Cost Engr Magazine

www.aacei.org

ENGINEERINGFebruary 2011

THE AACE INTERNATIONAL JOURNAL OF COST ESTIMATION, COST AND SCHEDULE CONTROL, AND PROJECT MANAGEMENT

COSTCOSTCOST

CPM’SCONTRIBUTION TOFORENSICSCHEDULEANALYSIS

PRESIDENT’SMESSAGEDID YOU KNOW?

PRACTICAL ISSUES INLOSS OF

EFFICIENCYCLAIMS

VOTE ON THEAACE CANADA

CONSTITUTION AND BYLAWS

OPENING YOUR DOOR TOOPPORTUNITY

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1COST ENGINEERING FEBRUARY 2011

CONTENTS

COST ENGINEERING

TECHNICAL ARTICLES

22 CPM’s Contribution to Forensic Schedule Analysis

Jefferey L. Ottesen, PE CFCC PSP, and Greta A. Martin, PE PSP

With the advent of CPM Scheduling in the late 1950s, the need for a new discipline inscheduling analysis was born and various methodologies emerged. Fifty years later, at least ninedifferent types of CPM analysis exist, and variations made within each type, render an evenlarger number. In the claims industry, where an expert’s credentials are key, and compliancewith Daubert criteria matter, claimed authorship and acceptance of a methodology is often dis-puted. In an effort to diffuse such conflicts, research was performed and a chronology formulatedto track the evolution and acceptance of CPM analyses. This article summarizes results of thiseffort, recognizes pioneers in CPM schedule analysis, and lists contributions made to the newdiscipline that today we commonly call, Forensic Schedule Analysis. This article was presentedas CDR.03 at the 2010 Annual Meeting in Atlanta, GA.

29 Practical Issues in Loss of Efficiency ClaimsRobert A. Dieterle, CCE and Thomas A. Gaines, CCC

Virtually every project, in which a contractor makes a claim for delay, acceleration, ordisruption, also included are damages associated with loss of labor efficiency. Often times, lossof efficiency claims represent a significant component of damages. There are numerous impactsthat can occur emanating from delay, acceleration, and disruption. Similarly, there are numeroustechniques and methodologies used to determine the damages suffered. More often contrac-tors, which may have been legitimately impacted, do not provide a supportable calculation thatprovides a causal linkage between the event(s) and resultant damages. The lack of a supportablecalculation classically results in a real dilemma to the owner, who has little basis to assess thetrue financial impact to the contractor, even in the face of acknowledged entitlement to an issue.This article will provide some practical considerations when dealing with claims for loss of laborefficiency, regardless of whether you’re the contractor or the owner. The article will identify thetypes of techniques most often used. For each technique, issues and challenges to their usewill be addressed from the vantage point of both the contractor and the owner. This article waspresented as CDR.07 at the 2010 Annual Meeting in Atlanta, GA.

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2 COST ENGINEERING FEBRUARY 2011

5 President’s MessageDid You Know?

7 Executive DirectionThe AACE International

Career Center Expanded

8 AACE CanadaVote on the AACE Canada

Constitution and Bylaws

12 Education Board News2010 AACE International

Scholarship Awards

15 Young Professionals in Cost Engineering

Spotlight on Tanner Courrier

4 AACE International Board of Directors

4 Cost Engineering Journal Information

14 2011 Election Voting Begins February 1

35 Professional Services Directory

35 Index to Advertisers

42 AACE International Bookstore

CONTENTS

DEPARTMENTS

ALSO FEATURED

COST ENGINEERING

18 Executive ArticleThe Impact of Change in the World of

Major Capital Projects

36 The AACE International Bulletin

Section News from Around the World

41 In MemoriamRemembering Dr. Brisbane H. Brown, Jr.

43 Article Reprints and Permissions

Sharing our Articles and Experience

44 Calendar of EventsAACE International Events and More

THE AACE INTERNATIONAL ONLINE BUTTON - This edition

of the Cost Engineering journal has access to additional ma-

terial on the AACE International website, www.aacei.org.

Anytime you see the symbol at center, there is additional

content online associated with that article or feature. Direct

your browser to www.aacei.org and look for the online but-

ton to access additional resources. If you are already reading

the electronic version, just click the online button directly.

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http://www.aacei.org/resources/ce/addlContent.shtml


COST ENGINEERING


HEADQUARTERS209 Prairie Avenue, Suite 100

Morgantown, WV 26501

800.858.COST fax - 304.291.5728

CONTENTSAACE INTERNATIONALBOARD OF DIRECTORS

PRESIDENTStephen O. Revay, CCC CFCC

403.777.4900 / [email protected]

PRESIDENT-ELECTMichael R. Nosbisch, CCC PSP


PAST PRESIDENTMark G. Grotefend, CCC

425-233-7417 / [email protected]

VICE PRESIDENT-ADMINISTRATIONAlexia A. Nalewaik, CCE MRICS


VICE PRESIDENT-FINANCEJohn J. Cicarelli, PE CCE PSP


VICE PRESIDENT-TECKen Cressman, CCC EVP


VICE PRESIDENT-REGIONSJulie Owen, CCC PSP


DIRECTOR-REGION 1Ginette Basak, P.Eng


DIRECTOR-REGION 2John C. Livengood, CFCC PSP


DIRECTOR-REGION 3Asoka K. Pillai, CCE EVP


DIRECTOR-REGION 4Duane R. Meyer, PE CCE

513.241.1230 x 640 / [email protected]

DIRECTOR-REGION 5Martin Darley, CCC FRICS


DIRECTOR-REGION 6Position to be Appointed

[email protected]

DIRECTOR-REGION 7Philips Tharakan Mulackal, CCE EVP

+91.476.287.2898 / [email protected]

DIRECTOR-REGION 8Tetsuya Yonezawa, CCE

+81.47.454.1582 / [email protected]

EXECUTIVE DIRECTORDennis G. Stork


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 International. AACE International is not en-

dorsing or sponsoring the author’s work. All content is presented solely for informational purposes. Columns,

features, and articles not designated as Technical Articles are not subject to the peer-review process.

Cost Engineering (ISSN: 0274-9696/11) is published monthly by AACE International, Inc, 209 Prairie Ave., Suite 100, Morgantown, WV 26501

USA. Periodicals postage paid at Morgantown, WV, and at additional mailing office. POSTMASTER: Send address changes to AACE

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40624074, Return undeliverable Canadian addresses to PO Box 503, RPO West Beaver Creek, Richmond Hill, ON L4B 4R6.Single copies: US$9

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US$72/year; all other countries, US$91/year. Overseas airmail delivery is available at US$99. Subscriptions are accepted on an annual-year basis

only. Copyright © 2011 by AACE International, Inc. All rights reserved. This publication or any part thereof may not be reproduced in any form

without written permission from the publisher. AACE assumes no responsibility for statements and opinions advanced by the contributors to

its publications. Views expressed by them or the editor do not necessarily represent the official position of Cost Engineering, its staff, or AACE

International, Inc. Printed in York, PA, USA. Cost Engineering is a refereed journal. All technical articles are subject to review by a minimum of

three experts in the field. To submit a manuscript for peer review, see author guidelines at www.aacei.org and submit a 200 word or less abstract

to [email protected]. Cost Engineering is indexed regularly in the Engineering Index., Cambridge Scientific Abstracts, by EBSCO Publishing, and

in the ABI/Inform database. Cost Engineering is available online, via the ProQuest information service; on microform; electronically on CD-ROM

and/or magnetic tape from Bell & Howell Information and Learning, PO Box 1346, Ann Arbor, MI 48106. PHOTOCOPY PERMISSION:

Authorization to photocopy articles herein for internal or personal use, or the internal or personal use of specific clients, is granted by AACE

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been arranged. The fee code for users of the transactional reporting service is ISSN-0274-9696/02 US$4.00. This permission to photocopy does

not extend to any Cost Engineers’ Notebook, AACE Recommended Practices supplements, or membership directories published in this

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Send to: Editor, 209 Prairie Ave., Suite 100, Morgantown, WV 26501 USA. Deadlines do not apply to technical papers.

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Vol. 53, No.2/February 2011

The Association for the Advancement of Cost Engineering

OUR VISION - To be the recognized technical authority in cost and schedule management

for programs, projects, products, assets, and services.

OUR MISSION - The members of AACE® enable organizations around the world to achieve

thier investment expectations by managing and controlling projects, programs, and port-

folios; we create value by advancing technical knowledge and professional development.


With this month’s message I would liketo share some interesting informationabout our Association. This informa-tion, in part, comes from some e-mails that I received from CarstenWredstrom, ICEC Senior Vice Chair-

man. I should first explain that ICEC is the International Cost En-gineering Council, a worldwide confederation of costengineering, quantity surveying and project management soci-eties to which AACE International belongs.

ICEC was founded in 1976, by four project cost management

associations, one of which was AACE International. Dr. Ken

Humphreys, PE CCE, a past executive director of AACE Interna-

tional, served as ICEC’s first secretary-treasurer for some 30

years.

To explain the purpose and mission of ICEC, I offer the fol-

lowing taken directly from their website:

“The International Cost Engineering Council (ICEC) is an

nonpolitical and nonprofit organization which was

founded in 1976, with the object of promoting cooper-

ation between national and multinational cost engi-

neering, quantity surveying, and project management

organizations worldwide for their mutual well being and

that of their individual members. ICEC member soci-

eties are located in more than 40 countries, and have

chapters or sections in many additional countries.

Through these chapters and sections, ICEC has access

to more than 120,000 cost engineers and project man-

agers in over 120 different nations. Regular ICEC meet-

ings are attended by delegates of the member societies

where subjects of common interests are exchanged and

discussed. Each member society has one vote on the

council.”


PRESIDENT’S MESSAGE

DID YOU KNOW?DID YOU KNOW?

Stephen O. Revay, CCC CFCC, President


On Friday Nov. 19, 2010, ICEC’s Region 2 sponsored a spe-

cial, “State of the Art Cost Management” seminar. The brochure

for that seminar stated:

“The seminar will focus on methodologies and profes-

sional development in the area of project cost manage-

ment. That includes: Total Cost Management

Framework (TCM) - An Integrated Approach to Portfo-

lio, Program, and Project Cost Management. TCM can

be used to plan and control resources, costs, profitabil-

ity and risk. TCM can help an organization design its

own processes and provides individuals a “map” to

help them in their career planning. TCM provides an

overview of the of the various methodologies in the

short and long term project work and is a valuable sup-

port for project managers.”

As the presenters were speaking about our document,

which was the culmination of a tremendous effort by our Tech-

nical Board and John Hollmann, I thought it appropriate to offer

best wishes on the presentation. After the seminar, Carsten

Wredstrom responded to my e-mail and stated:

“Thanks for your greeting. Ko did the presentation very

well, and it was very well received by the audience. We

did mention that the TCM Framework is available on

your web page. The ICEC network is very capable for

spreading the best of the best to the rest of the world

for the mutual benefit of the member organizations,

including the TCM model. Your AACE International cer-

tification program was also presented along with the

DACE program, as well as the AFITEP program that is

under development. Once again, thanks for the huge

effort your organization have put into developing the

TCM and certification program.”

In a subsequent e-mail Carsten Wredstrom wrote:

“I forgot to mention that Peter Smith, ICEC General-

Secretary, in his presentation on ICEC also presented

AACE International as one of the most important single

sources of CE knowledge.”

This correspondence made me wonder if our own members

recognized the incredible value of our TCM Framework. If you

have not reviewed the document, I sincerely urge you to do so.

It is free to download from our website and has been, the past

four years, one of the more popular downloads.

The statistics as regards to downloads from our website are

quite interesting. Based on our web statistics for the period Nov

8, 2010 to December 5, 2010, I was surprised to learn that the

sample Cost Engineering journal (September 2010 issue) had

been downloaded 8,542 times in a little less than a month. If

one assumes that the sample journal is not downloaded more

than once by any individual, this means that the numbers down-

loading our sample magazine is greater, by over 1200, than our

current membership.

As seen on our website under recent news:

“AACE International membership has increased by 7.8

percent over the same time last year. Through the end

of November, AACE International membership had

grown to 7,357 compared to 6,827.”

In descending order, the other top downloads for the period

Nov 8, 2010 to December 5, 2010 were:

• RP 25R-03 Estimating Lost Labor Productivity in Construc-

tion Claims – 6,831 downloads.

• RP 29R-03 Forensic Schedule Analysis – 6,799 downloads.

• RP 10s -90 Cost Engineering Terminology – 6,738 down-

loads.

• RP 22R-01 Direct Labor Productivity Measurement: As Ap-

plied in Construction and Major Maintenance Projects -

3,127 downloads.

• RP 14R-90 Responsibility and Required Skills for a Project

Planning and Scheduling Professional - 2845 downloads.

And,

• TCM Framework – 2,665 Downloads.

These statistics would seem to bear out the opinion above

that AACE International is one of the most important single

sources of Cost Engineering knowledge. The increased frequency

of fixed price contracts is perhaps the reason for the high num-

bers for the RPs that pertain directly with construction disputes.

If you are not familiar with the TCM Framework, you can

view, on our website (Resources/TCM Framework), a PowerPoint

presentation that explains it.

Going back to web statistics, you might be interested to

know that our website had, for the period Nov 8, 2010 to De-

cember 5, 2010, 55,741 visits and over 48 million hits. In terms

of visitors by country below is a list of unique visitors for the top

15 countries in descending order.

United States - Canada - Australia - United Kingdom (Great

Britain) - United Arab Emirates - China - India - Germany – Qatar

– France - Saudi Arabia- Malaysia - Singapore - Netherlands and

Oman.

In closing, I would like to congratulate the United Arab Emi-

rates section on becoming the third largest section in our asso-

ciation, with 373 members as of the end of October. I was

pleasantly surprised to learn that in December, 184 individuals

from that section had signed up to sit for certification exams;

119 in Dubai and 65 in Abu Dhabi. The UAE section leadership

certainly deserves commendation. �

EDITOR’S NOTE: To engage in other discussions, check out AACE

International’s Online Forums at www.aacei.org/forums.


These statistics would seem tobear out the opinion above thatAACE International is one of themost important single sourcesof Cost Engineering knowledge.



AACE INTERNATIONALCAREERCENTEREXPANDED

THE

EXPANDED

THE

As part of AACE International’s plan to provide

world class services to our members and

stakeholders, the Association has contracted

with Boxwood Technologies to administer our

online Career Center, located at the AACE In-

ternational website, www.aacei.org.

Job seekers using the new AACE International Career Cen-

ter will be able to tap cost engineering industry-specific jobs

and employers online, confidentially. Individual posting infor-

mation determines how public the information will be to po-

tential employers. Confidentiality features are included that

allow job seekers to only reveal their identifies to inquiries from

specific companies. There is no fee charged to post a resume

online, and the convenient editing function allows you to make

changes readily to your resume and career goals.

The more convenient, but robust, job search capability al-

lows individuals to search positions by multiple criteria and cre-

ate e-mail alerts whenever a new job positing meets those

criteria. The system allows the job seeker to post resumes,

technical papers, and other documents supporting their work

experience. The system will also track which jobs you have ap-

plied for, and the status of that job search within the company.

Job seekers will also have access to tips on writing resumes,

preparing for interviews, and other job seeking skills from ex-

perts in the hiring process.

These new intuitive capabilities and the easy-to-use design,

coupled with the career development resources now available,

will make AACE’s Career Center an important part of the career

of any professional in the cost engineering and cost control pro-

fessions. AACE International members also have access to the

comprehensive AACE Annual Salary Survey. It provides a wealth

of information about the current compensation trends for cost

engineering professionals.

To encourage job seekers to use the expanded Career Cen-

ter, AACE International will conduct a drawing for a complimen-

tary registration for the June 19-22 Annual Meeting in Anaheim,

Calif., from among individuals who have posted their resume

on the Career Center by March 31.

We are excited about this expanded capability to help our

members and stakeholders advance their career opportunities

and to assist employers find the best talent to advance their

company’s future. This collaboration with Boxwood Technolo-

gies will be one of several major improvements in our services

to the profession that AACE International will be unveiling in

2011.

In addition to an easier to use interface for job seekers, the

new site offers significant flexibility and more robust features

for employers as well, including the capability to alert employ-

ers when new job seekers fitting their search requirements post

their resume or contact information.

The new interface allows companies greater convenience

to posting, discounts for more frequent use of the Career Cen-

ter, and more valuable reporting tools for recruiters and human

resource professionals. For more information about the AACE

Career Center’s capabilities for employers, contact Christian

Heller at [email protected].

Boxwood Technologies rich history includes delivering qual-

ity job boards and online career center to more than 1,000 pro-

fessional associations. Their private-labeled, robust job board

and career center technology seamlessly integrates into our

website. In a class of its own, Boxwood is uniquely endorsed by

the American Society of Association Executives (ASAE) and is a

charter member of the International Association of Employ-

ment Websites (IAEWS).�

EXECUTIVE DIRECTION

Dennis G. Stork, Executive Director

AACE International Career Center


http://www.aacei.org/career/


CONSTITUTION & BYLAWS

AACE CANADA

As some of you may remember, in 2008, Re-

gion 1 voted on a new Constitution and By-

laws for AACE Canada. This new Constitution

and Bylaws was intended to update the 1985

Constitution and Bylaws formed when AACE

Canada was initiated. This new Constitution

and Bylaws was accepted by the majority who voted and rati-

fied unanimously at the 2008 AACE Canada annual meeting all

pursuant to the old Constitution and Bylaws. The old Constitu-

tion and Bylaws also required that the changes be approved by

Corporation Canada which is consistent with Canadian law.

Corporation Canada will not approve Constitution and By-

laws prior to formal acceptance by the association’s member-

ship. There were given a draft which they suggested looked okay.

When asked for formal approval, they declined to do so. Several

subsequent attempts by volunteers to get approval were unsuc-

cessful. It was consequently decided to get professional help.

The result of that help is the new Constitution and Bylaws being

proposed in this election.

To review all three constitution and bylaws (1985, 2008, and

the one being proposed) please visit www.aacei.org and go

under the Election tab. The proposed document is also pub-

lished below for your review.

BYLAWS of AACE Canada Inc.

(the "Corporation")

BE IT ENACTED as a bylaw of the Corporation as follows:

CORPORATE SEAL

1. The seal, an impression of which is stamped in the margin

hereof, shall be the deal of the Corporation.

HEAD OFFICE

2. The head office of the Corporation shall be:

c/o Suite 400, 1040 – 7 Avenue SW

Calgary, Alberta T2P 3G9

CONDITIONS OF MEMBERSHIP

3. Membership in the Corporation shall be limited to persons

interested in furthering the objects of the Corporation and

shall consist of anyone who is a current member in good

standing with the Association for the Advancement of Cost

Engineering International. (AACE® International) and who

is residing in Canada. Three classes of membership exist:

members, associate members and student members. As-

sociate members and student members do not have voting

privileges.

4. Membership dues are set annually by the board of directors

of AACE® International. Any member who fails to pay their

dues within one hundred and twenty days of being invoiced

are automatically transferred to inactive status and lose all

rights and privileges of membership.

5. Any member may withdraw from the Corporation by deliv-

ering to the Corporation a written resignation and lodging

a copy of the same with the secretary of the Corporation.

6. Any member may be required to resign by a vote of three-

quarters (3/4) of the members at an annual meeting.

MEMBERS' MEETINGS

7. The annual or any other general meeting of the members

shall be held at the head office of the Corporation or at any

place in Canada as the board of directors may determine

and on such day as the said directors shall appoint. The

members may resolve that a particular meeting of mem-

bers be held outside of Canada.

8. At every annual meeting, in addition to any other business

that may be transacted, the financial statements and the

report of the auditors shall be presented and auditors ap-

pointed for the ensuing year. The members may consider

and transact any business either special or general at any

meeting of the members. The board of directors or the

president or vice-president shall have power to call, at any

time, a general meeting of the members of the Corporation.

The board of directors shall call a special general meeting

of members on written requisition of members carrying not

less than 5% of the voting rights. Ten (10) members of the

Corporation present at the meeting shall constitute a quo-

rum. Each member present shall have the right to exercise

one vote.

9. Fourteen (14) days' written notice shall be given to each

voting member of any annual or special general meeting of

members. Notice of any meeting where special business

will be transacted shall contain sufficient information to

VOTE ON THE AACE CANADA



permit the member to form a reasoned judgement on the

decision to be taken.

10. A majority of the votes cast by the members present and

carrying voting rights shall determine the questions in

meetings except where the vote or consent of a greater

number of members is required by the Act or these by-

laws.

11. No error or omission in giving notice of any annual or gen-

eral meeting or any adjourned meeting, whether annual

or general, of the members of the Corporation shall inval-

idate such meeting or make void any proceedings taken

thereat and any member may at any time waive notice of

any such meeting and may ratify, approve and confirm any

or all proceedings taken or had thereat. For the purpose

of sending notice to any member, director or officer for

any meeting or otherwise, the address of the member, di-

rector or officer shall be his last address recorded on the

books of the Corporation.

BOARD OF DIRECTORS

12. The property and business of the Corporation shall be

managed by a board of directors, comprised of a minimum

of three directors. The number of directors shall be deter-

mined from time to time by a majority of the directors at

a meeting of the board of directors and sanctioned by an

affirmative vote of at least two-thirds (2/3) of the votes

cast in favour of the resolution at a meeting of members

duly called for the purpose of determining the number of

directors to be elected to the board of directors. Directors

must be individuals, 18 years of age, with power under law

to contract.

13. The applicants for incorporation shall become the first di-

rectors of the Corporation whose term of office on the

board of directors shall continue until their successors are

elected.

At the first meeting of members, the board of directors

then elected shall replace the provisional directors named

in the Letters Patent of the Corporation.

14. Directors shall be elected for a term of one (1) year by the

members at an annual meeting of members.

15. The President of the Corporation will also be the Director

for Region I of AACE® International and will be elected for

a two (2) year term as Director pursuant to the constitu-

tion and bylaws of AACE® International. Save for the im-

mediate past president the other officers will be elected

at the Annual Meeting of the Corporation.

16. The board of directors shall consist of the officers of the

Corporation.

17. A quorum of the board of directors shall consist of a ma-

jority of the board of directors.

18. The office of director shall be automatically vacated:

a. if at a special general meeting of members, a resolution is

passed by a majority of the votes cast in favour of the re-

moval of the director;

b. if a director has resigned his office by delivering a written

resignation to the secretary of the Corporation;

c. if he is found by a court to be of unsound mind;

d. if he becomes bankrupt or suspends payment or com-

pounds with his creditors;

e. on death;

provided that if any vacancy shall occur for any reason in

this paragraph contained, the board of directors by major-

ity vote, may, by appointment, fill the vacancy with a mem-

ber of the Corporation for any board position other than

the President. If the President’s position becomes vacant,

the Vice President shall become President for the remain-

der of the term of the vacated office and for the Vice Pres-

ident’s term as President.

19. The directors shall serve as such without remuneration

and no director shall directly or indirectly receive any

profit from his position as such; provided that a director

may be paid reasonable expenses incurred by him in the

performance of his duties. Nothing herein contained shall

be construed to preclude any director from serving the

Corporation as an officer or in any other capacity and re-

ceiving compensation therefore.

20. A retiring director shall remain in office until the dissolu-

tion or adjournment of the meeting at which his retire-

ment is accepted and his successor is elected.

POWERS OF DIRECTORS21. The directors of the Corporation may administer the affairs

of the Corporation in all things and make or cause to be

made for the Corporation, in its name, any kind of contract

which the Corporation may lawfully enter into and, save

as hereinafter provided, generally, may exercise all such

other powers and do all such other acts and things as the

Corporation is by its charter or otherwise authorized to ex-

ercise and do.

22. The directors shall have power to authorize expenditures

on behalf of the Corporation from time to time and may

delegate by resolution to an officer or officers of the Cor-

poration the right to employ and pay salaries to employ-

ees. The directors shall have the power to enter into a trust

arrangement with a trust company for the purpose of cre-

ating a trust fund in which the capital and interest may be

made available for the benefit of promoting the interest

of the Corporation in accordance with such terms as the

board of directors may prescribe.

23. The board of directors shall take such steps as they may

deem requisite to enable the Corporation to acquire, ac-

cept, solicit or receive legacies, gifts, grants, settlements,

bequests, endowments and donations of any kind what-

soever for the purpose of furthering the objects of the Cor-

poration.

24. The board of directors may appoint such agents and en-

gage such employees as it shall deem necessary from time

to time and such persons shall have such authority and

shall perform such duties as shall be prescribed by the

board of directors at the time of such appointment.



25. Remuneration for all agents shall be fixed by the board of

directors by resolution.

DIRECTORS' MEETINGS26. Meetings of the board of directors may be held at any time

and place to be determined by the directors provided that

48 hours written notice of such meeting shall be given,

other than by mail, to each director. Notice by mail shall

be sent at least 14 days prior to the meeting. There shall

be at least one (1) meeting per year of the board of direc-

tors. No error or omission in giving notice of any meeting

of the board of directors or any adjourned meeting of the

board of directors of the Corporation shall invalidate such

meeting or make void any proceedings taken thereat and

any director may at any time waive notice of any such

meeting and may ratify, approve and confirm any or all

proceedings taken or had thereat. Each director is author-

ized to exercise one (1) vote.

27. A majority of directors in office, from time to time, but no

less than two directors, shall constitute a quorum for

meetings of the board of directors. Any meeting of the

board of directors at which a quorum is present shall be

competent to exercise all or any of the authorities, powers

and discretions by or under the bylaws of the Corporation.

INDEMNITIES TO DIRECTORS AND OTHERS28. Every director of the Corporation and their heirs, executors

and administrators, and estate and effects, respectively,

shall from time to time and at all times, be indemnified

and saved harmless out of the funds of the Corporation,

from and against;

a. all costs, charges and expenses which such director,

sustains or incurs in or about any action, suit or proceed-

ings which is brought, commenced or prosecuted against

him, or in respect of any act, deed, matter of thing what-

soever, made, done or permitted by him, in or about the

execution of the duties of his office or in respect of any

such liability;

b. all other costs, charges and expenses which he sus-

tains or incurs in or about or in relation to the affairs

thereof, except such costs, charges or expenses that are

incurred as a consequence of willful negligence or default

as determined by a majority vote of the board of directors.

OFFICERS29. The officers of the Corporation shall be a president, vice-

president, secretary and treasurer and any such other offi-

cers as the board of directors may by bylaw determine.

Any two offices may be held by the same person.

0. Officers of the Corporation shall be appointed by resolu-

tion of the board of directors at the first meeting of the

board of directors following an annual meeting of mem-

bers.

31. The officers of the Corporation shall hold office for one (1)

year from the date of appointment or election or until

their successors are elected or appointed in their stead.

Officers shall be subject to removal by resolution of the

board of directors at any time.

DUTIES OF OFFICERS32. The president shall be the chief executive officer of the

Corporation. He shall preside at all meetings of the Corpo-

ration and of the board of directors. He shall have the gen-

eral and active management of the affairs of the

Corporation. He shall see that all orders and resolutions of

the board of directors are carried into effect.

33. The vice-president shall, in the absence or disability of the

president, perform the duties and exercise the powers of

the president and shall perform such other duties as shall

from time to time be imposed upon him by the board of

directors. The treasurer, in conjunction with the AACE® In-

ternational Executive Director and the AACE® International

Manager of Finance, shall have the custody of the funds

and securities of the Corporation and shall keep full and

accurate accounts of all assets, liabilities, receipts and dis-

bursements of the Corporation in the books belonging to

the Corporation and shall deposit all monies, securities

and other valuable effects in the name and to the credit

of the Corporation in such chartered bank of trust com-

pany, or, in the case of securities, in such registered dealer

in securities as may be designated by the board of direc-

tors from time to time. He shall disburse the funds of the

Corporation as may be directed by proper authority taking

proper vouchers for such disbursements, and shall render

to the president and directors at the regular meeting of

the board of directors, or whenever they may require it,

an accounting of all the transactions and a statement of

the financial position, of the Corporation. He shall also per-

form such other duties as may from time to time be di-

rected by the board of directors.

34. The secretary, when in attendance, shall attend all meet-

ings and act as clerk thereof and record all votes and min-

utes of all proceedings in the books to be kept for that

purpose. The secretary shall give or cause to be given no-

tice of all meetings of the members and of the board of

directors, and shall perform such other duties as may be

prescribed by the board of directors or president, under

whose supervision the secretary shall be. The secretary

shall be the custodian of the seal of the Corporation.

35. The duties of all other officers of the Corporation shall be

such as the terms of their engagement call for or the board

of directors requires of them.

COMMITTEES36. The board of directors may appoint committees whose

members will hold their offices at the will of the board of

directors. The directors shall determine the duties of such

committees.

EXECUTION OF DOCUMENTS37. Contracts, documents or any instruments in writing requir-

ing the signature of the Corporation, shall be signed by any

two officers and all contracts, documents and instruments

in writing so signed shall be binding upon the Corporation

without any further authorization or formality. The direc-

tors shall have power from time to time by resolution to



appoint an officer or officers on behalf of the Corporation

to sign specific contracts, documents and instruments in

writing. The directors may give the Corporation's power

of attorney to any registered dealer in securities for the

purposes of the transferring of and dealing with any

stocks, bonds, and other securities of the Corporation. The

seal of the Corporation when required may be affixed to

contracts, documents and instruments in writing signed as

aforesaid or by any officer or officers appointed by resolu-

tion of the board of directors.

MINUTES OF BOARD OF DIRECTORS

(AND EXECUTIVE COMMITTEE)38. The minutes of the board of directors (or the minutes of

the executive committee) shall not be available to the gen-

eral membership of the Corporation but shall be available

to the board of directors, each of whom shall receive a

copy of such minutes.

FISCAL YEAR39. The fiscal year shall be the calendar year, extending from

January 1 to December 31 of each year.

AMENDMENT OF BYLAWS40. The bylaws of the Corporation not embodied in the Letters

Patent may be repealed or amended by bylaw, or a new

bylaw relating to the requirements of subsection 155(2)

of the Canada Corporations Act, may be enacted by a ma-

jority of the directors at a meeting of the board of direc-

tors and sanctioned by an affirmative vote of at least

three-quarters (3/4) of the votes cast in favour of the

bylaw at a meeting of members duly called for the purpose

of considering the said bylaw, provided that the repeal or

amendment of such bylaws shall not be enforced or acted

upon until the approval of the Minister of Industry has

been obtained.

AUDITORS41. The members shall, at each annual meeting, appoint an

auditor to audit the accounts and annual financial state-

ments of the Corporation for report to the members at the

next annual meeting. The auditor shall hold office until the

next annual meeting provided that the directors may fill

any casual vacancy in the office of the auditor. The remu-

neration of the auditor shall be fixed by the board of di-

rectors.

BOOKS AND RECORDS42. The directors shall see that all necessary books and records

of the Corporation required by the bylaws of the Corpora-

tion or by any applicable statute or law are regularly and

properly kept.

RULES AND REGULATIONS43. The board of directors may prescribe such rules and regu-

lations not inconsistent with these bylaws relating to the

management and operation of the Corporation as they

deem expedient, provided that such rules and regulations

shall have force and effect only until the next annual meet-

ing of the members of the Corporation when they shall be

confirmed, and failing such confirmation at such annual

meeting of members, shall at and from that time cease to

have any force and effect.

INTERPRETATION44. In these bylaws and in all other bylaws of the Corporation

hereafter passed unless the context otherwise requires,

words importing the singular number or the masculine

gender shall include the plural number or the feminine

gender, as the case may be, and vice versa, and references

to persons shall include firms and Corporations.

1985 AACE Canada Constitution and Bylaws

2008 AACE Canada Constitution and Bylaws

Proposed AACE Canada Constitution and Bylaws


http://www.aacei.org/mbr/elections/ConstitutionBylaws_Canada_1995.pdf

http://www.aacei.org/mbr/elections/ConstitutionBylaws_Canada_2008.pdf

http://www.aacei.org/mbr/elections/ConstitutionBylaws_Canada_Proposed.pdf


In 2010, AACE International awarded $81,750 in schol-

arships, to students enrolled in university programs re-

lated to the cost and schedule management field. Two

programs, a scholarship competition and a matching

funds program, are open each year to students en-

rolled in colleges and universities in the US and Canada.

Nationality is not limited to US and Canadian citizens, however.

Top awards of $8,000 each were awarded to Evan Bingham,

a graduate student in the Del E Webb School of Construction at

Arizona State University, and Fereshteh Khoramshahi, a gradu-

ate student at the Schulich School of Engineering, University of

Calgary.

In a letter to AACE, Bingham wrote: “It was an absolute

privilege to be invited to the AACE International’s Annual Meet-

ing in Atlanta. The experience will be one I will not soon forget.

I would like to thank the Silver Foxes for funding my trip, as well

as the local section for their support.”

He continued, “I had the privilege of meeting many great

people during the conference and enjoyed the many classes

and presentations provided. I am sure those that attended

would agree that the hardest thing about being there is trying

to decide which of the many high quality presentations to at-

tend. A highlight of my trip was to attend a presentation given

by Hannah Schumacher, the president of my local section; It

was nice to see the AACE work at a local level here in Phoenix,

and then at a national and international level in Atlanta.”

Bingham concluded, “I am very grateful to the AACE for

2010 2010 EDUCATION BOARD NEWS

Charla Miller, Staff Director,

Education and Administration

With over 7,000 members, AACE In-ternational is the largest organiza-tion serving the entire spectrum ofcost management professionals.

AACEINTERNATIONALAACEINTERNATIONALSCHOLARSHIP

AWARDSSCHOLARSHIP

AWARDS



your support for education through the scholarship program

and will be forever indebted to you. I look forward to working

more with the AACE, especially here in my local section. Thanks

again for the unforgettable experience at the annual conference

and for helping me further my education and career in cost en-

gineering.

Many Thanks, Evan Bingham.”

Likewise, Ms. Khoramshahi, also sent a letter to AACE. She

said, “The AACE 54th Annual Meeting, held in Atlanta in June

2010, was an excellent professional experience for me. I believe

this meeting was an exceptional opportunity for maximizing the

educational and networking experience, as well as gaining up-

to-date information.”

She continued, “It was a friendly environment in which ex-

perienced professionals, industry experts, juniors and students

from around the world came together to attend the meeting

and therefore it helped reuniting with old friends and making

new ones. The Annual Meeting offered top quality presenta-

tions in the areas of cost and project management professions.

These sessions certainly helped me gain information about the

current and future research in the cost management profes-

sion.”

Khoramshahi noted, “Another program which I found very

interesting was the mentoring program which was a group ef-

fort of the Diversity Task Force, the Women in Project Controls

Committee, and the Young Professionals Task Force. Especially,

the Women in Project Controls Committee was attractive for

me since I worked as a project controller for six years.”

Commenting on her experiences, she said, “During the An-

nual Meeting, I had the opportunity to make connections with

the committee members and I found it really exciting to be con-

nected with these specialists in an international environment. I

hope I can maintain these connections to be able to network

with peers and to enhance my experience. The Young Profes-

sionals Task Force was also interesting as it was intended to en-

courage the involvement of younger members.”

Continuing, she said, “The Awards Luncheon was a unique

experience for me. I received recognition as the top Canadian

scholarship winner. This was such an amazing experience and

good feeling to be recognized both locally and internationally

among professionals in my field, and also to know the other

award winners. I also had the opportunity to socialize with some

members of the AACE Board of Directors and Education Board,

which was an exceptional experience.”

Concluding, she said, “I would like to take the opportunity

to thank AACE International, as well as the Chinook-Calgary Sec-

tion and the University of Calgary for supporting my travel to

the Annual Meeting. Also, specifically, I would like to acknowl-

edge Mr. Steve Revay and Mr. Pete Griesmyer for supporting my

travel to the Annual Meeting; my supervisor, Dr. Janaka Ruwan-

pura, who always supported and encouraged me throughout

my studies; and last but not least Ms. Charla Miller for her con-

tinuous support. She was always there to help and I really ap-

preciate her. The Annual Meeting was an exceptional

experience and I hope to have the opportunity to attend the fu-

ture events. Especially I have made a serious decision to attend

the 55th meeting.”

In addition, awards ranging from $6,000 to $2,000 were

awarded to students from ten other institutions who were suc-

cessful in the annual scholarship competition. Other awards in

varying amounts were made through the matching funds pro-

gram.

Matching funds awards are given to students by local AACE

sections by combining their donations with funds provided for

that purpose by AACE International members and sponsoring

corporations.

photo by Marvin Gelhausen

Education Board Chair, Pete Griesmyer presents a plaque to Evan

Bingham at the 2010 Annual Meeting. Bingham, was the top

US scholarship recipient.

photo by Marvin Gelhausen

Education Board Chair, Pete Griesmyer presents a plaque to

Fereshteh Khoramshahi at the 2010 Annual Meeting. Kho-

ramshahi, was the top Canadian scholarship recipient.



All of the funding for these scholarship programs comes

from donations from AACE members, corporate sponsors, and

local sections.

Individuals interested in supporting this important program

can make donations through the AACE International website at

www.aacei.org/education/funds/donate, or by sending your

donation to AACE Headquarters at 209 Prairie Avenue, Morgan-

town, WV 26501.

AACE International is the largest organization serving the

entire spectrum of cost management professionals. With over

7,000 members worldwide, AACE International is industry in-

dependent, and has members in 80 countries and 80 local sec-

tions. �

It’s time for the annual AACE election and full and asso-

ciate members can familiarize themselves with the can-

didates, their bios and goals in advance of actual voting

which will open on Tuesday, Feb. 1.

A complete list of the candidates, their bios and

goals was published in the January issue of the Cost En-

gineering journal and are posted online at www.aacei.org. Mar-

lene Hyde, CCE EVP and Alexia Nalewaik, CCE FRICS, are

candidates for President-Elect. Martin Darley, CCC FRICS, Peter

W. Griesmyer, and John L. Haynes, PSP are candidates for Vice

President-Administration. Mike Pritchett, CCC CEP, and George

Sandy Whyte, CCC CEP EVP, are candidates for Vice President-

TEC (Technical, Education, Certification. All members will vote

for these three offices.

In addition, members in Regions 3, 5, 6,and 8 will also vote

for a Director-Region of their respective region. In Region 3, the

candidates are James H. (Jay) Carson, CCC CEP PMP and Andrea

Bach, CCC. Dr. Anamaria Popescu, PE PSP is running unopposed

in Region 5. Logan Anjaneyulu, CCE CEP PSP, Nicholas Kellar,

CCC EVP PSP, and Tom Ross, CCC PSP are candidates for Region

6 while Dr. Paul Giammalvo, CCE, Keith Webb, and Ira C. Zip-

perer, CCT are the Region 8 candidates.

AACE voters will also find three Constitution and Bylaws

amendments on the ballot. The first would eliminate the “As-

sociate Member” class and classify everyone, except student

members, as full AACE members. Amendment 2 would elimi-

nate the “Emeritus Member” classification, better unifying the

Fellow and Life Member classifications. Amendment 3 clarifies

and cleans up Constitution and Bylaws wording, removing an

outdated 120 day grace period before unpaid dues result in a

member being moved to “inactive status.” Today’s electronic

database automatically makes the change when dues expire.

The amendment would change the word mail to “make avail-

able” Section 5 of the bylaws on amending the document to

better reflect the current electronic voting that replaced mailed

paper ballots. Section 6 also removes the word “mailed” and

uses the wording, “the dates the ballots are made available.”

AACE Canada will be voting on a new Constitution and By-

laws. AACE Canada members in Region 1 voted on amendments

in 2008, but the Canadian government refused to recognize the

changes. After a consultant was hired, AACE Canada was ad-

vised to put this new document up for a vote. The full text of

the proposed new document will be published in the February

issue of Cost Engineering journal and there will be electronic

links to the original and 2008 versions that will be posted at the

AACE International website, www.aacei.org.

VoteNet Solutions will be the independent outside entity

providing the electronic ballots, but all ballots will be accessed

from the AACE International website. Eligible voters can begin

voting at 12:01 a.m. on February 1, and voting will end at mid-

night on March 15. The AACE Constitution and Bylaws provides

for dues paid members to have the privilege of voting. Associ-

ate members do not get to vote on the Constitution and Bylaws

amendments, but can vote for candidates. Student members

do not have voting privileges. All eligible voters are urged to

participate and cast votes.

Anyone with election questions, or who encounters any

problems in trying to vote, should send an e-mail to:

[email protected] with a brief explanation of the question or

problem. The editor/election clerk or another headquarters

staff member will e-mail you back. An attempt is made to reply

back the same business day during the work week, or no later

than the next business day. Most voting issues or problems can

be quickly addressed and resolved. Members who pay dues or

are added in 2011 can be manually added if not on the ap-

proved voter list by e-mailing [email protected]. �

2011 ELECTION VOTING��

AACE International 2011 Election Voting Online

REMEMBERThe 2011 Scholarship

Application Deadline is

FEBRUARY15,2011

For information on apply-ing follow the link below orlog on to www.aacei.org.

Scholarship Application


http://www.aacei.org/awards/scholarships/online.shtml

http://www.aacei.org/mbr/elections/

The Young Professional Task Force is proud to in-

troduce a new bi-monthly article series, profiling

the young professionals in AACE International.

The recently conducted member-

ship survey showed a veteran membership base,

with 56 percent of the membership base over

age 45. Although AACE’s membership base is dominated by

the “baby boomers,” there are significant opportunities to at-

tract membership among young professionals.

Young professionals under the age of 34 comprise almost

20 percent of the membership base and are growing. To attract

and continue to create opportunities for younger professionals

in the industry, the Young Professional Task Force was chartered

in 2009. The group will enable younger members to work with

and learn from the experienced members, creating life-long re-

lationships, while also creating opportunities for young profes-

sionals to hold leadership positions both at the local and

international level. Specifically, the YPTF will pursue the follow-

ing objectives:

• Identify, sponsor and facilitate networking opportunities

for young professionals.

• Use web based communications and new applications to

attract younger members and effectively communicate

with all individuals involved in task force efforts.

• Establish meaningful relationships with other committees

and organizations within and outside of AACE Interna-

tional.

• Evaluate the entry level certification program from a young

professional standpoint and make suggestions for improve-

ment.

• Promote and assist in the creation of a mentoring program.

And,

• Work with local sections to plan events and presentations

at local universities.

Obviously all of these things cannot happen overnight, but

the group is gaining momentum on the way to making positive

things happen within AACE International. The following are

some of the initiatives that the group has taken on in 2010.

• Hosted a networking event at the 2010 Annual Meeting.

• Developed a website and Linked In account to take advan-

tage of social media.

• Co-hosted (with Women in Project Controls) the First An-

nual Leadership Retreat. And,

• Assisted with the implementation of AACE’s first-ever men-

toring program.

In addition, YPTF has several exciting initiatives planned for

this year, including:

• Participate in an outreach event with the Royal Institute of

Chartered Surveyors at Texas A&M University in January

2011.

• Sponsor a technical session at the Annual Meeting in Ana-

heim. And,

• Continue joint event planning and partnership offerings

with the Diversity Task Force and Women in Project Con-

trols Committee.

We hope you enjoy this article series and encourage you

to identify and reach out to a young or new member at your

next section meeting or any AACE International event. Invite a

new colleague, or ask a fellow member if they know any recent

college graduates in project controls or a related profession.

The important thing is that we recognize, from the inexpe-

rienced to the experienced, that we all have a duty to not only

preserve and maintain the status quo, but to leave the organi-

zation better off than it was when we were welcomed. �

YOUNG PROFESSIONALS IN COST ENGINEERING

YOUNG PROFESSIONAL’S TASK FORCE INTRODUCES

A NEW ARTICLE SERIESTanner Courrier, CCT and Joshua Rowan, CCT

The Young Professional Task

Force is proud to introduce a

new article series, profiling the

young professionals in AACE

International.




Tanner Courrier is a senior consultant in the Dal-

las office of The Kenrich Group, a national busi-

ness and litigation consulting firm. He is

experienced in analysis of economic damages

and project delay, primarily focused in the con-

struction and government contracts industries.

His projects have included power plants, high rise residential

buildings, oil refineries, laboratories and military defense pro-

gram contracts.

Tanner has worked for owners, construction and govern-

ment contractors, utility service companies, government agen-

cies, and others. He has worked with project managers, project

superintendents, design professionals and counsel preparing

analyses and presentations to assist in dispute resolution. Tan-

ner has also attended mediation proceedings at the Civilian

Board of Contract Appeals and participated in dispute settle-

ment negotiations.

Tanner has been involved with AACE International for two

years and is a Certified Cost Technician (CCT), Certified Fraud

Examiner (CFE) and LEED Green Associate.

Tanner joined AACE International in 2009, and attended

his first annual meeting in Seattle, Washington. During the

meeting, he participated in the Young Professionals Task Force

roundtable to identify what the association needed to do to

attract younger members.

Out of that meeting came the goal of creating a mentoring

program to foster the development of the future leaders of

AACE International. Tanner led the YPTF and worked with the

Women in Project Controls Committee and the Diversity Task

Force to design, implement, and administer a pilot mentoring

program from March 2010 through May 2010. Out of this ef-

fort came a better understanding of mentoring techniques,

successes, and areas for improvement, in order to offer a men-

toring program to the entire organization.

Tanner is currently the Chair of the Young Professionals

Task Force, the Director of Communications for the Nevada

Section, and recently sat on the committee that organized the

first AACE International Leadership Retreat in Houston, TX. His

goals within the association include; creating partnerships with

young professional committees in other organizations, reach-

ing out to college students through local sections to promote

AACE International, and creating networking and educational

events focused on young professionals. The YPTF is currently

working on coordinating a joint presentation with the Royal In-

stitute of Chartered Surveyors at Texas A&M University.

Tanner grew up just outside Minneapolis, MN, and earned

his BS in construction management, with a minor in business

administration from Minnesota State University, Mankato. He

graduated with honors and was very involved in campus activ-

ities and in the local community working for Habitat for Human-

ity and other charitable organizations. Tanner was the

president of his University’s National Association of Home

Builders student competition team and an active member of

the Construction Management Student Association. He plans

to continue his education by pursuing a masters degree in 2011.

YOUNG PROFESSIONALS IN COST ENGINEERING

SPOTLIGHT ON

TANNERCOURRIERTANNERCOURRIER

Julie Owen, CCC PSP

You have a chance to learn from

and meet the people that are

currently shaping the industry of

our chosen professions, how can

you pass up that opportunity?



Tanner’s first experience in the construction industry was

working for an exterior renovations company where he even-

tually became a project site manager. He was responsible for

coordinating activities, managing costs and materials, and com-

pleting projects on schedule. He developed a great reputation

with homeowners which eventually gave him the opportunity

to work in sales driven by repeat customers.

Tanner started out his professional career in 2008 as an in-

tern at The Kenrich Group. After earning his undergraduate

degree in 2009, he moved to Dallas, TX, to join a growing team

in the firm that specializes in construction and government

contract disputes. Tanner works with Professional Engineers,

Certified Public Accountants, Certified Management Accounts

and Certified Cost Engineers. Experts at The Kenrich Group tes-

tify on behalf of their clients and offer 20+ years of experience

with US Federal Acquisition Requirements, DCAA guidelines,

CPM schedule analysis and damage theory.

Tanner attributes his involvement in AACE International to

a few great mentors that have guided him along the way. Ken

Cressman, Julie Owen, Kristy Kastner, and Tom Ross are among

the people who inspired him to get involved.

Tanner is a strong believer that attending the Annual

Meetings is the best way to learn about and feel comfortable

with the organization. He thinks it is great to be involved on a

local level, but believes that the Annual Meeting gives a differ-

ent perspective that will make your local efforts, both at work

and within AACE International, more beneficial. Tanner says

he attends the Annual Meeting because it opens doors both

from a networking and technical standpoint. “You have a

chance to learn from and meet the people that are currently

shaping the industry of our chosen professions, how can you

pass up that opportunity?”

Being part of AACE International has shaped Tanner’s pro-

fessional development in many ways. He says being part of

AACE International has given him the opportunity to develop

networking skills, gain confidence in public speaking, develop

and practice leadership techniques, and refine his technical

abilities.

Tanner credits his success with AACE International to the

countless opportunities to get involved at the local and inter-

national level.

When asked what advice Tanner would give to other

young professionals, he responded, “Get out there and do

something to set yourself apart, get certified, join a committee,

attend an event, it doesn’t matter what you do, just do some-

thing!.” �

Tanner credits his success with

AACE International to the countless

opportunities to get involved at the

local and international levels.



THE IMPACTOFIN THE WORLD OF

Ma jor capital projects are the lifeblood

of the oil and gas industry, and their

end-products are a significant source

of revenue for the project stakeholders

(private, public and governmental par-

ties) who share the burden of cost and

risk associated with these projects. With so many interests rid-

ing on the success of a major capital project, it is no surprise

that every project management and execution team is under

intense pressure from stakeholders and investors to deliver on

budget and on time.

Given the many years experience of National Oil Compa-

nies (NOCs) and International Oil Companies (IOCs) of investing

heavily in the delivery of such major capital projects, it comes

as a surprise to many outside the energy sector that the average

cost overrun on major capital projects between 2005 and 2009

was 15 percent, and that nearly 40 percent of mega projects

(>$1bn) exceed budget and cycle time by 10 percent%.

While such overruns can be quantified, and greatly mini-

mized using a variety of best practice processes and early warn-

ing systems, the consequential effects of these overruns can be

felt by the party managing the project long after the project is

complete and the asset goes into operation.

The Changing Landscape of Major Capital Projects

Major capital projects are more complicated than ever be-

fore, on a number of levels—they are:

• larger in scale;

• require extensive financing;

• work to compressed project timelines;

• are technically more challenging;

• involve more stakeholders; and,

• are often managed by a collection of teams based in differ-

ent locations.

In addition, the geopolitical climate has changed: there is

an increased regulatory burden in terms of local/social content

EXECUTIVE ARTICLE

Ritchie Anderson,

Product Manager with 8over8

THE IMPACTOF IN THE WORLD OF

An 8over8 White Paper



and environmental responsibilities, and some US IOCs are re-

porting that influence of US foreign policy has to be classed as

a potential risk for some of their major capital projects.

In this changing landscape, the super majors are more

proactive than ever in protecting their capital investment in

order to gain maximum return on investment and secure a com-

petitive advantage that largely hinges on the success, and out-

put, of those capital projects. Their publicly-announced

strategies for 2009-2011, are very specific about focusing on

major projects, and the need to address cost overruns.

Some Common Causes of Overruns

Cost and schedule overruns can be attributed to a variety

of causes; not all are within the control of the project stakehold-

ers, for example an unstable geopolitical situation or natural

disasters. However, overruns that result from the following list

are very much risks that can be identified, managed, and miti-

gated by project stakeholders:

• incomplete design;

• a poorly defined or inappropriate contracting strategy; and

• inadequate contract execution.

An example of inappropriate contracting strategy includes

selecting an engineering procurement and construction (EPC)

contract as a vehicle to transfer risk from project stakeholders

to the EPC contractor without due consideration of the risks

that this contracting strategy, in itself, poses.

If an EPC contractor has won the contract on the basis that

completion risk would be addressed by binding the contractor

to a schedule to completion (secured by liquidated damages for

delay), and cost secured by receiving a fixed lump sum price,

then it comes as no surprise that the EPC contractor, who may

have bid low to get the work but knows that they are more likely

to overrun a lump sum bid than under-run, has more to gain

than lose by submitting as many claims and variation requests

as possible.

Other factors contributing to schedule delay and cost over-

run relate to materials and equipment, lack of EPC contractor’s

experience, late approvals due to poor coordination and com-

munication between project stakeholders, poor communica-

tions between project management team, contractor and

suppliers, and unrealistic project scheduling.

Another prime example of poor contract execution is not

having appropriate, joined-up tools and mechanisms to provide

continual oversight and governance of risks that may negatively

Figure 1 — Example of Management of Unplanned and Urgent Onsite Work



impact completing the project to schedule and on budget. Early

warning, and continual monitoring, of risks is critical to project

success. The days of managing and monitoring risk with a col-

lection of disparate spreadsheets stored over multiple laptops

and shared storage drives are long gone; they are simply not fit

for purpose in this era of the complex megaprojects.

This is not a reflection of the quality of the contract man-

agement team, it is simply a realization across the industry that

tracking vast quantities of data, contractual communications,

contractual obligations, and potential financial commitment vs.

budget vs. actual commitment vs. expenditure is something

that requires a comprehensive contract management system,

not a spreadsheet.

Getting the Rubber on the Road

Resistance to adopting a contract management system is

often significant from site-based project personnel. The most

commonly cited reason is that a contract management system

will slow down decision-making on fast moving projects, and

also inflict unnecessary bureaucracy on project staff who con-

tinue to invest in the paradigm that says, “managing capital

projects is more art than science.”

However, one does not have to ask too many contract en-

gineers to hear numerous stories of sleepless nights over how

to reimburse a contractor for work performed after a rushed

hand-written site instruction was issued by a field engineer,

without any follow up notification to the contract management

team; the first they heard about it was when the invoice was

received!

The truth of the matter is that to successfully manage mod-

ern, complex projects with compressed schedules in a changing

geopolitical climate, and with the lean management teams

commonly used these days, the project and associated risks

must be managed by exception.

International oil companies are increasingly realizing that

using a contract management system designed for major capital

projects, integrated with their ERP system, dramatically reduces

the effort required to fully manage and monitor everyday com-

munications, activities, contractual obligations and contract

spend, and does so in a transparent, repeatable manner. This

frees up valuable expertise to deal with the unexpected, (i.e.,

the exceptions).

To illustrate this, let’s take a look at how a contract man-

agement system for capital contracts provides complete trans-

parency and advance notice of site instructions to all that

require visibility, while providing the flexibility and speed re-

quired by field engineers to deal with minor, unplanned changes

to work that pop up on site. Good procedures and flexible sys-

tems can accommodate unplanned and urgent work on site,

(See figure 1).

The Consequential Effects of Overruns on Corporate Strategy

and Opportunities

It is worth taking a moment to reflect on other effects of

overruns, apart from the obvious metrics of spending more

than was budgeted for an asset that was delivered later than

planned:

• Affects standing with lenders and access to future capital:

this results from delayed income from production sharing

agreements, and also from cost recovery issues with host

governments, (See figure 2).

• Reputation as being a project partner that does not deliver

or monitor its commitments; this affects access to new op-

portunities and gives advantage to competitors. And,

• Harder to recruit the quality project and contract profes-

sionals required to replace the aging population of capital

project experts and practitioners.

Figure 2 — Capes/Opex/First Oil Diagram



These issues are of vital importance to the future of inter-

national oil companies in a global, commercial environment

where only seven percent of the world's reserves are now fully

accessible by international oil companies and there is a notable

increase in worldwide competition from national oil companies

expanding outside their host countries. In addition, the price

environment for oil and gas is uncertain with refining margins

also being squeezed.

Adopting a contract management system that provides

complete visibility into potential and actual risks, as well as a

set of standardized processes and templates that ease contract

management tasks in a cohesive, repeatable manner has proven

to be a winning formula around the world. Forward-thinking

international oil companies who have implemented a contract

management system have successfully delivered major capital

projects on budget and on time, and enhanced their reputation

as world class project partners. u

ABOUT THE AUTHOR:

Ritchie Anderson joined 8over8 as product manager with

20 years experience in the international energy, supply chain,

and IT industries. His career began with Mobil North Sea Limited

(MNSL) in Aberdeen, UK, where he worked in the facilities de-

partment for offshore projects in the UKCS. From there, he pro-

gressed to fulfilling a number of head office and site-based

commercial roles on the CAPEX phases of major capital projects,

most notably the SAGE Gas Plant (Phases A & B) in London, Bel-

gium, and St. Fergus, Scotland, and the Qatargas 1 project at

Ras Laffan, Qatar. As product manager with 8over8, Anderson

is the conduit between 8over8’s clients and the development

team. He can be contacted by sending e-mail to: R.ander-

[email protected].

8over8 Company Background

The mission of the 8over8 company is to help contract

stakeholders make informed decisions and execute their con-

tracts in the most efficient manner possible in order to protect

the stakeholder investment

The company works with its clients to protect their invest-

ment in capital projects, delivering collaborative contract life-

cycle management solutions that help energy companies bring

together people, processes, and content. The company’s cost-

effective web- based solutions enable customers to maximize

the contractual relationships with their business partners, re-

sulting in increased contract standardization, enhanced contract

controls, greater transparency, and shortened contract negoti-

ation cycles. The company’s scalable technology gives cus-

tomers improved visibility and the opportunity to embed best

practice in all contracts, while managing risk and maintaining

economic value, helping them navigate in an increasingly com-

plex and challenging capital project landscape. For additional

information, please visit: www.8over8.com. �

www.aacei.orgGETS A NEW LOOK FOR 2011

As a new feature for 2011, the AACE International

website, www.aacei.org, has received a comprehensive

redesign to emphasize a cleaner look and ease of use for our

members, volunteers, prospective members, and other

visitors to the website, while maintaining the continued

availability of our substantial collection of informational

content and resources. Browse for yourself at www.aacei.org.


As active experts in CPM

scheduling, we frequently hear

phrases such as the following:

• “Company ABC or person X

developed the presented delay

analysis, which analysis has been

widely accepted by the courts as an

accepted means of quantifying

delay.” Or,

• “Company ABC or person X

published the presented delay

analysis in the article or book

entitled ‘Y’ and is therefore

recognized as the founder of said

analysis.” Or,

• “Person X has testified more than 30

times on CPM delay analysis over the

past 30 years and is considered one

of the original founders of the

presented delay analysis.”

Such credential declarations

ostensibly establish credibility of the

expert and intend to further validate

reported findings of the analysis

performed, but rarely are such

statements verified during litigation. This

article attempts to identify and give credit

to those persons or entities actually

responsible for creating or advancing the

critical path methodologies that analyze

delay.

The Building Blocks of Critical Path

Methodology (CPM)

It is undisputed that the origins of

CPM began with James E. Kelley, Jr. and

Morgan Walker, in 1956, when they

developed algorithms that became the

“Activity-on-Arrow” scheduling

methodology for E.I. duPont de Nemours

& Co (DuPont) [5, 6, 7, 9, 10].

A parallel development of a

technique called Project Evaluation and

Review Technique (PERT) was under way

by the US Navy and the Lockheed

Company [1]. From both efforts emerged

several fundamental premises, or rather

the basic building blocks, of CPM

scheduling.

Individual elements of every CPM

delay analysis methodology recognized

today stem from these basic building

blocks. From Kelley and Walker’s 1959

article entitled, “Critical-Path Planning

and Scheduling” and Kelley’s 1960 article

entitled, “Critical-Path Planning and

Scheduling: Mathematical Basis,” the

following building blocks were

established:

• A high degree of coordination can be

obtained in the planning and

scheduling of a project when

information of all project functions

(or task activities) are combined into

a single master plan.

• Work jobs (more commonly referred

to today as schedule “activities”) are

logically linked together, based upon

the following questions:

• What activity immediately

precedes this activity (i.e.,

predecessor logic)?

• What activity immediately

follows this activity (i.e.,

successor logic)?

• What work can be concurrently

performed with this activity?

• On the basis of estimated elapsed

times, computed approximations to

the earliest and latest start and

completion times for each activity

can be calculated on a project.

• If the maximum time available for an

activity to complete, equals its

duration, the activity is called critical.

• A project’s longest path is defined as

the sum of durations for the chain of

activities that are critical.

• A delay to a critical activity will cause

a comparable delay in the project

completion time.

• Start delay is measured when an

activity’s actual start is later than its

calculated planned start.

• Production delay is measured when

an activity’s actual duration exceeds

the planned duration.

• If the maximum time available to

complete an activity exceeds its

duration, the job is called a ‘floater,’

or said to have float. Only after float

is absorbed will a delay to a floater

activity cause a downstream

displacement of successor activities.

(This premise forms the basis for

evaluating near-critical activities and

strings of near-critical activities.)

• Often large portions of a project

diagram form individual subprojects

in their own right. Each of these

subprojects can be solved separately,

a spectrum of solutions and a utility

function being obtained in each case.

(This premise forms the basis for

evaluating concurrent work activities

and strings, and the effect of

progress thereof on the overall

project duration.).

• The project activities can be easily

put into the form of bar charts for


PEER REVIEWED

CPM’s Contribution to ForensicSchedule AnalysisJefferey L. Ottesen, PE CFC PSP, and Greta A. Martin, PE PSP

Abstract: In his Socratic dialogue, "The Republic," Plato calls necessity the motherof invention. With the advent of CPM Scheduling in the late 1950s, the need fora new discipline in scheduling analysis was born and various methodologiesemerged. Fifty years later, at least nine different types of CPM analysis exist, andvariations made within each type, render an even larger number. In the claimsindustry, where an expert’s credentials are key, and compliance with Daubert cri-teria matter, claimed authorship and acceptance of a methodology is often dis-puted. In an effort to diffuse such conflicts, research was performed and achronology formulated to track the evolution and acceptance of CPM analyses.This article summarizes results of this effort, recognizes pioneers in CPM scheduleanalysis, and lists contributions made to the new discipline that today we com-monly call, Forensic Schedule Analysis. This article was presented as CDR.03 atthe 2010 Annual Meeting in Atlanta, GA.

Key Words: Claims, forensic analysis, longest path, project completion, and sched-

uling

TECHNICAL ARTICLE


ease of reading. (Preparing graphics

that show planned versus actual

dates for work activities was part of

the original CPM package, and is a

byproduct of Gantt charts

developed in 1917.)

• “Crashing” a schedule entails

changing the schedule’s critical path

activities such that the projected

completion date is made earlier. For

example, changing a critical

activity’s duration or overlapping

(i.e., logic changes) other critical

activities are commonly used to

‘crash’ a schedule. (This premise

forms the basis for using CPM to

decide how best to cost-effectively

accelerate a project.)

The Associated General Contractors

of America (AGC) published the

textbook, “CPM in Construction” in

1965. In it, AGC identifies ways to

control and monitor the CPM schedule

during a project, which further expounds

upon the premises above:

• The CPM schedule must be

updated periodically to reflect:

• New activities to be inserted

into the schedule caused by

change orders, new approaches

or chosen different means,

• Deleted activities caused by

change orders, new approaches

or chosen different means,

• Changes to an activity’s

duration, description, trade

indicator or cost,

• Recalculated planned early

start and finish dates, and

• Actual start and actual finish

dates for work activities.

• An updated CPM schedule

represents a new status and

therefore, creates a new

schedule wherein the critical

path may be different from the

preceding CPM schedule (This

forms the basis for periodic

CPM analysis, now commonly

referred to as a “windows”

approach.)

A comparison of these fundamental

building blocks relative to the nine

different types of CPM analysis is

presented below and demonstrates that

each analysis relies upon these basic

building blocks.

Forensic Schedule Analysis

In 2007, the AACE International

Recommended Practice 29R-03 “Forensic

Schedule Analysis” that defines nine

different types of CPM analyses was

published [4]. The document’s intent is

to, “provide a unifying technical

reference for the forensic application of

critical path method.” Specific

description of each of the nine analyses

is beyond the scope of this article,

however, RP 29R-03 is available on the

AACE International website for free

download, at www.aacei.org.

Each analysis, numbered 3.1

through 3.9 in RP 29R-04, is categorized

based upon a taxonomy of

characteristics. The top three tiers of the

taxonomy are shown in figure 1.

All are retrospective analyses,

meaning that they evaluate the project

after the fact. Methods 3.1 through 3.5

are observational, meaning that they

evaluate data as presented during the

project, whereas the remaining modeled

methodologies, methods 3.6 through

3.9, add or subtract information from

the schedule, to model ‘what if’ and ‘but

for’ scenarios.

All methodologies quantify delay to

CPM schedules, however, not all

methodologies are applicable or

acceptable in every instance. Refer to

RP29R-03 for further information.

Table 1 compares the building

blocks of CPM scheduling with the nine

different analyses presented in RP29R-

03. Whereas, there are many variations

within these nine different

methodologies, table 1 cannot address

every possibility and therefore, may not

represent the reader’s beliefs if such a

variation falls outside of those

parameters listed above.

As observed in table 1, all of the

basic building blocks are represented, in

full or in part, with each of the schedule

analysis methodologies. This

observation begs the question, “If the

present analyses include the basic

building blocks of original CPM

scheduling, what new has been

produced since the late 1950’s?” This

question is answered in part by the

authors’ search for documented

analyses in US case law, trade

publications, and in attempts to contact

a few known CPM scheduling sages in

the forensic scheduling industry.

Research Findings

An electronic search, using Westlaw

online, for documented delay analyses

used in construction cases was

conducted. References were found

relating to delay cases predating 1956,

but yielded no detailed description of an

actual delay analysis methodology

performed prior to approximately 1981.


Figure 1 — Simplified Taxonomy of Forensic Schedule Analysis RP 29R-03


These early cases imply use of a

simple comparison of a planned versus

actual project completion date, the

difference representing the delay

quantum.

Internet searches using multiple

variations of key words, such as “delay

analysis” and “CPM” were performed,

which likewise produced minimal results

prior to the early 1980’s. The AACE

International archives were then

searched which produced some, but few

papers prior to this same date. A few

interesting quotes from some of the

papers reviewed, and other research

performed, follow in subsequent

paragraphs.

In a telephone conversation with

Tom Driscoll, a recognized veteran in the

field of CPM scheduling, on February 18,

2010, Mr. Driscoll relayed his personal

experience in having worked at DuPont,

beginning in 1955, when the original

algorithms for CPM were being

developed. Mr. Driscoll himself learned

CPM scheduling, based on practical

experience, while working at DuPont,

and was able to apply it throughout his

career. He acknowledged that Mauchley

Associates, the company where Kelley

and Walker worked, were using CPM to

analyze delay in the early 1960’s.

Later, while working at O’Brien

Kreitzberg, circa 1965, Mr. Driscoll was

on assignment at Cape Kennedy, on the

NASA Apollo program, wherein he

instructed members of the Corps of

Engineers how to perform time impact

evaluations (TIE) of single-delay origin

changes on a CPM schedule. The

contractor would issue its own time

impact analysis (TIA) for the same

change, whereby both parties could

negotiate time extensions and related

costs in real time.

He also performed delay analyses

looking at what they called ‘snapshots’

of time based on the contemporaneous

updated schedules prepared. These

analyses represent some of the earliest

documented CPM delay analyses


Table 1 — Comparison of CPM Basics with Forensic Schedule Analysis Methodologies


performed which still have relevance

and are used in present day.

Early analyses were usually

performed by hand. Personal computers

had not yet been invented and were

deemed useful only for large projects

with many activities. Robert Vogeler,

stated the following in 1962:

“The concept of critical path

scheduling has no direct

relationship to computers and

is only the sophistication of

planning and scheduling

(except where the number of

activities is extensive, then

computer use is required

because of time and

complexity) [2].”

Our research and experience cause

us to conclude similarly about CPM. The

concepts of CPM are fixed and

determined, and have remained

unchanged since their invention. When

the number of activities to analyze is

extensive, however, use of a computer is

required. Today, the concept of doing

any such calculations on large CPM

schedules by hand seems nonsensical.

In his thesis paper entitled, “An

Investigation of the Expanding Role of

the Critical Path Method by ENR’s Top

400 Contractors,” Andrew Kelleher

provides a brief history of the use of

CPM and stated (in part),

“Even in 1965, contractors used

CPM as a tool to determine

fault for delays. In addition to

using CPM as a delay analysis

tool, contractors also used CPM

as a sales gimmick. Contractors

would claim to use CPM in

order to win negotiated work,

while not being fully

knowledgeable or experienced

with it, . . . [5].”

The possible interpretation of CPM

charts by owners gives rise to certain

very serious legal questions, which have

not been tested in court [5].”

Kelley and Walker recognized the

benefit of CPM for quantifying delay in

their earliest papers, and by 1965, CPM

was being used for delay analyses,

causation and assignment of

responsibility for delay. Mr. Driscoll’s

personal recollection supports this

position. Further, as of 1965, the

possible legal questions related to using

CPM schedules were also being

recognized, but had not yet been fully

tested in court.

In the early 1970’s, Mr. Kelleher’s

thesis states,

“Davis’ research shows the

primary users of CPM during

the 1970’s were large

construction companies. Davis’

research also shows 45 percent

of the survey group used CPM

seldom or never [5].”

By making CPM and PERT

techniques more complicated, network

programs tended to increasingly need

electronic data processing, causing a

decline in CPM usage during the 1970’s

compared with the 1960’s [5].”

Also in the 1970’s, legal and other

instructional publications emerged to

address CPM and delay impacts

including:

• “Construction Scheduling and Proof

of Claims,” Public Contract Law

Journal, Vol. 7, No.1, October 1974.

• “Project Scheduling Construction

Claims Practical Handbook,” by

Paul J. Walstad, John M. Wickwire,

Thomas H. Asselin, and Joseph H.

Kasimer, Waldron Enterprises 1975.

• “Modification Evaluation Impact

Guide.” Department of the Army,

Office of the Chief of Engineers,

Washington, D.C., July 1979.

In 1979, Stephen Revay wrote in his

article, “Time Extension in Construction

Contracts:”

“The single most important tool

which is needed to evaluate the

extension of time owing to

contractors under a specific

contract is the equivalent

extension of time schedule,

which most likely is the then-

current as planned schedule

adjusted to give effect to the

delays or sequential changes

flowing from the interference

examined [8].”

Mr. Revay speaks of relying upon a

contemporaneously updated CPM

schedule that further is modified to

show impacts of a delaying event on the

schedule to determine an appropriate

time extension. In short, he describes a

time impact analysis (identified in

RP29R-03 as method 3.7), such as was

already performed earlier at Mauchley

in the early 1960’s, in 1965, at Cape

Kennedy, and documented in AGC’s

textbook, “CPM in Construction,” which

is also dated 1965.


Figure 2 — Estimated Number of AACE Published Papers on CPM Delay

Methodologies


Without question, the advent of the

personal computer and available

scheduling software helped create a new

industry in forensic schedule analysis.

The advent of microcomputers

began in the late 1970’s, whereas before

that time, CPM scheduling was

performed either by hand or on a large

and expensive mainframe computer.

• Weighing approximately 50 pounds

and sized slightly larger than a

typewriter, the IBM 5100 portable

computer was announced by IBM's

General Systems Division (GSD) in

1975. IBM's Office Products Division

announced the Displaywriter in

1980, as an easy-to-use, low-cost

desktop text processing system.

• A UK-based company called, Micro

Planning Services, developed the

first commercial scheduling

software for the Apple II computer,

called Micro Planner v 1.0, in 1980.

• In 1981, scheduling software called

“Milestone” ran on an Obsborne

portable computer, running a pre-

DOS operating system called CP/M

(control protocol / machines).

• In 1982, software called “The

Planner,” was made available for an

IBM PC. Primavera Systems was

founded in 1983, (now owned by

Oracle), and has since become the

dominant player in CPM scheduling

software.

The number of written papers, that

address CPM delay analyses, greatly

increased, beginning in the early 1980’s.

Figure 2 shows the estimated number of

AACE International published papers on

CPM delay analysis for the past four

decades.

As computers became more

powerful and cost effective, and as CPM

software such as Primavera became

more robust and widespread, the

number of published papers increased

significantly each decade.

Mr. Kelleher’s thesis paper supports

that by 1990, more companies were

using CPM and also using it for claims

analysis. In his paper, he writes:

“Tavakoli and Riachi divided the

study sample into two groups

based on annual volume as

follows: large [construction]

companies (annual volumes

more than $200,000,000) and

small [construction] companies

(annual volumes less than

$200,000,000). They then

analyzed CPM usage among the

categories. By 1990, about 93

percent of the firms were using

CPM. . . About 80 percent of the

responding firms also reported

using CPM for claims analysis,

which may be a reason for

increased use [5].”

Jumping forward to present day, it

follows still that most firms use CPM

scheduling for construction related

projects.

Forensic Schedule Analyzers CPM in its origins focused on

forward looking analyses, whereas

forensic schedule analysis is largely

retrospective. The contributions made

by forensic schedule analyzers include

evaluating a project using the CPM

building blocks, but after the project was

complete, or nearly complete.

Some of the delay analysis

methodologies in RP29R-03, rely heavily

upon hindsight, while others

intentionally take measures to omit it as

a way to reflect decisions made by the

project personnel based on

contemporaneous knowledge (or lack

thereof) at the time.

The distinction between an analysis’

classification of being forward looking

(such as in a real-time TIA) and purely

retrospective (such as in preparing an as-

built critical path) is not always

apparent.

In fact, there are elements of both in

each of the nine methodologies, which

observation holds true throughout all of

the references reviewed in preparing

this article.

For this reason, the authors

recognize the original founders of CPM

scheduling as the first to also introduce

and use its principles in retrospective

scenarios as well. Still, there are many

practitioners who have contributed to

the industry in performing retrospective

delay analyses and presented those


Table 2 — CPM Survey Recipients



results at trial. Efforts were made to

identify a few of them.

A survey was prepared and sent or

e-mailed to a list of known testifying

experts on CPM delay analyses. A copy

of the survey is shown in figure 3. The

survey was intentionally made brief

under the assumption that the recipient

would not respond to a lengthy inquiry.

Follow up interviews were planned for

respondents whose responses

warranted further investigation. Table 2

provides a summary of the survey

responses received.

While periodic evaluation of

planned versus actual progress for

updated CPM schedules was recognized

by Kelley and Walker in the late 1950’s,

called a “snapshot” analysis by Tom

Driscoll, and documented by AGC in

1965, and was being used by both Ted

Trauner (who called it a

“contemporaneous analysis”) and Jim

Zack (who also called it a “windows

analysis”) in the late 1970’s, use of the

term “windows” to describe a periodic

delay analysis was apparently first

published by Patricia Galloway and Kris

Nielsen in their 1981 paper entitled,

“Schedule Control for PCM Projects [3].”

The term “windows analysis” has since

become a recognized term for a periodic

delay analysis in forensic scheduling.

In addition, Kenji Hoshino is

recognized for his efforts in establishing

a contemporaneous periodic delay

analysis referred to as a Bifurcated

Halfstep (or just “Halfstep”) analysis,

which separates actual schedule delay

from delay or gains realized simply by

making schedule modifications. His

analysis was first implemented in 2001.

Refer to AACE International RP29R-03 for

more details on this analysis.

Apart from those persons listed in

table 2, or referenced in the documents

cited herein, there have been hundreds

of others who have published books and

articles or made careers in mastering,

advancing the use and knowledge of,

and applying CPM scheduling and

related delay analyses.

As projects become increasingly

more costly and complex, the use of

CPM scheduling the need for forensic

scheduling analysis thereof remains

certain.

The basic building blocks of CPM

were founded by James E. Kelley,

Jr. and Morgan Walker with

DuPont (for CPM), and by the US Navy

and the Lockheed Company (for PERT

analysis).

These basic building blocks

formulate the bases for all forensic

schedule analyses performed today.

While other practitioners may claim to

have created a particular CPM delay

analysis, in truth, no such analysis exists

without the founders’ original building

blocks and applications thereof

developed and used, beginning in the

late 1950’s.

What has advanced is the size and

complexity of CPM schedules and the

abilities to analyze, reduce, and present

results in a simplified manner.

Outside of the original founders,

practitioners may accurately claim to

having found a simplified way to display

results of a complex CPM delay analysis,

but the delay analyses fundamentals and

techniques themselves, regardless of the

name used to describe them, were

created by the original founders. �

REFERENCES

1. The Associated General Contractors

of America, CPM in Construction. A

Manual for General Contractors,

The Associated General Contractors

of America, 1965.

2. Bogeler, Robert B. Critical Path

Scheduling – Philosophy and

Figure 3 — Forensic Scheduling Survey Sent



Experience. AACE International

Transactions. June 27, 1962.

3. Galloway, Patricia and Kris Nielsen.

Schedule Control for PCF Projects,

AACE International’s Professional

Practice Guide to Forensic Schedule

Analysis. AACE International, 1981.

4. Hoshino, Kenji P., CFCC, PSP. Forensic

Schedule Analysis, AACE

International Recommended

Practice No. 29R-03. AACE

International, June 2007, Revision 1,

June 2009.

5. Kelleher, Andrew H. An Investigation

of the Expanding Role of the Critical

Path Method by ENR’s Top 400

Contractors. Thesis paper of Virginia

Polytechnic Institute and State

University, Blacksburg, Virginia,

(2004): pgs. 5- 9.

6. Kelly, James E., Jr. and Morgan R.

Walker. Critical Path Planning and

Scheduling, Proceedings of the

Eastern Joint Computer

Conference, 1959.

7. O’Brien, James J. and Fredric L.

Plotnick. CPM in Construction

Management, Sixth Edition,

McGraw Hill, 2005.

8. Revay, Stephen, CCE, Time Extension

in Construction Contracts, Cost

Engineering, AACE International,

Vol. 21, No. 5, (September/October

1979).

9. Weaver, Patrick, A Brief History of

Scheduling – Back to the Future.

Presented at myPrimavera06, Hyatt,

Canberra, South Melbourne,

Australia, 2006.

10. Weaver, Patrick. The Origins of

Modern Project Management, PM

World Today – Second Editions, Vol.

X, Issue III, March 2008.

ABOUT THE AUTHORS

Jeffery L. Ottesen, PE

CFCC PSP, is President

of Alta Cascade. He can

be contacted by

sending e-mail to:

[email protected]

Greta Martin, PE PSP,

is a civil engineer with

Alta Cascade. She can

be contacted by

sending e-mail to:

[email protected]


http://www.aacei.org/am/currentAM/


Loss of efficiency claims are

prevalent in many construction

disputes. They are not well

understood and often difficult to

quantify. Ironically, they often represent

the largest component of a claim for

disruption to intended productivity

levels.

A loss of efficiency (or productivity)

occurs on a project when a contractor is

unable to perform at his or her historical

or estimated level of progress. In other

words, it takes longer to complete the

work (measured as worker-hours per unit

of measure) than was estimated or bid.

In many instances, contractors fail to

provide a causal link between the alleged

impacts that affected its productivity

levels and the resultant damages.

Because of this, owner’s are generally

reluctant to acknowledge that a

contractor has suffered a compensable

loss. Nonetheless, owner’s need to

recognize that the methodology for

determination of lost productivity need

not be an exact science.

One simple question must be

answered: “Why is the proof and

measurement of damages associated

with lost productivity so difficult?” To

answer this question, this article will first

address the general barriers to

understanding lost productivity that exist

between owners and contractors. Then,

the article will outline current techniques

used to calculate lost productivity, with

special attention paid to typical

shortcomings and usual objections.

It has been noted that “one of the

ironic things about loss of productivity

claims is that often the very factors that

produce the loss of productivity can also

serve to preclude the accurate and

precise record-keeping that would

constitute evidentiary certitude [11].”

Essentially, workers do not clock in and

clock out when they are working at a

lower efficiency level than was planned.

By its nature, lost productivity is not (or

cannot be) discretely tracked, which

makes it difficult to quantify.

Barriers to Recovery When a contractor and an owner

take to the negotiation table, be it to

work out a prospective change order, an

equitable adjustment to the contract, or a

posthumous claim, the manner in which

the contractor presents and prosecutes

its argument for lost productivity can set

the tone for the entire discussion. If any

of the conditions described below exist at

the negotiating table, the result will more

than likely be a skeptical response by the

owner, diminished chance of expedited

financial recovery, and far more effort

required by the contractor to prove the

damages. It is important to remember

that the burden of proof is on the

claimant. It is not the owner’s

responsibility to disprove causation,

methodology, or calculation.

Failure to Establish the Casual Link A contractor’s ability to persuade the

owner or trier of fact that its loss of

productivity request for change order,

equitable adjustment, or claim is valid

depends on the contractor’s ability to

prove causation, the nexus between

impact and damages.

The authors prefer referring to

causation as, the “causal link,” as this

term implores the claimant to connect

the impact to the damages instead of

merely identifying an impact and

assuming that it caused financial damage.

Too often a contractor enters a

negotiation with the owner armed only

with an accelerated schedule and a list of

a few of the 16 MCAA factors affecting

labor productivity [6]. Hypothetically, the

contractor has claimed fatigue, trade

stacking, and the ripple effect. No

schedule analysis has been performed by

the contractor to show how changes

would result in the factors that he or she

is claiming existed, and no causal link was

established between the changes made

to the project by the accelerated

schedule and the factors that could

produce a loss of efficiency. The

contractor simply argues that the

schedule was accelerated, therefore,

there must be productivity impacts.

The owner responds to the above

hypothetical proposal by saying that it is

understandable that a fatigue factor

could occur, because of overtime called

for in the accelerated schedule, but that

the trade stacking and ripple effects have

not been proven. The owner has

effectively reduced this portion of the

change order by two-thirds, without

having to prove a single point. The

contractor will have a difficult time

proving that these other two conditions

existed, without performing some type of

PEER REVIEWED

Practical Issues in Loss of Efficiency ClaimsRobert A. Dieterle, CCE and Thomas A. Gaines, CCC

Abstract: Virtually every project, in which a contractor makes a claim for delay,acceleration, or disruption, also included are damages associated with loss oflabor efficiency. Often times, loss of efficiency claims represent a significant com-ponent of damages. There are numerous impacts that can occur emanating fromdelay, acceleration, and disruption. Similarly, there are numerous techniques andmethodologies used to determine the damages suffered. More often contractors,which may have been legitimately impacted, do not provide a supportable cal-culation that provides a causal linkage between the event(s) and resultant dam-ages. The lack of a supportable calculation classically results in a real dilemmato the owner, who has little basis to assess the true financial impact to the con-tractor, even in the face of acknowledged entitlement to an issue. This article willprovide some practical considerations when dealing with claims for loss of laborefficiency, regardless of whether you’re the contractor or the owner. The articlewill identify the types of techniques most often used. For each technique, issuesand challenges to their use will be addressed from the vantage point of both thecontractor and the owner. This article was presented as CDR.07 at the 2010 An-nual Meeting in Atlanta, GA.

Key Words: Acceleration, claims, contractors, damages, delay, labor efficiency,

and owners

TECHNICAL ARTICLE



a schedule analysis. Although there may

be reasons that could hamper a

contractor’s ability to perform this

analysis, it is essential to prove the

impacts occurred.

Another potential response from

the owner could be that the contractor

was behind schedule and either was

dedicating (or will have to dedicate) an

overtime effort to the project to remedy

the schedule slippage. Hence, the loss of

productivity because of fatigue, to the

extent that it occurred, could have been

partially caused by the contractor’s need

to work overtime for its own schedule

recovery effort. Additionally, some of

the impact of trade stacking could also

have originated with the contractor,

since it was behind schedule and certain

areas of work had to be released to the

follow-on contactor. As noted by James

Krebs, “one of the most common

shortcomings in the proof of causation

for lost productivity is the inability to

separate contractor-caused and owner-

caused impacts on productivity [4].”

Bidding inaccuracies can also

resurface to complicate a contractor’s

claim for lost productivity. All of the

methods used for calculating lost

productivity damages have some

reliance on the precision of a

contractor’s bid.

In a measured mile methodology,

the work hours forecasted in the bid may

be compared to the least impacted

projection and the actual hours to

complete, in order to assess the

reasonableness of the results. Bid busts

related to material overruns or

incomplete bids may be pointed out by

owners in order to illustrate a faulty bid

and discredit any of the damage

methodologies. Conversely, a contractor

that can produce a bid estimate that,

with the exception of labor hours tracks

closely to actual costs, may be able to

use this information to support his or her

claim.

Courts have taken faulty bids into

consideration when ruling on loss of

productivity, as the US Court of Federal

Claims did in Triad Company v. United

States, 28 Fed Cl. 733 (1993). The court

recognized that the contractor had

experienced a financial loss and the facts

of the case showed a disruption.

However, the contractor had failed to

rule out other potential causes for the

overrun, such as an unrealistic bid [8].

Regardless of what scenario the

owner posits to dispute causation, it is

the burden of the claimant to prove that

the change or impact was the cause for

productivity impact. At any stage of the

project, a contractor’s failure to prove

causation and establish a causal link to

damages will likely create a negotiating

impasse.

Failure to Address Other Lost

Productivity Indicators It is generally accepted that there is

an order of preference among the

different methods of calculating lost

productivity damages [2]. If the data is

available and accurate, it is preferred

that the calculation be project-specific; a

measured mile calculation is an example.

If this is not possible, next in the

order of preference would be

comparative calculations, such as

comparing loss of productivity on the

current job to a past one that is similar in

nature and circumstances.

If either the contractor does not

have comparative projects or if his or her

record keeping is not that sophisticated,

a contractor may choose to calculate the

loss based on industry studies, or using a

total cost method, both of which are less

favorable approaches.

Using one of the less accepted

methods may be less burdensome for a

contractor, as there is not as much of a

need for record keeping, personnel, or

consultants. It also may demonstrate a

substantial cost impact with minimal

work. However, it will draw suspicion

from owners if the information is

available to perform one of the more

favorable calculation methods.

Therefore, contractors that cannot

perform a project-specific or

comparative calculation should outline

for the owner why it is presenting a

claim in any given form. “I’ve seen the

effects of an overtime schedule like this

a dozen times. We will always be 20

percent inefficient under these kinds of

conditions,” is a common vote of

confidence for the industry factor

method of estimating inefficiency. An

owner, however, wants to see figures

from the last time this occurred to this

particular company in a similar situation,

not studies derived with little or no

empirical evidence.

The bottom line is that the different

methodologies should corroborate each

other to a degree. The contractor should

use the most favored methodology that

he or she can, and when one cannot use

the best or preferred method, the

contractor should explain the reasons

why.

“Falling in Love” With Calculated

Value Compounding the situation is the

fact that a contractor will likely start with

the simplest method of calculating

damages and only try the exhaustive

techniques if the initial results are not

fruitful. When a contractor’s proof of

causation or calculation is challenged,

and it seems like the damages recovered

may be significantly reduced, the

contractor clings to the original, often

overstated valuation of lost productivity.

Failure to Adhere to Contract

Clauses There are many standard clauses in

construction contracts that affect the

recovery of lost productivity damages,

including notice requirements and

reservation of rights provisions. As a

contractor, it is important to follow the

requirements of each individual contract

to ensure that a legitimate claim for lost

productivity is not rejected on a

contractual technicality.

Owner Created Barriers to

Settlement The barriers created by owners in

the negotiating process are different

than those created by contractors, and

are mainly dependant on the proof

standards and motives of the owner.

Remember, that the burden of proof is

on the contractor and that prior to a case

being before a trier of fact, the owner is

the sole judge of the reasonableness of

the requested damages.

Standard of Proof and Project

Motives If an owner is overly concerned

about cost mitigation, its requirements

for proving and valuing lost labor

productivity requests may be stringent



and exact. An owner might set up a

protocol for paying contractors for lost

productivity, whether in the form of a

standard rate offer, or a predefined

technique for proving causation and

calculating the loss.

Each of these strategies for handling

lost productivity proposals has pros and

cons. Setting extremely high standards

for proving lost productivity and

requiring rigorous documentation can

identify inflated claimed costs and

eliminate unnecessarily large payouts to

contractors, but it could also require

long negotiations, cause more

administrative costs, or decrease the

likelihood of settlement and lead to

costly litigation. Being lenient in

negotiation of change orders, in an effort

to avoid costly litigation bears the risk of

overpaying for an impact that was not

actually encountered, or that was

caused by the contractor itself.

Understanding the “Exactness” of

Lost Productivity Owners need to understand that the

measurement of damages associated

with lost productivity damages is rarely

an exact science. Once the negotiating

parties can agree on liability and

causation, settlement is dependent on

the owner’s approach to determination

of a reasonable value of the loss.

As noted in a prior article, “Proof of

causation is a more rigorous standard

than the determination of quantum [1].”

The owner must acknowledge that all of

the preferred methods for lost

productivity damage calculation are

estimates. Even the most preferred

method, the measured mile,

approximates productivity. Demanding

exactness will only prolong the

settlement process and create a

confrontational environment.

Methods of Calculating Lost

Productivity The method used for calculating lost

labor productivity is generally

determined by such factors as the type

of work, the contractor’s record keeping

system, and the level of job progress at

the time of the claim.

After reviewing information, such as

certified payrolls, job cost reports,

payment applications, etc.; the

contractor must determine the most

effective method for a supportable

calculation of labor impact costs.

The authors have experience in the

most frequently used methods for

determining and evaluating lost

productivity including:

• project-specific measurements (e.g.,

the measured mile);

• comparative calculations;

• industry studies; and

• the total cost method.

The following will provide a brief

explanation of these most commonly

used methods for determination of lost

productivity, and show when and why

both contractors and owners struggle to

agree on their merits.

The Measured Mile Approach The measured mile, increasingly

popular among those involved in lost

productivity claims, is a technique that

isolates a non-impacted or least

impacted (least impacted period)

segment of a project and compares it to

a period during which an impact is

identified (impacted period).

A measure of project completion

must be chosen, based on the nature of

the work. If the work is wholly similar,

units installed may be an appropriate

measurement. If the work varies, labor

billings as a percentage of the total labor

value of the contract is an adequate

measure of completion [3].

The completion percentage is

compared to the work input; in most

cases, worker-hours. Thus, the

productivity rate can be studied over the

course of the project, with an eye

toward time periods that a contractor

identified as when he or she was

impacted.

A contractor will allege, “Based on

the measured mile productivity rate, our

firm would have finished the project

having expended X worker-hours, but for

the impact we suffered. We actually

expended Y worker-hours.”

The difference between X and Y is

the contractor’s claimed loss of

efficiency. If the timing of the project

segments identified for the least

impacted and impacted periods

correlates to the timing of the conditions

that impacted the contractor, causation

is likely proven and damages may be

recoverable.

If an owner can demonstrate that

there are other conditions in the least

impacted and impacted periods that a

rate differential could be attributable to,

it is likely that the claim will be rejected.

There are many reasons that this

calculation has become the preferred for

estimating lost productivity. Most

obviously, the method uses a

contractor’s actual rate of production for

the assessment, rather than a study from

a historical project that may not be

comparable.

The method also reduces the

importance of a contractor’s bid

estimate in quantifying the loss. A bid

estimate may still be used to verify the

accuracy of the measured mile

projection (such as a calculation that

shows a contractor overwhelmingly

beating its original bid), but in this

methodology, it hardly has the

importance as in a total cost claim, for

example. Additionally, the measured

mile allows a decision maker to see the

progression of a project, and visually tie

an impact to lost productivity. This goes

a long way toward establishing the

necessary causal link.

While the finished product can

sometimes appear simple and

straightforward, there are many

underlying decisions and assumptions

made in the preparation of a measured

mile calculation.

The most glaring underlying variable

to an owner is typically the reliability of

the data, usually dealing with the

completion percentage. If a contractor is

using units installed as a measurement

of completion, an owner will typically

take issue with data collected by anyone

except themselves. If a contractor uses

the payment applications’ reflection of

labor completed, an owner will usually

claim that the monthly payment

applications are only rough estimates

and that the project billings were front-

loaded.

A contractor should only present

data that it believes is accurate, as it may

be required to prove the validity of it to

recover damages. Furthermore, owner

prepared data should be used when

available, since it is difficult for the



owner to dispute something prepared by

his or her own people. Lastly, the owner

needs to understand, especially at the

onset of a project, that payment

applications are a certified

representation of the owner’s perceived

completion. Courts have rejected

challenges to their accuracy by those

attempting to dispute a measured mile

analysis [3].

The other main point of contention

between contractors and owners trying

to come to terms on a measured mile

calculation is the selection of the least

impacted period. Such scrutiny is

warranted, since the selection of this

period is essentially the sole determining

factor for calculating the projected input

needed to complete the project.

Often, shifting the least impact

period forward or backward in time can

have drastic effects on the projection,

and subsequently, the claimed labor

inefficiency. Contractors should identify

the time period that coincides with the

alleged impacts. Selecting a least impact

period that simply reflects the period of

optimum productivity will ultimately be

challenged.

Contractors presenting a measured

mile calculation to prove lost

productivity should outline the steps he

or she took to perform the calculation,

and provide the underlying data in a

transparent manner. Then, he or she

should identify the basis for the selected

least impact period. The care and

straightforwardness shown by taking

these simple steps should go a long way

at the negotiating table.

Comparative Calculations If the data does not exist to perform

a proper measured mile or other project-

specific analysis, the next most

preferable methodology is a

comparative calculation. This type of

analysis may also be favorable when an

entire job was impacted and a contractor

finds it difficult to demonstrate a least

impacted period. In the authors’

experience, a full and proper

presentation of this type of analysis is

rare.

Often times, a contractor’s idea of

comparative calculation is: “Compared

to the last five schools we built, our

productivity on this project is

significantly less.” The statement may be

true, but it does nothing to convince an

owner that the contractor’s firm has

been impacted.

Contractors that construct similar

projects over time should retain records

from past work to use in lost productivity

situations. Being able to demonstrate

the above statement with historical

project records would help the

contractor prove lost productivity. If a

contractor can produce records from a

project similar to the one in dispute,

with regards to characteristics and size, it

may be able to show that a productivity

differential existed. Then, if it can show

that there were owner caused

conditions on the current project, that

did not exist on the historical one, the

contractor has a reasonable basis for

recovery.

Industry Study and Lost Productivity

Factors The overwhelming majority of lost

productivity claims are presented using

one of the so-called “industry studies,”

and the factors that these studies have

presented for estimating such a loss.

The percentage-based factors are

applied with a very broad brush by

contractors that do not have the data or

are unfamiliar with project-specific, or

comparative analyses. The studies are

often blindly used, despite warnings and

disclaimers to their use.

The 1980 report entitled,

“Scheduled Overtime Effect on

Construction Projects,” commonly

referred to as the “Business Roundtable

Report” (herein BRT), offers this

summary:

“There is no precise conclusion

regarding the cost of overtime

that is universally

applicable[9].”

Yet, contractors of vastly different

trades and sizes, working on grossly

dissimilar types of projects, will all point

to the BRT as the final word on the

effects of overtime on productivity.

If an owner is going to dissect the

fundamental data of a measured mile

and critique the comparison being made

between the current project and a

historical counterpart, then the same

owner has a duty to establish the

relevance of an industry study. Any

contractor that presents these industry

studies, as the foundation of its lost

productivity argument, should consider

their respective shortcomings before

assuming that the information is

relevant.

In 1976, the Mechanical Contractors

Association of America (MCAA)

published Bulletin No. 58, “Factors

Affecting Labor Productivity.” The

document has been updated multiple

times over the years, though the factors

remain the same.

The publication identified 16 factors

that affect labor productivity on a

project. These include overtime, site

access, stacking of trades, etc. For each

of the 16 factors, the MCAA provided

loss percentages when the condition

was: minor, average, and severe.

The publication; however, fails to

differentiate or adequately define the

basis for these descriptions, and thus it is

difficult to know when these three

ranges are applicable. Furthermore,

although it is regularly used for after-

the-fact calculations of lost productivity,

the study was intended as a forward

pricing tool to be used in change order

evaluations experiencing one or more of

the conditions or factors.

Also, the MCAA notes:

“… factors listed are intended … as a

reference only. Individual cases

could prove to be too high or

too low. The factors should be

tested by your own experience

and modified accordingly in

your own use of them [6].”

Clearly, simply applying the

percentages to actual labor costs (or

hours) is expressly not recommended by

the publication.

In November 1980, the Business

Roundtable issued a report entitled,

“Scheduled Overtime Effect on

Construction Projects,” the

aforementioned BRT. The study

reviewed the impact of scheduled

overtime on construction projects. The

report provided graphs and figures on

how productivity declines, for varying

work week schedules, over time.



For example, in the 4th, 5th and 6th

week of a 50 hour work week,

productivity is reduced to 87 percent of

normal (i.e. non overtime) levels [9].

Those who view this study as an all-

encompassing estimator of efficiency

loss are being misled. The BRT uses data

from a single project that is now a half-

century old, and has several flaws as a

scientific study [10].

As quoted earlier, the study makes

no conclusion on the effects of overtime.

Similar to the MCAA Manual, the BRT

acknowledges that the values presented

are not necessarily indicative of the

impact of overtime on a specific project

or circumstance.

The so-called, “Leonard Study” is a

frequently referenced study during loss

of productivity discussions. This study

was prepared in 1988, by Charles

Leonard in his master’s thesis entitled,

“The Effect of Change Orders on

Productivity.”

The study provided models to

quantify productivity losses to

mechanical and electrical trades

resulting from the impact of change

orders on a project. Although the

Leonard Study (unlike others) is founded

on some empirical evidence, a significant

issue arises as a result of the data sample

used.

According to the study, the data

emanates exclusively from “problem”

projects, i.e., projects that had

productivity losses [5]. Thus, any

conclusions would have a built-in bias,

since it was not representative of all

projects. Simply put, Leonard ignored

projects that experienced no

productivity loss because of changes.

The existence of such projects is a

distinct possibility.

For the sake of demonstration,

consider a subcontractor that was

presented with an accelerated schedule

developed by the prime contractor and

directed to comply with its changes.

The subcontractor goes into change

order negotiations after presenting a

proposal that included a loss of

productivity claim based on three of the

MCAA factors affecting productivity

The subcontractor is alleging that

minor trade stacking will occur (10

percent), an average amount of fatigue

will be experienced (10 percent), and a

minor ripple effect from changes to

other trades will be felt (10 percent).

The subcontractor adds these

factors together and applies a 30 percent

loss of productivity to its 10,000 hour

bid, resulting in a claim for 3,000 lost

hours, valued at $240,000, after an $80

wage rate is applied. Not only has the

subcontractor failed to establish that

these conditions existed on the project,

but it has not demonstrated how it

determined the severity of each

condition.

As seen in the description of the

MCAA study above, the objections that

an owner could raise to the validity of

this presentation study are plenty. The

ideal situation would be that a

contractor presents a study that employs

empirical evidence and accurately

represents the work being performed.

Even in this case, the study will likely

have been compiled by the contractor’s

trade organization and regarded as

biased by the owner.

The real issue that plagues

contractors that use the industry factors

is causation. Contractors generally fail to

substantiate the condition actually

occurred (e.g. stacking of trades) and

was different than originally envisioned

during bid preparation, or from the

baseline schedule. Additionally, these

factors were derived by certain

industries, but in reality are not

“industry standards,” but rather studies

with little, if any, empirical evidence to

support and validate the findings.

Total Cost and Modified Total Cost The total cost approach, in its most

simple form, subtracts actual costs (or

worker-hours) from bid costs (or bid

worker-hours). It is generally established

that the following proofs must be

established before the use of this

method is accepted:

• The bid estimate was accurate;

• The costs are properly charged and

allocated;

• The contractor had no self caused

problems; and,

• There is no other method available

to determine damages.

The modified total cost approach is

essentially the same as a total cost

approach, except the contractor

attempts to account for the challenges in

total cost including:

• bid errors;

• contractor self-caused problems;

• change orders; and

• other definable issues unrelated to

the owner.

Merely acknowledging that other

impacts existed can be a major

roadblock to quantifying and separating

the effect of each.

It can be extremely difficult to prove

the four conditions of acceptance in

order to employ a total cost method. An

owner rarely accepts that it is solely

responsible for a contractor’s overrun

and will try to:

• discredit the bid estimate;

• show that other impacts existed;

• and perform some of the other

methodologies (such as a measured

mile) in order to disqualify a total

cost claim.

There are instances in which

contractors recovered damages via court

ruling [7], but before making use of a

total cost methodology, the contractor

should have:

• extreme faith in his or her original

bid,

• his or her cost accounting system,

and

• his or her performance on the

project.

Otherwise, the total cost method

will be deemed too broad and simplistic,

and will ultimately be rejected.

When facing a situation in

which normal productivity is

being impacted, contractors

must be diligent in maintaining project

records, both in the past and present.

This includes appropriate notations

in daily reports, communications with

the owner, and accurate record keeping.

Although no one methodology is

perfect (or even appropriate, given the

circumstances), maintaining accurate

records will enhance a contractor’s



ability to recover damages for lost labor

productivity.

Conversely, owners need to

recognize that lost productivity does

occur on projects, and it is exceedingly

difficult to calculate. In the authors’

experience, owners are generally willing

to reimburse contractors for impacts

that the owner caused. Often, it is the

contractor’s failure to provide a causal

link between the causation (impacts)

and resultant damages that results in an

impasse that often leads to drawn out

and costly litigations.

The same techniques that a

contractor can use to prove his or her

loss of productivity, can be used by an

owner to evaluate or dispute the claim.

Understanding the strengths and

weaknesses of the various techniques

will provide a better roadmap as to the

most appropriate method to compute

damages associated with loss of labor

productivity claims. �

REFERENCES

1. Dieterle, Robert and Alfred

DeStephanis. C.1 – Use of

Productivity Factors in Construction

Claims. AACE International

Transactions, AACE International

(1992): C.1.4.

2. Estimating Lost Labor Productivity in

Construction Claims, AACE

International Recommended

Practice No. 25R-03, AACE

International, (2004): p. 9-10.

3. James Corp. v. North Allegheny

School District, 1268 Pa. C.D. 2007.

4. Krebs, James, and Michael

Reynolds. Causation – How Is It

Proved? AACE International

Transactions, AACE International,

(2008): CDR.07.5.

5. Leonard, Charles A. The Effect of

Change Orders on Productivity. A

thesis in the Centre for Building

Studies, Faculty of Engineering &

Computer Science, p. 42 . Concordia

University. Montreal, Canada.

(August 1988).

6. Mechanical Contractors Association

of America. Productivity – PD2:

Factors Affecting Labor Productivity.

Change Orders, Overtime,

Productivity Manual, Rockville, MD,

1994.

7. Quaraishi, Zartab. Inefficiency. AACE

International Transactions, AACE

International. (2003): CDR.22.3.

8. Recovering Lost Labor Productivity.

Construction Claims Monthly,

Business Publishers, Inc., Silver

Spring, MD. Volume 19, Number 12

(December 1997): pg. 7.

9. Scheduled Overtime Effect on

Construction Projects, The Business

Roundtable, New York, NY

(November 1980): pg. 5.

10. Seals, Robert; and Josette

Rodriquez. Scheduled Overtime and

Loss of Productivity; Fact or Fiction?

A Business Roundtable Report. Cost

Engineering, AACE International,

Volume 48, Number 7, (2006).

11. Shea, Thomas E. Proving

Productivity Losses in Government

Contracts. Public Contract Law

Journal. American Bar Association,

Volume 18, Number 2, (March

1989).

ABOUT THE AUTHORS

Robert A. Dieterle,

CCE, is a vice

president employed

with Hill International.

He can be contacted

by sending e-mail to:

[email protected]

Thomas A. Gaines,

CCC is employed with

Hill International. He

can be contacted by

sending e-mail to:

[email protected]

Jim Zack, AACE International President 2006-2007, has joined Navigant’s Global Construction Practiceas Executive Director of its newly created Navigant Construction Forum. This Forum strives to be the con-struction industry's premier resource for thought leadership and best practices on avoidance and resolu-tion of construction project disputes globally.

Jim was formerly the Executive Director, Corporate Claims Management for Fluor Corporation. Jim pos-

sesses almost 40 years of deep industry experience in construction management and dispute resolution

services. He has been involved in more than 5,000 claims, both public and private, and has been designated

as an expert witness in mediation, arbitration and litigation. His disputes experience spans the globe, hav-

ing worked on claims in Canada, Egypt, China, Germany, Kazakhstan, Saudi Arabia, The Russian Federation,

and Trinidad & Tobago, as well as throughout the US.

In the construction disputes field, Jim is a recognized and well published expert in mitigation, analysis

and resolution, and defense of construction disputes. He is a nationally known author, speaker and trainer concerning the man-

agement, mitigation and resolution of construction claims and disputes and has testified as an expert witness. Jim is an AACE In-

ternational Fellow and the Royal Institution of Chartered Surveyors (FRICS). He is also a member of the Construction Management

Association of America (CMAA) and the Project Management Institute (PMI). He is a Certified Construction Manager (CCM); a

Certified Forensic Claims Consultant (CFCC); and a Project Management Professional (PMP). Jim is also a Past President of AACE

International.

Jim can be contacted by sending e-mail to: [email protected]. Additional information on Navigant is available

at: www.navigantconsulting.com/construction. �

James G. Zack, Jr. Joins Navigant as Executive Director of the Navigant Construction Forum



PROFESSIONAL SERVICES DIRECTORY

INDEX TO ADVERTISERS

For additional information about the listed advertisers or about adver-

tising with us, please phone Keith Price at Network Media Partners,

(410) 584-1966, or e-mail him at [email protected]

ADVERTISE IN THECOST

ENGINEERING JOURNAL

OR GO ONLINE ATwww.aacei.org

• REACH the entire AACE International mem-

bership 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.

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CONTACTKeith Price at Network Media Partners Inc.

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YOUR VISIBILITY

��

�

ARES Corporation, back cover

Bechtel Corporation, page 3

Conquest Consulting Group, this page

D. R. McNatty & Associates, Inc., this page

EcoSys, inside front cover

Management Technologies, this page

McDonough Bolyard Peck, page 17

Ron Winter Consulting, page 21

U.S. Cost, inside back cover


Atlanta Area SectionMembers and guests attending the

October 2010 Atlanta Area Section meeting

were treated to a presentation on the latest develop-

ments in vertical transportation technology by Kelly Moon

Crutchfield of Kone Inc.

Been in an elevator lately and noticed the ride was a little

shaky? If you were in attendance at the October section meet-

ing, you have a pretty good understanding of why. Wondering

what the difference is between traction and hydraulic elevators?

Or, how about the details of an underslung traction elevator?

What are the advantages and disadvantages of a holeless hy-

draulic? Ms. Crutchfield discussed these and more in her pres-

entation.

Attendees at the November section meeting saw Todd Ter-

rell, Director, Nuclear Development Communications, Georgia

Power, present an update on the development of units 3 and 4

at Plant Vogtle, southeast of Augusta. Todd updated the audi-

ence on construction activities at the site, the global sourcing

taking place, and provided some details of the technological ad-

vances made in nuclear power generation since the original

Plant Vogtle was constructed years ago.

Slides from both of these presentations have been posted

to the section website and can be found at http://www.aaceiat-

lanta.com/meetings.html.

Arizona Section


THE AACE® INTERNATIONAL BULLETIN

Submitted photo

Kelly Moon Crutchfield, of Kone Inc.,

shown above, discusses the latest in verti-

cal transportation at the October 2010 At-

lanta Area Section meeting.

SECTIONNEWS FROM AROUNDTHE WORLD

Submitted photo

Atlanta Area Section Members Sam Griggs, CCE, and Gene Reed

are shown in discussion with November's presenter, Todd Terrell

of Southern Co.

Submitted photo

Arizona Section Board members, shown above clockwise): Carol

Keigher, CCE, Hannah Schumacher, PSP, Max Shoura, PE PSP, Ray

Jussila, CCE, Chris Hudson, CCC PSP, Cindy King, Sunitha Jain and

Matt Joy, PSP.



The Arizona Section board meeting was on Nov. 18, 2010,

at Kitchell’s Training Center in Phoenix, AZ. The items discussed

include revisions to the section constitution and bylaws, section

award criteria, exam hosting and upcoming calendar of events.

East TennesseeThe East Tennessee Section’s November meeting was at

Johnny Carino’s Restaurant in Knoxville, TN. The guest speaker

was project manger John Farmer of Blaine Construction. John

presented an interesting overview of a recent limited renovation

of the University of Tennessee’s Neyland Stadium. The key areas

of construction included installation of a new plaza, an outdoor

amphitheater, the Terrace Club, Gate 21, and the West Side Fa-

cade. John shared pictures of the completed improvements and

the pictures were quite excellent and showed very attractive and

functional stadium areas. Just from the pictures it looks like UT’s

investment was well worth it.

The project was a hard money fixed bid construction con-

tract with seven competitors bidding against Blaine Construc-

tion. The final tally had only a 1.2 percent spread between the

first and second bidders, with an overall bid range of $18.6M to

$16.1M. Blaine was the general contractor, with four other

teaming companies, including landscaping, civil engineering, ar-

chitects, and structural engineering.

Major difficulties included work spread out over a large area

on different sides of one of the largest football stadiums in the

country. Blaine also had their low bid subs, which doesn’t

change the expectations of the owner one iota. Blaine’s previ-

ous experience on UT projects, a sharp pencil, and working in

the local area was no doubt the reason they won this project.

The schedule was a challenge as their deadline was to have work

completed by the first football game of the season, and there

were several changes that needed to be implemented along the

way.

Through close management scrutiny, a team that pulled to-

gether and went the extra mile, and a project manager that had

a can do problem solving attitude, they got the project done just

before the first game.

One interesting facet of the project and an excellent use of

space was the plaza, with an outdoor amphitheater located just

at the side of the plaza. This made an excellent area for students

and fans to come together to people watch, sit and relax, or use

it as a meeting place in a highly visible area. John said the am-

phitheater has become a hit with students enjoying the college

way of life and football fans.

Houston Gulf Coast SectionThe fourth meeting of the Houston Gulf Coast Section pro-

gram year for 2010-2011 was on Tuesday, Dec. 14, 2010, at the

HESS Club in Houston, TX. Fifty plus members attended the

meeting. This was a holiday meeting and even Santa showed up

to the meeting with his elf, John Arvin, talked about, “Gulf Cross-

ings: Linking the Land, Birds, and the people of the Gulf of Mex-

ico.” The highlight of the function was also the attendance of

Allen Hamilton, the past president of AACE International from

2000.

John's program focused on the conservation issues associ-

ated with migratory birds and how GCBO works to protect criti-

cal habitat around the Gulf of Mexico, from Florida to the

Yucatan Peninsula, Cuba and in South America.

John Arvin, is an associate director at the Gulf Coast Bird

Observatory in Lake Jackson, TX.

Submitted photo

Guest speaker John Farmer, project manager for Blaine Construc-

tion, is shown above presenting a program on the Neyland Sta-

dium expansion project to the East Tennessee Section in

November 2010.

Submitted photo

Arizona Section Board Members (clockwise): Hannah Schu-

macher, PSP, Marina Sominsky, Max Shoura, PE PSP, Ray Jussila,

CCE, Chris Hudson, CCC CEP, and Cindy King.

Submitted photo

East Tennessee Section November 2010 program speaker, John

Farmer, is shown receiving complements from Section President,

Larry Sheron,CCE EVP, after presenting his topic, Neyland Sta-

dium Expansion.


National Capital SectionThe National Capital Section began the year in September

2010, with a field trip to the Dulles Corridor Metrorail Project,

graciously hosted by the Bechtel Corporation Offices in Vienna,

Virginia.

The following week, the section continued with a reception

at the Swiss Embassy, which provided a good networking oppor-

tunity for members jointly with the American Society of Mechan-

ical Engineers – Washington Section, the D.C. Society of

Professional Engineers, and the Tau Beta Pi Washington Alumni

Chapter.

The October 2010 meeting was at the Alexandria, Va., offices

of Faithful and Gould, where their guest speaker, Jennifer Echard,

from the General Accountability Office (GAO), provided an excel-

lent seminar on the GAO Cost Guide, as well as a discussion on

the policies and procedures U.S. Department of Energy has in

place. She also discussed the GAO’s recent activities to improve

cost estimating procedures.

In November, the meeting was at the Ronald Reagan Building

in Washington, DC, in collaboration with the National Capital

Chapter of the Construction Management Association of America

(CMAA), and the American Society of Civil Engineers (ASCE). At

the meeting, Lauren Buckler, from JMT and Douglas Wrenn, from

McDonough Bolyard Peck, Inc. (MBP) were speakers to a “double

header,” where the section provided two seminars focused on

the Leadership in Energy and Environmental Design (LEED).

The section’s annual holiday party was at the corporate and

Fairfax Branch offices of MBP in Fairfax, Virginia, where members

thanked friends and members for their efforts through the past

year and looked on to the future.

The National Capital Section will continue holding meetings,

holiday parties, and other events throughout the coming year.

The section welcomes anyone traveling through the capitol re-

gion to attend the section meetings. We fully encourage every-

one to check out what is happening at the National Capital

Section at the section’s new website: www.aacei-ncs.org

Nevada SectionMembers of the Nevada Section, along with 13 students

from the Construction Management Program at the University

of Nevada, Las Vegas, attended an October 2010 site visit of the

Henderson Waste Water Treatment Plant which is scheduled to

be put in service in the summer of 2011

Rattlesnake Mountain SectionThe Rattlesnake Mountain Section on Nov. 16, 2010, offered

a site tour and overview presentation of the recently completed

Physical Sciences Facility, located at the north end of the Pacific

Northwest National Lab Campus. The regular section meetings

are on the third Tuesday of each month and begin with a social

half hour and light snacks, followed by an hourlong technical

meeting.


Submitted photo

National Capital Section members are shown above, after the

October meeting, with the speaker, Jennifer Echard from the

GAO, at the Alexandria Offices of Faithful and Gould. From left

to right, seated are: Chris Melling, Dan Melamed, CCC, Jennifer

Echard, Basil Alexander, and Brima Sesay, CEP,. Standing are:

John Simpson, CEP, Joe Perron, CCC PSP, Calvin Speight, CCE, Gene

Ransom Jr, Niyi Ladipo, CCE EVP, Gina, Daniel O. Stewart, PSP,

Dennis Allen, CCC, R. Israel Aguero, Brian Laush, Ken Himes, Keith

Corner, EVP, Eva Walter, EVP, and Dhruv Dua.

Submitted photo

Following the November 2010 meeting of the Nevada Section,

attendees toured the Sunbelt Auto Museum and viewed its col-

lection of 189 antique automobiles.

Submitted photo

Members of the Nevada Section and 13 students from the Con-

struction Management program at the University of Nevada

toured the Henderson Water Treatment Plant in 2010.


In the summer of 2007, work began on the Pacific North-

west Laboratory’s (PNNL) nearly 200,000 square foot Physical

Sciences Facility (PSF), a research complex with five laboratories

and a radiation portal monitoring test track that would house

important US and homeland security scientific capabilities,

equipment, and staff displaced from accelerated cleanup of Han-

ford’s 300 Area. This modern research complex contains five

laboratories, materials science and technology, ultra-trace and

radiation detection, as well as a deep underground laboratory,

a large detector laboratory, and a radiation portal monitoring

test track.

Paul Weinman, EVP, the lead PNNL project controls special-

ist, provided a 30 minute overview of the project. Jeff Pittman,

the PNNL construction manager, lead the group on a tour of the

PSF. A question and answer session was encouraged and pro-

vided additional insight into the project and the challenges that

occurred. The challenges involved multiple sources of funding

over a several year timeframe, during an unexpected downturn

in the economy.

St. Louis SectionAaron Everson and Carissa Vlahovich, of Jacobs Engineering

were the guest speakers at the Nov. 9, 2010, meeting of the St.

Louis Section. The title of their presentation was, “Effective Cost

Control Measures from Project Inception to Turnover.” They

pointed out that the challenge for cost control is generally to

show value to owners. Once a design contract is in place, the de-

signer should get the owner’s needs clarified and maintain client

participation throughout the entire design phase. Owner back-

grounds vary widely; some larger companies have an experi-

enced construction staff, while many small companies have

none. For the smaller companies, the key is to refine their pro-

posal requirements by presenting ideas for value-added services.

It is important to ensure that they have a complete understand-

ing of what they are getting.

When the client observes the development of the design

phase, they should be apprised of the estimate for the costs. If

the project is design/build, the general contractor and/or con-

struction manager is in charge of the design team; the GC/CM

needs to be very aware of their “comfort level” of serving as the

design coordinator.

Prior to the construction phase, the G/C should begin think-

ing about delivery strategy, such as the risks/rewards of variable

bid packaging, coordination time of the prime and subcontractor

schedules, and qualifications of potential contractors. Former

client references can be valuable to the decision process. Also

at this stage, a CM should perform a design review for confor-

mance; and create a client wish-list for later review with contrac-

tors. Incentive clauses should be carefully considered.

Contract Change can be classified as either owner-requested

or contractor-initiated. Owner changes stemming from client

program adjustments and/or client vendors may be inevitable. It

is a good practice to encourage early client acceptance of small

changes that would be beneficial. GC/Sub initiated changes that

stem from construction documents (design deficiencies, errors

and omissions) are an “open book” for contractors to drive up

the costs.

Escalation of labor and materials is a major focus of cost en-

gineers, but the role of the project schedule is often overlooked

as far as cost impacts. The rule of thumb, “usually faster is bet-

ter,” in terms of overall project costs. Cost savings can also be

achieved through substitution of materials and brands, engineer-

ing revisions such as value engineering alternatives; and soliciting

subcontractor coordination for cost reduction measures. Inde-

pendent estimates should add confidence to cost forecasts. Such

outside estimates, when thorough, will serve as a scope check

and a realistic view of unit costs, workhours, fees, and mark-ups.

When multiple change orders exist, combining them into a single

package may result in savings. Lastly, a well implemented safety

program can save lives and dollars.


Submitted photo

The Rattlesnake Mountain Section of-

fered a site tour and overview presenta-

tion at its November 2010 meeting.

Shown above from left are program pre-

senters including: Paul Weinman, EVP,

Pacific Northwest National Laboratory

(PNNL) PSF Project Controls Specialist;

Jeff Pittman, PNNL PSF Construction

Project Manager; and Gregg Andrews,

EVP, PNNL Senior Project Controls Spe-

cialist.

Submitted photo

Tom Wilson, CFCC PSP, scholarship chair of the St. Louis Section,

is shown above with Carissa Vlahovich and Aaron Everson, of

Jacobs Engineering, at the Section’s Nov. 16, 2010 meeting.



Southwest Ohio SectionThe Southwest Ohio Section’s Nov. 16, 2010, meeting was at the

Kings Island Resort in Mason, Ohio. Roy Anderson, president,

introduced Gil Laterza, PSP, and a current section board member.

He presented a paper titled, “Baseline Schedules – Is the Ap-

proval Process Achievable?” The presentation generated plenty

of discussion among the attendees. Gil has submitted an ab-

stract of the presentation to AACE International, in hopes of pre-

senting the paper at the Annual Meeting in June. Joe Zupsic,

CCC, the section’s certification chairman, noted that four people

sat for the November 2010 certification exams. He said all went

well. Also Region 4 Director and past section president, Duane

Meyer, PE CCE, reported on the Board of Directors meeting, as

well as his travels to other sections in the region. Duane passed

out examples of newsletters from other sections in hopes of im-

proving the SW Ohio newsletter. Section member Amy Cole vol-

unteered to look into the newsletter situation and asked

attending members to e-mail her their thoughts and sugges-

tions.�

HOW TO SUBMIT SECTION NEWS TO THE COST ENGINEERING JOURNAL All submissions should be e-mailed to [email protected].

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 one months 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,

[email protected]

Submitted photo

Gil Laterza, PSP, standing, presented his paper on the schedule

approval process to the Southwest Ohio Section attendees at the

November 2010 section meeting.

Submitted photo

Roy Anderson, President of the Southwest Ohio Section, shown

above left, presents a certificate of gratitude to Gil Laterza, PSP,

for his presentation at the section’s November 2010 meeting.

Cindy Whitmill Receives Kindle

from AACE International Drawing

Cindy Whitmill was the winner of a kindle in a fall

2010 drawing of AACE members who participated in the

2010 online Membership Survey.

Those completing the survey had the option to be

entered in the drawing. Commenting on her prize, Whitmill

said, “I have been using it and it is awesome.” An overview

of the survey results were e-mailed to members and posted

at www.aacei.org.



IN MEMORIAM

Dr. Brisbane H. Brown, Jr. (1930-2010)

Dr. Brisbane H. Brown, Jr. 79, of Gainesville, Florida, succumbed

to cancer on Monday, Nov. 15, 2010. Brisbane was born on

Wednesday, Dec. 3, 1930 in Schofield Barracks, Hawaii, to the

late Brisbane H. And Stella (Brick) Brown.

Dr. Brown is survived by his loving wife, Ann Brown; sons:

Mark Brown and Steve Brown.

Dr. Brown was a graduate of Virginia Military Institute in

1952 and then went to active duty in the Army Corps of Engi-

neers for over 20 years. His overseas duty posts included Dex-

heim Germany, Thule Greenland, Vietnam, and Seoul Korea. He

retired a Lt. Colonel and received numerous citations including

the Bronze Star.

Following the military, he received is Ph.D. from Oklahoma

State University and began teaching at the University of Florida

in 1974, working is way up to director in 1980, and served in this

capacity until 1987. He continued to teach at the university until

2010.

During his tenure at Florida he was instrumental in estab-

lishing the relationship with M.E. 'doc' Rinker, the chief sponsor

of the M.E. Rinker School of Building Construction and the cur-

rent building in which the school resides. In life few people get

to do what they truly love as an occupation, Dr. Brown was able

to do this. His only greater passion was family, gator football and

his wood working shop.

A Celebration of Dr. Brown's life was conducted at 10 a.m.,

Tuesday, Nov. 23, 2010, at the St. Augustine Church, 1738 W.

University Ave., Gainesville, Florida. Inurnment was at 2 p.m. at

the Forest Meadows East Cemetery, 3700 S.E. Hawthorne Road,

Gainesville, Florida.

In lieu of flowers, please send contributions to the Univer-

sity of Florida Foundation, Brisbane Brown Memorial, M.E.

Rinker School of Building Construction, P.O. Box

115703,Gainesville, Florida 32611. Full Military Honors were be-

stowed by the Army National Guard, St. Augustine, Florida.

Memories and condolences may be sent to the family by signing

Dr. Brown's guest book online at www.HonoringLives.com

Published in Gainesville Sun, Nov. 20-21, 2010 �

BOOKS AVAILABLE FOR REVIEW The following books are available from AACE International Headquarters

for review by readers of the Cost Engineering journal.

To volunteer to read one of the listed books and write a review for pub-

lication in the Cost Engineering journal, e-mail your request to:

[email protected]. Generally, the first reader volunteering to read and write

a review is assigned the task.

Reviewers are given 30 to 60 days to read the book and draft a review

for publication in an upcoming issue of the journal. Reviewers are asked to re-

turn the reviewed book to AACE International headquarters. Because of the

high cost to ship books, international reviewers will be asked to pay the ship-

ping cost, both to receive and to return, the requested book. International re-

viewers will be e-mailed the shipping cost and asked to provide credit card

information for billing of these charges prior to any shipment.

The returned books are added to the AACE International library. As new

library additions arrive, older versions of the same title or similar subject mat-

ter are retired. The retired books are then offered for sale as “used books” at

the Annual Meeting Bookfair in the exhibit hall. If a reviewer fails to return a

book, they will not be selected to do future reviews of other books.

Currently up for review are the following titles:

• Jurkiewicz, Wieslaw J., PE. Project Accounting For Complex Engineering

Projects Using Dual-Entry Accounting and Generic MS Access Database

Theory and Practice. This a 786 page softcover, published in 2010 by In-

finity Publishing, ISBN: 0-7414-5898-5. The book is divided into four

parts: Theory, Practice, Project Samples, and Tools, plus Appendices, At-

tachments, and a CD. This accounting suits long-duration costly projects,

such as nuclear power plants, offshore oil and gas facilities, large air-

ports, highway systems, as well as NASA and military development proj-

ects. Using many features of business accounting, it also tracks planned

and actual costs.

• Kendrick, Tom. The Project Management Tool Kit, Second Edition. This

is a 262-page hardcover, published 2010, by AMACOM books (www.ama-

combooks.org). ISBN: 978-0-8144-1476-7, $19.95. In an at-a-glance for-

mat, this practical resource offers step-by-step guidelines and proven,

use-them-now strategies for successfully executing every conceivable

project. Organized A-to-Z by broad project topics, entries cover all critical

business process areas—communication, control, cost, human resource,

procurement, quality, scope, teamwork, time, and leadership—with a

consistent priority on results.

• Lindeburg, PE, Michael R. Core Engineering Concepts for Students and

Professionals. This is a hard cover, two inch thick 8.5 x 11 textbook with

82 chapters, plus appendices and an index. Published in 2010 by Profes-

sional Publications, Inc. (PPI) (www.ppi2pass.com). ISBN: 978-1-59126-

190-2. Topics include: background and support; mathematics, fluids,

thermodynamics, chemistry, biology, heat transfer, statics, material sci-

ence, mechanics of materials, dynamics, circuits, physics, systems analy-

sis, computer programming, atomic theory, engineering management,

and engineering licensure.

• Coleman, Les. Risk Strategies (Dialling Up Optimum Firm Risk. This is

250 page hard cover book. Published in 2009, by Gower Publishing

(www.gowerpublishing.com). ISBN 978-0-566-08938-1. From an author

who has managed risk and teaches about it, but most importantly of all

has researched the theory of risk, this book will help senior executives

dial up the right level of risk within their organizations to optimize the

benefits of well-judged business risks.


Skills and Knowledge of Cost Engineering,5th Edition, RevisedScott J. Amos, Editor, 2007

This updated and expanded guide for fundamentals isan excellent choice for anyone interested in a concisereference to all aspects of the profession. The new 5thedition includes 27 chapters on estimating,manufacturing and operating costs, scheduling,

planning progress and cost control, and much more. This is a very usefulbook for those studying for the certification exam. 450 pages

1545-01 paper version - US$65.00 member/US$95.00 nonmember

1545-02 CD-ROM - US$65.00 member/US$95.00 nonmember

CCC/CCE Certification Study Guide, 3rd Edition

Michael B. Pritchett, CCE, Editor, 2006

The AACE International CCC/CCE Certification StudyGuide provides an all-encompassing reference text toprepare for the exam. The CCC/CCE Certification StudyGuide provides background information on how tobecome certified; gives those studying for thecertification exam a single reference text that includestheory, worked problems with answers, references, and

a full discussion of key topics; allows students to maximize their study time;and provides a concise overview of the fundamentals of cost and projectmanagement.

1820-35 paper version - US$65.00 member/US$95.00 nonmember 1820-36 CD-ROM - US$65.00 member/US$95.00 nonmember

SPECIAL OFFER - BUY BOTH AND SAVE!Skills and Knowledge of Cost Engineering, 5th Edition, Revised& CCC/CCE Certification Study Guide, 3rd Edition Combo

1820-98 - US$115.00 member/US$170.00 nonmember

PSP Certification Study Guide, 1st Edition

Peter W. Griesmyer, Editor, 2008

This study guide is intended to assist you in your studyand review of the overall topics as one step toward suc-cessful Planning and Scheduling Professional certification.The outline provides a listing of the terms you shouldknow & topics for which you should have a good under-standing of how to apply the concepts to solve problems.Each chapter also contains sample exercises, which test

your knowledge of that chapter's concepts. Additional sample questions areprovided in an appendix. 1820-37 paper version US$65.00 member/US$95.00 nonmember

1820-38 CD-ROM US$65.00 member/US$95.00 nonmember

EVP Certification Study Guide, 2nd EditionKen Cressman, CCC EVP and Gary C. Humphreys, Editors,2009

This study guide is intended to assist you in your study andreview of the overall topics as one step toward successfulEarned Value Professional certification. The outline pro-vides a listing of the terms you should know & topics forwhich you should have a good understanding of how toapply the concepts to solve problems. Each chapter also

contains sample exercises, which test your knowledge of that chapter's concepts. 1820-39 paper version - US$65.00 member/US$95.00 nonmember

1820-40 CD-ROM - US$65.00 member/US$95.00 nonmember

Cost EngineeringThe international journal ofcost estimation, cost/schedulecontrol, project management,and total cost management.Subscriptions are accepted onan annual basis. An automaticbenefit of AACE Internationalmembership, also available tononmembers. 5060-07 - US$72.00 (US)/ - US$91.00 (other countries) Please add US$99.00 for airmail - US$61 electronic subscription - see website

Cost Engineers’ Notebook This CD-ROM is an important reference for anyproject or cost professional. It includes data andprocedures related to basic skills and knowledgethat all cost engineers should possess, extensivematerial on capital and operating cost estimation,and papers in four subject areas: cost control,planning and scheduling, project management, andeconomic analysis and business planning.

4060-01CD-ROM

- US$80.00member/US$120.00 nonmember

AACE International Recommended Practices(Revised July 22, 2010)

Cost Engineering Terminology; Cost EstimateClassification System; Estimate Preparation Costs inthe Process Industries; Project Code of Accounts;Required Skills and Knowledge of a Cost Engineer;Roles and Duties of a Planning and SchedulingEngineer; Profitability Methods; plus many more.

4060-03 3-ring binder version

- US$105.00 member/US$165.00 nonmember

4060-05 CD-ROM


The Total Cost Management Framework

John K. Hollmann, PE CCE, Editor, 2006

4060-21 paper version


4060-20 CD-ROM


2010 AACE InternationalTransactions

5220-10CD-ROM

- US$90.00 member

- US$115 nonmember

AACE INTERNATIONAL BOOKSTOREAACE INTERNATIONAL BOOKSTOREmore online at www.aacei.org

The 1993-2010 Transactions CDs are availableat various prices through the Online Store atwww.aacei.org



ARTICLE REPRINT AND PERMISSIONS

COSTENGINEERINGVol. 53, No.2/February 2011

Readers of the Cost Engineering journal can purchase copies of se-lected articles that are published with an AACE International ref-erence number at the end of the article. Articles can be deliveredin print form or in Adobe Acrobat (PDF) format. Please refer to the AACE International reference number whencontacting our Publications Sales department.

TO ORDERContact: AACE International Publications Sales

at [email protected]

Reprint Prices:Quantity Member/Non-Member

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Contact UsAACE International

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For Information Concerning

Other Reuse Requests If you are seeking permission to copy,

quote, or translate into another language

any material from any issue of the Cost En-

gineering journal, please contact our Man-

aging Editor, Marvin Gelhausen at

[email protected]

Pages 22-28

CPM’s Contribution to Forensic Schedule AnalysisJefferey L. Ottesen, PE CFCC PSP, and Greta A. Martin, PE PSP

With the advent of CPM Scheduling in the late 1950s, the need for a new

discipline in scheduling analysis was born and various methodologies emerged.

Fifty years later, at least nine different types of CPM analysis exist, and variations

made within each type, render an even larger number. In the claims industry,

where an expert’s credentials are key, and compliance with Daubert criteria mat-

ter, claimed authorship and acceptance of a methodology is often disputed. In

an effort to diffuse such conflicts, research was performed and a chronology for-

mulated to track the evolution and acceptance of CPM analyses. This article sum-

marizes results of this effort, recognizes pioneers in CPM schedule analysis, and

lists contributions made to the new discipline that today we commonly call,

Forensic Schedule Analysis. This article was presented as CDR.03 at the 2010 An-

nual Meeting in Atlanta, GA.

Reprint 21856

Pages 29-34

Practical Issues in Loss of Efficiency ClaimsRobert A. Dieterle, CCE and Thomas A. Gaines, CCC

Virtually every project, in which a contractor makes a claim for delay, accel-

eration, or disruption, also included are damages associated with loss of labor

efficiency. Often times, loss of efficiency claims represent a significant compo-

nent of damages. There are numerous impacts that can occur emanating from

delay, acceleration, and disruption. Similarly, there are numerous techniques

and methodologies used to determine the damages suffered. More often con-

tractors, which may have been legitimately impacted, do not provide a support-

able calculation that provides a causal linkage between the event(s) and resultant

damages. The lack of a supportable calculation classically results in a real

dilemma to the owner, who has little basis to assess the true financial impact to

the contractor, even in the face of acknowledged entitlement to an issue. This

article will provide some practical considerations when dealing with claims for

loss of labor efficiency, regardless of whether you’re the contractor or the owner.

The article will identify the types of techniques most often used. For each tech-

nique, issues and challenges to their use will be addressed from the vantage point

of both the contractor and the owner. This article was presented as CDR.07 at

the 2010 Annual Meeting in Atlanta, GA.

Reprint 21857


CALENDAR OF EVENTS

FEBRUARY 20112-6 50th Annual Western Winter

Workshop, AACE International

San Fransisco Bay Area Section

Pebble Beach Resort

Pebble Beach, CA

Contact: John Haynes, PSP

phone (925) 913-7541

[email protected]

www.aacei.org/regions/2011www

10 Owner’s Night -

Capital Program Updates,

Construction Management Associa-

tion of America (CMAA)’s Southern

California Chapter,

The Grand Conference Center

Long Beach, CA

Contact: phone (562) 434-8409

fax (562) 296-9708

[email protected]

www.cmaasc.org

16-18 The International

Roofing Expo,

Hanley Wood Exhibitions,

North Halls at the

Las Vegas Convention Center

Las Vegas, NV

Contact: phone (972) 536-6415 or

800-684-5761

[email protected]

www.TheRoofingExpo.com/attendee

24-26 CSI Academies,

The Construction Specifications

Institute (CSI)

Dallas, TX

Contact: www.csinet.org/academies

APRIL 20111 Mediation Seminar,

Construction Management Associa-

tion of America (CMAA)’s Southern

California Chapter

The Grand Conference Center

Long Beach, CA

Contact: www.cmaasc.org

13-14 Cost Engineering Event 2011,

Cost Engineering,

Hotel Ara

Rotterdam, Holland

Contact: www.costengineering.eu/event

18-20 FIATECH 2011 Conference

and Showcase,

FIATECH,

Sheraton Wild Horse Pass Resort

Chandler, AZ

Contact: www.fiatech.org

19 Celebration of Engineering &

Technology & Innovation (CETI) Gala,

FIATECH,

Sheraton Wild Horse Pass Resort

Chandler, AZ

Contact: www.fiatech.org

JUNE 201116-19 AACE International

Education Seminars,

AACE International

Disneyland Hotel

Anaheim, CA

Contact: phone 1-800-858-COST

fax (304) 291-5728

[email protected]

www.aacei.org

19-22 AACE International’s

55th Annual Meeting,

AACE International

Disneyland Hotel

Anaheim, CA


fax (304) 291-5728

[email protected]

www.aacei.org

23-24 AACE International

Education Seminars,

AACE International

Disneyland Hotel

Anaheim, CA


fax (304) 291-5728

[email protected]

www.aacei.org


AACE International,

209 Prairie Avenue, Suite 100,

Morgantown, WV 26501 USA

phone: 304-296-8444

fax: 304-291-5728

e-mail: [email protected]

website: www.aacei.org

Please submit items for future

calendar listings at least 60

days in advance of desired

publication.




Documents

Cost Engr Magazine