Chicago Sun-Times, the Detroit News,
rective measures, and agree on the best way to proceed, is not and the Los Angeles Business Journal. Considered an
easy at first. Begin by recognizing that you have hit a speed- expert on small business, he has spoken worldwide to
bump and that you need to use it to make things better. That step groups of 10 to 5,000, and is in high demand for
alone will keep the situation from escalating into an argument. keynotes, training and consulting. He may be contact-
Once you have agreed that you are going to work this ed through his web site BartonGoldsmith.com or at
through in a safe and sane manner then simply replay your ver- (818) 879-9996.
sion of what happened between you and your co-worker. This
way you both know what the other person experienced and how
they are feeling. You can then respond to their needs rather than
react to your own highly-charged emotions.
Now you need to take a little time to process what has
occurred. For most people an hour is enough but others may
need much less or a little more time. It all depends on your expe-
rience; individuals who regularly use speed-bumps as a growth
opportunity need much less time to process their feelings than
those who are new at it. Whatever the length of time that is need-
ed you must agree to never walk away angry with the other per-
son. If that means talking about it into the wee hours of the
morning so be it. Truth be told if you don’t resolve the issue you
won’t be your best self the next day no matter how much sleep
you get.
Once you have experienced what it is like to actually resolve
an issue with a co-worker or boss, you will be more available to
do it again the next time. You will also have the benefit of not
holding on to the negative feelings that accompany arguments.
Learning to correctly process and communicate your feelings is
one of the best tools you have for maintaining a profitable busi-
ness and for keeping your job.
Everyone experiences difficult moments. It is how we han-
dle these moments that make the difference between businesses
that work and those that don’t. Learning to slow down and calm-
ly investigate the way you deal with problems is a tool that will
make your working world a better, and more successful, place to
be.
So the next time you hit a speed-bump, slow yourself down
and take a little time to examine how you really feel about what

Cost Engineering Vol. 51/No. 3 MARCH 2009 7

 C ERTIFICATION PAPER
Standard Project Work Breakdown
Structure (WBS)
SAP— An Effective Tool for The WBS is a grouping of related
items from the estimate, into main
Managing Multiple Small Projects elements. All elements in the WBS
structure are created with the same
numbering system for each project. Figure
Betty A. Poettcker, CCC 1 lists the items in a standard WBS.
The WBS elements include the
ABSTRACT: SAP can be used as an effective tool to assist in the management of cost, schedule,
and resources for a single project, as well as, for a portfolio of small projects. Using this method following.
for small projects allows project managers to analyze a group of projects and make timely deci- • Owner's Costs—home office costs
sions. This article will explore the use of SAP in each of the three areas of project costs, mile- such as project management,
stone schedules and resources. Each section will describe the setup in SAP, the analysis of the document control, engineering, and
data for management and project controls, and the benefits of using SAP as a tool for project project expenses.
management. A standardized approach for each project in the portfolio provides consistent • External Engineering—engineering
information that can be analyzed across the entire portfolio of projects. The key to using SAP by an external engineering company.
successfully is to be consistent and to update the information regularly. SAP can be an effective • Procurement—materials purchased
tool for managing and controlling multiple small projects.
by the owner company and/or by the
KEY WORDS: Cost, milestones, planning, schedules, and resource management engineering company.
• Direct Construction Work
Packages—all items from the estimate
million dollars, and are from an owner which are purchased and/or
Editor’s Note: In 1972, five former IBM employees
– Dietmar Hopp, Hans-Werner Hector, Hasso company perspective. External companies constructed by a construction
Plattner, Klaus Tschira, and Claus Wellenreuther – are usually engaged to provide part or all of contractor.
launched a company called Systems Applications the engineering and construction • Construction Management—time
and Products in data processing in Mannheim, installation services. The framework for
Germany. Their vision: to develop standard spent by the owner company's
application software for real-time business every project is the same and will be construction team. This does not
processing. Over the course of three decades, SAP has described in greater detail. include field coordination provided by
evolved from a small, regional enterprise into a This article does not discuss portfolio the contractor.
world-class international company. Today, SAP is management, (i.e., which projects to
the global market leader in collaborative, inter- • Indirect Construction Costs—items
enterprise business solutions. The company now execute during a given year.) Only projects provided by the owner company, such
employs more than 51,500 people, whose that have received approval in the annual as safety watches, scaffolding, and
commitment and innovative spirit pace its future capital budget are considered. The inspections.
success. assumption is that the annual budget is in • Unit Support—support provided by
place, together with a list of projects that operations and maintenance for
AP can be used as an effective tool

S
will be worked on, as well as, the project reviews, isolations, commissioning,
to assist in the management of cost, stage(s) that will be completed. validation, etc.
schedule, and resources for a single This discussion will conclude that SAP
project, as well as for a portfolio of small can be used effectively for managing
projects. Cost, schedule, and resource multiple small projects in the areas of cost,
management are essential on all projects. schedule, and resource management. Project No. 12345
This is true regardless of size or complexity Title: Project One
of the project. The use of cost, schedule, PROJECT COSTS
and resource management helps ensure 12345 Project One
that projects are completed on time and 12345.1 Owner's Costs
To begin, let’s discuss how SAP is beneficial
within budget. 12345.2 External Engineering
for managing costs, for an individual
This article will explore the use of SAP 12345.3 Procurement
project, as well as, a group of projects. All
for each of the project control elements of 12345.4 CONSTRUCTION
projects in the group are set up with a
project costs, milestone schedules, and 12345.4.1 Direct Construction
standardized work breakdown structure.
resources. Each section will describe the Work Packages
The project estimate is recast into a control
setup in SAP, the analysis of the data for 12345.4.1.1 CWP 1 (Title)
budget, and a forecast is entered for each
management and project controls, and the 12345.4.1.2 CWP 2 (Title)
work breakdown structure (WBS) element.
benefits of using SAP as a tool for project 12345.4.2 Construction
This allows reporting and analysis for
management. Management
similar activities on all the projects in the
Although SAP has the capability of 12345.4.3 Indirect Construction
group.
providing extensive details for large Costs
projects, this discussion will focus on small 12345.5 Unit Support
projects. The projects described typically 12345.99 Contingency
have a total installed cost of less than three Figure 1— Standard Work Breakdown
Structure

Cost Engineering Vol. 51/No. 3 MARCH 2009 9

 • Contingency—funds specified in the In the event that project changes are Regular review of project costs, and re-
estimate for items that may be required, the cost of approved changes are forecasting future costs, provides early
required, but are unknown at the time also assigned to one or more WBS warning if certain elements are trending
of the estimate. elements. As shown in figure 2, the sum of over budget. The project manager can
the original budget and the supplemental then make decisions and/or take corrective
Each of the WBS elements can be funds then becomes the current budget. action that will either bring the project
divided further if more detail is desired. The next step is to enter a forecast for back on track, or will necessitate a request
For example, if there are multiple work each WBS element. Initially, this will be for supplementary funding. If the project is
packages, then the direct construction work the same as the original budget. The nearing completion, it might be possible to
package WBS may have another level with forecast-to-go amount for each WBS reduce the forecast for some WBS
several sub-elements, one for each work element is reviewed on a regular basis, and elements, thereby reducing the forecasted
package. Figure 1 illustrates multiple work the forecast for each WBS element is overall total installed cost.
packages. updated to ensure the forecast amount is Figure 3 shows that project one is
sufficient to complete the project. trending over budget by $17,000 or 2
Cost Management The third step is to forecast the cash percent. The forecast trend column
When a project receives approval for flow requirements for the total installed identifies which items were under-
implementation, the first step is to recast cost of the project. The cash flow can budgeted or over-budgeted. Closer
the estimate into a control budget, which either be entered at the highest-level WBS examination indicates that procurement is
becomes the baseline, or original budget. element, or at the lowest-level WBS complete and the forecast for WBS
Each item in the estimate is assigned element. For larger projects, it is 12345.3 can be reduced by $5000. It may
to a WBS element, according to the advantageous to forecast the amount also be possible to reduce contingency to
definitions identified in the previous projected to be spent in each month at the bring the project back to equal, or less
section. The project implementation plan lowest level WBS element. This method than, the budgeted amount.
will assist in determining the assignment of allows the project manager to examine
items in the estimate to the WBS elements. each element individually. Benefits of SAP for Cost Management
The result may be that some items In his article entitled, Effective Cost A standardized template is easily
from the estimate will be grouped into a Management -- Back to Basics, Robert L. entered into SAP for every project. In a
single WBS element. For example, if all Tichacek, PE, states that, “cost multiple small project environment, there
the material is to be procured by the management focuses upon measuring are usually too many projects being
construction contractor, then the WBS performance, comparing against managed simultaneously to allow sufficient
element for the direct construction work expectations, and finding reasons for time to build a unique work breakdown
package will contain both materials and divergence [1].” structure for each project. In addition,
labor. many smaller projects have a short

Figure 2— Cost and Commitment Report

Figure 3— Cost and Commitment Report

10 Cost Engineering Vol. 51/No. 3 MARCH 2009

duration and do not require the same be exported to a spreadsheet and charted • detailed engineering;
attention to detail that is required on a for visual benefit. • construction; and
large project. A summary of all projects also provides • validation.
Standard cost reporting eliminates the historical data that can be useful for
need to use spreadsheets for reporting costs estimating subsequent projects. If the Major milestones include the
and commitments. Spreadsheets can be amount spent on construction following.
time consuming and may be inconsistent management, for example, is usually more
across all projects. Using SAP cost reports than estimated, then the estimator can use • The design basis memorandum
improves accuracy by eliminating errors the historical data to justify an increased (DBM);
that can be made by transposing data from amount on future projects. • engineering design specification
SAP or other reports into a spreadsheet. Using SAP as a tool to manage and (EDS);
SAP contains real time data. There is report project costs has many benefits and • Issue for construction (IFC); and
no need to wait for the month-end reports possibilities. The standard WBS provides • turnover.
from the accounting department. Details the framework for managing a group of
of each transaction are easily accessed by small projects. If long-lead equipment is to be
the drilldown capabilities in SAP. purchased, this can also be planned in the
SAP provides a rollup of all projects, MILESTONE SCHEDULES network. It should be noted that project
facilitating forecasting by month, and by stages are identified in the network and not
year, to assist in capital portfolio SAP can also be an effective tool for in the WBS structure. Only one stage of
management. Corporate management is managing schedules in a multiple small the project is released at a time.
keenly interested in the cash flow project environment. Networks are used Work centers are assigned for the
distribution for all capital projects, to for scheduling. A standardized set of engineering and construction activities.
ensure that the total annual forecast is activities and milestones within each Each work center can be unique or
within the annual spending plan, and that network provides the framework that represent a group of companies. For
sufficient funds are available at the facilitates schedule management. This can example, if a resident contractor will do the
appropriate time. be for an individual project, as well as, for a construction, then a unique work center
The impact of increasing or reducing group of projects. would be assigned to the construction
the forecast for a single project is activity along with the estimated hours. If
immediately identified in the total group of Standard Milestone Schedule (Network) the construction will be issued for bid to a
projects. Figure 4 provides an example of The milestone schedule is a contractor other than the resident
grouping several projects together in one combination of main stages (activities) and contractor, then a work center representing
report. major milestones. Every project has the a non-resident contractor would be
A summary report of all projects can same set of activities and milestones. assigned.
provide valuable information for analyzing Similar to the WBS, the network can Schedule Management
project metrics, such as average cost index also be expanded to include multiple To be used effectively, in a multiple
or the percentage of engineering cost, engineering and construction work project environment, project schedules
when compared to the total installed cost. packages. The main stages represented in must be reviewed and adjusted on a regular
This highlights the importance of a the network include the following. basis The schedule for each project is
standard WBS for all projects. Figure 5 reviewed with the project manager and
illustrates the effect of extracting the • investigation; updated with the latest information. Each
external engineering costs. The data can • development; project manager may have eight to 12

Figure 4— Plan by Month

Figure 5— External Engineering

Cost Engineering Vol. 51/No. 3 MARCH 2009 11

 projects at various stages. Some projects changing the schedule on one project has RESOURCES
may be in the investigation stage. Other on a group of projects.
projects will be in the detailed engineering It is also beneficial to pull together a Planning resources becomes easier
stage, or in the construction stage. list of projects that are in the same stage in with the use of SAP, especially when the
SAP has a powerful option that allows any given time frame. For example, the same group of project managers, engineers,
the project activities to be filtered, construction manager may want to review a and designers of various disciplines in the
effectively reducing the number of list of all projects that will be constructed owner company execute multiple projects.
activities that need to be reviewed. For by the resident contractor during the If the projects are small in size a limited
example, you may want to find all the summer months. Since the construction pool of resources usually does the work,
activities that have either started or are activity in each project identifies an and requires working on several projects at
scheduled to begin within the next 30 days. estimated number of hours, as well as, a once. SAP can be used effectively to
Or you may want to find all the activities planned start and finish date, SAP can pull analyze and level the workload.
scheduled to be completed within the next together all resident contractor
30 days. construction for all projects. See figure 6. Planning Resources in the Milestone
It is then possible to analyze the report. This information can be shared with Schedule (Network)
If there are too many activities that are to the resident contractor to assist in planning Internal labor is managed as a sub-
be completed in the given time frame, then resources required on the project, operation of the major activities in the
the project schedules can be revised to especially during peak construction times. network, and is not duplicated in the WBS.
make the workload manageable. By It is also useful to determine which projects Since the network consists of project stages,
limiting the number of activities that may need to be rescheduled in order to internal resources can be assigned to each
require a review, the amount of time load level the work. SAP can provide a stage of the project. Home office resources
required to update a group of projects is graphical view in the form of a gantt chart are assigned a unique work center, which
reduced. that provides easy identification of allows management to view the capacity
construction activities that may need to be loading for each resource.
Benefits of SAP for Schedule rescheduled. Planned hours are entered for each
Management Figure 7 shows an example of how the resource as a sub-activity on each of the
When all projects are kept up-to-date, data can be viewed in the form of a bar main stages of the project. When the
schedule analysis becomes effective and chart with a distribution of hours required duration of the activity is changed, the
efficient. By using a standard set of in each month. The same reporting can be duration of the hours planned for each
activities and milestones, the project done for other like activities, such as resource is also changed. Regular reviews
manager can easily view the impact that engineering by an external engineering by the individual resource are essential to
company.

Figure 6— Construction Activities

Figure 7— Construction Hours During Summer Months

12 Cost Engineering Vol. 51/No. 3 MARCH 2009

ensure that there are enough hours
planned to complete each activity.

Resource Management
Reporting within SAP is used to
display the planned hours versus the
available capacity of each resource with a
unique work center. The data for all
projects in the group is reported by week,
by month, or by year, and can be displayed
either as a list or as a graph.
Both the list and the graph will
identify the workload of the resource.
Figure 8 illustrates the planned hours for
an electrical engineer for week 2 to week
14.
A graphical view of the capacity plan
for an individual resource will quickly
identify time frames where the resource is
either overloaded, or has available capacity. Figure 6— Construction Activities
If the resource has available capacity, he or
she can be assigned to one or more a forecast of the hours required to complete project has an impact on the schedule,
additional projects. If the resource is the work will be added for the resource. resource loading, and cash flow of the
overloaded, it may be possible to extend If the work is complete, then any entire portfolio. The effect of the change is
the duration of the activity in the network. remaining hours will be removed. Actual immediately visible in SAP. The key to
The plan in figure 8 demonstrates that hours entered into the timesheet by the using SAP successfully is to be consistent,
this resource has available time in weeks individual resource will draw down the and to update the information regularly. It
five, six, and seven, but is overloaded in planned hours. Depending on the has been shown that SAP can be an
weeks eight, nine, and ten. The question to frequency of entering hours into the effective tool for managing and controlling
be asked is, can the work in week eight be timesheet, SAP will provide an accurate multiple small projects. ◆
started earlier? Extending the duration of picture of remaining hours for the active
the activity will have impacts on other activities in each project. ACKNOWLEDGMENTS
resources, as well as on other milestones Planning hours for resources in the Sincere appreciation is given to my
and activities in the project, and on the project networks allows better colleagues, Denise Bos, Ken Kuehn, Jill
overall group of projects. management of department resources Gowan, and Susan Delaney for their
If it is not possible to extend the overall. As explained in the previous advice and encouragement.
duration of activities to load level the hours section, the workload for each resource can
for a resource, then it may be necessary to be adjusted to allow full use of available REFERENCE
request an additional resource, or out- hours. If a resource is overloaded, and the 1. Tichacek, Robert L., Effective Cost
source the work to an external engineering duration of the activity cannot be changed Management -- Back to Basics. 2005
company, to keep the projects on track. because of schedule restraint, then the over AACE International Transactions,
capacity can provide justification for hiring CSC11. Morgantown, WV: AACE
Benefits of SAP for Resource an additional resource. International, 2005.
Management SAP reporting can also be used to
One of the benefits of using SAP for calculate the cost of hours planned for RECOMMENDED READING
resource management is that it assists the work centers in each project. The cost 1. Basak, Ginette B., Understanding
owner resources with prioritizing their report for planned work can then be used Owner Needs. 2005 AACE
workload. When the list of activities is to assist in the preparation or validation of International Transactions, CSC06.
sorted in order of finish date, each resource the project estimate and cash flow. Morgantown, WV: AACE
can easily see the activities that are SAP can be an effective tool for International, 2005
required to be completed in a given time managing the workload of a pool of 2. Westney, Richard E., Effective Control
frame. resources, which is an important part of of Multiple Small Projects. Cost
Each resource can view the list of project controls. Engineers' Notebook, 1989 AACE
projects he or she has been assigned to, and International, 1989.
determine if the hours planned are standardized approach for each 3. Rad, Dr. Parviz F. and Dr. Ginger, A
sufficient to complete the work for that
stage of the project. If the remaining hours A project in the portfolio, provides
consistent information that can be
are zero, but the work is not complete, then analyzed across the entire portfolio of
Levin. Formalized Model
Managing a Portfolio of Internal
Projects. 2005 AACE International
for

projects. Changing the data for one

Cost Engineering Vol. 51/No. 3 MARCH 2009 13

 Transactions, PM.04. Morgantown,
WV: AACE International, 2005. News from AACE International Region 8
ABOUT THE AUTHOR
Betty A. Poettcker, CCC, works in
project controls with NOVA Chemical
Corporation of Red Deer, Alberta, Canada.
She can be contacted by sending e-mail to:
poettcb@novachem.com.

ATTENTION AACE
International Members
-
Look in the upcoming
April issue of the Cost
Engineering
journal for a listing of
the winners from the Submitted photo
On December 15, 2008, five cost engineers working for Colombian oil company Ecopetrol, in
annual election which is AACE International’s Region 8, took the CCC/CCE exam in Bogota with Technical Board
ending March 15 Director John Hollmann, CCE CEP acting as proctor. Should they pass, this group will represent
the first CCC/CCEs resident in Colombia. The CCC/CCE candidates from Ecopetrol in
Colombia are, shown above from left to right, Ricardo Londoño, Alex Castro, Alexandra
Rodriguez, Mario Vila, and Andres Pereira.

14 Cost Engineering Vol. 51/No. 3 MARCH 2009

 SSpecial Focus
pecial Focus

Cost Management Drives National Economies

egion 7 Director of AACE International, Madhu P. Pillai,

R emphasized the direct and highly visible influencing link

between effective cost management and national
economies, in his keynote address to the Global Symposium on
Project Management at the Center Stage of Economic
Transformation.
The global symposium was conducted Dec. 16-18, 2008, in
New Delhi, India. The symposium was organized by the
International Project Management Association (PMA) and the
International Construction Project Management Association
(ICPMA) with active participation of various ministries of gov-
ernment of India, industry, international consultants and acade-
micians. Mr. Pillai's keynote address titled, "Strategic Fit &
Effective Cost Management: Drivers for National Economies" was
Submitted photo
well received by more than 350 delegates. The attendees repre- Madhu Pillai is shown above delivering the keynote address for the
sented different facets of industry and business. Global Symposium on Project Management at the Center Stage of the
The event was very timely to discuss the possible contribu- Economic Transformation in New Delhi, India. The symposium was
tion of project management knowledge areas and practices to mit- December 16-18, 2008.
igate the impact of the ongoing economic recession in many sec-
tors across the world.
Mr. Pillai elaborated on multiple opportunities to manage
the cost element in various areas of nation building and areas
contributing to national GDP. The cost for the system (govern-
ment, semi-government and private) for getting the benefits of
each plan/program reached to the beneficiary with its full value,
many times becomes prohibitive because of ineffectiveness and
inefficiency. Establishing that almost every link in this chain
needs to be primarily planned monitored and controlled in terms
of dollar values, he proposed that many of AACE International
practices and the Total Cost Management (TCM) Framework
can help the situation for noticeably positive results. He added
that internationally accredited professional certifications play a
major role in enforcing best practices and systems. Submitted photo
The keynote also facilitated awareness about AACE Madhu Pillai, AACE International Region 7 Director, and Adesh Jain,
International among the professional community and many of Chairman of IPMA, participate in a question and answer session at the
the delegates were inquisitive about AACE International prac- Global Symposium in New Delhi, India. The symposium was Dec 16-
tices, certifications, and activities. ◆ 18, 2008.

Voting in the AACE International Elections Runs from February 1 - March 15

The annual AACE International Board of Directors election began Feb. 1 through March 15. The full slate of candidates was
published in the December 2008 issue of Cost Engineering journal. Candidate photos, bios, goals and objectives can be viewed
in the hard copy of the journal, the online version, or click on "Click here to vote” image on the homepage of our website
(www.aacei.org). Most offices have two candidates vying for election, with the exception of two of the Regional Director offices. In
Region 3, there are three candidates vying for the office of Director-Region 3. Those candidates include: Asoka K. Pillai, CCE
EVP; Andrea Bach, and Ernest Hani, PSP. In Region 8, Candidate Tetsuya Yonezawa, CCE, is running unopposed. For all other
offices, there are two candidates for each opening.
Please take time now to review each candidates bio, goals and objectives and select which candidates for whom you desire to
cast your vote. ◆

Cost Engineering Vol. 51/No. 3 MARCH 2009 15

 T ECHNICAL A RTICLE PEER REVIEWED
The 2002 Control of Asbestos at Work
Regulations (CAWR) introduced the new
Programs and Projects Driven by duty to manage asbestos risk in non-
domestic premises. Regulation 4, the duty
Asbestos Regulations to manage asbestos came into force on
May 21, 2004, following an 18-month lead-
in period.
Paul Stanford Kupakuwana The Control of Asbestos Regulations
(CAR) 2006 came into force on Nov. 13,
ABSTRACT: Asbestos’ ability to resist high temperatures resulted in its extensive use as a fire- 2006. These regulations, which are used in
proofing and insulation material from the 1950s through to the mid 1980s. But today, asbestos
conjunction with the Approved Code of
is equally viewed as a beast. This arises mainly from a consideration of the dire consequences
of deaths from asbestos-related cancers that have resulted from past exposure. Asbestos litiga- Practice L27, brought together the three
tion has given rise to claims against some former producers, sellers, distributors, and installers. previous sets of regulations covering the
Some were forced out of businesses, or into diversification and bankruptcy. This article analy- prohibition of asbestos, the control of
ses the implications of new asbestos regulations in determining program and project directions asbestos at work, and asbestos licensing [9].
at the London Borough of Hillingdon. That analyses showed a significant impact.
Purpose and Significance of Research
KEY WORDS: Asbestos, programs, projects, regulations, resources The primary purpose of this article is
to identify and describe programs and
he London Borough of Hillingdon related cause of death from ill health. It is projects at the London Borough of

T (LBH) is situated 14 miles from

Central London, on the western
edge of Greater London. It is the second
said that airborne asbestos fibres can be
deadly if they are inhaled over a long
period of time. Past exposure is said to be
Hillingdon, whose implementation were
influenced by the new asbestos regulations.
This study aims to demonstrate the
largest London Borough, covering about now responsible for about 4000 people potential influence that new legislation
42 square miles. It is bounded to the North dying from asbestos-related cancers every could have in determining corporate
by the London Borough of Harrow and year. This figure is expected to rise over the program and project directions, especially
Three Rivers District Council, to the South next 10 years and then decline. Research given the fact that we exist in environments
by the London Borough of Hounslow and suggests that the groups most at risk are full of uncertainty and characterized by
Spelthorne District Council, to the east by those who carry out building maintenance legal dynamics.
the London Borough of Ealing and to the and refurbishment work [11].
West by South Bucks District Council. Research carried out indicated that Literature Review
London Heathrow Airport and Brunel any type of building built before 2000 Asbestos litigation has given rise to
University are within the Borough (houses, factories, offices, schools, claims against some former producers,
boundary [14]. hospitals, etc) could contain asbestos [11]. sellers, distributors, and installers. The
The Borough contains a mixture of Although some asbestos containing effects of this litigation have included the
residential, rural, shopping and industrial material has been removed over the years, selling out of businesses, diversification,
areas and incorporates the communities of there are many thousands of tones of and forced bankruptcy of some large
Hayes, Harlington, Harmondsworth, asbestos still present in buildings. It is asbestos manufacturers, mainly in the US
Sipson, Hillingdon, Yiewsley, West estimated that over half a million non- and the United Kingdom [3].
Drayton, Cowley, Uxbrdge, Ickenham, domestic premises currently have some Booker and North in their book,
Harefield, Ruislip, Eastcote Northwood form of asbestos in them. There is extensive Scared to Death, tell the inside story of all
(part) and Pinner (part). The major repair and removal work, which will major scares of recent decades including
shopping area is Uxbridge where the Civic continue for the foreseeable future [10]. asbestos, showing how they have followed a
Centre is located [14]. The use, supply and importation of remarkably consistent pattern [4]. Even
The LBH manages many properties of asbestos and asbestos products were though a scare often begins with some
different sizes, age, construction, location banned for all but a few exceptions by the genuine problem, such as asbestos, Booker
and environment. The majority of these 1992 Asbestos (Prohibition) Regulations and North analyze the crucial role played
are held primarily for service or socio- [11]. The regulations also banned the in each case by supposed scientific experts
economic reasons. There are also second-hand use of asbestos building who are said to eventually turn out to
additional properties leased from other materials that are not part of an existing misread or manipulate the evidence; then
landlords [7]. Part of this huge building building, taken down and put up again by those sections of the media who are also
portfolio is subject to regular outsourced within the same premises. said to eagerly promote the scare without
reactive and cyclic maintenance work, The 1994 Construction Design and regard to the facts.
alterations, extensions, and occasional Management Regulations, and their 2007 The tipping point of any scare, Booker
demolition [14]. revision, require that the client of and North show, comes when it is taken up
The health and safety executive (HSE) demolition and major building works takes by the politicians., They and other officials,
reports that asbestos is the main cause of positive steps to identify any hazards come up with an absurdly disproportionate
occupational ill health from about 1950 associated with the site, including asbestos, response. This, they say, leaves us all to pay
onwards, and is the greatest single work- and informs contractors accordingly.

16 Cost Engineering Vol. 51/No. 3 MARCH 2009

 Table 1 — Cost Estimate Methods Developed for Usage at the Planning Stage and the Factors They Employ

a colossal price, often running into billions the location of all asbestos materials. new legislation could have in determining
or even hundreds of billions of pounds. Access to all parts of a building is rarely corporate program and project directions.
A deliberately fostered confusion achieved for various reasons, and variations By use of a cross-sectional hedonic
between different types of asbestos is what in materials used during construction can pricing model, employing property specific
created within the US one of the greatest lead to inconsistencies that may not be data, a study was carried out to investigate
swindles in legal history. Some termed this noticed at the time of the survey. the relationship between asbestos and the
a $200 billion miscarriage of justice. It Asbestos within flooring, ducting, or prices of single properties.
brought Lloyds of London to its knees. This hidden voids may still escape detection
was said to have been followed by a further until the actual refurbishment or Study and Discussion
multi-billion pound scandal on both sides demolition process is undertaken. When In order to meet statutory
of the Atlantic when new laws allowed planning projects, all clients should budget requirements regarding the compilation of
specialist contractors to charge almost any both sufficient time and funds to deal with asbestos information and records for all its
sums they liked to businesses and to hidden or trapped asbestos materials. buildings, as well as identify any asbestos
homeowners panicked by the scare [4]. These may have been missed (e.g., that could pose a risk to buildings users, the
The stigma of asbestos to blight a concealed) within the building structure; LBH embarked on a number of programs
property and to influence sales and or, present in previously inaccessible voids and projects. Included in these programs
property values downwards at below market etc.) [2]. and projects was the initiation of a four-year
average is said to be another modern day asbestos survey program in 1999, to update
problem [1]. Research Methodology its records. Tables 1 and 2 show the
J.D. Fisher and others carried out a The methodology for this study asbestos related project activity and cost
study to develop a valuation procedure and encompassed evaluating information from levels for eight financial years to 2007/8.
a model for estimating the impact of the the following three primary sources. The LBH proceeded with the
presence of asbestos-containing materials establishment of asbestos registers as
(ACMs) on real estate income property [8]. • Responses from three requests for required by the new regulations to manage
A key aspect of the valuation procedure was information (RFIs) by department; asbestos risk in non-domestic premises.
that the value of a property with asbestos, • Acquisition reports, documents and Whether to carry out a type 1
and hence the value adjustment for the studies; and (presumptive), or type 2-semi-intrusive, or
presence of asbestos, depended on the • interviews with two local authority type 3-intrusive asbestos survey is a decision
optimal strategy for dealing with the senior executives. that has to be made. In making this
asbestos. decision, consider the following
Value-maximizing conditions were Once the complete set of data was cost/benefit items, in addition to LBHs
derived from the model for determining if assembled, it was organized, assimilated, standing orders (See table 1):
and when removal should occur. and reviewed for common themes.
Information obtained from a survey of real By gathering information on the • Is the survey type the minimum
estate appraisers provided data for types of projects being managed and the acceptable to the health and safety
parameterizing the model for the purpose contexts in which they were being carried executive?
of simulating the effects of ACMs on the out in a bid to comply with legal • Opportunity cost and time-value-for-
value of different categories of property [8]. requirements, this study is able to money considerations (e.g., do I
In all but the simplest of building demonstrate the potential influence that undertake a type 2 asbestos survey
types, an asbestos survey is unlikely to find

Cost Engineering Vol. 51/No. 3 MARCH 2009 17

 Table 2 — Project Cost Levels

now, and a type 3 later, if and when it number of properties with in place asbestos The database was updated in February
becomes necessary)? registers began to increase, this resulted in 2003, and has allowed certain information
• Asset management and property-life- a gradual decline in both surveys and to be available through the LBH’s intranet
cycle considerations (e.g., is the removal projects over the years (See table from September 2005. Usernames and
property a candidate for either 1). Roughly 99 percent of the non- passwords were created for key staff for use
refurbishment or demolition? Has it residential properties had been surveyed by in conjunction with the web-tracker. In
reached the end of its economic the end of March 2007 [16]. 2006, an alternate CAPS database was
usefulness and should be considered All asbestos that had been identified as rolled out to property services staff,
for either sale or disposal). posing an immediate risk was removed, together with appropriate training. Asbestos
• Is the building listed, and are there any encapsulated, or programmed for removal. related information was fed into this CAPS
legal limitations to structural Where unavoidable delays occurred in database on an ongoing basis [16].
alterations? removal, management procedures were Linked to this PSI-AMS database was
established to ensure that risks were an annual maintenance license fee and an
After examining these considerations, negated or minimized [16]. insurance software escrow agreement.
it was decided to carry out an asbestos type If suspected asbestos containing This agreement provided the LBH with the
2 survey. This was the basis for the materials were found during refurbishment protection and assurance that the LBH
establishment of an asbestos register. This or demolition work (and not previously would be able to access the source code of
was the minimum acceptable to the HSE. identified), The LBH stopped work. its software application if its software owner
[See tables 1 and 2]. A full investigation was carried out to went out of business or failed to meet
The LBH procured services from determine whether asbestos was present contractual obligations to maintain the
measured term contractors. To pre-qualify (samples collected and analyzed), and software (See table 2) [16, 18].
as a measured term contractor, one has to proper account taken if asbestos was From 2006 forward, all new asbestos
to be licensed by the health and safety subsequently confirmed. All asbestos surveys and re-inspections started to be
executive; and, the environmental agency. containing material was always removed or entered into a new asbestos database,
Asbestos removal contractors must be dealt with by a licensed asbestos removal which linked into the new CAPS property
registered with the Asbestos Removal contractor who also had health and safety database (See table 1) [16].
Contractors Association. Asbestos executive approval. This ensured that the The property design and standards
surveying firms must be accredited by the LBH fulfilled its legal obligations, and that (PDS) group which housed the asbestos
United Kingdom Accreditation Services. all asbestos waste materials were disposed management function was responsible for
The asbestos survey costs were largely of in strict accordance with the current the identification, management and
determined by the property size and the legislation for dealing with asbestos waste removal of asbestos from the LBH’s
prevailing survey hourly rates. Asbestos [16]. property stock. The PDS kept a depository
removal costs were largely based on To ensure that full asbestos of accessible asbestos registers. The PDS
volumes and hourly rates. information was kept, a web-based asbestos offered guidance on asbestos management
Adoption of best value procurement database package called Asbestos to LBH staff either by phone or through its
practices helped to contain costs. It cost Management Suite (AMS) was purchased intranet posted asbestos in buildings
about £200 ($286.74) per ton to legally in 2001/2 from a company called process map. Asbestos awareness seminars
dispose of hazardous waste like asbestos Performance Support International (PSI) were organized on an occasional basis (See
[20]. (See table 2). A firm called Alcontrol table 1) [16].
Type 3 asbestos surveys were only Technichem Limited was contracted to The PDS was in constant liaison with
undertaken for pre-refurbishment and/or carry out asbestos surveys and to make the facilities management (FM) group in
pre-demolition as required by law. As the direct entries into the PSI-AMS database. terms of the need to commission asbestos

18 Cost Engineering Vol. 51/No. 3 MARCH 2009

Type 3 surveys for either pre-refurbishment based on: Type 1 survey > Type 2 training, preparation and submission of
or pre-demolition. Most re-refurbishment survey > Type s Survey. monthly progress reports. The asbestos
or demolition projects had concomitant (The reason: Type 1 presents the manager’s professional indemnity
asbestos related projects (See table 1) [16]. greatest probability of finding asbestos, insurance cover was embraced within the
Refurbishment and/or demolition therefore the highest risk to exposure LBH’s insurance portfolio (See table 2)
projects based on a Type 2 asbestos surveys and/or potential litigation). [16].
were observed to generally have relatively • Asbestos related costs for projects The CAR 2006 made asbestos
higher cost variances than those based on a concurrent with refurbishment and/or awareness training a mandatory
Type 3 survey. The positive cost variances demolition and based on: Type 1 requirement for all workers who may be
for refurbishment and/or demolition Survey > Type 2 Survey > Type 3 exposed while working. Every employer
projects, concurrent with asbestos Survey was compelled to ensure that adequate
removals, were assumed to have occurred (The reason: Type 1 presents very information, instruction, and training was
mainly because of the following reasons limited asbestos information at the given to his/her employees who might be
[15]: onset). exposed to asbestos, or who supervised such
employees, so that they were aware of the
• For projects with an initial asbestos In cases where the respective properties of asbestos and its effects on
survey below the level of Type 3, the properties were deemed to have reached health. In compliance with this
survey presented limited information the end of their economic usefulness, requirement, a program was rolled out by
on the asbestos containing materials at property sales and disposals were the LBH to provide training and
the start of the project. considered. It was observed that some development for employees to enable them
• Some asbestos survey and/or removal property selling prices were affected by to satisfactorily carry out their duties while
work was scheduled outside normal asbestos considerations. Potential buyers avoiding the dangers of asbestos. This
working hours and the cost was preferred to bid at prices lower than the program saw quite a number of LBH staff,
therefore at premium rates. market average. Asbestos considerations head teachers and premises managers
• Project delays (e.g., because of the affected on average 36 percent of the receive the necessary training. The
asbestos survey upgrade; health and properties’ selling prices (See table 1) [16]. presentation of this training was out-
safety executive notification came These findings concurred with earlier sourced. In addition, relevant literature,
prior to asbestos removals; design studies carried out by C.S.Decker and pamphlets and posters from authoritative
alterations; etc). others which indicated that, when sources such as the HSE and the
• Design options being considered on controlling for relevant socio-economic environmental agency continued to be
site without adequate time to consider variables, asbestos is a significant disseminated on a real-time basis (See table
cost implications. (e.g., possibly determinant of property values [6]. Risk 1) [16].
prompted by the need to avoid inheriting liabilities that may prove costly The LBH continued to carry out a
disturbing presumed asbestos in both the un-anticipated asbestos removal range of duties in respect of the
containing materials). costs and postponed timescales, both identification, management, and removal
• Exposure to claims and counter-claims seemed to incur financial penalties. of asbestos from its property stock. It
(e.g., extension of time claims; human The Asbestos (Prohibitions) procured measured term contracts,
exposure claims; etc.). Regulations of 1992, made it necessary for standing price agreements or similar call-
• Projects’ critical paths getting affected the establishment of a strict liaison among off contracts for asbestos removal/
by asbestos related delays, often the LBH’s property design, planning and reinstatement and asbestos consultancy
resulting in a domino effect cost-wise. procurement functions. This cooperation services in compliance with EU
• In some cases, commissions for surveys was observed to work well, with Regulations, the LBH’s Constitution and
and removal work were done on an procurement observed to execute its Contract and Procurement Standing
adhoc basis, and this introduced high sustainable procurement strategy [16]. Orders and best practice.
set-up costs. There was a need for the LBH to In June 2006, a rolling program of
resource the necessary asbestos related asbestos re-surveys was commenced in
The observed general pattern for costs skills. A position was created initially for an order to facilitate the updating of the
and risks can be summarized as follows asbestos supervisor and later on upgraded asbestos registers and also to ensure
[15]: to asbestos risk assessment manager. This continued compliance with CAR 2006
function was responsible for the provision [See table 1]. Another rolling program for
• Asbestos surveying fees cost estimate: of asbestos risk management Services for annual asbestos risk assessments in schools
Type 3 surveys > Type 2 surveys > general fund buildings and schools. and non-domestic properties was put in
Type 1 surveys. This responsibility included place in November 2007, in line with the
(The reason: Type 3 is intrusive; Type adherence to program, tendering, element of due diligence[See table 1].
2 is semi-intrusive; Type 1 is management of measured term Annual asbestos audits / risk
presumptive). contractors, site checks of survey content assessments were carried out to ensure that
• The risk of finding more asbestos and quality control, monitoring of the element of due diligence was exercised
containing material during resources uses and payment certification, at all times and that the premises held up-
refurbishment and/ or demolition is the provision of awareness seminars and to-date asbestos registers. In some cases,

Cost Engineering Vol. 51/No. 3 MARCH 2009 19

 asbestos audits / risk assessments were need for maintenance or removal/disposal Hazards Centre Trust (December
carried out on demand and on an ad hoc in the future. 1995), Chapter 9 -The Asbestos
basis ahead of such projects as As asbestos is removed and many Producers, ISBN-10: 0948974133;
refurbishments, demolitions, and disposals premises are cleared of known asbestos, it is ISBN-13:978-0948974137.
[16]. said that the need for annual type 2 4. Booker C. and R. North. Scared to
A contractors’ site register was inspections would be negated. The Death - From BSE to Global
introduced by the LBH for use in credibility of such a pro-active strategy and Warming: Why Scares Are Costing
conjunction with the asbestos register by its presumed benefits, however, need to be Us the Earth, The Cromwell Press,
duty holders to inform contractors about further investigated and validated. Trowbridge, Wiltshire. ISBN 0-8264-
potential asbestos hazards. Any contractor This study had a limitation in that it 8614-2, (2007).
working on the fabric of the building was did not proceed to determine the 5. Coomber R. Finance and
made to first consult the asbestos register percentage effect that asbestos had on each Benchmarking Officer, London
and then sign and date the log sheet to property’s selling price. This presents an Borough Hillingdon, Finance and
certify that he/she had consulted before opportunity for further research work. Resources, Property Design and
commencing work. This requirement Aggressive marketing campaigns, Standards Team, Civic Centre,
protected the LBH or duty holder from any backed by millions of dollars, are targeting Uxbridge, Middlesex, United
possible asbestos related claims. decision-makers and consumers in Kingdom, (2008).
A permit-to-work was only issued when developing countries. The increase of 6. Decker C.S., D.A. Nielsen and R.P.
all pre-set requirements had been met asbestos consumption in countries which Sindt. Residential Property Values and
satisfactorily [16]. have little information on long-term Community Right-to-Know Laws: Has
The LBH also dealt with isolated cases consequences of asbestos exposures. These the Toxics Release Inventory Had an
of the removal of fly-tipped asbestos whose countries have few if any specific asbestos Impact? Growth and Change, A
cost was settled through the use of the laws, no enforcement of the laws which do Journal of Urban and Regional
management reserve. There were no exist, no official workplace inspections, no Policy, Vol. 36 Issue 1 (Winter 2005):
reported legal suits or claims made against compensation, no health services and no pg. 113.
it nor health related incidences [16]. social security. This is a cause for serious7. Edwards G. Head of Corporate
concern. Some trade unions are Property Services, Performance of the
his study succeeded in campaigning against asbestos and are at the Property Portfolio, Financial Year 2004

T demonstrating the significant

influence that the new asbestos
legislation had in determining corporate
forefront of the ban asbestos movement.
They also expose the nefarious practices of
the exploiting organizations [13]. ◆
/ 5, Finance and Resources Civic
Centre, Uxbridge, Middlesex, United
Kingdom (2005).
program and project directions at the LBH 8. Fisher J.D., G.H. Lentz , and K.S.
in its bid to comply. From a business ACKNOWLEDGMENTS Maurice Tse, Valuation of the effects of
perspective, this new legislation presented The author wishes to acknowledge the Asbestos on Commercial Real Estate,
opportunities, threats and risks. following people who also contributed to American Real Estate Society, Journal
Opportunities arose from a consideration this effort: Geoff Eldridge, Phil Hopkins, of Real Estate Research, Volume 7,
of new business ventures which capitalized Richard Coomber, Mayur Patel, Martin Issue 3, (1992) pg. 331-350.
on the new legislation. Whereas, threats White, and Nesrin Crilly. 9. Health and Safety Executive, A Short
and risks arose from the potential for Guide to Managing Asbestos in
asbestos related deaths, prosecution and/or REFERENCES Premises, Published by the Health
litigation with its associated costs and 1. Alberini Anna. Determinants and and Safety Executive, (October, 2003)
claims. As we exist in environments full of Effects on Property Values of United Kingdom
uncertainty and characterized by legal Participation in Voluntary Cleanup 10. Health and Safety Executive,
dynamics, this study further strengthened programs: The Case of Colorado, SIEV- Asbestos, Published by the Health and
the need for a management reserve for Sustainability Indicators and Safety Executive, (April, 2005), United
dealing with unknown unknowns in Environmental Valuation, Department Kingdom.
program and project management. of Agricultural and Resource 11. Health and Safety Executive, The
Economics, University of Maryland Control of Asbestos Regulations
Limitations and Suggestions for Future and Fondazione Eni Enrico Mattei, 2006 - A Guide for Safety
Research (2006). Representatives, Published by the
Progressive organizations are said to be 2. Alcontrol Technichem Limited. Type Health and Safety Executive, United
adopting an increasingly pro-active 3 Asbestos Survey at Barra Hall Kiosk, Kingdom, (December 2006).
approach to remove all known asbestos, Survey No. A05/03/116/PC, Report 12. Hopkins P. Budget Coordinator,
wherever practical and economical over issued March 31, 2005, on behalf of Asbestos Management Programme,
the next few years. It is said that the obvious Hillingdon Property Services. Compiled Expenditure, London
benefit to such a strategy would be to 3. Asbestos Hazards Handbook: A Borough of Hillingdon, Finance and
reduce the anticipated capital expenditure Guide to Safety Work in the Resources, Property Design and
on asbestos in future years and negate the Community and at Home (London Standards Team, Civic Centre,
Hazards Centre Handbook), London (2008).

20 Cost Engineering Vol. 51/No. 3 MARCH 2009

 Uxbridge, Middlesex, United Kingdom 2. Chattopadhyay S, Braden J.B. and
13. Kazan-Allen L., Asbestos-The Human Patunru A. (2005), Benefits of AACE International
Cost of Corporate Greed, A Hazardous Waste Cleanup: New Distance Learning
GUE/NGL publication, European Evidence Opportunities
United Left/Nordic Green Left, from Survey - And Market-Based
European Parliamentary Group, Property value Approaches, visit - www.aacei.org
Brussels (2006). Contemporary Economic Policy,
14. Kelly C. Invitation to Tender, Asbestos Volume 23
Technical Support Services Contract, Issue 3 Page 357-375, July.
Corporate Procurement Unit (1S/07), 3. Colquitt L.L., Hoyt R.E. and
London Borough of Hillingdon, 10th McCullough K.A. (2002), The Impact
March, Document Revision 1 (2008). of Asbestos and Environmental
15. Kupakuwana P.S. A Critical Analysis Reserves
of Asbestos Removal Project Cost Increases on Shareholder Wealth,
Implications. Cost Engineering, Casualty Loss Reserve Seminar,
Vol. 49, Issue No.11, (Nov. 2007). Arlington, VA.
16. Kupakuwana P.S. Asbestos and
Legionellosis Risk Assessment ABOUT THE AUTHOR Registration is now open for Stevens
Institute of Technology Graduate Certificate
Manager, Asbestos Management Paul Stanford Kupakuwana is an
and Master's programs!
Programme, Compiled Statistics, asbestos and legionellosis risk assessment
London Borough of Hillingdon, manager, with the London Borough of AACE International is partnering with
Finance and Resources, Property Hillingdon, Finance & Resources, Stevens Institute of Technology (Hoboken,
Design and Standards Team, Civic Property Design and Standards Group, N.J.), and is pleased to offer its members a
Centre, Uxbridge, Middlesex, United Uxbridge, Middlesex, in the United 10% discount off tuition for relevant Stevens
Kingdom, (2008). Kingdom. He can be contacted by sending WebCampus courses. Notify Stevens Institute
17. Nesrin Crilly, Occupational Health e-mail to: kupakuwana@hillingdon.gov.uk, of your membership and your interest in the
Unit Manager, London Borough or to: kupakuwanaps@yahoo.com. 10% member discount when you sign up for
any Stevens WebCampus course. At the com-
Hillingdon, Occupational Health He passed the UK’s Institution of
pletion of the course, 10% of the tuition cost
Unit, Civic Centre, Uxbridge, Chemical Engineers’ Design Project will be rebated to you.
Middlesex, United Kingdom, (2008). Examination in 1989. In 1992, he achieved
18. NCC Group, Escrow Solutions, Full an MBA degree from the Hull University With over 120 instructor-led courses, the
Verification, Assure, Secure, Advice, Business School in England. Thereafter in WebCampus program offers you a convenient
NCC Services Ltd, 2000, graduated with specializations in and flexible way to earn any of 17 Masters
www.nccgroup.com, (2007). Manufacturing and Process Engineering Degrees or 38 Graduate Certificates com-
19. Patel M. Senior Surveyor, London through the UK based Engineering pletely online. Offering maximum flexibility
Borough Hillingdon, Finance and Council. In 2008, he achieved several for professionals, you can access your
WebCampus courses from home or while
Resources, Estates & Valuation professional certifications, PMP® and
traveling, any time, day or night. Online
Service, Civic Centre, Uxbridge, PRINCE2™ Practitioner, all in the field of courses offer you the perfect balance of con-
Middlesex, United Kingdom, (2008). project management. Professionally, he is venience and academic rigor, as they cover
20. Shorter A. Dumping on Britain for a registered both as a European Engineer the same material and are conducted by the
Profit, BBC News Magazine, United and a Chartered Engineer. He is a same faculty as Stevens conventional courses.
Kingdom, (May 4, 2005). Corporate Member of the UK Institution
21. White M. Corporate Property Strategy of Engineering and Technology, and a Detailed course and program descriptions, as
Manager, London Borough Fellow of the Institute of Directors. well as admission information can be
Hillingdon, Finance and Resources, Between 1982 and 2008, Paul worked in obtained at: http://webcampus.stevens.edu/.
Corporate Property Strategy, Civic Zimbabwe, South Africa and the United
Students do not have to be accepted into
Centre, Uxbridge, Middlesex, United Kingdom in various capacities for both the a program in order to take graduate classes at
Kingdom, (2008). public and private sectors. His lecturing, Stevens. It is possible to take up to three (3)
research and consultancy interests are classes as a non-matriculating student while
RECOMMENDED READING focused mainly in the areas of project and your application is under review. For more on
1. Bond S.G. Do Market Perceptions operations management. He has previously this and if you have any further questions,
Affect Market Prices? A Case Study of a led/delivered hard, transformation, and soft please do not hesitate to contact the
Remediated Contaminated Site. projects. In addition, he has consulted for WebCampus Division at:
Department of Property, Faculty of various organizations, presented and
Architecture, Property Planning and published papers and e-books with some webcampus@stevens.edu
Fine Arts, University of Auckland, jointly, in internationally refereed journals. or at
Auckland, New Zealand, Chapter 12 1-800-496-4935.
(2002).

Cost Engineering Vol. 51/No. 3 MARCH 2009 21

 SSpecial Feature
pecial Feature
Quentin W. Fleming and Joel M. Koppelman, Primavera Systems, Inc.

The Two Most Useful Earned Value Metrics: The CPI and the TCPI
ABSTRACT — The Project Management Institute (PMI) has just released the
most have rarely ever used the TCPI. What a pity, for the TCPI
Fourth Edition to its world standard on project management: A Guide to the when used in conjunction with the CPI provides a powerful set of
Project Management Body of Knowledge, the PMBOK ® Guide. Many new tools in the management of a single project, a program, or a full
features have been added to this massive document among them new coverage portfolio of projects.
of an earned value metric called the “To-Complete Performance Index” or
simply the TCPI. What is the TCPI and why is it important? This article
describes its purpose and utility. Earned Value Management (EVM). . .The Ten Requirements
As a general rule, whenever a project manager makes the deci-
henever a project commits to the employment of sion to employ earned value in the management of a project, that

W earned value to help manage their effort, they are sud-

denly inundated with a windfall of performance met-
rics which are available in no other project management tech-
choice ideally should be supported by management, the stake-
holders at all levels. Stakeholders must want to know the full truth.
The reason: EVM performance data can be available to everyone
working the project: the functions, senior management, the paying
nique. New acronyms suddenly emerge: PV, EV, AC, SV, SPI,
CV, CPI, BAC, EAC, TCPI, and on and on. While all of these customers, all parties who have a vested interest in the success of
performance indicators can have value to any project, two EVM the project. As long as everyone has a rudimentary understanding
metrics in particular are critical to projects. They are the “CPI” of what the EVM data means, everyone connected to the project
and the “TCPI.” knows what everyone else is doing. Thus, it is imperative that there
The CPI (Cost Performance Index) tells us, “what we have be a management buy-in whenever a project manager elects to
accomplished for what we have already spent.” Did we stay with- employ EVM on a project.
in the budget, or did we overrun? By contrast, the TCPI (To- The commitment to employing EVM requires both the com-
Complete Performance Index) focuses on future work: “what per- pliance with certain basic requirements, and discipline on the part
formance levels we must achieve on the remaining work in order of everyone supporting the project. Based on our experience, 10
to meet our financial commitment to management.” While most key requirements are listed which must be met in order to success-
practitioners of earned value understand the utility of the CPI, fully implement EVM. Some find these requirements overwhelm-
ing. See for yourself. These requirements include the following 10

Figure 1 — Monitoring Earned Value Cost Performance (CPI)

22 Cost Engineering Vol. 51/No. 3 MARCH 2009

Figure 2 — The Relationship of Cumulative CPI versus TCPI

bulleted items. to all persons who have a vested interest in the project. All
stakeholders will receive the same actual performance results.
• EVM requires that the project be fully understood, defined, Only one set of books is allowed.
and scoped to include 100 percent of the project effort. You • EVM requires that project management, in conjunction with
need to know what constitutes 100 percent of the work in order management at all levels, and customer stakeholders, decide
to measure progress along the way. on the appropriate actions to be taken to stay within author-
• EVM requires that the defined scope be decomposed, broken ized project expectations.
down into major management tasks, which are selected as
points of management control, then planned and scheduled These 10 requirements are what is needed to successfully
down to the detailed work package level. implement earned value on any project. To the authors, these
• EVM requires that an integrated and measurable project base- requirements constitute nothing more than following fundamental
line be authorized, relating the scope of work directly to an project management best practices.
achievable budget, then locked into a specific time-frame for Now let us discuss the two, in the opinion of the authors, most
performance measurement. It’s called: bottom-up planning. important earned value indicators: the Cost Performance Index
• EVM requires that only authorized and budgeted work be (CPI) reflecting completed performance, and the To-Complete
accomplished. The effort being worked must be tightly con- Performance Index (TCPI) with a focus on the required future per-
trolled. Scope creep cannot be allowed. All changes must be formance.
managed, and not worked until specifically authorized by the
project manager. What Is A CPI (Cost Performance Index), And How Is It Used?
• EVM requires that physical performance be measured (the The EVM Cost Performance Index (CPI) is a reflection of
earned value) using previously defined schedule metrics. project cost efficiency. The CPI relates the physical work accom-
• EVM requires that the values earned be related to the planned plished expressed in its budgeted value, against the actual costs
values to reflect performance against the project baseline. incurred to accomplish the performed work. Budgets can be set
Earned value less the planned value represents a variance from with various monetary values, hours, deliverables, anything that
the baseline plan. can be measured. The issue: are we staying on target, under-run-
• EVM requires that the actual costs being reported be consis- ning, or perhaps overrunning our costs? This concept is portrayed
tent with the earned value being measured, to allow for an graphically in figure 1.
accurate portrayal of cost performance. The relationship of val- Perfect cost performance would be defined as achieving a CPI
ues earned to actual costs reflects the true cost performance. of 1.0. For every dollar spent we would get an earned value equal
Earned value less actual costs provides cost performance. to one dollar. Sometimes we do better, sometimes worse. This is a
• EVM requires that forecasts be made periodically (weekly, particularly critical metric to track for performance less than 1.0 is
monthly) as to how much time, and how much money it will a reflection of excessive costs spent against budget. Initial overruns
take to complete 100 percent of the project. are typically non-recoverable. Think about it: in order to recover an
• EVM requires that a full disclosure of actual results be made overrun you must under-run future work. Rarely does this happen.

Cost Engineering Vol. 51/No. 3 MARCH 2009 23

 Figure 3 — Two To-Complete Performance Index (TCPI) Formulas

The same conditions which may have caused the overrun in the ect management techniques give a comparable “early-warning” sig-
first place are likely to occur again and again. nal. This formula, the BAC/Cumulative CPI = EAC, can be used
Sometimes the CPI will reflect values over 1.0, suggesting that on the total project, or any sub-project, or integrated project teams
an under-run of costs is occurring. Care must be taken when actu- to predict final results on their work.
als reflect an under-run of costs to budget. Oftentimes this condi- The CPI metric can be used to track periodic results (month-
tion is simply the result of costs which are lagging, slow to be ly, weekly, daily), or the cumulative position to see the long-term
recorded in the organizational cost ledger. For example: we meas- performance trends.
ure the earned value and give full credit, but the related costs are
not reflected in the cost ledger. Reason: many/most of the project What Is A TCPI (To-Complete Performance Index), And How Is
work may be performed by outside “purchased labor,” people who It Used?
are not part of the internal labor system. Thus there can be a time Whereas the CPI is an indicator of past cost performance, the
mismatch between the earned value measured, and the actual pay- TCPI has its focus on future performance. At issue: what will it take
ment of the purchased labor invoices. The payment of invoices to meet the goals set by management? The TCPI works in con-
generally takes more time than the recording of labor. junction with the CPI, and is conceptually illustrated in figure 2.
Under runs of costs are rare. And if artificially caused by lag- The CPI can be thought of as “sunk-costs,” whatever the
ging actual costs, the positive results can hide or offset problems results they cannot be altered. In the illustration shown, the cumu-
that need management attention. It takes organizational discipline lative CPI is at .75, for every dollar spent we only earned 75 cents
to make sure that earned value credits match the actual costs. of project work. If the project is exactly 50 percent complete, in
Why is the CPI so important? Answer: because past perform- order to stay within management’s budget, we must accomplish
ance can be used to accurately determine requirements for final $1.25 for every dollar in the future. Will this likely happen?
performance, in order to meet financial goals. The cumulative Questionable at best, but highly unlikely. Opportunities for
(from the beginning) CPI has been shown to stabilize from about improvements are illustrated by use of the TCPI.
the 20 percent completion point of project performance. Empirical The formula for the TCPI is: the [work remaining] (defined as
scientific studies by the US Department of Defense on 155 actual total budget less the earned value) divided by the [funds remain-
contracts has shown that at the 20 percent point of project comple- ing]. Note in figure 3, there are two scenarios for funds remaining.
tion, the final projected results will only change by plus or minus Funds remaining will focus initially on the authorized budget.
10 percent. What a finding! What useful data. Management will track performance against what it has authorized
In practical terms, one can immediately take the total author- in the form of an official budget. However, once it becomes obvi-
ized budget (BAC), divide it by the cumulative CPI and project the ous that the budget is no longer achievable, the next question from
total costs of a project with an accuracy of plus or minus 10 percent. management is: how much money will it cost to complete this job,
If management doesn’t like the final cost projection, then correc- called the estimate at completion (EAC). The project then stops
tive action can be taken to change the forecasted results. Few proj- work and makes a new forecast of what is needed to finish the job.

24 Cost Engineering Vol. 51/No. 3 MARCH 2009

 Preparing a new EAC forecast can get emotional. Unrealistic Officer (CEO) of Primavera Systems, Inc. His corporate website is
optimism sometimes takes over, at the expense of realism. It is not http://www.Primavera.com
uncommon for projects, when making a new EAC forecast to Fleming and Koppelman are the co-authors of “Earned Value
assume that everything will suddenly go right, and that all project Project Management,” published in 1996, by the Project
risks are behind them. Thus an initial EAC may be unrealistic, Management Institute (PMI). The Third Edition of this book was
unachievable. “Piecemeal EACs” are often the norm, where the released in the fall of 2005. Over 80,000 copies have been sold by
EAC projection goes up each month as actual performance is PMI worldwide.
known.
Using figure 2 as an example, would an EAC requiring a END NOTES
future TCPI of 1.25, or 1.10 be achievable? Probably not. More This article first appeared in the December 2008 issue of
likely, a TCPI of 1.0 or .90 would be reasonable. But it is painful to Crosstalk Magazine. All terms used in this article are consistent
admit the full value of an EAC, having just acknowledged that the with the A Guide to the Project Management Body of
BAC is no longer valid. Knowledge (PMBOK ® Guide), Fourth Edition, published in
December 2008, by the Project Management Institute, Newtown
mploying the EVM technique can present a project with Square, PA, US. The terms are: planned value, earned value, actu-

E data not available with any other management tool. And

while each metric can be useful, the authors are of the
opinion that the two metrics described above are particularly use-
al costs, schedule variance, Schedule Performance Index, cost vari-
ance, Cost Performance Index, budget at completion, estimate at
completion, and To-Complete Performance Index.
ful in the management of any project, or program, or a portfolio of The points of management control are sometimes called project
projects. ◆ teams, subprojects, or control account plans (CAPs) depending on
the organization.
ABOUT THE AUTHORS Dr. David S. Christensen, “Using Performance Indices to
Quentin W. Fleming is a management consultant specializing Evaluate the Estimate at Completion,” The Journal of Cost
in earned value. He has been a consultant to the staff at Primavera Analysis of Cost Estimating and Analysis, Spring 1994, page 19.
Systems, Inc. since 1993. Quentin was on the core team which Figures used in this article are inspired from the book, Earned
updated the Project Management Institute’s (PMI) PMBOK ® Value Project Management, third edition, Quentin W. Fleming
Guide Fourth Edition, released in December 2008. His personal and Joel M. Koppelman, published by the Project Management
website is http://www.QuentinF.com Institute, Newtown Square, Pennsylvania, 2005.
Joel M. Koppelman is the cofounder and Chief Executive

Cost Engineering Vol. 51/No. 3 MARCH 2009 25

 T ECHNICAL A RTICLE PEER REVIEWED

These metrics can be applied at the

Soft Skill Quantification (SSQ): individual level to allow a person to better
understand his or her own actions, how to
Human Performance vs. Metric work better with others, and most
importantly, how to be more productive
and successful. Application of the metrics
Edward Muzio and Dr. Deborah Fisher of human interaction has been shown to
produce immediate results in
ABSTRACT: In this follow-on study to a successful initial pilot study by the authors, the Soft Skill
communication skills, negotiating skills,
Quantification (SSQ) tool was evaluated for its ability to accurately detect high-performers as a
function of SSQ metrics. The SSQ model has demonstrated for a second time the ability to conflict resolution, and overall
distinguish between performance levels based upon measurable constructs. Furthermore, effectiveness [15].
seven emotional intelligence metrics were identified as being correlated with high perform- The four metrics can be described as
ance, but it was more moderate values of these metrics that corresponded with the highest per- follows.
formers. Contrary to intuition, "more" is not always "better" when it comes to SSQ metrics.
Behavior is the most clearly visible
KEY WORDS: Statistical analysis, forecasting, human performance indicator of another person's
behavioral preferences. Behavioral
s cost engineers we are very good at recent body of knowledge surrounding “soft assessment teaches the ability to read

A using statistical techniques to

forecast costs. Facility capacities
and historical costs, analyzed with
skill quantification” (SSQ) suggests that
this is becoming possible. This article
describes a follow-on study to an initial
and respond to behavioral tendencies.
This improves influencing skills,
teamwork, and career direction using
regression analysis, produce “factors” that pilot “soft skill quantification” (SSQ) study information easily observed.
can be used to estimate future costs [6]. that demonstrates the feasibility of such an Motivation is a quantifiable part of
And these statistical techniques not only approach [16]. any individual that can be measured
apply to money, but time as well. and understood as the basic reason for
Scheduling impacts, statistically Background taking action. The factors related to
correlated with project plans, are used to Figure 1 summarizes the metrics of motivation can be quantitatively
justify sound scheduling practices [12]. human beings, divided into hard and soft assessed and then learned and used to
Furthermore, these same statistical skills. The bottom two levels of the triangle influence others in a way that is
techniques can be used to forecast project illustrate hard skills. At the base is the individually meaningful.
performance. When actual performance is native intelligence with which one is born. Emotional Intelligence (EQ) is
analyzed using performance-impacting It identifies what an individual had before comprised of up to 82 different specific
“factors,” future project performance can receiving any training or education. In that skill attributes that can be used to
be accurately forecasted [7]. sense, it answers the question of who the characterize an individual's strengths
Although our industry has not person is inherently. and development areas. By mapping
traditionally used statistical correlation The second level is a measure of one's an individual's skills to the
techniques with human soft skills, we have skills and education. It is comprised of requirements of the job, departments
recognized the importance of the human what was studied at school, as well as can craft a data-based development
contribution to successful group work additional education and training around plan to raise performance to the next
outcomes, and the corresponding impact to specific subject areas, such as cost level.
project control [3]. Understanding the certification. It answers the question of Task Balance is an indication of the
impact of motivational theories, for what a person can do based upon an inherent task type preference that each
example, such as McGregor, Maslow, acquired skill set. individual has. It can be used to
Alderfer, McClelland, and Herzberg has The top four levels of the triangle obtain and maintain optimal job
been shown to be critical [13]. represent an individual's soft skills. At first satisfaction and performance.
Furthermore, we have developed non- glance, they appear to be more abstract
quantitative applications and developed than the bottom two levels. However, our Any of these metrics can be used as an
"best practices" related to these theories for analysis indicates that the metrics of soft organizational effectiveness tool at an
our industry. And we know how to broadly skills (soft skill quantification or SSQ) can individual or team level. They can be used
recognize and characterize a high be measured and correlated with actual for organizational optimization, team
performance culture within an performance. development, and to identify ideal job
organization [14]. SSQ comprises the following four matching for current or future employees.
But can we take the next step, using basic metrics of human interaction.
statistics to truly, quantitatively measure Methodology
and correlate people's soft skills and predict • behavior;
or forecast future human success? Can • motivation Population
human performance be forecasted and • task balance; and, The target population analyzed was an
predicted like project performance? The • emotional intelligence (EQ). organization of engineering professionals

26 Cost Engineering Vol. 51/No. 3 MARCH 2009

 Table 1 contains the list of all of these
parameters.

Data Gathering: Real-World

Performance
Independently of the assessment
process, the program manager compiled
the formal employee performance results
as determined by the rotation hosting
groups. This information had already been
collected using the company's standard
360 degree feedback process based upon
consistent, pre-defined criteria. Therefore,
this information was considered to be the
Figure 1 — Fisher’s Hierarchy of Skills [8.9] company's assessment of real-world
in the early part of their careers. analysis focused exclusively on comparing individual performance. It was provided to
Participants were members of a program assessment results to real-world job the researchers independently of any other
which hires between 40 and 150 recently performance. assessment results.
graduated engineers into the parent The real-world performance ranking
company each year. These individuals, Data Gathering: SSQ Assessment itself consisted of a numerical rating of 1, 2,
specifically hired for their expected ability A total of 35 engineers were given an or 3, with 1 being assigned to the highest
to succeed in a dynamic environment, are SSQ assessment suite from the metrics in performers. As shown in figure 2, only 17
hired with the intent of completing table 1. Assessments were provided directly percent of participants were rated in the
between two and three different to the employees, who took them highest performance category. The
engineering assignments in their first year individually at different times over majority, 46 percent, fell into the middle
of work approximately a two week period, all performance category, and the remaining
While on their temporary assignments, without manager intervention. 37 percent fell into the third and lowest
these engineers are given project work The exercise involved the following category.
and/or sustaining work to be completed three specific activities:
within the scope of their “rotation.” The Independence of Data Sets
program manager, oversees the hiring, • Emotional Intelligence (EQ) : To the best knowledge of all involved,
development, and placement of all of the Sorting two representative lists of 18 none of the employees had any prior
engineers, and serves as their direct statements, each in preferential order. experience with the assessment tool or its
manager during the time they are engaged These statements represent various underlying research. Neither the
in their 4-6 month projects. axiological patterns of thought which employees nor the manager were allowed
With frequent job changes and have been correlated to specific soft to see any report until all had completed
targeted development, both driven by the skill indices [18]. the assessment.
employee, this rotation program is a • Behavior: Selection of most and least Basic, standard instructions were
microcosm of the larger business climate preferred of 24 sets of behaviorally communicated regarding the mechanics of
nationwide, in which there are about as descriptive terms. These terms can be how to complete the assessment, but no
many job seekers on the market who are correlated to individual behavioral additional information pertaining to the
employed as there are who are seeking jobs tendencies and corresponding skill tool or the research was communicated in
[10]. Career motion becomes a constant, areas [2]. advance of all employees and the manager
with an emphasis on employability and • Motivation: Ranking of 16 sets of completing their assessments.
portable skills [4]. Both accurate candidate personal preferences which can be This complete independence of actual
screening and effective employee correlated to individual internal performance from SSQ assessment result
development are essential in this motivation [1]. was critical in the ability to establish a
environment, for the individual employees meaningful statistical link between the
and for the program, especially in light of The resulting output of this particular two.
the upcoming labor shortages that our SSQ assessment suite was a total of 81
industry will be experiencing [17]. parameters, including the following. Analysis
In this follow-on study to the A discriminant analysis technique was
successful initial pilot, the SSQ tool was • 67 attributes of emotional intelligence selected because of its natural application
evaluated for its ability to accurately detect (from item 1); to such a data set. As explained by MIT
high-performers independently of any • 8 specific behavioral characteristics [5].
other information [16]. By contrast to the (from item 2); and, Discriminant analysis uses continuous
pilot study, which demonstrated • 6 specific motivational factors (from variable measurements on different groups
application of the SSQ model in employee item 3). of items to highlight aspects that
development and job placement, this distinguish the groups and to use these

Cost Engineering Vol. 51/No. 3 MARCH 2009 27

 Table 1 — Measured SSQ Parameters for This Study

measurements to classify new items. The clear separation of the lowest That is to say, which factors have the
Common uses of the method have been in performers from the others along the strongest ability to differentiate
biological classification into species and "Function 1" axis is apparent. This performances? Like the full discriminant
sub-species, classifying applications for function was the most descriptive of the analysis, the stepwise analysis produced
loans, credit cards and insurance into low two, accounting for 82.5 percent of the good differentiation. Unlike the full
risk and high risk categories, […etc.]. population's variation based upon analysis, however, the stepwise analysis
In this case, the groupings are by Eigenvalue analysis. (Function 2 yielded only a single linear function.
performance levels and the analysis was accounted for the remaining 17.5 percent). A review of the structural coefficients
conducted to see if any of the SSQ metrics While further study and analysis are of that function indicates a group of seven
could be connected to performance in a characteristics that play the largest role in
planned, it certainly looks from these initial
statistically meaningful way. results like a future performer could be differentiation (characteristics with
The following two types of evaluated against these functions and a coefficients greater than 0.8). Table 2 lists
discriminant analysis were conducted: prediction could be made of his or her these characteristics, which can be
performance level. reasonably labeled as the most important
• A full discriminant analysis, to drivers of the measurable differences
determine whether complex Step 2—Stepwise Discriminant Analysis between the low, medium, and high
combinations of SSQ measurements The stepwise discriminant analysis was performers.
could provide predictive information; used to determine which of the particular The meaning of the coefficients is
and, SSQ parameters were most important. quite straightforward. Based on the
• A stepwise discriminant analysis to
identify those SSQ parameters with
the closest relationship to ultimate
performance.

Step 1—Full Discriminant Analysis

The most compelling result of the two
analyses came from the full discriminant
analysis. The technique yielded a set of
two linear functions of the SSQ
parameters, which clearly showed the
ability of the SSQ parameters to distinguish
individuals from the various performance
groups. Figure 3 displays the close
clustering of the three different
performance groups, based on the two
functions calculated using all of the data
collected. Figure 2 — Distribution of Performer Rankings where n=35

28 Cost Engineering Vol. 51/No. 3 MARCH 2009

stepwise discriminant analysis, the
performance-predicting function would be
the sum of each characteristic multiplied
by its coefficient. This is essentially adding
together the characteristic scores, after
weighting them by the coefficients. The
characteristics whose coefficients have the
highest absolute value in table 2, are most
important to the predictive function.
Table 3 gives the values of the full
linear function evaluated at the centroid of
each performance cluster. What is most
fascinating in this analysis is the fact that
the highest performers did not have the
highest scores for the parameters in the
linear function generated by the stepwise
analysis.
In other words, the highest performers
did not have the highest scores for the
characteristics used to differentiate
performers. Contrary to what would be a
very intuitive assumption, it turned out that
it was those clustered around the medium
scores that seemed to perform the best. Figure 3 — Canonical Discriminant Functions
Figure 4 clearly shows that it was the “see” what the performance evaluation observable behavioral metric that most
middle performers that were clustered system “sees.” The next logical step might correlated to success. Instead, it was
around the highest scores, with the lowest be to collect data on another set of specific EQ attributes which can be both
performers predictably clustered about the individuals and compare predicted measured and learned. This is good news
lowest scores. performance to actual performance using for well-designed employee development
the functions determined here. programs, and bad news for pre-hire
Results The results of the stepwise screening methodologies that rely upon
The result of the full discriminant discriminant analysis (step 2), on the other behavioral cues and/or motivational
analysis (step 1) is fairly straightforward: hand, raise some much more complex and profiles alone.
While more data and analysis are interesting issues. Second, there is the fact that it was
needed and planned, the SSQ model has First, there is the fact that all of the more moderate coefficients that predicted
demonstrated for a second time the ability most important measured characteristics the highest performers. Contrary to
to distinguish between performance levels come under the heading of “Emotional intuition, “more” is not always “better.” All
based upon measurable constructs. Intelligence.” This suggests that in this of the characteristics listed in table 2
The scatter plot in figure 3 population it was neither the innate seemed instead to be better in moderation,
demonstrates that the SSQ process can motivational structure metric nor the as illustrated in table 3.

Table 2 — Structure Matrix for Coefficients > 0.8

Cost Engineering Vol. 51/No. 3 MARCH 2009 29

 Why? The answers for some
characteristics appear straightforward. The
idea that successful employees must have a
moderate need to belong to a team (sense
of belonging), and a moderate need to
experience external rewards (status and
recognition), makes sense. It seems
intuitive that either of these characteristics
taken to either a high or low extreme could Table 3 — Linear Function from Stepwise Analysis Evaluated at Performance Group
Centroids
be detrimental [11]. The data supports this
conclusion: the most successful workers
are incentivized by external factors, but not
totally reliant upon them. The same might
be said for enjoyment of the job: the best
employees have fun, but not too much fun.
The need for moderation in other
factors is less intuitive. The preference
toward moderate scores in self
management and realistic personal goal
setting are perhaps the most surprising.
How can moderation be best on scores
which measure an employee’s ability to Figure 4 — Graphical Display of Normalized Stepwise Analysis Function Centroids
realistically set and execute goals? And
what of sense of timing? How can visibly stretching the limits enhances this REFERENCES
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on a bit too much is not actually any more ACKNOWLEDGMENTS 7. Fayek, Aminah, Stephen O. Revay,
productive, but merely appears so in the The authors would like to thank Mr. Doug Rowan, and Donald Mouseau,
eyes of colleagues and management. Erv Thomas of Intel Corporation for his Assessing Performance Trends on
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taking” is rewarded, the too-meek department at the University of New Cost Engineering journal, (Oct.,
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performance characteristics of their 2007) http:///www.groupharmonics
employees, so perhaps the occasional act of .com

30 Cost Engineering Vol. 51/No. 3 MARCH 2009

9. Fisher, Deborah J. (b) Commonalities Get the Job You Want, FT Press, New
Renewing Your
of Practice: Lessons Learned from York (2008).
Sandia National Laboratories, 16. Muzio, Edward, Deborah Fisher, Erv Membership Dues Online
Keynote address to the program and Thomas, Valerie Peters., Soft Skills If you forgot to pay your dues, you
project management community of Quantification (SSQ) for Project can do so on our secure website:
practice, (Sept. 24, 2007), England. Manager Competencies, Journal of https://www.aacei.org/PortalTools/Logi
10. Goleman, Daniel, Emotional Project Management, (June 2007). n.cfm
Intelligence, Bantam Books, New 17. Preparing for a Future Labor Shortage, A large percentage of the member-
York (1998). http://gbr.pepperdine.edu/042/labor ship remains on a calendar year renew-
11. Goleman, Daniel, Social shortage.html, accessed (Nov., 2007). al and all those dues expired on
Intelligence, Bantam Books, New 18. Smith, Dr. Robert Kinsel (1998). 12/31/08.
York (2006). Hartman Validation Compendium. If you have changed your address,
12. Griffith, Andrew F., Scheduling ©1998 by Clear Direction, Inc. phone number or e-mail address in the
Practices and Project Success, Cost www.cleardirection.com/docs/validati past year, please update it once you
Engineering journal, (Sept., 2006): p. o n / v a l i d a t i o n c o m p e n di u m . p d f , have logged into your profile, so we
24-30. accessed (Oct., 2006). can provide membership services to
13. Kaliprasad, Minnesh, The Human you without interruption. The AACE
Factor I: Attracting, Retaining, and ABOUT THE AUTHORS
International database is automated, so
Motivating Capable People, Cost Edward Muzio is President & CEO of
it automatically stops creating mail
Engineering journal, (June 2006): p. Group Harmonics, Inc., 400 Gold Ave SW,
labels for members whose dues have
20-26. Suite 909, Albuquerque, NM 87102. He
14. Kaliprasad, Minnesh, The Human can be contacted by sending e-mail to: expired. Therefore, it is important to
Factor II: Creating a High ed@groupharmonics.com. Or visit the renew prior to your expiration date.
Performance Culture in an company website at: If you have forgotten or misplaced
Organization, Cost Engineering www.groupharmonics.com your login information, please contact
journal, (June 2006): p. 27-34. Dr. Deborah Fisher is Vice President, AACE International Headquarters for
15. Muzio, Edward, Deborah Fisher, Erv Research and Training with Group assistance
Thomas, Four Secrets to Liking Your Harmonics, Inc. She can be contacted by Phone: +1.800.858.2678 / +1.304.2968444
Work: You May Not Need to Quit to sending e-mail to: Email: info@aacei.org
dfisher@groupharmonics.com

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Cost Engineering Vol. 51/No. 3 MARCH 2009 31

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Trevor X. Crawford, CCC, Editor, 2006 Cost Modeling; Reporting; Contingency Management; Risk Justifying the Cost of Sustainable Practices; Evaluating
Covers: Planning; Schedule Development; Schedule Analysis Environmental Regulations; Benchmarking; Competing Sustainable Strategies: Using Value Engineering;
Management/Control; and Classics. Economics of Environmental Waste Remediation and Waste Evaluating Competing Sustainable Strategies: Other
Management; Cost-effective Waste Minimization and Techniques
PPG#5: Earned Value, 2nd Ed. Pollution Prevention; and Construction Practices
Robert A. Marshall, Editor, 2007 PPG #19: Leadership and Management
Covers: Why Use Earned Value?; Basics of Earned Value; PPG #12: Construction Project Controls of People
Cost/Schedule Control System Criteria; Actual Physical Dr. Douglas D. Gransberg, PE CCE, and James John J. Hannon, CEP, Editor, 2008
Percent Complete; Productivity and Earned Value; Earned E. Koch, Editors, 2002 Covers: Leadership; Teams; Leadership Roles; Motivation;
Value Reporting; Applications of Earned Value Project Covers: Introduction to Construction project Controls; Cost and Ethics.
Management; and more. Control; Schedule Control; Quality Control; Document
Control; Computer Applications; and International Project PPG #20: Forensic Schedule Analysis
Controls James G. Zack, Jr., CFCC, Editor, 2008
PPG#6: Construction Cost Estimating, 2nd Ed. Covers: Recommended Practice No. 29R-03 Forensic
Dr. Douglas D. Gransberg, PE CCE, And Carla Schedule Analysis; Synopsis of Recommended Practice; Basics
Lopez del Puerto, CCC, Editors, 2006 PPG #13: Parametric and Conceptual
of Schedule Delay Analysis; MIP-Observational Static Gross;
Covers: Recommended Practices; Estimating Theory; Estimating, 2nd Ed.
MIP-Observational Static Periodic; MIP-Obersvational
Conceptual, Parametric, and Range Estimating; Estimating Douglas W. Leo, CCC, Larry R. Dysert, CCC,
Dynamic Contemporaneous As-Is; MIP-Obersvational
Factors and Indices; Estimating Material Costs and Quantity and Bruce Elliott, CCC, Editor, 2004
Dynamic Contemporaneous Split; MIP-Observational
Surveying; Estimating Labor Costs; Estimating Equipment Covers: Parametric/Conceptual Estimating; Classification;
Dynamic Modified or Recreated; MIP-Modeled Additive
Costs; Subcontracting Costs; Estimating Overhead and Methodology; Capacity Factoring; Process and Non-Process
Single Base; MIP-Modeled Additive Multiple Base; MIP-
Indirect Costs; Profit, Contingencies, and Mark-Ups; Industries; and Systems
Modeled Subtractive Single Simulation; Non-CPM Schedule
Estimating International Construction Costs; and more.
Delay Analysist Techniques; General Schedule Analysis Articles

AACE International Ordering Instructions

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• Allow 2 to 3 weeks for delivery. *Please call for shipping and handling costs if ordering by mail or fax
 FFor the Bookshelf
or the Bookshelf
Ken Humphreys

Green Home Improvement

his book is highly recommended. It is an inexpensive vol-

T ume which will appeal to homeowners and contractors.

Its emphasis is on projects which can be undertaken to
make homes more "green" and environmentally sustainable. A
Green Home
Improvement
by Dr. Daniel D. Chiras,
RS Means Company, Inc.,
total of 65 projects are described and each well illustrated project 2008,
description provides an estimate of cost. The projects cover green 302 pages, US $24.95
flooring, walls, counter tops & cabinets; heating and cooling effi- ISBN 978-0-87629-093-4
ciency; water conservation minimizing electrical use; green roof-
ing and siding; doors & windows; and green paving, landscaping
and pools. Another part of the book discusses considerations in
building a new green home and an appendix covers safety tips, a
glossary of terms, and a resource guide to books, pamphlets and
websites dealing with green buildings. The book is replete with
great ideas to make homes more green and energy efficient. If
only a few of these ideas are implemented, the cost of the book
will be repaid many times over.

Dutch Association of Cost Engineers Price Book, 26th Edition

he Dutch Association of Cost Engineers and Reed

T Business Information have just released the 26th edition

of this premier source of process industry construction
cost information for Europe. The DACE Prijzenboekje (Price
Dutch Association of Cost
Engineers Prijzenboeke,
26th Edition
Dutch Association of Cost
Book) is a data book of unit costs from hundreds of actual proj- Engineers and Reed Business
ects in Europe. The 26th edition retains the pocket size format of Information, 2008,
previous editions. The book contains an incredible amount of 110 Euro
actual project cost information for completed process industry Reed Business Information may
be contacted at
projects submitted by leading engineering - construction and
abonnementen.bouw@reed-
process industry companies. This book is truly worth its modest business.nl
cost for anyone concerned with estimating projects in the
European Common Market. While the book is in Dutch, its
many cost tables are very easy to interpret using and English-
Dutch glossary. ◆

34 Cost Engineering Vol. 51/No. 3 MARCH 2009

 P rofessional S er vices D irector y

2009 Editorial Calendar

Practical Articles Sought for the
The 2009 Editorial Calendar is posted at the
Cost Engineering Journal AACE International website, www.aacei.org. Author
The Cost Engineering journal is seeking articles from guidelines are listed under the Submitting
members for publication on practical job related topics. Manuscripts banner. A manuscript submission form
These articles should not be very technical, but provide use- and publication agreement must be completed to
ful information on dealing with day to day problems, lessons- submit a manuscript.
learned on prior projects, how to basics that may be of help to
student members, or those just entering the cost and project
controls professions.
If you like more information please contact Cost Advertise in the
Engineering Managing Editor, Marvin Gelhausen at Cost Engineering journal
mgelhausen@aacei.org.
• Reach the entire AACE International membership every month
by placing an ad in the Cost Engineering journal.
• Place your products/services in front of over 50,000 users each
month with a banner ad at our website, www.aacei.org.
Index to Adver tisers • Exhibit at the 2009 AACE International Meeting in Seattle, WA,
and meet over 750 AACE International members face to face.
ACM, Inc., this page Contact Chris Martin at Network Media Partners Inc.
p: 410-584-1966 • f: 410-584-8359 •
ARES Corporation, back cover e-mail: cmartin@networkmediapartners.com • www.aacei.org.
Bechtel Corporation, page 8
Deltek, inside back cover
Footbridge Staffing, page 31 Order your PSP Certification
George Washington University, page 40 Study Guide at the
AACE International Bookstore
IPA Institute, page 7
Visit the AACE International Online Bookstore at
McDonough Bolyard Peck, page 14 www.aacei.org/bookstore/
MOCA Systems, page 6
ORACLE/Primavera, inside front cover The PSP Certification Study Guide
PMSI, page 40 is intended to assist you as one step
toward successful Planning and
Pro-Est - Construction, page 2 Scheduling Professional certification.
Each chapter contains sample exercises,
Questant, LLC, this page
which test your knowledge of that chap-
Ron Winter Consulting, page 4 ter's concepts. Additional sample ques-
tions are provided in an appendix.
Skire, Inc., page 25
For additional information about the listed advertisers or about advertising with us, please
phone Chris Martin at Network Media Partners, (410) 584-1966, or e-mail him at
cmartin@networkmediapartners.com

Cost Engineering Vol. 51/No. 3 MARCH 2009 35

 TThe Bulletin
he AACE International Bulletin

Chicago Midwest Section Chinook Calgary Section

Some 46 Chinook-Calgary members and guests attended
the February technical dinner meeting in the Riverview Room of
the International Hotel. President Tanveer Ahmed asked mem-
bers to be sure to vote in the AACE International Board of
Directors election this month. He also announced that the
March 26 technical session will be a joint meeting with PMI.
Director Region 1 Peter Ripley announced that all AACE
International sections across Canada are involved in cost engi-
neering activities. Ginette Basak acted as moderator for a discus-
sion panel titled, Estimate, Cost and Schedule Linking, Fact or
Fiction. She introduced Ingo Gloge, Manager, Project Services
Submitted photo
with Concise Design and Gerry Hopkins, Manager, Project
The January 14 Chicago Midwest Section meeting featured a panel discus-
sion and question and answer session. Shown above from left are panel mem- Management System, Suncor Project Services.
bers, James Turner, Jonathan Moss, and Dave Sauerman. Ingo Gloge suggested that one can streamline most complex
project costing using real time project examples. With central-
ized project cost management, schedule estimates can be report-
ed in a single system. As time is money, integrating cost esti-
mates, scheduling, and cost management is desirable to avoid
conflicts between cost estimators and planners. He cited a lack of
standards as a drawback in reporting of project execution.
Computer assisted drawings provide a basis for cost information
reporting for comparison between budget estimate and actual
cost. There is various software available for use instead of spread-
sheets, but these need to be examined for compatibility with a
project. There also needs to be more collaboration between esti-
mators and planners during project execution.
Gerry Hopkins used information from Suncor’s Voyageur
project for project management systems. In order to improve
information update, earned value reporting on a monthly basis
Submitted photo
The February Chinook Calgary Section meeting included a panel discussion was done using cash flow from computer programs rather than
between Gerry Hopkins, above left, and Ingo Gloge, above right. The panel from spreadsheets. They tried linking accounting control to
moderator was Ginette Basak, above center. schedule activities and used curves to adjust monthly cash flow
values. In 2007, a second integration was used to obtain cash
flow in PRISM and send cost information directly to SAP.
Updates were used to revise and send cost information to
finance. They introduced new logic requirements in schedule,
cost process training. There was concern over who controls what
and when in a project.
In the Voyageur Project, Suncor initiated PRISM based
activity dates and cash flow as managed in SAP and/or linked to
a detailed schedule. Presumably dates were adjusted automati-
cally by the computer program. PRISM is now fully implement-
ed in the Voyageur Project. The Firebag project is currently
reviewing requirements. The goal is to standardize procedures
and processes used.
The two presentations were followed by lively
question/answer period.
About 60 Chinook-Calgary Section members and guests
attended the Jan 14, technical dinner meeting in the Riverview
Submitted photo Room of the International Hotel. President Tanveer Ahmed
At the January Chinook Calgary Section meeting, Section President Tanveer introduced PMISAC’s Marriane who asked for nominations for
Ahmed, above left, talks with speaker, Lenz Grzyb, above center, vice president PMI’s awards, to be submitted by the end of January. Tony Isaac
of Worley Parsons Calgary. He was introduced by Tony Isaac, above right.

36 Cost Engineering Vol. 51/No. 3 MARCH 2009

then introduced Len Grzyb, VP of WorleyParsons Calgary. who Submitted photo
gave a talk on Alliance Project Delivery. Nonn Powell, Savannah River
Worldwide there have been some 300 alliance type projects Nuclear Solutions, LLC, Vice
over the past 15 to 17 years, usually in long term contracts. They President of Site Integration,
have been used for lump sum, fixed price, reimbursable, bid and above left, and Central
negotiated type contracts. They require governance by both par- Savannah River Area Section
ties with integration of organizations inside companies and President, Ronny McIver,
clients’ offices. If one party does not make money then they are a above right, shake hands at the
failure. Business goals are important when agreements are shared. January section meeting.
Joint teams set goals, roles and responsibilities. A steering com-
mittee determines leadership in the project, removes road blocks,
and approves annual plans. Personnel career development
requires work rotations.
The alliance ensures that appropriate resources are provided,
using workload forecasting with at least monthly updates.
Reporting involves streamlined billings and cash flow estimates.
Using an integrated team allows for systems, office and operations
maintaining a business relationship.. Organizing around clients’
business involves delegation of authority with joint solutions for
shared problems. Using long term workload forecasts determines
staff requirements, personnel rotation and hiring to suit the proj-
ect vision and goals.
Cross-pollination between partner staff improves staff satis-
faction. A long term project needs to be matched to current busi-
ness and project drivers in order for alliance growth and renewal. Submitted photo
There has to be client satisfaction and the alliance must focus on Myron Berry, above right, of the Central Savannah River Area Section, vol-
providing an operating facility-not on just a single deliverable. unteered his Saturday morning on January 24, judging at the Future City
Feedback from completed projects is required to ensure that Competition, one of the events of National Engineers Week, February 15-21.
future adjustments can be incorporated into alliance methods. is based on the basic and sound planning principles, including
Project level goals include safety, costs vs AFE’s, optimized the following.
program execution, value and innovation quality, improved engi-
neering efficiency. The relationship goals and strategic plans • segmenting scope into discrete projects;
require support and compliance with approved processes. It must • ensuring line management accountability;
operate between a facility group in an operating company and • integrating technical/cost/schedule/risk performance base-
contractor group. The staff needs to manage inside and outside of line for each project; and,
the alliance and client. Business acumen is a necessity. They • managing both the risks and opportunities as integral parts of
need to keep working on renewal with an emphasis on relation- the performance baseline.
ships with the entire client organization. The goal is to manage
service to client’s requirements, stressing project focus. Each integrated project team leader is responsible for deliv-
Following the presentation, there was a question/answer peri- ering results, backed by a definitive scope, a rigorous and sound
od. estimating process, a detailed basis of estimate (BOE) and a com-
plete package of BOE documentation. The end result—an inte-
Central Savannah River Area Section grated, prioritized performance measurement baseline that is
January’s Central Savannah River Area Section dinner meet- externally certifiable, clearly identifies performance based incen-
ing featured Norman Powell, Vice President of Site Integration, tives for each major WBS element, and provides the foundation
of the Savannah River Nuclear Solutions, LLC. As part of the for a streamlined change control process and identification and
new integration contractor team at the Savannah River Site, Mr. implementation of cost savings.
Powell is responsible for the overall integrated site baseline, The Central Savannah River Area Section once again spon-
including change management and interface management for sored one of several awards given to winning teams at the 2009
the Department of Energy’s Savannah River Site. His responsi- Future City Competition. Myron Berry spent several happy
bilities include developing the site interface plan and maintain- hours Jan. 24., discussing and reviewing students concepts for
ing relationships with other site contractors. He also leads the improving water use by creating home systems that minimize use
planning and integration of projects and operations, project con- of the of municipal or externally supplied water for daily require-
trols, and the site-wide performance measurement system includ- ments. Sponsored across the US by the professional engineering
ing risk identification, estimating standards, and work authoriza- community, Future City strives to stir young people’s interest in
tion. science, technology, engineering, and math. Students work in
Since the contract award, SRNS has been hard at work devel- teams under the guidance of a teacher and a volunteer engineer
oping their baseline estimates and preparing for contract baseline mentor to design and build a city of tomorrow. They must also
certification. The SRNS proposed “projectized delivery model” conduct research for an essay on a pressing social need.

Cost Engineering Vol. 51/No. 3 MARCH 2009 37

 Mr. Berry congratulated the New Charleston - First Baptist Houston Gulf Coast Section
Church School team winning the CSRA sponsored “Best The sixth meeting of the HGCS program year for 2008-2009
Planned City” award. The Future City event was huge this year. was on Tuesday, Feb. 10, at the HESS club in Houston. Over 70
We picked an excellent team that actually laid out the plan in members attended the meeting. Dr. Stephen P. Mulva, from the
great detail on who did what and when each action was due. Construction Industry Institute (CII), spoke on, “Oil and Gas
They will be great schedulers and planners in a few years. The Benchmarking.”
team’s mentor, James Plemmons, is an AACE International The Construction Industry Institute’s (CII) Benchmarking &
member from the Charleston area and teaches project manage- Metrics program has been developing benchmarking metrics and
ment courses at the Citadel and at surrounding area companies. producing performance data for the construction industry for
more than 10 years now. Over the past three years, CII has
Great Lakes Section embarked on the oil and gas benchmarking with the sponsors
The Great Lakes Section Board has been busy crafting new from oil and gas owner companies. This presentation offered the
ideas for the upcoming season of meetings in southeast Michigan. benchmarking methodology, metrics and progress to date.
The three main initiatives are reaching out to new participants, try- Stephen P. Mulva, Ph.D., is the associate director,
ing out new meeting locations, and holding a series of programs Construction Industry Institute (CII) for Benchmarking and
around the fundamentals of cost engineering and project man- Metrics. He comes to CII from Texas State University-San
agement. Marcos, where he taught courses in construction management
The first meeting was on Sept. 24, 2008. The program was an for the past four years. He earned his master’s at the University of
introduction to AACE International and presentations were given Texas and his doctorate from Georgia Tech. At UT Austin, he par-
by several long time members on how the organization promotes ticipated in the civil engineering project management program
cost and schedule management practices. For this initial meeting, and helped Dr. Richard L. Tucker, the original CII Director, dur-
members were allowed to sponsor one guest who is new to the ing a CII funded study that led to the development of the
Great Lakes Section at no cost. This resulted in a positive Institute’s best practices. Prior to his association with Texas State
response and drew professors and students from local universities. University, he was a project management consultant with Austin-
The Great Lakes Section also honored long-time section board based ePM, where he was involved in modeling and simulating
member Dave Van Tassel for his years of outstanding service to industrial and offshore projects. He also has experience with
AACE International. Fluor, Bechtel, and Phillips Petroleum.
The next meeting was on Oct. 22, 2008, and was an open The HGCS will sponsor a five-week project controls training
forum discussion on planning and scheduling. The format includ- course beginning Thursday Night, April 23, at Aker Solutions’
ed Tamara Sutton of Walbridge Aldinger discussing the contrac- office located at 3600 Briarpark Drive, Houston, TX 77042. The
tor’s perspective on project scheduling and Jim Krebs of ACM dis- two primary goals for the course are to provide an opportunity for
cussing the owner’s perspective on project scheduling. Questions project controls professionals to improve their skills and knowl-
were posed by the representatives to each other with open discus- edge through study and sharing with their peers and the second
sion from all attendees. The goal of the evening was to present goal is to serve as a review course for potential candidates who
and explore these differences and offer experiences of successful desire to earn a nationally recognized certification in project con-
project scheduling. This meeting received a positive response and trols. Contact Valerie Venters at vsquareval@aol.com for further
created a lively discussion from those in attendance. details.
The Great Lakes section has also been reaching out to local
colleges and universities. The section is promoting and educating Montreal Section
students on AACE International and careers in project controls, The Montreal Section has been enjoying excellent technical
cost engineering and estimating. In the fall, some of the section presentations this season. In December 2008, a group of 60
members attended open houses at Wayne State University and attended the special presentation by Gerald McEniry entitled,
Eastern Michigan University and distributed AACE International “Evaluating the Cumulative Impact of Changes on Labor
information to students. The students showed an interest in the Productivity - An Evolving Discussion” with some highlights from
profession and were excited to learn about these types of careers. an article authored by William Ibbs and Gerald McEniry and
In addition to hosting certification exams, the final task for recently published in AACE International’s Cost Engineering
2008 saw the section sponsor a scheduling training class in journal. This topic attracted a wide range of participants as Mr.
December. The four topics covered were planning, critical path, McEniry explained the compounding or cumulative effect of
progress collection and control and project controls - resource numerous changes that can occur on a project. Data from
management, performance management. There was a good turn- researched studies were discussed that developed statistical rela-
out with professionals of varying experience in the industry attend- tionships between the amount of change and end-of-project labor
ing. The feedback forms that were filled out by the participants productivity. A series of curves were presented that can serve as
indicated that the class was helpful in promoting their knowledge guidelines. Other sources of data on productivity loss were also
and understanding of scheduling principles. discussed. The presentation was followed by an extended ques-
The Great Lakes section is looking forward to a busy 2009. tions and answer period.
Presentations have included estimating as a career in January, the
annual Engineer’s Week joint meeting with ASCE and MSPE in Palm Beach Section
February, a March presentation on claims management and a job- Noted management consultant and author, Dr Harold
site tour (TBD) is planned for April. Kerzner, was the speaker for the Feb. 12, Palm Beach Section

38 Cost Engineering Vol. 51/No. 3 MARCH 2009

meeting. The meeting was in the Terrace Room of the Palm aging a global project team; the problems with managing scope
Beach Gardens Marriott. changes on a long term project where the value of the project
Dr Kerzner has been published in periodicals and texts. He changes; the differences between a project champion and an exit
is currently serving as the executive director for the International champion; the risks of establishing a collective belief; the impor-
Institute of Learning and is completing the 4th edition of his col- tance of project risk management; establishing a criteria for can-
lege text, Best Practices in Project, Program and Portfolio celing a project; the danger of spending good money after bad
Management. His presentation was a case study entitled, ‘The money; the importance of politics in project decisions; and the
Rise, Fall and Resurrection of Iridium,’ This was a project where application of professional responsibility.
the risks were not evaluated and the change control process was This meeting was jointly sponsored by the Palm Beaches and
nonexistent. The result was a $4 billion cost overrun and the Treasure Coast Sections of AACE International and the South
investors lost 100 percent of their money. This presentation was Florida Chapter of PMI.
of great interest to everyone who is concerned about runaway There is much interest among the group about the section
costs and how to avoid cost over-runs. hosting a certification workshop in the spring. It was announced
The Iridium Project was designed to be the 8th wonder of the that we would have to have a minimum of five people to sign up.
world; a complete global satellite communication system where FP&L has graciously agreed to let us use their facilities at the
you call anywhere in the world at any time. But after more than Juno Beach headquarters to assist the Section in this endeavor.
10 years of development and at a cost in excess of $6 billion, The section has presentations scheduled in the upcoming
Iridium filed for bankruptcy protection within the first eight months on the exciting new nuclear program that is being kicked
months of operations. off by FP&L to meet the fast-growing demand for electricity. In
The case study is a classical example of the complexities in addition, a presentation is scheduled for their extended power
managing long-term, high technology projects. Topics discussed uprate (EPU) projects. A power uprate involves modifying or
include: developing a business plan under market uncertainty; replacing existing plant components, such as the turbine genera-
the necessity to evaluate assumption periodically; when to evalu- tors, pumps, heat exchangers, valves and certain control systems,
ate the assumptions; establishing a cost baseline under uncer- to increase electric generation capacity. (Instead of building new
tainty; managing a long-term project under extreme risks; man- power plants).
Also discussed was a possible joint meeting with PMI in May.

Rocky Mountain Section

The Rocky Mountain Section was fortunate to have two
excellent speakers for its November 2008 meeting. Discussion
was about the “Construction Industry Institute” (CII). Keith
Molenaar, a professor for the University of Colorado provided an
introduction and background history of CII. He also discussed
the development by CII of the Project Definition Rating Index
(PDRI) used to evaluate project definition. This was followed by
John Zimmerman of Jacobs Engineering who presented infor-
mation on how PDRI is used for industrial projects.
The Rocky Mountain Section members and wives held their
Christmas meeting on Dec. 11., 2008, at the Embassy Suites in
the Tech Center here in Denver. The program featured Bill

Submitted photos
Gerald McEniry, shown above and below, presented a program at the
December 2008 Montreal Section entitled, “Evaluating the Cumulative
Impact of Changes on Labor Productivity - An Evolving Discussion.”

Submitted photos
Rocky Mountain Section December 2008 speaker Bill Spear, above left, and
Section Vice President, Ken Giese, talk following a splendid program.

Cost Engineering Vol. 51/No. 3 MARCH 2009 39

 Submitted photo
Shown above are sone of the attendees of the Rocky Mountain Section’s
December 2008 meeting
Spear, managing partner of MTB Project Management
Professionals Inc. in Denver, CO. Mr. Spear provided a discus-
sion of the precious metals industry in general, and then focused
in on the platinum group of metals and their respective markets.
He then discussed the basics of platinum recycling both from a
process and a feasibility perspective, and then discussed the
investor-funding challenges to construct and operate a full-scale
plant. ◆

HOW TO SUBMIT SECTION NEWS TO THE

COST ENGINEERING JOURNAL
All submissions should be e-mailed to editor@aacei.org.
Information may be included in the body of the e-mail or as an
attachment. Microsoft Word files are the preferred format.

All photos should be sent as PC tiff or jpg files at 300 dpi. If

submitting at only 72 dpi, please send the photo as large as possible as
conversion will reduce its size. Include the names and titles of each
person shown in any photos.

Many times AACE International Sections have been referred to

as chapters. The correct reference should always be to a Section.
AACE International does not have chapters. Please do not refer to
Sections as chapters.

If an event is during the month of publication, it will be listed as

an upcoming event even if members will not receive their journal in
the mail until after the listed event. The journal goes to press about a
month in advance of the issue date, which is always the first of each
month, at which time the electronic version should be posted.

AACE International reserves the right to edit all submissions and

to refuse to publish any submissions determined by the editor or
executive director to not meet the standards of the journal.

Anyone with questions on submitting copy or photos may

contact Managing Editor Marvin Gelhausen at
mgelhausen@aacei.org, Graphic Designer/Editor Noah
Kinderknecht at nkinderknecht@aacei.org, or IT/Graphics Specialist
Robin Donley at rdonley@aacei.org.

40 Cost Engineering Vol. 51/No. 3 MARCH 2009

 hen new members join PDF™ presentations as well as desk-top

W AACE International, an attempt

is made to assign them to a local section.
However, this assignment is not always practical, as
sharing for collaboration and roundtable dis-
cussions. Our new communication tool is DimDim™
which requires no software installation for partici-
some members are not close to a section. These pants. Since we do not have a toll-free phone number,
members are usually unassigned or at-large. we suggest using a headset with microphone combi-
CyberSection was established to support all of our at- nation for cost free participation. We have had only
large or unassigned membership. partial success using Vista™ and FireFox™, so we sug-
The AACE International CyberSection is now gest using Internet Explorer 7™.
bringing “the section experience” to at-large and unas- Shortly, we will be contacting the unassigned and
signed AACE International members. The goal of the at-large membership with an invitation to join the
CyberSection is to provide an internet based experi- CyberSection, however, any AACE International
ence for members to communicate, network, and member is welcome to participate. If you have ques-
meet - much like that of a standard section. The tions, comments, or would like to participate in help-
CyberSection uses a combination of websites and ing CyberSection; please post at the www.aacei.org
internet communication tools to accomplish this goal. forums.
We are constantly reviewing and testing new technol- As “SuperCost” our CyberSection mascot says:
ogy to improve. Your participation will help to hone
and perfect these tools and techniques.
For a number of years we have been using Yahoo
Groups ™ to post messages and conduct meetings. As
new, cost-effective tools and support became avail-
able, we moved under the AACE International
umbrella and adopted DimDim™ as our web confer-
encing tool. Web conferencing allows us the ability
to host presentations and discussions and to record
them for future viewing. Our CyberSection page,
under Regions on AACE International’s main website,
www.aace.org, has been recently updated to reflect
these new features and enhancements. “Stop by and say hello.”
CyberSection meetings are announced by direct
e-mail and forum postings. The meetings will be web- The AACE International CyberSection was
hosted voice chat, via phone-in and internet voice. founded Aug. 23, 1999, as a standing committee
We have the capability to make PowerPoint™ and reporting to the Vice President of Regions.

Don’t have a local section, traveling or on assignment?

Feel free to visit our CyberSection webpage under AACE International Regions:
www.aacei.org/cyber
Sign up for the CyberSection forum and begin the on-line section experience.
 The 2009 Western Winter Workshop
March 13-15, 2009
It’s time to prepare for the premier west coast event for project controls specialists, planners and schedulers,
cost managers, estimators and bidders, project managers, risk managers, and professional engineers working in
the cost and management field. The San Francisco section of AACE International will be holding the 48th
Annual Western Winter Workshop, March 13-15, 2009 at the scenic Portola Hotel and Spa in Monterey,
California.
AACE International celebrates 48 years of the Western Winter Workshop contributing to the cost manage-
ment profession. The 48th annual workshop brings us up-to-date with cost objectives, as well as adding the “The
TCM Approach to Building Information Modeling, “4-D,” and much more.

“Over 20 Billion in Capitol Management Projects” to be discussed in a Saturday panel session. Capital
Program directors include:
Andrew Fremier, Bay Area Toll Authority
Bijan Sartipi, California Department of Transportation
Harlan Kelly, San Francisco Public Utilities Commission
Ivar Satero, San Francisco International Airport
Kathy Mayo, Bay Area Rapid Transit (BART Earthquake Safety Program)
Leonard Takayama, Sacramento International Airport
Paula J. Hammond, Washington State Department of Transportation
Susan Martinovich, Nevada Department of Transportation

The San Francisco section will continue to host the President’s Cup golf outing, a tradition spanning back
to 1961 and a great place to network in an enjoyable setting. This annual golf outing has supported the educa-
tion fund for decades while helping to nurture lasting relationships amongst the participants. Grab your clubs
and come along to enjoy the beautiful ocean course at Pacific Grove Golf Links. Stephen P. Warhoe, PE CCE
CFCC, this year’s AACE International President, will be on hand to award the trophy for the President’s Cup
golf challenge.

Join us and continue to grow this young west coast tradition in our 48th year!
Visit www.aaceisf.org for more information

Exhibitors and Sponsors Contact:

John Haynes • 925-570-4647 • jhaynes@trsconsultants.com
 A r ticle Reprints and Per missions

Cost Engineering Journal, Volume 51/Number 3, March 2009

Pages 9-14 Pages 26-31

SAP — An Effective Tool for Soft Skill Quantification (SSQ):
Managing Multiple Small Human Performance vs. Metric
Readers of the Cost Engineering
Projects Edward Muzio
journal can purchase copies of selected
articles that are published with an
Betty A. Poettcker, CCC and Dr. Deborah Fisher
SAP can be used as an effective tool to
AACE International reference number assist in the management of cost, schedule, and In this follow-on study to a successful ini-
at the end of the article. Articles can be resources for a single project, as well as, for a tial pilot study by the authors, the Soft Skill
delivered in print form or in Adobe portfolio of small projects. Using this method Quantification (SSQ) tool was evaluated for its
Acrobat (PDF) format. for small projects allows project managers to ability to accurately detect high-performers as a
Please refer to the AACE analyze a group of projects and make timely function of SSQ metrics. The SSQ model has
decisions. This article will explore the use of demonstrated for a second time the ability to
International reference number when
SAP in each of the three areas of project costs, distinguish between performance levels based
contacting our Publications Sales upon measurable constructs. Furthermore,
milestone schedules and resources. Each sec-
department. tion will describe the setup in SAP, the analysis seven emotional intelligence metrics were
of the data for management and project con- identified as being correlated with high per-
To Order trols, and the benefits of using SAP as a tool for formance, but it was more moderate values of
Contact: AACE International Publications project management. A standardized approach these metrics that corresponded with the high-
for each project in the portfolio provides con- est performers. Contrary to intuition, "more" is
Sales at pubsales@aacei.org
sistent information that can be analyzed across not always "better" when it comes to SSQ met-
the entire portfolio of projects. The key to rics.
Reprint Prices: Reprint 21637
using SAP successfully is to be consistent and
Quantity Member/Non-Member to update the information regularly. SAP can
1-9 copies $5.00/$7.50 be an effective tool for managing and control-
10-49 $4.50/$7.00 ling multiple small projects.
50-79 $4.00/$6.50 Reprint 21635
80-99 $3.50/$6.00
100-499 $3.00/$5.50 Pages 16-21
Programs and Projects Driven by
To Contact Us Asbestos Regulations
AACE International Paul Stanford Kupakuwana
209 Prairie Avenue, Suite 100 Asbestos’ ability to resist high tempera-
Morgantown, WV 26501 tures resulted in its extensive use as a fireproof-
USA ing and insulation material from the 1950s
Phone: 304.296.8444 through to the mid 1980s. But today, asbestos is
Fax: 304.291.5728 equally viewed as a beast. This arises mainly
from a consideration of the dire consequences
of deaths from asbestos-related cancers that
For Information On Other Reuse have resulted from past exposure. Asbestos liti-
Requests gation has given rise to claims against some for-
If you are seeking permission to mer producers, sellers, distributors, and
copy, quote, or translate into another installers. Some were forced out of businesses,
language any material from any issue of or into diversification and bankruptcy. This
article analyses the implications of new
the Cost Engineering journal, please
asbestos regulations in determining program
contact our Managing Editor, Marvin and project directions at the London Borough
Gelhausen at mgelhausen@aacei.org of Hillingdon. That analyses showed a signifi-
cant impact.
Reprint 21636

Cost Engineering Vol. 51/No. 3 MARCH 2009 43

 C alendar of
C alendar of Events
Events
March 2009 London, UK 15-17 The 23rd IPMA
Contact: www.smi-online.co.uk World Conference,
2-3 The New Engineering Manager: The International Project
moving from Technical Professional to 31 The 2nd Annual CFO Green Management Association (IPMA),
Manager, Conference: Making Sustainability Cost Helsinki, Finland
The American Society of Mechanical Effective, Contact: www.refresh09.com
Engineers (ASME), CFO Publishing
Omni Houston Hotel Westside InterContinental The Barclay New York Hotel
Houston, TX 25-28 AACE International Education
New York, NY
Contact: phone (973) 882-1167 Seminars, AACE International
Contact:
fax (973) 882-1717 Sheraton Seattle Hotel,
www.cfoconferences.com/green2008
infocentral@asme.org Seattle, WA

April 2009 Contact: phone 1-800-858-COST

5-6 Professional Responsibility for fax (304) 291-5728
Engineer, 1 SMi Energy Conference: Horizontal info@aacei.org
The American Society of Mechanical Drilling Technology and Techniques for www.aacei.org
Engineers (ASME), Coalbed Methane,
Omni Houston Hotel Westside SMi Group, 28 - July 1 AACE International’s
Houston, TX Copthorne Tara Hotel 53rd Annual Meeting,
Contact: phone (973) 882-1167 London, UK AACE International
fax (973) 882-1717 Contact: www.smi-online.co.uk Sheraton Seattle Hotel,
infocentral@asme.org Seattle, WA
20-21 SMi Energy Conference: Legal Contact: phone 1-800-858-COST
11-12 SMi Energy Conference: Oil & Issues in Oil and Gas, fax (304) 291-5728
Gas Satellite Communication, SMi Group, info@aacei.org
SMi Group, Crowne Plaza Hotel www.aacei.org
Copthorne Tara Hotel London, UK
London, UK Contact: www.smi-online.co.uk
July 2009
Contact: www.smi-online.co.uk
May 2009 2-3 AACE International Education
13-15 The 2009 Western Winter Seminars, AACE International
Workshop, 4-5 Developing a Leading Edge Seattle Sheraton Hotel,
The San Francisco Section of Operations Strategy, Seattle, WA
AACE International, MITSloan Management,
Cambridge, MA Contact: phone 1-800-858-COST
Portola Hotel and Spa,
Contact: http://mitsloan.mit.edu/exceed fax (304) 291-5728
Monterey, CA
info@aacei.org
Contact: John Haynes
June 2009 www.aacei.org
jhaynes@trsconsultants.com
8-12 ASME Turbo Expo 2009, 27-28 Developing a Leading Edge
24-26 Automation & Power World The American Society of Mechanical Operations Strategy,
2009, Engineers (ASME), MITSloan Management,
The ABB Group, The World Center Marriott Resort and Cambridge, MA
Orlando World Center Marriott, Convention Center, Contact: http://mitsloan.mit.edu/exceed
Orlando, FL Orlando, FL
Contact: www.abb.com/a&pworld Contact: IGTI Editor’s Note: Please submit items for
phone (404) 847-0072 future calendar listings at least 60 days
30-31 SMi Energy Conference: www.asmeconferences.org in advance of desired publication.
Unconventional Gas,
SMi Group,
Copthorne Tara Hotel

AACE International, 209 Prairie Avenue, Suite 100, Morgantown, WV 26501 USA phone: 304-296-8444
fax: 304-291-5728 e-mail: editor@aacei.org website: www.aacei.org

44 Cost Engineering Vol. 51/No. 3 MARCH 2009