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December December 2003 2003

The AACE International Journal of

Cost Estimation, Cost/Schedule Control, and Project Management
Our Vision: Advancement of Cost Engineering Through Total Cost Management


2004 Candidates
Candidates for the 2004 Election are Listed with Bios and Goals

Certification Paper Project Uncertainty Management

Technical Article A Fast Track Value Analysis Methodology for Major Design-Build Construction Projects

Cost Engineering Focus: PROJECT MANAGEMENT

Technical Article Research Project Impact Analysis

Executive Article Why Toyota and Honda Topped the 2002 J.D. Power Study

Education Board

Education Fund Donors are Thanked Study Groups

Certification Board The Ethics Corner Ethics in International Project Work

Photos courtesy of the Washington, DC Convention and Tourism Corporation (WCTC)

Promoting the Planning and Management of Cost and Schedules

Visit our website at

AACE International Board of Directors

President Ozzie F. Belcher Belstar, Inc., VA 703-645-0280/fax: 703-645-0286 e-mail: President-Elect Clive D. Francis, CCC, Black & Veatch, MI 734-622-8543/fax: 734-622-8700 e-mail: Past President Dr. James E. Rowings Jr., PE CCE Peter Kiewit & Sons, Inc., NE 402-943-1334/fax: 402-271-2989 e-mail: Vice President-Finance Robert B. Brown, PE PMA Consultants of Illinois, LLC, IL 312-920-0404/fax: 312-920-0405 e-mail: Vice President-Administration William E. Kraus, PE CCE B & C Project Services, CO 970-206-0947/fax: 970-226-1818 e-mail: Vice President-Regions Joseph Wallwork, PE CCE GREYHAWK North America, NY 516-921-1900/fax: 516-921-5649 e-mail: Vice President-TEC James G. Zack Jr. Fluor Daniel, CA 949-349-7905/fax: 949-349-7919 e-mail: Director-Region 1 Mahendra P. Bhatia SNC-Lavalin Inc., Calgary, Canada 403-294-2100x2421/fax: 403-294-2875 e-mail: Director-Region 2 Douglas W. Leo, CCC Eastman Kodak Co., NY 716-722-6466/fax: 716-722-1100 e-mail: Director-Region 3 Robert E. McCoy, CCC BWXT Y-12, LLC, TN 865-482-7658 e-mail: Director-Region 4 Marvin Woods, CCE Project Controls Group, Inc., MO 314-838-4987/fax: 314-389-8957 e-mail: Director-Region 5 Stephen W. Warhoe, PE CCE 303-740-2665 e-mail: Director-Region 6 Mark G. Grotefend, CCC 253-835-8081 e-mail: Executive Director Barry G. McMillan e-mail:

The AACE International Journal of

Cost Estimation, Cost/Schedule Control, and Project Management


Depar tments
Presidents Message ................................3 In Our Estimation ..................................5 Executive Article ....................................6 2004 Candidate Profiles ........................9 Education Board News ........................16 Certification Corner ............................18 The Ethics Corner................................20 For the Bookshelf..................................25 Special Feature ....................................37 Professional Services Directory ............38 AACE International Bulletin ..............39 Article Reprints and Permissions ..........42 Calendar of Events ..............................44

Featured Ar ticles Project Uncertainty Management

Maruboyina Ramgopal, CCE
This article argues that all current project risk management processes induce a restricted focus on the management of project uncertainty, because the term 'risk' encourages a threat perspective. The article discusses the reasons for this view, and argues that a focus on uncertainty rather than risk could enhance project risk management, in terms of designing desirable futures and planning how to achieve them. Current comprehensive project risk management processes are compatible with a focus on uncertainty, but warrant some modification to reflect a more helpful uncertainty management paradigm.


A Fast Track Value Analysis Methodology for Major Design-Build Construction Projects
William F. Brouillard Jr., CCC


Use of the value analysis (VA) methodology as an integral part of the design/build process, will eliminate unnecessary functions (The basis of VA methodology), will reduce initial and life cycle costs, compress construction schedules (saving time and money) while retaining the core principals of preserving value and function. The fast track VA session described in this case study will illustrate that the concepts and methods used for the Orange County Convention Center, Phase V Expansion, further reinforces the need for continued use and even increased use of the VA methodology in the design-build concept.

Research Project Impact Analysis

Santa Falcone and David Bjornstadt


Sandia National Laboratories (SNL) funded a study at the University of New Mexico to revisit two examples of technology transfer from SNL for the purpose of measuring their full social return and to develop a standard method for making such evaluations. This article describes the comprehensive and systematic template composed of seven steps developed to measure the impact of R&D and reports the findings of the study, providing insight into the social value of research. The cost benefit ratio for society, when counting the cost of developing one technology at SNL for defense related purposes, was 1:4 and, using the most conservative estimates, for the second technology, the ratio was 1:30.

In This Issue
Board of Directors Contact List ........................1 Call for Volunteers ..........................................8 PSP Certification Promotion ........................20 Index to Advertisers ......................................38 2004 Editorial Calendar................................38 In Memory Of ..............................................41

On the Cover: Washington DC will be the site of AACE International's 48th Annual Meeting, June 13-16, 2004. Photos courtesy of WCTC.
Vol. 45, No.12/December 2003

AACE International Headquarters

209 Prairie Avenue, Suite 100 Morgantown, WV 26501 ph: 800.858.COST fax: 304.291.5728

Managing Editor - Marvin Gelhausen e-mail:

Graphic Designer/Editor - Noah Kinderknecht e-mail:

Policy concerning published columns, features, and articles 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 endorsing or sponsoring the authors 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) is published monthly by AACE International, Inc. Periodicals postage paid at Morgantown, WV, and at additional mailing office. POSTMASTER: Send address changes to AACE International; 209 Prairie Ave., Suite 100, Morgantown, WV 26501 USA. Single copies: US$8 members/ US$12 nonmembers (both +shipping), excluding special inserts available to AACE members only. Subscription rates: United States, US$60/year; all other countries, US$76/year. Overseas airmail delivery is available at US$99. Subscriptions are accepted on an annual-year basis only. Copyright 2003 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 Pontiac, IL, 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, please e-mail it to 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 International, Inc., provided that the base fee of US$4.00 is paid directly to Copyright Clearance Center, 222 Rosewood Drive, Danvers, MA 01923 USA. Telephone: 978.750.8400. For those organizations that have been granted a photocopy license by CCC, a separate system of payment has been arranged. The fee code for users of the transactional reporting service is ISSN0274-9696/02 US$4.00. This permission to photocopy does not extend to any Cost Engineers Notebook, AACE Recommended Practices and Standards supplements, or membership directories published in this magazine and/or special inserts. Payment should be sent directly to CCC. Copying for other than personal or internal reference use without the express permission of AACE is prohibited. Address requests for permission on bulk orders to the editor. ADVERTISING COPY : Contact Network Publications Inc., Executive Plaza 1, 11350 McCormick Road, Suite 900; Hunt Valley, MD 21031. Telephone: 410.584.1998. E-mail: for rates. Advertisers and advertising agencies assume liability for all content (including text, representation, and illustrations) of advertisements printed and also assume responsibility for any claims arising therefrom made against the publisher. The publisher reserves the right to reject any advertising that is not considered in keeping with the publications mission and standards. The publisher reserves the right to place the word advertisement with copy which, in the publishers opinion, resembles editorial matter. All advertising accepted for publication in Cost Engineering is limited to subjects that directly relate to the cost management profession. Current rate card available on request. COST ENGINEERING DEADLINES : Submissions for Cost Engineering must be received at least 7 weeks in advance of the issue date. Send to: Editor, 209 Prairie Ave., Suite 100, Morgantown, WV 26501 USA. Deadlines do not apply to technical papers.

P residents P residents Message

Ozzie F. Belcher, President

The Best Present is AACE International

n Spencer Johnsons, latest book, The Present [4], Dr. Spencer describes a search for a gift, that once you have received it you never quite look at your life the same again. By now many have also read Dr. Spencers previous work, Who Moved My Cheese [3], which deals with recognizing and adapting to change in a way that also makes one examine his/her life. One of the best presents I received was in the late 1980s from several AACE International members. They encouraged me to join the association. The members were: Wayne Brown, Abe Sind, Mike Belle, and David Rossoff. The present I received from these four gentlemen was that they were instrumental in my joining, attending meetings, participating in AACE Internationals numerous offerings, and staying with AACE International for the past 15 years. My employer recognized the overwhelming value of an AACE International membership, and it has provided many invaluable benefits that I have taken advantage of over the years. At that time I did not realize that my AACE International membership was a way for me to focus my past experience, help me to make better present-day recommendations to my organization, and help better prepare me for the changing future [1].

the management of cost and schedules. More Benefits Are Being Developed As we move into the new year, we will see continued development of our existing AACE International offerings, a new web site link for court recognized experts to list their individual and/or corporate qualifications, a planning and scheduling specialty certification, and several other new and exciting offerings. All of these offerings can be found are on our website ( which gets over 600,000 hits a month. These are just a few of the pending benefits that AACE International has in the development stage. I can honestly say that as an employer in private industry, with experience in working with large governmental organizations, developers, and general contractors AACE International membership offers value-based benefits that keep an organizations overhead costs down. AACE International offers the best training resources for cost, scheduling, and project controls personnel. These offerings are second to none. Many AACE International members, who are also project managers, are able to include reasonably accurate cost and schedule estimates with their recommended project solutions. One assistant chief program director in the Washington-Baltimore area once stated that the organizations top project managers had one overwhelming trait in common their ability to present the organizations management with cost and schedule data that enabled the decision makers to make well-informed and confident decisions [5]. An AACE International membership offers your organizations members a vital part of what they need to succeed in a global economy. Whether you are researching international markets, international wage data, materials costs, equipment costs, labor productivity for various trades in other geographical areas, or considering international ventures AACE International has the information

Benefits of AACE International Membership For years AACE International has offered many benefits to its members. A few of these include: section meetings, corporate sponsorship, expertise, numerous cost and schedule publications, salary surveys, service want ads, help wanted ads, special interest groups, recommended practice guides, great practical journal articles, distance learning, on-site training, on-site certification exams, an on-line library, custom training, cyber section meetings, continuing education units, and global leadership in the continued development of our associations mission,

Cost Engineering Vol. 45/No. 12 DECEMBER 2003

you can use immediately. AACE International members have experience and expertise in cost and scheduling data management. The associations corporate sponsors have international experience that can help your organization succeed on a global level. The AACE International website and its countless visitors, along with the associations 5,000 members, use AACE International to take advantage of our many different offerings. I urge you to take the AACE International challengevisit our website, our on-line library, or call our headquarters office. Contact AACE International to find out why AACE International is the best present you can give your organization, or an individual working in the cost and scheduling profession, to help them succeed in todays global economy. PS: During this past October I had an opportunity to visit our colleagues in the

Chinook-Calgary Section. There was no doubt that the Chinook-Calgary Section recognizes that an AACE International membership is the best present you can give in a challenging global economy. The section has over 100 members, great meeting attendance, seven plus years of section recognition awards, numerous past members of the international board of directors, numerous Fellow and other distinguished AACE International award members. There are several corporate sponsors, including one that is recognized as one of the top four global engineering contractors [2]. I would like to convey a special thank you to the Chinook-Calgary Section for hosting my October visit to Calgary. x Ozzie Belcher President AACE International REFERENCES Dunlop, James J. Leading the

2. 3.



Association, American Association for Society Executives. Engineering News Record article, Top Global Engineering Constructors. Johnson, Spencer. Who Moved My Cheese, published by Double Day in 1998. Johnson, Spencer. The Present, published by Double Day in October 2003. US Army Baltimore Corps of Engineers.

Mark Your Calendar

for AACE Internationals

48th Annual Meeting

June 13-16, 2004 Washington, DC /


Distance Learning Courses Starting January 12, 2004

On-line courses are rapidly becoming one of the most popular ways for professionals to obtain professional development training. AACE International has courses to suit your needs, and is always looking for more. You can enroll now for one of the distance learning courses in our catalog. All classes in the following list consist of one class each week during the 10-week semester. Students are not required to attend class at specific times but can do the course work each week at their own convenience. Topics for the upcoming semester include: Construction Blueprint Reading Oral and Written Communications for Construction Supervisors Contract Documents and Construction Law Planning and Scheduling Estimating and Bidding 2 And remember, "Introduction to Construction Estimating" and "An Applied Framework for Project Management" can be started at any time. Find complete course outlines and registration forms on the AACE International website,

Cost Engineering Vol. 45/No. 12 DECEMBER 2003

II n Our Estim n Our Estimation

Barry G. McMillan, Executive Director

News & Notes

irst I want to share some information about some of the activities going on, and to thank you for your involvement as Members of AACE International. Our association is a living, dynamic group of professionals, from many industries and backgrounds, and that is what makes it fun to work for you. There is always a backdrop of new ideas and projects and volunteers who are working with us to advance the goals of the Association. I thank you for all you do and hope you continue to recognize that by participating in your Association you can help others, make friends, and advance your profession. As noted in our President's column, Ozzie is one of our best salesmen, and he loves AACE International. He and other members of your Board of Directors often visit sections and corporations to help enlighten our members on what the Association is doing and why. If you have an interest in someone visiting your section, please let us know and we'll see what we can arrange. The same goes for Corporate Sponsor visits. As you may know, we have a special group of about 30 companies that have signed up to be Corporate Sponsors. This program provides a win for both the companies and their employees. If you have eight people and your company wants to sponsor them by paying their dues, while at the same time getting many side benefits, please contact me and we'll be happy to explain the program. In this issue you can see the names of the many contributors to our Education Programs. This program has funded hundreds of students over the years and enabled them to get some help in paying their education costs. We are an educational organization, and we rely on your generous donations to fund our scholarships. If you've contributed during the last year, check the list for your name, and Thank You! Last month, I attended the Primavera User's Conference where we talked to many of our members who visited the AACE International Booth, as well as many other prospective members. It was a very well done meeting, and I was pleased that we were exhibiting there. Primavera has been a long time supporter of the Association, and we were certainly pleased to participate in their event. Plans are on-going to provide the new PSP Certification for Planning and Scheduling Professionals at the next annual meeting (Washington DC, June 13-16, 2004). I do hope that those who are working schedulers will take the time to investigate this new special program that is just for you. We have some of the best experts anywhere designing the exam and it will be another credential that some in the industry should find useful for demonstrating their capabilities. On a sad note I just recently learned that Ralph O'Neal passed away in late August. Ralph was a former chair of the Productivity Committee and a long time member. Ralph worked in Houston for many years for Stone and Webster Engineering, and was always a pleasure to work with. At Headquarters we are pleased to add a new face, Teri

Jefferson, who will be taking over from Jennie Amos as Meetings Coordinator. Jennie is still with us and will be spending most of her time as our new Marketing Manager. We hope that this will give us more flexibility in getting the word out to others about what our association is about and why it is such a great place for cost management professionals to support. I hope that you have a wonderful holiday season, and that the economy is working to your advantage. x Barry G. McMillan may be reached by phone at 800.858.COST or 304.296.8444, and by e-mail at

Cost Engineering Vol. 45/No. 12 DECEMBER 2003

E Executive xecutive Article

Dr. Susan Lightle, CPA; Dr. Kenneth Rosenweig, CMA; Dr. John Talbott, CMA

Why Toyota and Honda Topped the 2002 J.D. Power Quality Study
oyota again topped the annual J. D. Power and Associates quality study released in late May of 2002. Toyota scored the highest mark ever with 107 defects per 100 vehicles, while Honda came in second with 113 defects. The study was based on responses of approximately 65,000 new car owners queried during their first 90-days of ownership. These results do not surprise us as we have been fortunate to make numerous sojourns to the Toyota plant in Georgetown, Kentucky and observe the manufacturing processes. These trips were normally facilitated by a former Japanese student of ours, Minako Vanke, CPA, who personally knew individuals in higher management. In addition, several of our students are employed at the Honda Plant in Marysville, Ohio. Journeys to Marysville in conjunction with discussions with these students lead us to believe that Toyota and Honda possess several similar management philosophies which account for their success. It is our conclusion that success for these companies derives from company cultures that foster associate (employee) involvement with the goals of the organization, human (employee) development, and adaptation for improvement. These company cultures incorporate user-oriented (as opposed to control-oriented) accounting systems and elaborate systems for motivating, generating, and using associate ideas for process improvements. The company cultures are dependent upon employing the highest quality of associates. The purpose of this article is to examine these complementary aspects of an effective company culture.

The Accountants Role The accounting function is traditionally viewed as an input to managements decision-making process. Both companies require its accountants to transcend the traditional accounting role of number crunching and become actively involved in decision making and in supporting the managerial responsibilities of other associates. While the accountants are still involved in reporting and analysis, they also have the opportunity to assist others and participate actively in a variety of areas. Rather than acting primarily in a restraining capacity, as is characteristic of many control-oriented traditional accounting systems, accountants serve an empowering role in the company. This empowering role for accountants involves providing other associates with the informational resources, both financial and non-financial, they need to accomplish their broadened responsibilities, as well as serving as information specialists on interdisciplinary teams of associates with responsibilities for company operations. The new role for accountants requires them to have a new set of skills that is consistent with the company culture. For example, the financial reporting system at one of the companies was becoming outdated and wasnt satisfying user

needs. After extensive research and testing, the company selected new reporting software which required modifications to the existing structure and reports. Key users were identified by the accountants and asked to aid in setting up the reporting tree structure. The accountants worked with outside consultants and established what departments, sub-departments and accounts rolled up into the respective reports. The accountants then created and managed the various reports that were needed for the different users. The process was described by one of their accountants as follows, I believe that empowerment has helped us become a leader and a benchmark standard. This is just one example of how many stereotyped professions, such as accounting, can transcend their typical roles and responsibilities into being more productive members and hopefully creating a synergy effect that will ripple throughout the organization. Continuous improvement in the accounting function characterizes both companies. This is consistent with the two companies cultures, both of which focus on adaptation for improvement. The last time we visited Toyota, for example, they were embarking upon a program to attempt to trace more costs to the Camrys, Siennas, and Avalons as opposed to driving them with overhead rates. The purpose of the tracing, of course, was more accurate product costing and better pricing data which empowers operating managers to make better manufacturing and marketing decisions. The user focus and adaptability of the accounting systems at Toyota and Honda serve to support the companies focus on empowering managers and is fully consistent with the transformed cultures of those companies. Worker Empowerment Honda and Toyotas focus on associate empowerment extends to all levels of associates, including line workers. Two main focuses of worker empowerment are in the areas of work group improvement programs and employee suggestion systems. An example of the former is the VIP (Voluntary Improvement Program) system at Honda. It is comprised of three parts. One of the elements of the triad is the NH-Circle (NH-C) where a group of associates (workers) bond together and brainstorm solutions for workplace problems. Subsequent to the brainstorming, proposals are submitted to a committee for evaluation. The committee then either allows the circle to go ahead with the solution, or provides an explanation why the NHC cannot continue with this idea. If continuation is agreed upon, the circle works together to collect pertinent data such as the possible causes of the problem, how the problem is occurring, how often the problem is occurring, and various cost data related to the problem. The circle then comes up with several countermeasures, such as more ergonomically suitable equipment, to correct the problem. Each

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countermeasure is tested to see how practical it is in terms of safety, cost, and overall performance. The best overall countermeasure is implemented and data is again collected to measure performance. The final step in the process is when all the circles for that quarter compete against each other before a review board, which is comprised of upper management. The winning circle and its members receive a reward, usually an all expense paid trip of some nature. The second element of the Honda approach is the suggestion system. The suggestion system confronts problems that require a less structured approach. An associate fills out a suggestion system form and gives it to the team leader for approval. If the team leader approves, then the associate can continue with the suggestion. For example an associate working on one of the processes noticed that if a gun holder were built and put in a specific location, it would allow the associates to retrieve the gun quickly, rather than having to carry the gun during the process. The associates could reach over and grab it, use it, and then put it back when finished. The monetary incentive includes the ability to work on their suggestions on overtime. However, the larger benefit is that the associates know that they are involved and that they make a difference. Another pecuniary benefit for the associates is that after the suggestion is completed, and turned in to be evaluated, they may receive VIP points for their completed suggestion. Toyota employs a similar empowerment program but with an upside motivational aspect. Worker empowerment ideas at Toyota that are adopted permit the individuals name to go into a drawing at Toyotas annual employee festivities where numerous automobiles are given away. Once a workers name is submitted it remains under consideration for future year drawings. On one visit to Toyota a worker related to us that his name was in the hat nine times for the current years drawing and his excitement was truly palpable. This type of formal empowerment program leads to outstanding worker suggestions. Our favorite concerns a native Kentuckian who had taken the seat out of his fishing boat and constructed what was in essence a small roller coaster that ran from one end of the car to the other. This allowed him to avoid having to walk from end to end, and sped up the production process considerably. Hire Smart The Toyota plant in Georgetown, Kentucky, is the type of manufacturing facility normally depicted in training films. We begin our management accounting classes with a Toyota film, for example, which we believe shows the students how things should be done. The plant is immaculate and employees are courteous and productive. These individuals, however, are the product of a tremendously selective hiring process. Employees at Toyota must pass both a written and oral examination, a simulated team performance, a drug test, and a probationary period before they become permanent team members. The late W. Edwards Deming recognized the tremendous importance of the hiring process in his writings that focus on process improvements. Companies can improve processes by improving the quality of raw materials, purchasing new machinery, or altering the process of hiring and the training of

employees. American companies, however, tend to emphasize the technical aspects of the production process and assume that the worker will be able to produce. While the costs of the hiring process at Toyota are not publicly available, estimates are that Toyota spends extravagantly per employee to staff its US plants. It is questionable whether Japanese companies such as Toyota and Honda would emphasize the hiring process if process improvementand ultimately profitabilitywere not highly correlated with the quality of the workforce and the initial hiring process. Toyota, for example is so enamored with the quality of the work force that they decided in 1996 to construct their $700 million truck plant in Evansville, Indiana, as opposed to Georgetown, Kentucky. Sources at Toyota related to the authors that Toyota feared that 3,000 quality employees did not remain in the Georgetown, Kentucky, area in light of the 6,000 already employed there by Toyota. Management Commitment The key to the success of Toyotas and Hondas approach to empowerment is the well-defined mechanisms for acting on and rewarding employee ideas for improvement. The most obvious reason that worker empowerment fails is that many companies have no intention of deviating from the hierarchical, chain-ofcommand approach to management in the first place. The following examples are cases in point. Recently, a major parcel distributor decided to pass decisionmaking powers from management to hourly union employees. It did this so that employees would no longer believe that they were just part of a process and to make tedious, boring work more meaningful. Worker empowerment at the company started with a team coordinator and captains of quality, business development, employee relations, cost, and safety. The team coordinator had the role of keeping the entire team informed and focused so that the team accomplished its goals. The team coordinator was also responsible for team meeting agendas, and facilitating team meetings to ensure all captains had the opportunity to present the continuous improvement opportunities that would impact customer service and employee relations. The team coordinator role rotated among the team members every four to six months. All team members were given the opportunity to develop their leadership abilities, increase their knowledge of the business, and coordinate within and outside the team. Initially, the company acted as if the hourly worker input was valued, but after several months management would not show up for the meetings with the team coordinator or was unavailable because of previous business commitments. When the hourly employee realized that the worker empowerment was a joke, employees either quit offering suggestions for improvement, or came up with excuses for not attending the teams meetings. Management, of course, wanted to know why the meetings were unfruitful and why the hourly employees were bucking the system. The answer to managements somewhat rhetorical query was 1) improper training, 2) lack of clearly defined team goals, and 3) lack of directions at team meetings (the team meetings would often end up in a bitching session about the poor equipment or worker empowerment). Sadly, the authors participated in a laborious worker

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empowerment program where process mapping was implemented in order to enhance operational performance. Despite an abundance of excellent ideas that manifested themselves in the process maps, the suggestions were in general not adopted. The lack of a formal worker empowerment program and of true management commitment were the culprits, in our opinion. These culprits do not exist at Toyota and Honda.

n highly competitive industries such as automotive, corporate survival may depend upon worker innovation and involvement, and a user-oriented and highly adaptive accounting system. Worker innovation and involvement in turn depends upon a formal worker empowerment program, good hiring practices, appreciation and reward for the innovator and true company commitment to the empowerment approach. The result is the top two finishers in the 2002 J. D. Power Quality Study. x

Author Dr. John Talbott, CMA can be contacted by e-mail at


olunteers are needed for the AACE Certification Board. It's fun, fulfilling, frustrating, satisfying, time-consuming, and rewarding - all of these adjectives describe what it is like to be a member or chair of the AACE International's Certification Board. The Certification Board meets twice a year. For those who do not have company support for the travel, this can be a rather expensive proposition, although one of the meetings is normally held at the Annual Meeting.

Perhaps your foremost justification is the ability to have a direct influence on the content and direction of your Association's certification operations. Additionally, you will find that satisfaction of helping to produce new materials and directions for other cost/management professionals can be very rewarding personally. You simply need to contact the Certification Administrator at: AACE International Headquarters (304) 296-8444 or e-mailing:

Cost Engineering Vol. 45/No. 12 DECEMBER 2003

TThe 2004-20 he 2004-2005 Slate of Candidates

ncluded in this issue of Cost Engineering journal is the slate of candidates for the 2004-2005 administrative year. All AACE International members eligible to vote in the 2004 election are urged to read and review the biographies of each candidate along with their goals and objectives for the office they seek.

Prohibitions on Campaigning The Association Board recognizes that the professional reputation and experience of candidates for Association office are ample testimony to their qualifications and ability to serve. Further, it is believed that these credentials do not need amplification and that campaigning for office by, or on behalf of, candidates is unnecessary, undesirable, and unprofessional. After nomination, campaigning is defined as organized oral or written solicitation of votes or support either by a candidate or by an individual member or Section on behalf of a candidate. A proven violation of this policy shall be considered as prejudicial to the best interests of the Association and a breach of professional ethics. Such conduct will be subject to disciplinary action as provided for in the Association Bylaws. Further, a proven violation(s) of this policy by an aspirant to office, after due hearing in accord with the Bylaws, shall disqualify said individual from holding Association office. The AACE International Canons of Ethics also states that, Members will not campaign, solicit support, or otherwise coerce other cost professionals to support their candidacy or the candidacy of a colleague for elective office in a technical association. Additional Nominations May be Made by Member Petitions Under Article II, Section 4 of the AACE International Constitution and Bylaws, Other nominations for the office of Director may be made by a petition signed by at least ten (10) members or associate members. Other nominations for the office of an Officer of the Association may be made by a petition signed by at least fifty (50) members or associate members. The petitioners shall be responsible for (a) obtaining in writing the agreement of the nominee to serve if elected, (b) securing the biographical data of the nominee, (c) submitting the petitions, the agreement and the biographical data to be received by the Vice President-Administration at least five and one-half months (on or before Jan. 9, 2004) prior to the Annual Meeting. Members are encouraged to submit petitions for individuals whom they believe are qualified, but no individual may circulate or cause to be circulated, a petition on his or her own behalf. Ballots Must Be Received at Headquarters on or Before March 19, 2004 Election of Officers and Directors is by sealed letter ballot. The official election ballot for Officers shall be mailed to each Member and Associate Member by mid February 2004. Each voter shall properly signify on the ballot the voters choice for the various Officers and mail their ballot back to Headquarters. A small envelope is provided for the member to seal their ballot in and a business envelop is provided to mail the ballot back in. Members need to remember to sign the signature line on the back of the return envelope. For election of Directors-Region(s), ballots will be sent to the members and associate members in the region in which a Director-Region is to be elected whereupon each voter shall properly signify on the ballot the voters choice for the Director and transmit it to headquarters. All ballots must be received at Headquarters on or before March 19, 2004. Note that this is earlier than usual because the Annual Meeting falls a week earlier (June 13-16, 2004, in Washington, DC). Ballots received after March 19, 2004, will not be counted.

Articles from previous editions of the Cost Engineering journal may be purchased through the AACE International Online Bookstore at AACE Internationals website, The cost per article is US$7.50 for nonmembers and US$5.00 for members of AACE International. If you are interested in purchasing additional copies of articles appearing in this issue please refer to the Article Reprint and Permissions information on page 42.

Please Do Not Forget to Vote

Ballots will be mailed by mid February 2004 You completed ballot must be returned to Headquarters on or before March 19, 2004 Your Vote is Important to the future of AACE International.

Thank you for your participation!

Cost Engineering Vol. 45/No. 12 DECEMBER 2003

President-Elect (Vote for One)

Robert B. (Bob) Brown, PE AACE International Activities: Member, 1988; Director - Region 4 1996-98; Technical Board 1998-2002; Technical Board Director Special Interest Groups 1999 - 2002; Vice President - Finance 2002 -2004; Presenter of papers at Annual Meetings; Contributor Cost Engineering journal columns and articles. Section Activities: Member of Chicago-Midwest Section; Presenter at monthly Technical Program; Presenter at ChicagoMidwest Section Annual Seminars. Education: B.S. Civil Engineering, University of Illinois at Chicago, 1972; registered P.E., Illinois, 1973. Other: Over 39 years of Project Controls experience including nine years with Illinois DOT and 23 years with Chicago Metro Water Reclamation District. Currently Senior Principal in the Chicago office of PMA Consultants LLC (an AACE International Corporate Sponsor), responsible for managing and performing planning, scheduling, cost estimating, construction audits, writing contract documents and providing expert testimony on construction claims. Has also been a guest lecturer at John Marshall Law School. Goals and Objectives My experience on the Board of Directors in the past as a Regional Director and currently as the VP-Finance presented me with a unique opportunity to gain insight into the workings of the Association. This experience will provide me with the knowledge to make informed decisions to lead and grow this organization as your President. My specific goals and objectives include: Provide guidance and support for the AACE International Executive Director and staff enabling them to work even more effectively and efficiently Use VP-Finance experience to sustain our positive financial base and develop achievable goals for future membership growth Work with marketing on methods to increase AACE Internationals visibility in the field as there are too many technical firms and organizations that are still unaware of the valuable products and services that we offer Promote the value of AACE International membership to firms and individuals; encourage membership growth through expanded outreach programs to our members employers and clients by providing technical and educational resources that allow them to excel professionally Maintain existing member services and provide leadership in developing additional services in response to evolving membership demographics and a changing technology; help local Sections become a technical resource for local firms and universities Work with Education and Certification Boards to promote the development and implementation of specialty certifications and on-line exams Support the Technical Board in the development of quality technical products. Philip D. Larson, CCE AACE International Activities: member, 1985; certified, 1986; Vice-President Administration 2001-2003; Vice-President Finance 1996-1998; Director-Region VI, 1993-1995; AACE Name Change Committee Chair 1994-1995; Technical Board 19982003. Section: President, Seattle Section, 1991-1993; Vice-President 1990-1991; Education Director 19881990. Award of Recognition 1990; Award of Acknowledgment 1992. Education: B.S., Architecture, cum laude, Washington State University. Other Contributions: Sr. Vice President, WinEstimator, Inc., Seattle, WA; responsible for product development for Windows estimating software, including design of Primavera scheduling interface, CAD Integration; Also manage Corporate Solutions Group (CSG) and Partners in Education (PIE) program; American Society of Professional Estimators (ASPE) member, 1986; certified 1987; Society 2nd Vice President 2001-2002; West Governor, 1995-97; Puget Sound Chapter President (twice), Vice-President. Certified Project Management Professional (PMP) 1990, Project Management Institute (PMI). Other Activities: Instructor, University of Washington Project Management Certificate Program, Cost and Scheduling Management, 1991-2003. Goals and Objectives As a member of AACE International, Inc. for over 18 years, I have been very fortunate to serve the association for the majority of that time. I am honored and privileged to have been able to help on many issues facing our association, making decisions, and executing a strong financial investment plan as Vice President-Finance which resulted in the best two year performance of our association, and as Vice President-Administration making the effort necessary to recognize our Fellow members. During my recent term as VP-Administration, we were able to recognize 14 Fellows during a two year period compared with only two Fellows in the previous four years. We also voted for Las Vegas by overwhelming majority as the site of our Golden Anniversary in the Silver state in 2006. Most all of these issues were the result of working with other members, board members, headquarters staff, and interested parties from other associations and companies. As President Elect my goals for a successful tenure include strengthening our membership through increased and specific marketing to the industry to attract more individual and corporate members. We belong to a technical association and there are many technical people who benefit greatly as we have from being members. I would also be very proactive regarding annual meetings and site selections, as I support financially viable and attractive locations and would offer that these locations would attract more presenters and attendees, which is necessary to the success of AACE International. In short, as President-Elect, President, and Past President it would be my goal to increase membership by a minimum of 20% while ensuring the ongoing quality of our technical products and services. Thank you for your support!


Cost Engineering Vol. 45/No. 12 DECEMBER 2003

Vice President-Finance (Vote for One)

Mahendra P. (Pal) Bhatia AACE International Activities: Pal has been actively participating in AACE International activities at the local Calgary Chinook Section and has held many positions in the local Board, including Local Section President. He was part of the organizing committee that hosted a very successful year 2000 Annual Meeting in Calgary. He has volunteered at teaching seminars in capital cost estimating at both Local Section and University levels. Pal graduated from Nainital Polytechnic in India in 1965 and from University of Manitoba in 1974 and is currently working as Chief Estimator with SNC Lavalin Inc. in Calgary, Canada, with nearly 32 years of experience in the Petrochemical Industry. I am currently the Region 1 Director, working closely with the VP regions as well as other board members. Additionally, he has extensive experience in the field of cost engineering, cost control and project controls management. Goals and Objectives Provide professional support for the AACE International Financial Manager and staff and work closely with the HQ staff. Work with the Board and staff to sustain current financial base and develop achievable goals for growth. Present a detailed and understandable quarterly report to the Board of Directors and membership. Maintain appropriate records and cooperate with the Annual Audit. Develop an annual budget consistent with the needs of the Association. Assist in identifying issues that can help the staff work costeffectively. Strengthen investment portfolio. Michael C. Ray, PE CCE AACE International Activities: Active in AACE International at Section, Region, and Association level since 1982. Member Atlanta Section, four terms as Section Director, one term as Section President. At Association level, served as Region III Director in 1997. Active member in the Claims and Dispute Resolution SIG. Currently Chair Planning & Scheduling Professional Task Force. Presented papers at six Annual Meetings. Published in Cost Engineering journal. Speaker at section meetings and AACEI seminars. Certified Cost Engineer [CCE] in 1986. Mr. Ray is a Professional Engineer with a heavy construction and environmental background. He is the founder and president of a litigation support and project management consulting firm. Goals and Objectives Having previously served on the Board of Directors, I understand the importance of finance to the efficient operation of the Association. Since the level of service to our membership cannot exceed the ability of the association to pay for these services, I will do my utmost to assist the Board of Directors in arriving at decisions that result a healthy balance between the services to members and of their cost. Included in this effort are the preparation of realistic budgets for office operations, annual meetings and the many activities of the association. Once the budgets have been approved, they must be tracked to assure that the Association operates within its means.

Cost Engineering Vol. 45/No. 12 DECEMBER 2003


Vice President-Regions (Vote for One)

Katrina D. Knight AACE International Activities: 1991 AACE-I top scholarship recipient; full member since 1994; Region 3 Director 2001-2003; President, Vice-President, and Scholarship Chair - Catawba Valley Section; 2003 recipient of the AACE-I Outstanding Regional Director Award; member of Technical Board; and member of Atlanta Section. Education: B.S. and M.Eng. Civil Engineering, Clemson University. Professional Experience: Ten years in cost/project management. Professional Recognition: Featured in Journeys of Women in Science and Engineering: No Universal Constants Goals and Objectives AACE International has afforded me several opportunities and has enabled me to grow within our profession. Having served in several leadership positions within AACE International at the section level and most recently on the Board of Directors has improved my appreciation of the organization and what it stands for. If elected Vice President Regions, I will work to accomplish the following: Be a champion for the association members best interest. My primary focus will be on membership, for without members there is no organization. Gear marketing plan toward the retention of current members, reclaiming past members, and recruiting new members through working with the Board of Directors, in particular, the Region Directors and the marketing manager at the headquarters office. Assure that the marketing plan for the association is kept up to date in regards to the demographics of the association and the cost engineering field in general. Work closely with each Region Director to assure that they maintain constant contact with each section in their region. Work closely with the Board of Directors and headquarters staff to ensure that individual members needs are met. Work closely with the Board of Directors to ensure that the association has the individual members best interests as a top priority. Marvin Woods, CCE AACE International Activities: Member 1992; certified 1996; currently serving on Board as Director - Region 4; Member, St. Louis Section, Past President and continues to serve the St. Louis section as a member of their Board of Directors; Instructor - St. Louis Section certification study course. Education: B.S. Engineering Management, University of Missouri at Rolla (1982); MBA Lindenwood University (1987). Other Contributions: Affiliate Professor, construction management Washington University in St. Louis; instructor for construction cost engineering and cost estimating courses. Background: over 21 years of experience in project management and project controls. Employers: McDonnell Douglas Corporation, MorrisonKnudsen Corporation, Science Applications International Corporation, KWAME Building Group, Inc., ML Johnson and Company, Inc., The Boeing Company, and Principal and Cofounder Project Controls Group, Inc. Goals and Objectives Our Association is faced with several opportunities; 1) increasing membership in these economic times, 2) membership retention, 3) challenges from similar Associations. As you can see these opportunities have a common thread, Membership. As an Association dedicated to fulfilling the needs of our members, my primary responsibility if elected VP Regions, will be to emphasis the value added services that AACE International provides to its members. This would be accomplished by working with the Regional Directors to establish real communication with the local sections (not just a quarterly report), bring to the members awareness the products and services that are available from AACE International, and continue to emphasis the value that AACE International membership brings to the individual members and ultimately their employers. Work with Regional Directors to encourage activities within the Sections that promote Association interests, including encouraging certification and technical involvement by members Work with AACE International Headquarters to continue to refine the Associations marketing plan and implement the plan Support AACE International President in setting up and participating in corporate visits Work with Regional Directors to establish regular communication with the Sections within their Regions Institute a system where the Regional Directors contact new members within their regions welcoming them to the Association and encouraging section participation


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Director-Region 1 (Vote for One)

Mustansir Raj, CCE AACE International Activities: Actively involved since 1994. Served as Director Certification, Vice President, and currently President of Chinook Calgary Section. Member of AACEI Estimating Committee. Contributing member of AACEI Education Board. Also Contributed to CCE/CCC Certification program. Presented technical paper at Portland, 2002 annual Meeting. Mustansir holds BS degree in Mechanical Engineering with postgraduate diploma in management Worked with Klockner (KHD) India, SABIC and presently with Bantrel Co in Canada since 1998 as Senior Estimator. Received Bantrel 2002 Quality Award. Mustansir is Competent Toastmaster, Competent leader and has also served as Area Governor of Toastmaster International. He has 20 years of experience involving project management, cost engineering and cost estimating in petrochemical, oil and gas projects. Goals and Objectives As a cost engineering professional with extensive industrial experience together with proven organizational skills and leadership capabilities, I fully understand the challenges of Region Director. I look upon the role of Region 1 Director as being an opportunity to be part of a fantastic team to: Improve and maintain communication within all the 8 sections of region 1.Establish effective liaison with each sections officers, other regions and with Headquarters. Continue the efforts to enhance corporate membership and recruit new members, as membership is a core value of any organization. Arrange and promote professional and technical development programs in region 1 by exchanging information on interactive panel discussions, technical presentations, annual seminar and skill & knowledge workshops. Make Region 1 an outstanding region by sharing the dynamism and experience of Chinook Calgary section (recipient of 12 consecutive Outstanding section awards) amongst all 8 sections. Attract and encourage University students and new graduates to Cost Engineering field by close coordination and participation with local universities and arranging joint programs. Rohit (Roy) Singh, CCE AACE International Activities: Member since 1985. Education Board Member-2nd year representing the Canadian sections interest and promoting scholarships. Secretary, VicePresident, and President of the Toronto Section. Participated in the development and authoring of a chapter of the upcoming S&K 5-AACEI. A project Controls Manager at Babcock and Wilcox, Canada A teacher in Cost Engineering and Project Management in Toronto,Canada. Ray has presented at annual meetings seminars at AACEI for the last 10 years. Mr. Singh is an Engineer Graduate from the University of New Brunswick,Canada. He has also completed a degree in Education. He has 23-years of project controls, engineering construction support, project management, and cost/schedule engineering experience on heavy industrial projects throughout Canada. Goals and Objectives As a practicing project controls professional with experience in a variety of industries, I understand the challenges facing our profession. We must perform this critical work with utmost skill. Employers should regard member employees as valuable resources. AACE International can and must be a leading force in addressing the issues of training, technical improvement, and professional recognition for individuals. The benefits this will lead to improved project cost/schedule performance, and corporate profitability. As Region 1 Director, my goals will be to: Promote an environment of open communication. . Foster a spirit and plan of recognition of the value of professional involvement, and promote this message to all represented corporations. Promote the continued effort to identify and recruit individual members Encourage and promote Student membership Evaluate potential opportunities for new Section establishment Increase our presence on university campuses encouraging new graduates to follow a career in those business processes that comprise AACE International's technical focus. Promote the Corporate sponsorship program and diversify the Educational outreach in Canada.

Cost Engineering Vol. 45/No. 12 DECEMBER 2003


Director-Region 2 (Vote for One)

Charles E. Bolyard Jr. AACE International Activities: Member, 1993. Section: National Capital Section President, 1999-2000; Vice President, 19981999; Section Secretary, 1997-1998; Education Committee Chair, 1996-2003; Scholarship Committee Chair, 1996-1997; Government Liaison Committee/Chair, 1997-2003; AACEI Liaison to CICC Forum and Whole Building Design Guide (WBDG), 2002-2003. Education: B.S., Civil Engineering, 1974, West Virginia Institute of Technology. Other Contributions: President, McDonough Bolyard Peck, Inc.; over 30 years of experience in construction cost estimating, CPM scheduling, total project management and claims analysis projects; Member, American Society of Civil Engineers (ASCE), Heavy Construction Contractors Association (HCCA) and the Construction Management Association of America(CMAA). Goals and Objectives Increase membership by increasing the exposure of AACEI throughout the public and private sectors. Members at all levels are the foundation of AACEI. We can also benefit from strategic alliances with other professional associations that are on the rise in membership and certification programs, while reemphasizing the benefits of the Cost Engineering Profession. Increase member certification. The expanded program of ICC, CCE, CCC and Scheduling certifications offers so much more to the membership and to the professional community and should be a focus of every Section and Region. We should and need to take advantage of increasing awareness of the value of professional certification and re-certification programs across the industry. Active participation at every level is the key to achieving the goals above. To strengthen member participation requires positive, active and innovative involvement from Sections and Regions. Michael A. Withers Michael A. Withers is a former Chief Estimator and currently serves as the Director No Photo of Business Development for S.C. Myers & Provided Associates, Inc., of Washington, DC, where he also is on the companys Board of Directors. He attended the University of Maryland, Baltimore County campus, where he studied political science and later he attended the Maryland Drafting Institute where he focused on engineering design. He has been an active member of the National Capital Section of AACE International and has attended several of the Annual meetings. He currently is a Section Director and serves as treasurer. He has served on several committees since 1992, including Student Affairs, Membership, Scholarship, and currently he is the CoChair of the 2004 Annual Meeting that will be at Washington, DC. He has also served as the National Capital Section President for two terms, Vice President for two terms, and treasurer for two terms. Goals and Objectives To increase US and international recognition of the organization. Increase local and regional membership. Streamline committee operations to be more efficient and responsive to local sections and members. Increase interest in the Cost Consultant Certification Process and further streamline the process. Work closely with the Government Liaison Committee to further AACE International interests with the government sector. Increase the overall attendance at local section meetings. Increase Corporate Sponsorship for the organization through improved strategic relationships and diversifying the focus of cost control efforts to include new markets.


1. 2. 3. 4. 5,


6. 7.


Reflective of his AACE International participation, Charlie believes that the Associations continued growth must start at the local level through healthy Section, Regional, and Student member groups. This requires close liaison between the Association at-large and the local levels of AACE International, with increased participation by Board Members in Section activities, through establishment of new Sections and most importantly through the increased active participation of the membership.


Cost Engineering Vol. 45/No. 12 DECEMBER 2003

Director-Region 4 (Vote for One)

Donald B. Giegerich, PE AACE International Activities: Member since 1982. Board Member, Technical Director, Vice-President, and President of Chicago Midwest Section. Member of the Claims and Dispute Resolution Special Interest Group. Served as Program Coordinator of numerous Chicago Midwest Section seminars. Prior involvement with CFMA, PMI and American Arbitration Association. Mr. Giegerich has a B.S. Civil Engineering, Lafayette College and M.S. Civil Engineering, N.J.I.T. and is a registered engineer. Employed by URS Corporation, Regional Manager Dispute Resolution Services, Chicago, IL. Over 30 years of experience in engineering, scheduling, estimating, cost control, and claims analysis in the construction industry. Goals and Objectives As Regional Director of Region 4, I would strive to meet the following goals and objectives within the region: Provide increased support to sections Promote AACE International technical and educational functions Represent Region 4 interests Jeffrey D. (Jeff) Kursave, CCC AACE International Activities: Jeff has served as President, Vice-President, Treasurer, and Secretary of the St. Louis Section, and is currently serving on the Board of Directors. He is a Certified Cost Consultant and has been instrumental in helping the Section conduct a Certification Study Group once or twice per year for the past two years. Previously, Jeff served as co-founder and the first President of the Middle Tennessee Section. Jeff has over 20 years of experience in the project controls industry. He currently works as a Senior Project Controls Specialist for Science Applications International Corporation (SAIC). Previous employers include: IT Corporation, Lockheed Martin, H&M Construction, Morrison Knudsen, and Lockwood Greene. Jeff earned his Bachelor of Science degree in Construction Engineering from Murray State University in Murray KY. He resides in OFallon, Missouri with his wife and three teenagers. Goals and Objectives As a project controls professional, I understand the challenges of our profession. AACE International and its Sections must continue to be a force with Employers and clients in educating them on the values of good project controls. My goals as Region 4 Director will be to: Section Support In supporting all 13 sections within Region 4, my primary objective will be to provide leadership assistance to active sections, promote participation by members at large, and strive to rebuild inactive sections. Efforts will be made to enable several regional activities - such as joint seminars and certification training. Technical and Educational Functions Paramount objective within AACE International and Region 4 should be to deliver strong technical programs and educational support. Improvements to local section programs can be made through exchange of ideas and sharing of technical resources. Promotion of AACE International activities needs to be extended through University outreach and corporate sponsorship. Region 4 Representation Through active participation in AACE International activities, the primary objective is to provide strong representation to support local interests and concerns. Efforts will be made to encourage frequent feedback from sections and members at large - to increase communication with the national board and solicit national support for Region 4 program initiatives. Maintain communications with all the Sections in Region 4 through Section Officers. Facilitate the flow of information between AACE International and all Sections within the Region. Develop a monthly exchange of information via e-mail with Region 4 Sections. Hold a Regional meeting for all Region 4 Section Officers on a yearly basis. Continue to identify and recruit Corporate and individual members within the Region. Promote ways to recruit members. Educate employers of the value of AACE International and our standards. Proactively market AACE International to INCREASE membership. Encourage and assist each Section in providing Certification study groups. Evaluate potential opportunities for establishing new Sections (including Student Sections). Increase relations with universities within the Region. Encourage technical and professional development program in every Section. Encourage Annual Convention attendance. Actively promote AACE International.

Cost Engineering Vol. 45/No. 12 DECEMBER 2003


E ducation E ducation Board News

AACE International Would Like to Thank the 2003 Contributors to the AACE Education Fund
Because you gave, AACE International was able to award nearly $32,000 in scholarships to 28 deserving students this year. Since the Education fund was established, nearly $750,000 worth of scholarships have been awarded.
Editors Note: All contributors are listed alphabetically under six categories indicating various dollar amount ranges of the 2003 contributions. AACE International Sections are listed first, followed by individuals. Special Funding + 2,000.00 Alabama Section Central Savannah River Section Chinook-Calgary Section + 1,000.00 M. Curran British Columbia Section Catawba Valley Section East Tennessee Section Houston Gulf Coast Section New Jersey Section San Francisco Bay Area Section Seattle Section $101 to $999 Atlanta Area Section Mr. Mahendra P. Bhatia Genesee Valley Section Mr. Wayne Harold Gosse, CCE Great Lakes Section Mr. Kurt G.R. Heinze, ECCE Dr. Kenneth K. Humphreys, PE CCE Mr. Ching-Sen Lu Mr. Donald F. McDonald, Jr. PE CCE Mr. Robert E. McTague North Florida Section Northern West Virginia Section St. Louis Section Southwestern Ohio Section UHDE GMBH Mr. Kul B. Uppal, PE Mr. Anthony Werderitsch, PE CCE $51 to $100 Mr. A. Larry Aaron, CCE Ms. Ginette B. Basak, P.Eng. Mr. Osmond F. Belcher Mr. Lawrence J. Bloch, ECCE Mr. Nelson E. Bonilla, CCE Mr. Arthur S. Edwards, ECCE Mr. John A. Foushi, ECCE Mr. Clive D. Francis, CCC Mr. Guy A. Gaines Mr. Michael E. Horwitz, PE CCE Mr. Harry W. Jarnagan, PE CCE Mr. Bob M. McCally Mr. Robert McCullough, PE CCE Mr. C. Arthur Miller Mr. Michael R. Morrison, CCC Mr. Clair H. Murdock Dr. James E. Rowings, Jr. PE CCE Mr. John F. Steiger, CCE Mr. Robert E. Templeton, PE CCE Dr. Carl Wolf, CCE $26 to $50 Mr. Drew W. Agnew Mr. Steve P.G. Alister Mr. Robert Allison Mr. William R. Barry, CCC Mr. Abhimanyu Basu, PE Mr. Donald B. Bertolini Mr. Steven G.J. Boeschoten Mr. Christophe N. Bredillet Mr. Richard J. Burrell Mr. Tony B. Cabral Mr. Mark T. Chen, PE CCE Ms. Resa D. Conway Mr. Kelly W. Cuthbertson Mr. Aldo Eugene DAgostino Mr. Casimir De Cwikiel, PE CCE Mr. Robert E. Denmark Mr. Leon A. Dominick Mr. Dennis D. Dryer Mr. Larry R. Dysert, CCC Mr. Theodore S. Eddy Mr. Ronald G. Eubanks Mr. James J. Fetterolf Mr. Leo B. Glaser Mr. Ingo G.H. Gloge Mr. John L. Glossbrenner Mr. John A. Greenman Mr. Christopher O. Gruber, CCC Mr. Allen C. Hamilton, CCE Mr. Toshiharu Kanaoka Mr. Robert L. Kimmons Mr. Daniel Laboy, PE Mr. Frederick L. Langhoff, Jr. Mr. Donald R. Lindahl Mr. Dale Lundgren Mr. William A. Manfredonia Mr. Donald C. Mather Mr. Barry G. McMillan Mr. Albert H. Meyer Dr. Andrzej Piotr Minasowicz Ms. Nora Nisman Mr. Gary L. Nixon Mr. Mbazulike Nwankwo, CCC Mr. Andrew Opoku Nyamekye Dr. Joseph J. Orczyk, PE CCE Mr. David E. Pearson Mr. Franklin D. Postula, PE CCE Mr. Robert E. Reed, Jr. PE CCE Mr. Cletus C. Rivard, PE Ms. Terry F. Robinson Mr. Raymond Lewis Rogers Mr. Richard A. Selg, CCE Mr. Forrest W. Stone, Jr. Mr. Raymond J. Suarez, ECCE Mr. Gary L. Sullivan, CCE Mr. Anwar Ali Syed, CCE Mr. Johan Van Diggelen Mr. Harold M. Vessey Mr. George D. Weaver, Jr. PE Mr. Harvey J. Welker Mr. Stanley A. West, CCE Mr. Thomas A. Wilson, ECCE Ms. Cheryl E. Young Mr. James G. Zack, Jr. $25 and Under Mr. Aavo A. Agu Mr. Seth Agyepong-Wiafe, CCC Mr. James S. Albany, ECCE Mr. Sami M. Al-Dayriyeh Dr. Yazan Al-Naib Mr. Oommen C. Ampilathu Mr. Jerome Augustyn, CCE Mr. Suresh C. Badlani, CCE Mr. John Andrew Bailey Mr. Robert F. Baim, CCE Mr. Roger K. Baird Mr. Robert D. Bakewell, CCC Mr. Michael Charles Barsam Ms. Jennifer Bates, CCE Mr. H. Jack Behrens, ECCE Mr. Richard H. Bender Ms. Fatima C. Bernardo Mr. Vasanth K. Bhat Dr. Andrew Nyakaana Blair, CCE Ms. Joyce M. Bogner Mr. Robert H. Briest, CCC Mr. Dale E. Brisboe Mr. Michael B. Brodeur Mr. Joseph A. Brown, CCE Mr. Nigel Roy Brown, CCE Mr. Robert W. Brown, CCC Mr. Stephen C. Burgan


Cost Engineering Vol. 45/No. 12 DECEMBER 2003

Mr. Pierre Johannes Burger Mr. Ben Calvin Mr. Giovanni Cannistra, PE Mr. Thomas D. Carr Mr. Bruce W. Carter Ms. Kathleen Jane Carter Mr. Frank P. Castrichini Mr. Benton C. Cavin, CCE Mr. L.John Chaifetz Mr. Sherman Chan Mr. Kam-Sun Chow, CCC Mr. Sujit Roy Chowdhury Mr. Peter Christensen, CCE Mr. Marvin E. Clark Mr. Lloyd M. Clauss Mr. Robert B. Connors, PE CCE Mr. W. Doug Creech, CCC Ms. Elizabeth Creighton Mr. Gildasio Fernandes Dantas Mr. Ronaldo T. de Almeida Regro Mr. Maureio M. De Silva Mr. Kenneth M. Decossas, PE Mr. Michael D. Delllsola, PE Mr. John H. Detweiler Mr. I. Ross Dewar Mr. James P. DoKoozian Mr. Albert W. Doolittle Mr. Ted A. Downen Mr. Henry Alex DSouza Mr. Ron DuBois Ms. Joan C. Dyck Mr. Robert L. Dyer Mr. Stuart Ashley Eban Ms. Dorothy Awatt Ekeng Mr. Bruce Elliott, CCC Mr. Daniel Pitts Elliott, PE ECCE Mr. Sherif M. El-Mahdy, CCE Mr. Leonard Enger, CCE Mr. Jack F. Enrico, ECCE Mr. Gustav Enyedy, Jr. PE Dr. John O. Evans, III Mr. Henrique da Silva Ferreira Mr. Raymond R. Firmin Mr. Morris E. Fleishman, CCE Mr. Aidan Foley, ICC Mr. James G. Force Mr. Scott E. Foster Mr. M. Steven Franklin, CCE Mr. Anthony D. Furia, CCC Mr. Bhupendra Gandhi Mr. Pedro A. Garza Mr. Norman P. Gerstenzang, PE Mr. Luiz Gerszt Mr. Michael Giannelia Mr. Jay M. Gorey Mr. Ludo Goubert Mr. Peter R. Grimm Mr. David Wayne Halligan Mr. Yuji Harada Mr. Giles M. Hargraves Mr. Timothy John Havranek Mr. Fergal J. Hayes Mr. Eugene E. Heeger Mr. John H. Heitkamp Mr. John A. Henderson Mr. George E. Heywood

Mr. Douglas O. Hoffman Mr. Ulrich Hofmann Mr. Ray Hopkins Mr. W. Mark Howell, PE CCE Mr. James Nigel Howey Mr. Brian Eugene Hughes Mr. William H. Hunt, CCC Mr. J. Marshall Hunter Mr. Martin Leslie Huse Mr. Anthony G. Isaac Mr. Ellis J. Jackson Mr. Vijay S. Jambhekar Mr. Christian R. Jean Mr. Dennis A. Jones Mr. Robert B. Jones Mr. William H. Kapfer Mr. Sumio Kawakami Mr. Edmund L. Kelley Mr. Robert D. Kelly Mr. Olurotimi A. Kemiki Mr. Robert A. Kenney, PE CCE Mr. Humphrey David Kerger Mr. Frank Kettlewell Mr. Vinny Kissoon Ms. Katrina D. Knight Mr. Thomas L. Kondziolka Mr. Edward M. Kopp, III CCC Mr. William E. Kraus, PE CCE Mr. William M. Krebs Mr. William M. Kreidler Mr. Umesh Krishnappa Mr. Eric J. Kubina Mr. Jeffrey D. Kursave, CCC Mr. Kin Hung Kwong, CCE Mr. Kwadwo Kyei Mr. Thomas S. LaGuardia, CCE Mr. John Paul Lancaster Mr. W. Philip Laughlin Mr. Glenn J. Laverty Mr. Donald D. Law Mr. Danny Lee Mr. Jamie Lee Lollar, CCC Mr. Henry Loos Mr. Adalto Luiz Souza Lopes Mr. John M. Lord Mr. Luciano Soares Lucena Mr. Robert L. Mabry Mr. Igor V. MacKay Mr. Kenneth Charles MacKenzie Mr. Tibor Magyarosi Mr. Joseph P. Majewski, PE Mr. Roger D. Mapp Ms. Christy Elaine Mathis Mr. James A. McDonough, Jr. Mr. James R. McIver, CCC Mr. Ashley Mendes, CCC Mr. Luis Menendez, CCE Mr. Duane R. Meyer, PE CCE Mr. Jack M. Mihalovich Mr. Joseph A. Monistere, CCC Mr. Bernard Morris Mr. Dexter C. Murphy, PE Mr. James Mitchell Murphy Mr. Robert H. Murphy Mr. Joshua Mutize, Sr. Mr. Ingram C. Myers, Jr. CCE

Mr. Clayton Myhre Mr. Guildo Nadeau Mr. Shinkichi Nakata Mr. Siva Kumar R. Nattamai Dr. James M. Neil, PE Mr. Peter G. Nell Mr. Irving K. Nemi, CCC Mr. Joao Alberto G. Neri Mr. Ching Kin Ng Mr. Prabhakar Vasudev Nilkund Mr. John P. Nolan, Sr. Mr. Michael R. Nosbisch, CCC Mr. Ebere Sam Nwansi, CCE Ms. Oluyemi Olapeju Obe Mr. Michael E. OConnell Mr. Terence W. OConnor Mr. Adegoke Odetunde Mr. Shin-Ichi Ohi Mr. Murtala Ayodeji Oladapo Mr. Neil D. Opfer, CCE Mr. Charles L. Osborn Mr. George H. Ostermayer, III CCE Mr. Fumio Otsu Mr. Jayant S. Pandya Mr. Samuel S. Parkins Mr. Shashank P. Parulkar Ms. Cynthis D. Pelli Mr. Ronald V. Penn, CCC Mr. Wolfgang A. Penno Mr. Dennis J. Pestka Mr. Andrew T. Petrella Mr. J. David Philpot, CCE Mr. Bernard A. Pietlock, CCC Dr. Giuseppe Pignanelli Mr. Raymond W. Pittenger Mr. Mark S. Post Ms. Gwynne M. Powell Mr. Serge Pressoir, PE Mr. Daniel G. Quartieri Mr. Shahamat U. Qureshi Mr. Mustansir Hussain Raj, CCE Mr. Ronald B. Rector Mr. Stephen O. Revay, CCC Mr. James E. Rich, PE CCE Mr. Eric Richter Mr. Scotty R. Riemer Mr. Peter W. Ripley, CCC Mr. Jose G. Rodriquez Mr. Daniel F. Rondinelli, CCC Mr. Romey Ross Mr. Thomas J. Rye Mr. Adnan Saaty, PE CCE Mr. N. Sabanathan Mr. Manuel Sais, Jr. Mr. Yoshimi Saito Mr. Mark C. Sanders, PE CCE Mr. Richard S. Scaglione Mr. Nick J. Scheyen Mr. Earl J. Seabrook, III CCC Mr. Robert Seals Mr. Peter J. Seed Mr. David Seltzer Mr. Chand D. Shah, PE CCE Mr. Charles P. Shipp Mr. Jim W. Short, CCC Mr. Krishna K. Shrivastava

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MR. Richard J. Sieracki MR. Michael L. Sifford Mr. Remo John Silvestrini, PE Mr. John Singh Mr. Andrew Sipos, PE Mr. Jeffrey H. Skinner Mr. William B. Solomon Mr. John C.R. Solu Mr. John Squillace Ms. Barbara Jean Stehno Ms. Cindy Lou Strickland Mr. Walter J. Strutt, PE CCE Mr. Adam T. Strutynski

Mr. Rolle O. Studerus Mr. Hario Suryohusodo Mr. Luc Tasiaux Mr. Marvin S. Titus Mr. Terrance M. Tokaryk Mr. Joseph A. Tramontana Mr. Joseph E. Van Etten Mr. Joseph E. Van Steenbergh Mr. Masilamani Vetrivelan Mr. Riaz Waglay Mr. Chen Wai Loon Mr. John W. Walker Mr. Scott Michael Walker

Mr. Stephan W. Weaver, ICC Mr. Gary R. Weeks Mr. Henry Wegier Mr. James J. Weppler Mr. David A. Williams Mr. Michael Aaron Withers Mr. Tony Yee Wong Mr. Charles P. Woodward, PE CCE Mr. Alan C. Wright Mr. David James Yarwood Mr. Kelvin Yu, CCE Mr. Laurence J. Zabrowski Mr. Jose Zerpa x

C tificatio Cer ertification Corner

Valerie Venters, CCC, Certification Board Member

Study Groups
ou want to become certified but don't know how to get started. I know what you are thinkingit's has been a long, long time since you poured over exam material and really studied for a test. Then the burning question: What if I don't pass? Let me offer a suggestion for how to get startedjoin a STUDY GROUP. The study group approach may not work for you, but your ultimate goal is to improve your skills and get certified. One of the best places to get questions answered about confusing or difficult concepts or problems is in a study group. Oftentimes, individual group members have more expertise in the material covered in one of the exam sections than another and can "teach" the material to the other members in the groupand all can learn together. Taking turns teaching and explaining helps build confidence in all the members. The study group also provides a support group. All of us feel discouraged and overwhelmed at times, but a study group can "refuel" your motivation and make studying more productive. Let me give you an example. At one of our local section meetings, several members indicated an interest in becoming certified. The idea of forming a study group began to take shape. We needed presenters who were experienced project controls professionals. We recruited an experienced scheduler to present the scheduling material, an experienced cost engineer to present the cost material, and an experienced estimator to present cost estimating. Other volunteers helped present contracts, present/future value concepts, and behavioral science. A 10week program was mapped out. The first two sessions would cover writing the paper, particularly the abstract and working the basic format of the paper. The other eight sessions would focus on the exam concepts and material. Our group agreed to meet once a week immediately after

work for two hours. We divided the chapters of the Skills and Knowledge of Cost Engineering and the Certification Study Guide into blocks of material: Scheduling, cost engineering, cost estimating, present/future value, and other related material. The presenter for that block of material would prepare his/her presentation, assemble work problems on the subject, and lead an open question/answer discussion at the end of the evening. The open discussion at the end is very important. This is where "real life" examples from the workplace are tied to the presentation material. The results have been extremely successful. Six project controls professionals applied and sat for the exam. Five have passed and only one was unsuccessful. As word spread through our local section that a project controls study group was happening, many other members began to attend the classes. The concepts and material presented not only benefited the people interested in taking the exam, but also was a great benefit to less experienced project controls professionals who were new to our profession. I think we can sum it up this way. A quote from one of our study group members: "Procrastination has always been a problem for me, but studying with others kept me motivated and excited about learning. Telling a co-worker that I would meet them at the study group meeting tonight ensured that I would actually be there. If I had studied alone, I would have procrastinated and started tomorrow. I would never have become certified at that rate. I just received my letter - I PASSED !!! I want new business cards!" There is no time like the present to get started. Gain confidence in your abilities, improve your skills, and distinguish yourself as a certification cost professional.x


Cost Engineering Vol. 45/No. 12 DECEMBER 2003

T E thics C The he E thics Corner

Dr. Kenneth K. Humphreys, PE CCE

Ethics in International Project Work

n an earlier Ethics Corner article, I discussed the ethical implications of doing business in other countries and the practice of gift giving in order to enhance the ability to obtain contracts or to expedite permitting. If you work for a company which engages in these practices or which uses an agent to give gifts abroad, or if you are aware of a company which does this, you would do well to bring this discussion to their attention. Engineering Times June 1998 issue carried an editorial on international work which bears repeating [1]. It said in part:

arise in numerous countries. Development of an international code of ethics that could be accepted by the world community would be an unequivocal step toward preventing such policies. Unfortunately, there is no international code of ethics which might help curtail those practices abroad which US engineers see as being unethical. There is also no justification for doing as the Romans do. Engineers must obey their codes of ethics, no matter what custom prevails at the project location. That may mean that the job will be lost in some cases, but that is part of the price of practicing ethically. Engineers who do think it is acceptable to use an agent abroad to do the dirty work, thus acting like Pontius Pilate and washing ones hands of the problem also need to realize that they are committing a felony under US law and are subject to prosecution. At one seminar I conducted, a participant said the those who wish to engage in this practice have only one option, to give up their citizenship and become a citizen of the country in question. So long as they are US citizens, the Federal Corrupt Practices Act applies to them. His comment also applies to corporations. A US corporation is a citizen in the eyes of the law. Those companies engaging in bribery can avoid the law only by giving up their corporate charters and reincorporating abroad. Is your company willing to do that? x

Engineers involved in an international business situation that strains their professional code of ethics may wish that an interpreter of ethics abroad were at least as accessible as a translator of languages. In the current absence of a uniform international approach, a good sense of ethics may feel like a handicap to professionals trying to succeed within cultures that play by different rules. If engineers do as the Romans do in violation of their ethical code, they may make shortsighted economic gains, but in the long run, they can lose the respect of their peers and the international community---and break the law. Bribing public officials to influence the award of projects is just one example of an unethical practice encountered overseas. Outlawed by the Federal Corrupt Practices Act in the US, such situations nevertheless

AACE International Specialty Certification Update Planning and Scheduling Professional (PSP)
AACE International is developing the Planning and Scheduling Professional (PSP) certification designation to provide a method to credential professionals with knowledge and expertise in these disciplines. This unique program will distinguish professional planners and schedulers as having the abilities to pass a rigorous exam aimed to show their capabilities. The creation of this first-of-its-kind certification program was revealed in June, 2003. The first examination is scheduled in conjunction with the 2004 AACE International Annual Meeting, June 13-16, 2004, at the Omni Shoreham Hotel in Washington, DC. Michael C. Ray, PE CCE, President of Legis Consultancy Inc., of Atlanta, GA, is leading the task force by serving as Task Force Project Manager. Vera A. Lovejoy, CCC, is the co-chair; Other members of the PSP task force include: Abhimaynyu Basu PE; Jennifer Bates, CCE (Technical Board Representative); Ozzie F. Belcher (AACE International President); Thomas W. Burns Jr.; Ron. F. Cagle; Timothy T. Calvey, PE; Kymberli Coffman, CCE (Certification Board Representative); Edward E. Douglas III, CCC; Dr. John O. Evans III; Clive D. Francis, CCC (AACE International President-Elect); Lee J. Hobb; Kenji P. Hoshino; Marlene M. Hyde, CCE; Nicholas L. Kellar, CCC (Certification Board Representative); Gilbert A. Laterza; Paul E. Makris; Donald F. McDonald Jr., PE CCE (Education Board Representative); Barry G. McMillan (AACE International Executive Director); Michael R. Nosbisch, CCC; George H. Ostermayer III, CCE; Glen R. Palmer; Thomas F. Peters, PE; Zartab Z. Quraishi, PE CCE; Dr. Parviz F. Rad, PE CCE (Education Board Representative); Dr. James E. Rowings Jr., PE CCE (AACE International Past President); Robert Seals; Ian A. Street, CCE; Heath I. Suddleson; Stephen P. Warhoe, PE CCE (AACE International Director, Region 5); Anthony J. Werderitsch, PE CCE; Ronald M. Winter; James G. Zack Jr. (AACE International Vice President-TEC). For more information on PSP certification, see page 29. For more than a quarter of a century, AACE International has defined new levels of professionalism through rigorous certification programs for cost and management professionals providing the Certified Cost Consultant (CCC) and Certified Cost Engineer (CCE) professional designations. AACE International also has an Interim Cost Consultant (ICC) certification for those new to the profession. AACE's CCC, CCE, and ICC designations represent the standard of excellence in today's cost and management industry. For additional information on AACE International, its certification programs, or to participate in development of this work, please visit our website at or contact AACE International Headquarters at 800-858-COST or 304-296-8444.


Cost Engineering Vol. 45/No. 12 DECEMBER 2003

management, a pre-occupation with down-side risk or threats to a project would be a likely starting position. Recognition of uncertainty and its associated risk are at the core of the initial stages of developing critical chain schedules. The emphasis on dependencies in the usual approach to developing a project network for a Maruboyina Ramgopal, CCE critical chain schedule helps to avoid risks of missing interactions of different parts of the ABSTRACT: This article argues that all current project risk management processes induce a project. The use of two-point estimates to assess restricted focus on the management of project uncertainty, because the term 'risk' encourages a and address the early view of schedule risk threat perspective. The article discusses the reasons for this view, and argues that a focus on associated with task uncertainty sets the tone up uncertainty rather than risk could enhance project risk management, in terms of designing front for the appreciation of risk in the real desirable futures and planning how to achieve them. Current comprehensive project risk world. In addition to task uncertainty, iteration management processes are compatible with a focus on uncertainty, but warrant some uncertainty (a topic not written of much to date modification to reflect a more helpful uncertainty management paradigm. in the critical chain literature) can also be taken into account in the sizing of feeding and project KEY WORDS: Risk management, uncertainty, project management, planning and scheduling buffers. These resulting buffers themselves become a highly visible and direct assessment of rotecting the value of a project involves sometimes uncertainty implies opportunity in the schedule risk associated with the project as a dealing with the uncertainty that will be the sense of potential welcome effects. Effective whole. associated with its delivery. The role of risk management aims to improve project project management is to assist in turning performance by helping to manage both threats Possible Consequences of a Threat uncertain events and efforts into certain (down-side risk), and opportunities (up-side Perspective Taking a down-side or threat perspective of outcomes and promises. If this is the case, then risks). Risk is defined in the PMBOK Guide the primary process associated with project 2000 as an uncertain event or condition that, if risk is likely to have a number of consequences management should be that of risk it occurs, has a positive or negative effect on a for the role and scope of a risk management process. management. How other processes, (such as project objective [4].

Project Uncertainty Management

scope, schedule, and spending management) support risk management is critical for successful project management and for maximizing the value of project-based efforts. One of the more recently introduced project management methodologies has at its core a focus on the management of uncertainty and risk. Finally, a uncertainty management approach should facilitate integration with project management earlier in the project life cycle than a threat orientated risk management process. The need to explore and understand uncertainty (and avoid a largely pessimistic threat orientated perspective), is greatest in the earliest stages of the project life cycle, during conception when uncertainty is at its greatest. An uncertainty management perspective more naturally focuses attention on this stage of the project than threat orientated risk management. Comprehensive project uncertainty management can operate as an important extension of conventional project development, with the potential to influence project design and base plans on a routine basis, occasionally influencing very basic issues like the nature of project stakeholders and their objectives. Uncertainty and the need to manage it is inherent in all projects. Most project management activities are concerned with reducing uncertainty from the earliest conception stage to the final support stage of the project life cycle (PLC) [1], clarifying what is to be done and ensuring that it gets done. Sometimes the implications of uncertainty are threats, in the sense of potential adverse effects,

With this perspective, risk management looks like uncertainty management. In practice, all current project risk management processes induce a restricted focus on the management of project uncertainty, because of the common tendency to think of risk in purely down-side, threat terms (a tendency which even the authors are not always able to resist). For example, the PMBOK Guide 2000 contains frequent references to risk in threat terms which include giving examples of risks as threats, using terms like severity of impact, the description of risk responses, and the use of probability impact matrices, to determine whether a risk is low, moderate, or high. A pre-occupation with threats might reflect a difficulty in throwing off the commonly understood meaning of risk, or an underlying view that it is more important to use risk management to manage threats than opportunities. A focus on threat management is reasonable, and very useful, in the face of a general tendency to set challenging objectives. If a tight budget for a project is set, then by definition this implies a preponderance of threats to keep to budget over opportunities to come in below budget. Nevertheless, if the potential for opportunities is never explored, then inflation in objectives is a likely consequence, unless those setting objectives make arbitrary adjustments to the objectives to make absolutely sure that they are difficult to achieve. Either way, a threat perspective in risk management is encouraged with limited incentive for opportunity management. In particular, for managers new to risk

Consequence 1Concern With Achieving Predetermined Objectives Risk management is seen as enhancing control, and protecting assets and operations. risk management is about minimizing disturbance to the project, and ensuring everything goes according to plan to meet project objectives. Project objectives, and any information about acceptable tradeoffs between these objectives, provide a framework within which threats must be managed. The nature of objectives and tradeoffs are commercial decisions, part of the project design, and outside the scope of risk management. It is perhaps indicative of a perceived failure of conventional risk management and project management to address objectives and trade-offs that the concept of value management has been introduced. Consequence 2Risk Management is Delayed Until a Project Design or Plan Has Been Developed If risk management is about managing threats to the project, it has limited application until the project is sufficiently well formed for threats to be identifiable. Therefore, there is little point in pursuing risk management until the design stage of the project life cycle, or even the plan stage, is largely complete. risk management is in the conceiving stage of the project life cycle and early in the design stage is of little value, because there is too little information about the project. It follows that risk management is most likely to involve a single major exercise towards the end of the

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design or planning stage, followed by lesser behaviors identified in the previous section updating activities at subsequent major project operate. milestones. Uncertainty About Design and Logistics The nature of the project deliverable and Consequence 3A Focus on Specific Risks the process for producing it is a fundamental Associated with the Current Project Concern is with threats to the project aspect of project uncertainty. In principle, design and plan for execution. Since both are much of this uncertainty is removed in prespecific to the project, concern is only with what execution stages of the project life cycle by can go wrong on this project. Technical failures attempting to specify what is to be done, how, and threats to the schedule are key issues. when, and by whom, and at what cost. In Problems with the organization structure are of practice, a significant amount of this concern only insofar as they affect the current uncertainty may persist through much of the project. Impacts on other projects are not a project life cycle. concern for the project management team, unless they threaten the project in some way. Consequence 4A Focus on Impact Reduction A threat perspective on risk implies a focus on impact reduction and responses concerned with avoidance, mitigation (reducing the size of impact), and prevention (reducing the probability of occurrence). Transferring risk to another party wherever possible looks like an attractive response. Consequence 5No Proactive Management of Good Luck A threat perspective focuses attention on the potential for bad luck and coping with this, but this tends to preclude thinking about exploiting opportunities presented by good luck, should this occur. If the opportunities presented by good luck are not recognized and seized, and only bad luck is captured, the cumulative effect on project performance is clear, especially when contractual boundaries mean one partys good luck is not passed on to another. The behaviors listed above may occur spontaneously to some degree in any single project, but over time the occurrence of a behavior near the top of the list is likely to have knock-on effects, encouraging or inducing lower listed behaviors in a cumulative manner, until all behaviors are exhibited habitually on all projects. Applied in this manner, risk management can still be of substantial benefit to project management. However, it is difficult to exploit the full potential of risk management when one or more of the above behaviors operate. The more ingrained these behaviors become, the more difficult (but the more useful) it becomes to extend risk management to take a broader perspective on project risk and uncertainty. The Scope of Uncertainty Table 1 lists the types of uncertainty that should be addressed in any project context. In principle all of these types of uncertainty could be addressed within comprehensive project management and embedded risk management processes. However, risk management processes which adopt a threat perspective will address only part of this uncertainty, particularly if Uncertainty about design and logistics; Uncertainty about fundamental relationships; Uncertainty about objectives and priorities; Variability; Uncertainty about the basis of estimates; and Uncertainty associated with the conditional nature of estimates.

Uncertainty About the Basis of Estimates An important area of uncertainty relates to the basis for estimates produced by project parties [4]. For example, it is often necessary to rely on subjective estimates for probabilities in the absence of sufficient relevant statistical data for determining probabilities objectively. Uncertainty about the basis of estimates may depend on who produced them, what form they are in, why, how and when they were produced, and from what resources and experience base. Uncertainty Associated With the Conditional Nature of Estimates A particularly important source of uncertainty concerns the assumptions used to generate estimates. The need to note assumptions about resources choices and methods of working is well understood [4], if not always fully operationalized. However, estimates also ought to clearly indicate the extent to which they have been adjusted to allow for assumptions about the incidence of force majeure events, possible changes in project context and scope, and bias during the estimating process. Towards Uncertainty Management In this section we consider what might be done to develop an uncertainty management approach which encompasses all forms of project related uncertainty. Existing risk management processes are an obvious starting point, but these will need modification and augmentation if they are to facilitate comprehensive treatment of project uncertainty.

Table 1 Types of Uncertainty

Uncertainty About Fundamental Relationships A pervasive source of uncertainty is the multiplicity of people, business units, and organizations involved in a project. The relationships between the various parties may be complex, and may or may not involve formal contracts. The involvement of multiple parties in a project introduces uncertainty arising from ambiguity about roles and responsibilities, and Revise Terminology Present use of the term risk is ambiguous. uncertainty associated with moral hazard and Best practice regards risk as encompassing both adverse selection considerations. threat and opportunity, but guidance on risk management is frequently couched in threat Uncertainty About Objectives and Priorities An aim of improving project performance management terms, and in common parlance presupposes clarity about project objectives and risk is more usually synonymous with threat. An the relative priorities between objectives and obvious first step towards uncertainty acceptable trade-offs. Attempting project management is to remove this ambiguity and management or risk management when this use the terms uncertainty and risk with their clarity is lacking is like attempting to build a everyday meanings, employing the words risk or tower on wet sand. The implications of threat to unwelcome consequences, and the uncertainty related to the nature of objectives word opportunity to welcome consequences. and relative priorities need to be managed as Consideration of threats (risk) and opportunities much as uncertainty about what is achievable. then becomes part of uncertainty management. The term uncertainty management itself implies more than just a combined Variability An obvious area of uncertainty is the size of consideration of threats and opportunities. project parameters, such as time cost and quality Rather, the term implies a more fundamental related to particular activities. For example, we purpose of exploring and understanding the may not know how much time and effort will be origins of project uncertainty before seeking to required to complete a particular activity. The manage it, with no preconceptions about what source of this uncertainty is often a lack of is desirable or undesirable. Key concerns are knowledge about what needs to be done and understanding where and why uncertainty is how, rather than a set of specific risk events or important in a given project context, and where it is not. This is a significant change in emphasis conditions. compared with most risk management processes.


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Replacing the word risk with the word uncertainty could significantly broaden thought processes in risk identification which becomes uncertainty identification. Further, concern with identifying sources of uncertainty rather than threats, should encourages a more open ended, neutral description of factors, and facilitate a less constrained and more creative search for response options. After simple substitution of uncertainty for risk in all terminology, an additional step would be to modify wording in risk management guidelines wherever this associates risk (uncertainty) with threat. For example: a problem or a weakness becomes an issue, impact becomes consequence, mitigate becomes modify, avoid risk becomes resolve uncertainty, and so on. Address Uncertainty About Fundamental Relationships, Design and Logistics Risk management is usually motivated by the large scale use of new and untried technology while executing major projects, and other obvious sources of significant risk. A threat perspective encourages a focus on these initial motivating risks. However, key issues are often related to sources of ambiguity introduced by the existence of multiple parties with a variety of objectives, and the project management infrastructure. Such issues need to be addressed very early in the project and throughout the project life cycle, and should be informed by a broad appreciation of the underlying root uncertainties. C.B. Chapman and S. Ward suggest a six Ws framework for this purpose based on the following six questions [1]: 1. 2. 3. 4.

Uncertainty management needs to include the development of operational measures of performance in a way that provides incentives for project parties to make appropriate tradeoffs between performance criteria. Failure to address this issue creates substantial uncertainty about project performance. This failure also has implications for the efficiency and effectiveness of individual parties which go beyond individual projects. Expose and Investigate Variability Single point estimates of a particular parameter are of limited value for uncertainty management purposes without some indication of the potential variability in the size of the parameter. The current widespread use of probability impact matrices generates unnecessary uncertainty by oversimplifying estimates of impact and probability associated with particular sources of risk. Alternative approaches should be adopted which highlight, rather than obscure and under estimate, uncertainty about estimates of impact and probability [1]. As noted earlier, difficulty in estimating time or effort required to complete a particular activity may arise from a lack of knowledge rather than from only the uncertain consequences of particular threats or opportunities. Attempting to address this difficulty in risk management terms is not particularly appropriate. A uncertainty management perspective implies action to improve knowledge of organizational capabilities and manage variability in the performance of activities which contribute to projects. In this, uncertainty management must go beyond addressing uncertainty associated with a specific project, to include management of operations which provide an input into a range of projects.

Address Uncertainty Associated With the Conditional Nature of Estimates Existing risk management processes generally recognize the desirability of recording key assumptions used to generate estimates [4]. However, practice could improve in terms of the extent to which assumed conditions are recognized and managed, particularly in risk financing terms. The project manager cannot be expected to be responsible for all force majeure events, or for major changes in project context and scope, but the organization at some level has to be. Determining at what organizational level these responsibilities ought to lie should be an important aspect of uncertainty management. PROTECTING PROJECT VALUES FROM UNCERTAINTY Project PlanningDependencies and Durations No matter how good a project schedule is or how well resources perform in the execution of tasks in that schedule, if critical dependencies associated with the project are not included in the description of the effort, they represent considerable risk to delivering project value. The Dependency Network The primary aspect of planning in a critical chain environment is a process known as network building. It is a multi-pass approach designed to assure that no key dependencies for the project are missed. Like all effective project management planning processes, it starts, as Stephen Covey might say, with the end in mind. It requires careful consideration of what the project is about, emphasizing identification of the true value-generating aspects of the project. Network Building and Risk Identification The emphasis of network building in a critical chain environment is on clarity of task inputs necessary to support that tasks deliverables. The resulting discussion of input requirements are directly related to risks associated with the ability of that task to do what needs to be done for its required output. The backward building of the network assures that outputs are understood before defining inputs. This focus on dependencies is, in effect a focus on risk, since missed dependencies in plans and schedules are a serious source of risk. Two-Point Estimates and Risk Assessment/Avoidance/Mitigation Schedule and cost risk assessment are inherent in a critical chains two-point duration and iteration estimates. Once basic dependencies are identified in the network building process, the uncertainty and potential variation associated with individual tasks and

Who are the parties ultimately involved? What do the parties want to achieve? What is it that each party is interested in? Which way (how) is each partys work to be done? 5. What resources are required? and Clarify Uncertainty About the Basis of 6. When does it have to be done? Estimates The basis for all estimates needs to be Understanding the uncertainty associated with each of these basic questions, and the understood, in terms of the quality, reliability implications of interactions between them, is and integrity of underlying data [4]. As noted fundamental to effective identification and earlier, uncertainty about the basis of estimates management of both threats and opportunities. may depend on who produced them, what form Use of the six Ws framework from the earliest they are in, why, how and when they were stages of the project life cycle could usefully produced, and from what resources and inform development of project design and experience base. Noting pertinent information about the basis for estimates in the six W terms, logistics. would provide useful information about the Address Uncertainty About Objectives and basis of estimates. This would help counteract bias in estimates, discourage decision making Priorities Strategies for managing project uncertainty based on inappropriately limited data, and cannot be divorced from strategies for managing facilitate selective, cost effective development of project objectives and associated trade-offs. A estimates where appropriate. key issue is whether all parties understand their responsibilities and the expectations of other parties in clearly defined terms which link objectives to planned activities.

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groups of tasks are the next link related to the risk of keeping project promises and delivering desired value. Even if identified, mitigated, or avoided through additional tasks in the network, task delivery is still subject to technical or performance risk. In addition to serving as the basis for turning the dependency network into a critical chain schedule, the two-point estimation process is an excellent vehicle for further understanding risks and ways of addressing them. The first, commitment-level estimate should reflect the inherent task or iteration risk associated with the piece of the project in question. The difference between the larger and smaller estimates is directly related to the assessment of necessary safety associated with task estimates. The amount of safety necessary, relative to the aggressive but achievable estimate will highlight the level of risk associated with the task. The reasons for that safety, which should be a piece of the estimation discussion, will provide opportunities for identifying additional inputs and tasks that can serve to rationally reduce either or both of the estimates, or to help assure that they wont be exceeded in execution. Project Scheduling -- Integrations, Variation, and Rational Promises Some of the major beneficial effects of the critical chain approach come from the linking of scope and time management to risk management. The intimate interactions of these processes in the critical chain approach make them difficult to pigeonhole in the taxonomy of the traditional project management body of knowledge [2], and therefore they can easily be overlooked. The conduits for much of this connection are found in the development and use of schedule buffers and in the process of buffer management. Resource BehaviorsMinimizing the Effect of Parkinsons Law Non-critical chain-based projects often rely on safety embedded within tasks and task due dates (milestone schedules) to schedule and control projects. This approach runs the risk of suffering from the impact of common resource behaviors that will minimize the ability to gain time on the schedule. Parkinsons Law, Work expands to fill the time allowed, is a resulting reflection of these behaviors. Since ultimately, project performance hinges on appropriate behaviors, the underlying purpose of critical chain methodologies is to provide policies and procedures that support desired practices. Project and Risk Response ControlClarity of Priorities and Corrective Action Planning, scheduling, and synchronization are all processes will create a model of expectation for the project organization. But that model needs to be managed once it comes into contact with reality. Appropriate resource

behaviors, especially the required focus on the most important task at hand, require the occasional guidance to clarify priorities in a shifting situation. And if the critical chain scheduling process is used, something needs to be used to replace task due-dates to assess the health of project promises.

isk management can make an important contribution to effective project management. However, there is some justification for the view that current risk management processes are threat orientated and that this limits the contribution that risk management can make to improving project performance. Comprehensive treatment of project uncertainty requires an approach which amounts to modifying and augmenting current project risk management processes. One simple, but effective modification involves replacing the word risk with uncertainty in risk management guidelines, including use of the phrase project uncertainty management instead of project risk management. An uncertainty management perspective draws attention to the need to understand variability in organizational activities that have an input into a number of projects. Developing this understanding need not be associated with uncertainty management for any one particular project and could therefore take place independently of any project management activity. This is a weakness in current risk management processes which are not readily focused on sources of variability, particularly ones which apply to many projects. Similar arguments apply to the identification and management of assumed operating conditions underlying estimates. A uncertainty management perspective needs to address some aspects of project related uncertainty outside of particular project contexts, as part of managing the project infrastructure, taking a programmed or corporate view. Finally, a uncertainty management approach should facilitate integration with project management earlier in the project life cycle than a threat orientated risk management process. The need to explore and understand uncertainty (and avoid a largely pessimistic threat orientated perspective), is greatest in the earliest stages of the project life cycle, during conception when uncertainty is at its greatest. An uncertainty management perspective more naturally focuses attention on this stage of the project than threat orientated risk management. Comprehensive project uncertainty management can operate as an important extension of conventional project development, with the potential to influence project design and base plans on a routine basis, occasionally influencing very basic issues like the nature of project stakeholders and their objectives. Management of uncertainty and risk in an effort to deliver promised project value with certainty is what project management is all

about, and risk and uncertainty lie in the future. Critical chain scheduling and buffer management is not only a technique for the development and tracking of project schedules. It is a coherent and comprehensive approach to project management that encompasses and effects other processes and practices associated with project management as well. Most importantly, its implications for looking forward and taking appropriate actions for accepting, avoiding, and mitigating risk are significant and beneficial. x
REFERENCES 1. Chapman C. B. and Ward S. Project Risk Management: Processes, Techniques And Insights. Chichester, UK, John Wiley, ISBN 0471-95804-2, (1997). Duncan, William R., ed. A Guide to the Project Management Body of Knowledge, Project Management Institute, Upper Darby, PA. (1996). Patrick, Francis S. Program Management Turning Many Projects Into Few Priorities with TOC, Proceedings: PMI International Symposium. (1999b). PMBOK 2000. A Guide to the Project Management Body of Knowledge, 2000 edition, Project Management Institute, USA, ISBN 1-880410-25-7.




ABOUT THE AUTHOR Maruboyina Ramgopal, CCE, is a senior planner with Bechtel Limited at the Spalding Energy Project, West Marsh Road, in Spalding Lincolnshir in the United Kingdom. He can be reached at Certification Papers - Each candidate seeking certification as a Certified Cost Consultant/ Certified Cost Engineer (CCC/CCE) is expected to write a professional paper of a minimum of 2,500 words on a cost engineering-related subject and it must be submitted before or at the time of the examination. Each month some of the top scoring entries are published as an example of what constitutes a good entry. Other members and readers will also gain insights on current industry trends and projects with the publication of these papers in the Cost Engineering journal.

2003 AACE International Membership Expire Dec. 31, 2003 Please make sure that you or your company has paid your 2004 dues to ensure that all of your membership services continue uninterrupted.


Cost Engineering Vol. 45/No. 12 DECEMBER 2003

F or the Boo F or the Bookshelf

Alexia Nalewaik, CCE

Identifying and Managing Project Risk

his risk management book provides a good overview of the risk management process from start to finish, and provides examples from technical projects. The text guides the reader through the three steps of risk identification, assessment, and management, and discusses the difference between macro-management of risk at a corporate or portfolio level, and micro-management of risk at the project level. For example, in the insurance and finance industries, large populations are used to generate expectations of the typical result, whereas the single project considers each activity within the project to provide a credible outcome. Three types of risk are identifiedscope, schedule, and resource risks, with resource risks including project team members, outsourcing/procurement, and finances. Scope, schedule, and resources are also described as project constraints, which pull the project in different directions depending upon the weight or importance assigned to each area. The book stresses the need for an understanding of each facet of the project in order to identify areas of risk. The author recommends deconstructing the schedule and project work breakdown structure (WBS) in order to detect missing work or risky dependencies. There is a very strong emphasis on scheduling, with many good suggestions regarding risk reduction, and the timing of risky activities during the course of the project. The methodology and principles are primarily for project management in general, and can easily be applied to construction projects. The information provided is largely qualitative, with some brief discussion about quantitative analysis, methods, and risk assessment tools. Some of the quantitative methods described are specifically for IT projects, with criteria such as technology, architecture, and system complexity. The material in the book relies heavily on the PMI Guide to the Project Management Body of Knowledge, 2000 edition (PMBOK). There is a detailed analysis of historical information, based upon project data gathered by the author and stored as part of the Project Experience Risk Information Library (PERIL) database. The examples provided are primarily from IT and software projects, with one construction exceptiona recurring example throughout the book is the construction of the Panama Canal. The bulk of the book focuses on good risk management techniques, decision-making, and project planning. Management tools, such as root cause analysis, diagnostic project metrics, and financial metrics, are described in detail. The author emphasizes, repeatedly, that communication and documentation are the keys to successful risk management. The book concludes with a discussion about establishing a reserve in both the project schedule and budget, based upon the identified risks and their impact, and emphasizes the need for continuous risk assessment throughout the life of the project.

Although this text focuses heavily on IT projects and scheduling, the principles contained within are well-defined and can be applied to any project. The author provides the reader with a broad scope of information regarding risk management, and the book is an excellent resource for those who seek an introduction or refreshment of good project management and risk management concepts. x

Identifying and Managing Project Risk - Essential Tools for Failure-Proofing Your Project, by Tom Kendrick, 354 pages, 2003, AMACOM, ISBN 0-8144-0761-7

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A Fast Track Value Analysis Methodology for Major DesignBuild Construction Projects
William F. Brouillard, Jr., CCC
ABSTRACT: Use of the value analysis (VA) methodology as an integral part of the design/build process, will eliminate unnecessary functions (The basis of VA methodology), will reduce initial and life cycle costs, compress construction schedules (saving time and money) while retaining the core principals of preserving value and function. The fast track VA session described in this case study will illustrate that the concepts and methods used for the Orange County Convention Center, Phase V Expansion, further reinforces the need for continued use and even increased use of the VA methodology in the design-build concept. KEY WORDS: Value analysis, design-build, life cycle costs, and guaranteed maximum price Editors Note: This article is based on the Orange County Convention Center Phase V Expansion. The Design-Build Concept he design-build concept of project delivery is a complex process which, in order to be effective, must have buy in from all partiesthe owner, owners representative, architect, and contractor. Without buy in, the process, and ultimately the project, is doomed to failure. It has been said that the design-build method of project delivery can trace its origins to 1800 B.C. with the building of the pyramids. Master Builders who employed the designbuild process built the pyramids. Later designbuild projects include the Grecian amphitheaters and temples. The Romans used the design-build process for the construction of the aqueducts. In one form of the design-build (DB) process, the owner hires a DB firm to deliver a specific project, who in turn, hires the architectengineer (AE). The DB firm develops the scope of the project with the owner and communicates this scope to the AE firm. The AE firm is responsible for developing the design package from concept to mid design and finally to completed design. During the design phase, the design is reviewed and rereviewed with the owner for his concurrence. When the design is approved, the project goes to bid with construction firms who have been pre-qualified by the DB. The developed contractor bid is usually in the form of a guaranteed maximum price (GMP). After review of the bid, the contract is awarded by the DB firm (not the owner). Design-Build has many advantages that include (but are not limited to) the following. Time SavingsReduced overlap in design-construction phases, reduction in bidding period, reduction in potential claims between the AE and contractor because of constant interface, and reduction in scope definition and development. Single Owner Point of Contact Reduced aggravation for owner (Hes still running his business), No three-way finger pointing, and less owner support services are required to monitor the process. Pre-Selected EquipmentThe design scope is refined enough by the bid document stage, that equipment is preselected and can be pre purchased in order to take advantage of any tax breaks or contractor markups. Early Firm PriceNegotiated D-B calls for a fixed upper limit early in the process, usually at 65 percent design, and a price competitive selection fixes the price before the construction is authorized. Reduced Administration LoadNo need to mediate between the AE and the contractor and a reduced likelihood of future legal action. Owner Input During DesignThe owner typically participates in design development meetings and design reviews. Cost SavingsReduced completion time, closer constructability reviews between the designer and builder during the project, less duplication of effort, shared savings incentives, and reduced chance of legal action.

Cost of third party oversight; AE AttentionThe AE will need to be more attentive to the needs of the DB team; Capital CostsCapital (project) costs and issues are more important to the DB team than operating-maintenance (OM) costs and issues; The designer may be selected on a cost basis; The owner is limited on his control of the design; Initial concept development is critical; Less Bidding CompetitionCompetitive bidders are pre-selected by the DB team; Increased potential for liability for the AE; Owners are usually interested in best price rather than best value; and Inherent owner concern for negotiated prices.

The actual implementation of a designbuild process can be tailored to fit the individual clients needs, however the basic premise remains the same from a relationship standpoint. The design-build delivery method has grown in popularity over the last 10 years because of a reduced owners capacity to be involved in the day-to-day running of a project and still be able to run his business and his choice not to bring construction professionals onto his payroll. Value Analysis and the Design-Build Concept In the DB process, VA involvement should take place at the concept stage (10 percent), mid design stage, and finally at the final stage of design. Ideally the VA team should consist of a cross section of the overall project team, owners representatives, engineers and architects from various disciplines, civil, structural, MEP (mechanical-electrical-plumbing) and also representatives from the contractors team. This VA Team could be considered a volatile mix with each party interested in protecting his turf. It is recommended that the VA team leader(s) should come from an independent source. By having the VA team leader come from the DB team, it will serve to diffuse critics of vested interests and reinforce to the VA team that the owners best interests should be the concern of all. Value Analysis has an integral part in the DB process for the following reasons: Insures that the project scope is developed per the owner specificationThis premise is based upon the use of function analysis in order to ensure that the project and its components fulfill the desired function. As the project design is refined, further VA should take place in order to ensure that earlier VA concepts were incorporated in the present design and that new VA ideas will emerge by further study.

Like most best-laid plans, DB can also have potential disadvantages that include (but not limited to) the following. Unresolved IssuesUnresolved issues may occur especially during higher delay cost-times;


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In a major project each phase of the design process is subject to value analysis. The use of VA assists in the defining of scope requirements (function) and serves as a method to bring forth cost saving ideas that can be implemented later in further design stages. Unfortunately, VA usually comes up when a bust takes place between the conceptual budget and GMP. Value Analysis and the Design-Build Concept -The Finley-McNary Study In January 2001, the firm of FinleyMcNary reported on their survey of engineering professionals, Survey on Value Engineering. This survey focused on transportation projects as users of the DB Concept. The Finley-McNary concept of value engineering (analysis) is summarized below: Value engineering is the process of changing a projects design after the bid is awarded to better suit the means and methods of the chosen contractor. This process is used to save money, save time, improve quality, and/or improve constructability of a project. The owner and contractor usually share any savings. Highlights from that survey revealed the following. Most (86 percent) respondents said they have participated in bridge construction or renovation projects where value engineering was used. Nearly everyone who responded (96 percent) said value engineering is either a great tool (47 percent) or occasionally useful (49 percent). Two-thirds (66 percent) said value engineering improved constructability on their most recent project that included value engineering, and 65 percent said it saved time. Most (83 percent) of the respondents said that value engineering saved money on their most recent project. Most contractors (69 percent) said value engineering improved the constructability of their most recent value-engineered project. More than half (59 percent) of designers agreed. Almost three-quarters of designers (73 percent) said that value engineering is unrelated to design-build. The breakdown of the survey group was as follows: 30 percent design firms; 29 percent DOT/Turnpike/Toll Authority; 24 percent contractors; and 17percent other The Finley-McNary study results describe one side of the opinion coin, which projects a perception of value analysis that we must be diligent to change.

Value Analysis and Design Build The New Jersey Experience In 1996 the State of New Jersey Department of Transportation (NJDOT) began a pilot program of design-build for various projects, which included highway alignment, bridge replacement, noise barriers, access ramps, and a new interchange. The NJDOT determined that 30 percent plans would be required before a project is advertised. The reality indicated that plans ranged from 30 to 90 percent. NJDOT realized that the state work force and the road contractors had very little experience with the design-build delivery method, however NJDOT decided that the potential gain outweighed the risk factor. Projects could be built faster, because the design and construction activities could be concurrent rather than sequential. Value analysis was to be one means for the contractor to be innovative and creative while keeping within the contract specifications. The NJDOT experience concluded that value analysis could be a useful and appropriate tool to stimulate creativity, innovation, and cost savings. The NJDOT study does send a caution, that in order to succeed, owners must release projects early because a contractor is less likely to develop VA incentives on a completed design. The Fast Track Value Analysis Method The Orange County Phase V Expansion A Case Study On Oct. 6, 1998, the Orange County Board of County Commissioners voted to move forward with the long-term master plan for the Orange County Convention Center (OCCC). Construction on the Phase V expansion began in Spring 2000, with substantial completion in May 2003. The $748 million dollar addition will be connected to the existing center by a covered walkway and after completion will bring the total exhibit hall facilities to 2.1 million square feet. This expansion makes the OCCC one of the largest convention centers in the US. Two value-engineering sessions were conducted. The first session in March 2000 was conducted because the construction estimate and the designers cost estimate both indicated budget overruns ranging from 15 to 25 percent. As a result of the first value engineering session, numerous recommendations were accepted by the owner and directed for implementation resulting in savings that lowered the budget variance to within one percent of the owners construction budget. The second value engineering session took place in July 2000. The purpose of this session was to reconcile and evaluate the status

of ideas generated in the first session and to generate/evaluate an additional $65.4 million in ideas The design development phase was completed on May 1, 2000, this, along with addendums one through three is the basis for the development of a guaranteed maximum price (GMP) estimate by the construction manager. Pre-Value Engineering Study Activity It was immediately determined by the owners representative that only two and a half days would be allocated for the study, which set the fast track tone of the study. The first phase of this value engineering study began with the reconciliation of ideas developed in the first VE session in February 2000. This was accomplished by sending out the complete idea list from VE I to both the construction manager and the design manager for their feedback and incorporating these items into one document. This document was then filtered to eliminate VE ideas that both parties concurred had been implemented. This filtered list was to become the starting point for VE study II. As the study date approached, meetings were conducted with the DB team and their sub consultant who would be leading the VA study. The contractor and AE were specifically excluded from these meetings since the DB team had all the functionality requirements from the owner and that other players would be directed by the decisions that came out of these meetings. At these meetings, the essential foundation of the VA study was established to include constraints and most important of all essential function along with the FAST diagram, cost model, and to clarify the study objectives. A later work session was conducted by the DB team that established the following goals of the VA study. preserve function; identify $65.4 million in potential savings; improve constructability; and reduce life cycle costs An item that would have crucial importance on how the study was to be directed was the cost model based upon the contractors GMP (guaranteed maximum price) quote. This cost model focused on the costs of the various phases of construction and broke the costs down further in order to find the costliest items in each phase of the project. This activity was to become the basis of focus of this VA study, since the study time was compressed. The study was to focus on cost items since the DB team had already established function. The developed function was to be presented to the VA team in the prestudy package of information.

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The developed cost model determined that of the total $444.0m total construction costs, $214.0m or 48 percent of the total costs were in design package #9 (interiors and bridges) and $100.0m was in design package #5 (structural frame). It was determined during these meetings that the ideal development and ranking would be of the same format as the first VA session in February 2000. It was also determined at this time that the design documents were sufficiently detailed to allow the VA team for this session to break into two groups. The first group would brainstorm and develop ideas related to civil and architecture and the second group would cover mechanical, electrical, and plumbing ideas. The VA Workshop A team of 41 members was assembled to gather, organize, and evaluate data in support of achieving the VA objective. Members represented the entire spectrum of the convention center design, construction, and owners representative teams. The VA team began by identifying those ideas previously accepted during the first VA session, but in the opinion of either the construction manager and/or the design manager, had not been fully implemented in the design development. On the second day, the team broke up into two teams, Team #1 was tasked with creative brainstorming of mechanical, electrical, plumbing ideas and Team #2 performed creative brainstorming of civil, structural, architectural ideas. The teams had generated 165 ideas during a brainstorming session. These ideas were than ranked by the criteria developed by the DB team that included project savings, constructability, life cycle cost, and quality. The ranking session resulted in 108 of the 165 ideas being carried forward into development. Later on the second day, Teams #1 and #2 regrouped in order to develop the approved ideas. In this session costs were calculated, sketches were developed, and idea sheets were input into the computer database in order for the analysis of cost savings to begin. During the tabulation and input of developed ideas, it was determined that some of the savings from one idea may overlap into other ideas. One example of overlapping savings was in idea #38 which called for the reduction of shear locking devices and door monitoring switches, that idea generated $500,000 in savings. However, idea #38A called for the elimination of the shear locking devices and reduction of door monitoring switches, that idea generated $1.5m in savings, but it would be impossible to accept savings for both ideas. The facilitation team began analyzing the ideas immediately and determined that 15 ideas at a value of $54m depicted an overlapping savings of $36m. These ideas were

segregated for reporting and presentation purposes. During evaluation of the developed ideas, the scope and intent of the design documents became clearer. This resulted in adjustments to the baseline (CM) estimate that did not require a change in the design documents. These adjustments were reflected in various ideas rather then as separate issues. Again, an example of this is found in idea #81 that was to review cost savings for using structural steel at the entrance from 48 lbs. per SF to 18 lbs. per SF. This savings was a component of all three options that were developed for changing the entrance design. Another example was to reduce food service equipment allowance to $5.7m. This decision resulted in a $2.0m savings to the project. These estimate adjustments resulted in an additional $4.8m in project savings. The development session produced some ideas which had a significant impact for project cost savings. One such idea was to cut the building off at column line #42; this idea projected a $15.9m savings and would make the southeast corner similar to the northeast corner. Another idea that had a significant impact to the project involved the redesign of the entry from a dome to one curve. This idea had a potential savings of $3.4m. A third idea that was developed called for the elimination of skylights at the entry. This idea showed a potential savings of $2.2m and would require little or no redesign to the project It should be noted that there would be some redesign anticipated in order to accommodate these VE ideas with the significant savings items requiring more redesign than the simple items. However, these potential savings outweighed the cost and design schedule impacts. Presentation to the owner and his representatives began on the third day. During this session the owner determined approval/disapproval of ideas to be carried forward into implementation. At this session 108 ideas were presented, 20 of which reflected overlapping savings and estimate adjustments that would require further consideration. Of the 88 remaining ideas, the owner accepted 53 for implementation, reflecting a total savings of $29.0m A total of 35 ideas that, upon presentation on July 14, were not accepted for implementation by the owner or owners representative. The rationale for this decision was varied. Discussion of each idea clarified the owners position on program requirements; customer and employee comfort issues, and code interpretation issues that could not be overcome. It should be noted that although some items were not chosen for implementation, the choice was not based upon the soundness of the idea, but rather

the informed judgment of the owner not to give up the item at this time. Of the 35 ideas which were initially rejected during the July 14 presentation, nine were accepted a week after the study ended. The nine ideas reflected a further savings of $10.0m. Following the VE study, the general contractor performed an analysis of the VE teams recommended cost savings. This analysis was performed to reconcile the teams estimated costs with the contractors estimate. As a result of this analysis, the cost savings were increased by another $500k. The final results of this phase V VE study projected total idea savings of $47.0m. Because of these savings, the owner was instructed by the Orange County Commissioners to move forward with construction, making this project the largest construction project in Orange County creating hundreds of jobs and stimulating the local economy during this period of economic change.

s owners move forward with their future development plans, they will be analyzing risk and reward as criteria for their project management strategies. Leading this future wave will be the design-build project delivery system. Design-build offers many advantages in terms of gain and has proven to minimize risk for the owner. Value analysis has all the desirable characteristics needed to enhance and expand the traditional concept of DB. By using function analysis as a scope development criterion, the owner has a check/balance that his desires of functionality are met. Value analysis as proven by the NJDOT study to be a tool to stimulate creativity, cost savings, and innovation. The fast track method as described in the Orange County Convention Center case study, is but another tool in the professional project managers tool bag. Fast track provides a means to develop creative solutions to benefit the owner when time is of the essence. Fast track also satisfies the core principals of value analysis, To achieve essential characteristics without sacrificing performance or quality. x

REFERENCES 1. Finley-McNery Engineers. Survey on Value Engineering, Jan. 2001. 2. Jaffe, Richard and Felix, William B. Jr. Value Engineering (VE) and Design/Build - New Jerseys Experience Value World, Summer 1999. 3. Johnson, Richard L. Alternative Delivery Methods of Construction. Presentation to PMA Consultants, LLC, June 2000. 4. McAfee, Richard J. Communication with Bill Brouillard, Oct.18, 2001. 5. PMA Consultants LLC, Orange County Convention Center Phase V Expansion Value Eng. Analysis. July 21, 2000.


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Research Project Impact Analysis

Santa Falcone and David Bjornstadt
ABSTRACT: Sandia National Laboratories (SNL) funded a study at the University of New Mexico to revisit two examples of technology transfer from SNL for the purpose of measuring their full social return and to develop a standard method for making such evaluations. This article describes the comprehensive and systematic template composed of seven steps developed to measure the impact of R&D and reports the findings of the study, providing insight into the social value of research. The cost benefit ratio for society, when counting the cost of developing one technology at SNL for defense related purposes, was 1:4 and, using the most conservative estimates, for the second technology, the ratio was 1:30. KEY WORDS: Research and development (R&D), and value impact analysis

ublic sector scientists and engineers have a natural reluctance to place value on their work in research and development (R&D). They view R&D as an essentially intellectual and clearly beneficial pursuit. Public sector scientists and engineers are, however, under increasing pressure to identify and measure the impacts of their research to justify further funding. This demand arises from a combination of budgetary pressures, the realignment of political power, and increasing competition from the growing number of researchers. Indeed, the conventional view that such measurement is too complex, speculative, and time intensive to be practical is no longer tenable. The relevant question is rapidly becoming how, rather than whether, to develop measures to validate continued public support of specific R&D activities. What will cause the public to support R&D? In the past, doing good science was considered sufficient. Good science has meant demonstrating that the scientific method was correctly employed to expand the basic, applied, or developmental knowledge frontier as identified by each scientific disciplines experts. Belief in the linear model of innovation science progress leads sequentially to economic progressundergirded this sufficiency, in theory. While politicians and policy makers may not be fully cognizant of the theoretical underpinnings of their decisions (i.e., innovation is now known to be better represented by nonlinear models [6,10]), they are aware that the link between research and the achievement of societal goals through fulfillment of public organizational missions (at costs society is willing to pay) needs to be made more explicit to withstand the increasing scrutiny of competitors for public funds. The assumption here is that this new thrust of R&D

measurement will make the link sufficiently clear to garner the support necessary to both sustain public sector R&D and improve the quality and efficiency of publicly funded research, ensuring it is worthy of that support. The purpose of this article is to provide specific guidelines for public sector R&D impact evaluation and metrics. A seven step process leading to a comprehensive evaluation of the impact of research and development is used as an organizing framework. We take as our point of departure the fact that publicly funded research, while subject to net benefit criteria, must also contribute to the wider set of goals that distinguish the public sector from the private sector. Thus, while economic criteria must be included, they must be included in a way responsive to public goals and as one of several relevant criteria. We therefore include a variety of indicators to generate the fullest possible description of the project, realizing all cannot be precisely measured for every project. The aim is to provide a common framework for comparing projects, built up from the subproject level. Public Sector R&D Evaluation What is sought in public sector R&D is success achieved by attention to goals, wisely planning spending through the use of nearterm metrics, and the generation of historical metrics to validate or refute past spending decisions relative to guiding, not binding, criteria. There is, however, very little agreement about how to specify these criteria. Public R&D impact has been gauged by bibliometrics (citation and co-citation analysis); peer review; participation counts for training/education activities and for mechanisms designed to facilitate technology transfer; science user or customer surveys; and publication, patent, copyright, and product counts [2]. Although each of these metrics adds information, the meaning of the

information is not clear because of the inherent limitations of this surrogate data. For example, reviewers are subject to the bounds of human rationality, cognitive capacity, and bias. Therefore, peer review can potentially yield arbitrary, biased, or other than rational outcomes [3]. Publication or patent counts measure a representation of R&D output, rather than the output itself. The number of citations, while communicating the existence of linkages, may not be instructive concerning the importance, quality, or relative impact of the work within a field or subfield because of differences between disciplines in citation, peer communication, and information flow patterns [8]. In addition, demarcation of the boundaries necessary for quantification may be somewhat arbitrary. For example, the lifetime of a technology can be measured from either invention or market introduction to the replacement by its sequel or to complete obsolescence of the technology. A second difficulty is whether (and if so, how) to apportion responsibility for commercialization between R&D and entrepreneurship. Complexity of measurement may increase when research output diffuses across several industries, requiring data to be gathered from many geographically dispersed organizations and locations. Despite these limitations, data is still needed to answer the policy makers question: What impact on industrial products, processes, services, and productivity will public sector R&D investment yield? Though many R&D outputs are not monetizable (i.e., What is the dollar value of one conference presentation?), to be included here they must be quantifiable. As noted, once impacts are enumerated, R&D managers will ultimately require a method to compare the R&D outputs of competing projects. To satisfy the need for comparable data, we argue for standardization of comprehensive measurement. All available data, both monetized and non-monetized, should be reported to the evaluation audience in a standardized format. Comprehensive, as used here, is intended to mean complete, extensive, thorough and, most importantly, inclusive. In the private sector, one value has preeminencenet revenue, that is, contribution to profits. In the public sector, market values compete with values that derive from the responsibility of governance. Thus, the public sector considers values such as equity (or distributional issues), due process (or fairness issues), effectiveness, representativeness and participativeness (democratic process) as well as contributions to the quality of the environment and quality of life. As a result, impact assessment in the public sector will necessarily include metrics that would be considered improper from a pure economic perspective.

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The fact that we are using multiple criteria means that the basic unit of observation takes on greater importance. For example, R&D impacts can be observed at the following eight levels: 1. 2. 3. 4. 5. 6. 7. 8. individual consumer(s); individual firm; subset of specialized firms within an industry; all firms within an industry; multiple industries within an economy; all industries within an economy; multinational economies; and worldwide.

From an economic perspective, the only impacts that are appropriate to include in the assessment of domestic public sector investment are those that cause measurable change at level six, the aggregate economy. From an equity perspective, if the subset of firms in level three is firms within a particular geographic region, targeted by government, for special treatment (like inner city neighborhoods or economically depressed regions), the impact of public sector investment in that region may be an additional appropriate impact to assess (See Appendix A). Likewise, concerns over other criteria might focus on individuals, demographic subsets, tribal nations, or even the worldfor topics like global climate change. Perhaps most important, in creating evaluation metrics, care must be taken to avoid double-counting when moving from perspective to perspective. With that realization in mind, a list of possible R&D impacts is shown in Table 1. The list is reflective of current literature and may well be extended by future work. The impacts are categorized into the following four areas: economy, technology/knowledge, environment, and health. (The first two areas represent a classification of metrics commonly reported in articles and reports on R&D and technology transfer evaluation. To these were added the areas of environmental and health/quality of life impact). The two sections of impacts in the area of economy are distinguished as monetized or non-monetized. Monetized metrics are separated into costs and benefits. Monetized costs were categorized as either capital, equipment, or labor. Benefits are measured with estimates of net profits, cost savings, and revenue generated from patents or license agreements. The monetized metrics are used to conduct cost/benefit analysis. Non-monetized metrics are separated into positive impacts and negative impacts. Positive R&D impacts are measured using the following counts: new business start-ups, successive types of users, jobs; and percent of industry dispersal.

Successive types of users refers to the number of types of industries that use or receive benefit from the research output. Industry dispersal refers to the number of firms (reported as a percentage) within the technologys base industry that have implemented the technology. In regard to job counts, to present an accurate accounting of impact, it may seem reasonable to reduce the credit for the prosperity engendered by the successful commercialization of a new technology by an accounting of the loss of sales and workers displaced by the replacement of the existing technology. However, technology is necessarily destructive and creative simultaneously. As the old technology is made obsolete, the new technology increases the efficiency of resource usage. The resources that are unused by the more efficient new technology and would have been expended using the old, are now free to be applied to a more efficient use. In a moderately competitive economy, the displaced workers are only temporarily, not permanently, unemployed. Society experiences a net gain, not loss, from new technology. Therefore, since it would, in the long term, misrepresent the true impact to reduce impact by the effects of the replacement of the old technology, that reduction is not commonly included in assessments of the impact of new technology and is not recommended here. Job counts should be reported as gross not net new jobs. In the area of Technology/Knowledge, the impact of R&D is measured by counts of tangible outputs of the R&D (products, devices, incremental improvements, the solving of significant universal problems, and algorithms /software) and surrogate measures of these outputs (patents, publications/presentations, postdoctoral research, and industry training). Significant, universal problems extend beyond the scope of the R&D project being assessed, creating hindrance or difficulty in other scientific or technical endeavors and are therefore worthy of measurement. It is important to note that while the aggregate of the enumerations for the four areas of impact will create an overall profile of impact, the assertion is not being made here that the individual enumerations (for example the number of patents) equate to impact because the enumerations alone may only represent potential rather than actual impact. The impact in the area of environment is measured by estimates of known increments or decrements to the number of pollutants in the air, water, or waste related to the R&D. The pollutants are qualitatively graded to indicate the severity of the risk they pose and reported according to the number of pollutants within each grade. (The grading and evaluation, to be consistent with current legal reporting requirements, should be done in accordance

with the rules that the EPA, state, or local environment agencies have developed to implement legislation such as National Environmental Protection Act (NEPA), 1970; Toxic Substances Control Act, 1970; and National Clean Water Act (1977,1981,1987); National Clean Air Act, etc. ) In regard to health/quality of life, data on changes in accident or death rates related to the R&D are reported for the employees within industries and for the public, if applicable and significant. Estimates of verified influence on changes in longevity or quality of life for employees and for the public, if applicable and significant, will also be sought. The differences in R&D projects and constraints on resources and data availability preclude obtaining data for each metric at each level for every R&D project, since R&D impact can range from worldwide to exclusively local. However, the recommendation here is to obtain data for as many indicators as availability and appropriateness permit. We now turn to the recommended seven steps to standardize comprehensive public R&D impact evaluation. Seven Public R&D Evaluation Steps Step 1: Sketch an innovation time line from the inception of this research area or technology to the present day. The purpose of this step is threefold. First, an innovation time line marks the major milestones that have occurred in this area of research. This, by necessity, also identifies the important problems or needed advances or improvements that have existed and those that continue to exist (the appropriate prioritization of the current needs in the research area or technology should become apparent), resulting in a state of the technology/research area profile. Second, this familiarity with the research area or technologys history helps to differentiate major advances from incremental improvements and their associated impacts. Third, participation of or feedback from the technical or scientific community of customers is a necessity to adequately complete this step. The participation of this community will increase the likelihood that the research will be timely and have optimal impact. It warrants mention that this method is intended to improve and assist the conduct and measurement of public sector R&D rather than complicate or impede it. The level of effort to complete this step, for example, should be on the order of the following. The scientist or engineer should seek to verify their own knowledge of the research areas innovations by consulting experts in the area, review articles, proceedings presentations, or texts published within the last three years. The


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key features of the resources consulted are that they should be credible and as current as possible. Step 2: Identify all potential or actual clients/ customers/ beneficiaries of the research /technology project. The purpose of this step is to broaden the researchers perceived set of clients or customers of the research. It is important to identify the users, clients, customers and beneficiaries that will make use directly or indirectly of the research results. Identify here means specific individuals in specific organizations (at minimum two or three individuals representative of the majority) rather than types of organizations or names of industries.
(cost of producing knowledge)
*capital purchase new buildings *equipment purchase equipment/materials > $10,000 *labor wages (including overhead) subcontracts training/reskilling costs

*net profits *cost savings product, process, service cost savings cost savings from more efficient building use cost savings from reducing equipment needs cost savings from more efficient labor use *revenue from licenses

(cost of transfer)
*capital *equipment *labor


create/save jobs start-up new business industry dispersal successive types users increase US market share retain domestic industry improve balance of trade


new products incremental product improvements new processes new devices new algorithms/software new copyrights new patents citations new patents successfully solved problems new tests, codes, standards, calibrations new publications citations new publications new technical reports post doctoral research projects collaborative industry projects collaborative university projects follow-on research projects

new air pollutants new water pollutants new soil contaminants new waste production

abate air pollutants abate water pollutants abate soil contaminants abate waste production

increase incidence of disease increase accidents increase worker mortality decrease longevity decrease safety decrease personal freedom

decrease incidence of disease decrease accidents decrease worker mortality increase longevity increase safety increase personal freedom percent of society receiving benefit from

The importance of specificity cannot be over-stressed. This will increase the likelihood that the researcher is cognizant of whom the active players are in the area and who will be interested in, able to comprehend, and make use of the results. This is important in regard to competition, collaboration, dispersion, use of the results, and oversight considerations. Step 3: Write a lay description of the objective of the research/technology project. Writing for the lay audience (referring here to individuals who may not be scientists or engineers but are involved in allocating or administering research funds), heightens the awareness of the impact that agencies or organizations can have on research agendas and develops the capacity to address the concerns of this clientele, the purpose of this step. This awareness necessitates inclusion of a brief explanation or justification of government involvement in this research area. The conventional explanation for government involvement in research and development is that, left to its own devices, the market would produce too little R&D because of externalities. (A good [product or service] is produced that is public in the sense that consumption by one individual does not diminish the quantity available for others (like a radio wave) and specific individuals cannot be excluded from consuming the good. When this is true, the market will not produce the good in optimal quantities. Examples include national defense or public health). A second circumstance justifying government participation is the presence of significant externalities. Externalities occur when benefits (or costs) from an activity spill out to third parties. In the case of R&D, private firms often have difficulty recapturing the benefits from their investments. Basic R&D produces diffuse benefits that are typically well removed from opportunities to recapture costs by marketing the results. Firms may undertake a small amount of basic R&D while the total benefits to society justify greater amounts. For more applications-oriented research, externalities may still occur. Government may also wish to stimulate more applied R&D to take into account specific types of external benefits such as improved environmental quality, quality of life, or energy independence. The brief explanation recommended here would explain the current status or relationship of public/private research in the area specific to the project. Step 4: Chart the research plan, indicating on a yearly basis, the activities necessary to begin, execute, and implement the results of the research and development. The purpose of this step is twofold. First, projecting the milestones for the research on an annual basis is necessary for the estimation of costs in Step 5. The identification or estimation of the date of market introduction is necessary for the calculation or estimation of benefits. Second, it will establish a plan to contact and obtain input and feedback from the individuals, especially ultimate end-users, identified in Step 1. This will incorporate follow-through for the adoption and use of the research results as an important part of completion of the project. Step 5: Identify the positive or negative impacts of the research. The purpose of this step is to record actual or estimated counts for R&D economy, technology/information, environment, and health/quality of life positive and negative impacts. The type of impacts to consider for inclusion should be derived from Table 1. Ideally, accurate data would be obtained for each category. In actuality, the available information is not that precise, certain, exhaustive, or unequivocal [7]. The profile of each research project will, therefore, include only the items for which data are available or can be reasonably estimated. Step 6: Conduct a net present value or cost benefit analysis. To conduct the analysis, all anticipated or actual research costs and benefits for both the government entity and all other collaborators should be projected on a yearly basis.

*Indicates monetized metrics

Table 1 Public Sector R&D Impacts

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Costs The feasibility of accomplishing the research objective within the time and resources allotted should be apparent after completing this step. As noted earlier, the concept of costs we are employing is the total cost of transferring the technology and, if appropriate, the total costs of resources uniquely associated with the acquisition of the innovation by the government laboratory. The type of costs to consider for inclusion should be derived from Table 1. Table 1, presumes, in its comprehensiveness, that perfect information is available. The standardization and thoroughness that are actually feasible, given normal conditions of imperfect information, are demonstrated in the two examples reviewed in Parts III and IV. The cost to produce knowledge refers here to the investment made by the government laboratory to create or obtain expertise in a technology. It is measured by the sum of the costs of capital, equipment, and labor. For the laboratories, the fully burdened historical annual cost of the average scientific technical person at the laboratory includes operational R&D costs such as the cost of overhead for buildings, their maintenance, equipment, and purchases of incidental materials. This average annual cost is multiplied by the total number of scientific and technical persons involved in obtaining the targeted technology each year. The cost of the transfer of the technology to the private sector is measured by the amount of government and private sector investment allocated to the transfer. This can include grants, salaries, lodging, training, travel, equipment, facilities, and related costs. The costs should be reported either as the sum of the cost of producing knowledge and the cost of the transfer or, if appropriate, as only the cost of the transfer. For example, the national laboratories are multi-program laboratories, with R&D programs in national security, energy resources, environmental quality, and industrial competitiveness. For some technology transfers, the cost of producing knowledge should all be allocated to the transfer. For others, for example those transfers of technology developed for a specific purpose such as national security, counting only the cost of the transfer may be a more realistic cost figure because the laboratory cost to produce the knowledge is often a sunk cost, unrelated to the actual transfer. It would have been incurred regardless of whether or not the transfer occurred, since the laboratory needed and used the knowledge for other purposes. (It is difficult and expensive to assess all of the sunk costs in defense research. In addition, all of the benefits derived from the investment in defense research are also difficult to trace since results are often published and dispersed

widely, contributing to many different fields. If it were possible to trace the benefits of all research to all industries, the truest measure of impact could be derived. However, when data are publicly released and can be used without citation, it is impractical to produce a truly allinclusive assessment of impact.) The benefit of national security and a viable defense were the intended and realized return on the investment made to produce the knowledge. Since there may often not be a valid basis to apportion a part of these sunk costs to the transfer, two numbers are calculated, one with these sunk costs included and the other with sunk costs excluded. This allows the evaluation audience to make the judgment based on full information. Benefits The three categories of benefits recommended for inclusion here are net profits, cost savings, and revenue from licenses or agreements. When R&D produces a new product or process, the license fees, the net profits and/or cost savings that accrue to the companies involved (e.g., if the government lab has a patent or copyright that is leased revenue from these fees, the net profits from the sale of the product and cost savings realized when it is used), are tabulated in this step. This method aggregates this mix of benefits, without double-counting, from the firm, industry, and market level. Appropriate published data and industry experts should be consulted to estimate cost savings and net profits. Once the monetized benefits are identified, the time period over which the benefits are estimated to accrue must be determined. The nature of technology is for it to be in continuous development. (For example, commercial impetus for the development of the transistor resulted from market pressures created by the discovery, refinement, and application of the vacuum tube. A bibliometric study might not make this connection, but a retrospective market research study would demonstrate this point. The institution that invented the transistor, Bell Labs, was actively searching for amplification devices that could improve upon the vacuum tube, which had become a big business). One technology can be said to breed another when it is replaced by its sequel. Thus, the lifetime of a technology extends from its discovery or invention through its market introduction, exploitation, and replacement by its sequel to when it becomes completely obsolete as a technology. The most complete and accurate investment appraisal or return on investment evaluation for a technology would be conducted from its market introduction to its point of complete obsolescence. Unless the point of complete

obsolescence has been reached in a retrospective study, and therefore the actual lifetime is known, the recommendation here is to consult with experts in the field to obtain the most accurate lifetime estimate possible and then apply the following: 1. for technologies with estimated life spans of less than 10 years, the experts best estimate, 2. for technologies with estimated life spans of more than 10 years: (a.) for technologies that are not revolutionary, set the benefit time period as 10 years; (b.) for technologies that are radically new, revolutionary in character, set the benefit time period as 20 years. Although it may be valid to anticipate that a technology will continue and develop over more than 20 years, current convention in finance, accounting, and engineering economics is to limit forecasts, more commonly to five to 10 years, because of the uncertainty and unpredictability of the future. Finally, the estimate of benefits needs to take into account the cycle of growth and decline of cost savings or net profits that will occur during the estimated market life of the technology. The analyst must define the total period over which the innovation will be successfully marketed, the distribution of total sales across this period, and the value of units sold. (A large number of studies have carried out similar calculations. For example, see [4, 5, 9]. For retrospective analysis, the researcher typically has a good deal of information on which to base an estimate of total benefits and their distribution over time. For example, data will likely be available on current applications of the technology, and current sales upon which forecasts of future sales can be based. For prospective studies, in general, two types of innovations occur, those that are truly new and unique and those that are successive generations of an existing technology. For unique innovations, the analyst will, through consulting with experts, determine both the best case and worst case scenarios for what the potential market is if/when adoption occurs. The current adoption cycle of the current generation of the technology should be adjusted, employing expert opinion and other available data, to achieve the most reliable estimate possible. The purpose of this step is to use a structured form of analysis to glean more information from the data gathered. The cost benefit calculation simulates the projection of net revenue employed by the private sector, but adjusts it to take into account the broader economic goals of the public sector. In particular, rather than netting revenues and costs, the public sector nets benefits and costs where benefits is a somewhat broader concept


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than that used in the private sector. Although the results of a cost benefit calculation can be provided in a number of different ways, the components of the analysis are the same (see Appendix B). Net present value is used here to aggregate costs and benefits. Net present value is calculated in two steps. First, we convert the dollars in each year to a base year to correct for the fact that, because of inflation, the value of money changes over time and dollars from later years typically possess less purchasing power than values in earlier years. The GDP deflator series (base year is 1992) is widely available and is recommended for this purpose. Second, the constant dollars are then discounted to the year when funding for the research project under investigation began. This is done to recognize the fact that a dollar payable at some point in the future, say one year from now, is worth less than a dollar today. The difference between the two time periods is sometimes called the rate of interest or rate of return, but for present purposes we refer to it as the discount rate. While there is no exactly correct discount rate, there are an almost infinite number of reasons put forth why discount rates should be higher or lower. In general, people who favor smaller government favor higher discount rates and those who favor larger government favor lower ones. In the US, the Office of Management and Budget sets rules for benefit cost analyses for government projects. The OMB has recognized this problem and issues an official discount rate in its A-95 circular. However, because the discount rate can significantly influence the calculation, it is often wise to bracket this rate to illustrate the sensitivity of the analysis to this choice. A bracketed or sensitivity analysis would, for example, use five percent and nine percent in NPV = [(B0-C0)/(1+i)0] + ... +[(BnCn)/(1+i)n) + T/(1+i)n] addition to the current official rate of seven percent for i in the following formula: where C represents all tangible costs, B represents all tangible benefits, where the time frame over which costs are incurred and benefits are received extends from 0 to n, the relevant rate of discount to equate future values to the present is represented by i, and where T, the discounted terminal value, captures any value of the project after its end date (such as residual or scrap value). It is important to not disregard the other steps and place undue emphasis on the outcome of the cost benefit analysis. Some products of R&D do not penetrate economic markets in an easily traceable way, yet make important contributions to knowledge. If a positive net present value is important to the research project under investigation, a thorough assessment, regardless of the outcome of step seven, could be the

foundation of later research, if anticipated costs and benefits change with time. Alternatively, it could prevent inappropriate future investment, if the concept resurfaces and conditions have not changed. Step 7: Complete a technology impact profile report. The purpose of this step is to create a standard format or convention to enable comparison with the same project over time and between projects. Following a brief description of how the projects were selected, the impacts for the two technologies are presented. Case Selection A time lag exists between the transfer of technology and evidence of its impact. To allow enough time for the impact of the transferred technology to be measurable, technologies were selected that had been transferred at least three years prior to the beginning of this study. (The transfers selected occurred prior to the increased emphasis on technology transfer. With the increased funding, planning, and support, subsequent transfers may achieve much greater impact.). The total population of documented technology transfers at the time of the study from Sandia National Laboratories was well over 1,000. (If literature citations and more casual exchanges of data were included, the transfers would number in the many thousands. Source: SNL technology transfer official.) For the most part, the transfers are technologies from within the Laboratories technical core competencies. The core competencies consist of four scientific research foundations (engineered materials and processes, microelectronics and photonics, computational and information sciences, and engineering sciences) and four integrated capabilities (advanced manufacturing technology, electronics technology, advanced information technology, and pulsed power technology [12]). Another classification for the Laboratories is in regard to the mode by which the transfers occur. For example, transfers occur through cooperative agreements, technical assistance programs, and publication of research findings. A former manager of SNL technology transfer reviewed SNL technology transfers, choosing two transfers that met the following criteria: 1) successful transfers; 2) different from each other (in technology, transfer mechanism, type industry, time since transfer, etc.); 3) SNL maintained contact with the industries involved in the transfers; and 4) the industries would probably be receptive to participating in the study. The two selected were: plasma spray technology transferred to Fisher-Barton, Inc. and polycrystalline diamond drill bits transferred to the rock drill bit industry. The plasma spray transfer involves a small business, an industry less than 100 years
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old and the startup of a new small business. Thermal spray is within the engineered materials and processes core competency and the transfer occurred through a DOE technical assistance program for small businesses. The polycrystalline diamond drill bit transfer involves small, medium, and very large businesses, an industry more than 100 years old, and robust competition. Polycrystalline diamond drill bit technology is within the engineered materials and processes core competency, but is also very interdisciplinary including technologies from the computational and information sciences and engineering sciences (mechanical design and fluid mechanics) core competencies. This transfer occurred through industry advisory committees and industry and university research funded by SNL. Case Study 1: Thermal Spray Table 2 represents the impact of the plasma spray technology transfer from Sandia National Laboratories to Fisher-Barton, Inc. in regard to health, economy, and technology/information. Indicators in three categories contribute to a very positive impact profile for this research project. Particularly in regard to economy and technology/information, the indicators show that the transfer fostered productive, sustainable growth. TST is currently engaged in many activities and projects to develop new products and processes. Because of confidentiality concerns, these were not reported here, but could be reevaluated in the future to enable a more complete and accurate assessment of impact. The Fisher-Barton case is an excellent illustration of successful collaboration between a very large government laboratory and a small company. Despite some inherent disadvantages, including limited capital and slack resources, small companies are, in some ways, ideal candidates for working with government laboratories. The decentralization and flexibility of the small company often contribute, as here, to the success of collaborations. Often, a small company competes on the basis of innovation and, thus, has a vital stake in the transfer, as well as great commitment. Research has demonstrated that smaller firms are more likely to develop commercial products from their interactions with government laboratories [1]. Case Study 2: Polycrystalline Diamond Drill Bits Indicators in four categories (Table 3) contribute to a very positive impact profile for this technology transfer. Particularly in regard to economy and technology/information, the indicators show that the transfer fostered productive, sustainable growth. SNL is currently engaged in research to advance the efficiency and effectiveness of PDC drill bits,

further increasing the benefits that will be derived by society from this technology. (One recent example being the report from BP Exploration Co. (Columbia) Ltd. that in drilling in Columbia's Cusiana field, one PDC bit saved $419,000 [11]). The impact profile for the polycrystalline diamond drill bit technology transfer is a success story. The contribution that Sandia National Laboratories made to the oil and drilling industries is considerable. In many respects the PDC bit case is an ideal example of the way public R&D should work. The government initially got involved in PDC bits because of market failures associated with geothermal drilling technology and government priorities for energy resources. SNL management had the foresight to examine from a systems viewpoint all aspects of energy availability from discovery through production and final use of energy supplies. This led SNL to emphasize areas where industry had identifiable technical problems to be solved. Both SNL and industry could effectively work on the same problem and satisfy two very different sets of needs, serving

the public good and increasing the efficiency and profitability of industry. In collaboration with industry, the early review of the industrys technological needs, the targeting of specific technologies, and the setting of specific R&D goals provided direction uniquely available through the combination of the Laboratories concentration and depth of scientific expertise in conjunction with the Laboratories perspectiveexternal to industry. The capacity to provide funds to sustain industrial R&D was also a contributing factor to this transfers success. Technology was transferred into the public domain and widely used. Commercial benefits accrued precisely because knowledge was freely available. The collaborative spirit and free flow of knowledge are striking features (occurring as they did in a very competitive industry) of this transfer. This case stands in marked contrast to the Fisher-Barton case, not so much in the quantity of benefits, as in the distribution of benefits. In the drill bit case, the benefits were distributed quite broadly and the flow of knowledge was less hand-to-hand. While the diffuseness of the

benefits presents some problems for evaluators, it is an equally valid approach to technology transfer and one that is particularly likely to lead to impacts of great magnitude.

ECONOMY POSITIVE IMPACTS Business Startups 1 Jobs created 10 Successive Business Users 6 *Cost\Benefit ratios (cost = knowledge production and transfer costs) @ 5% 1:4 @ 7% 1:4 @ 9% 1:3 * Cost\Benefit ratios (cost=transfer costs) @ 5% 1:274 @ 7% 1:229 @ 9% 1:193 TECHNOLOGY/INFORMATION POSITIVE IMPACTS new patents 1 new publications 4 citations new publications 5 industry trainee (number of) 1 industry trainee (number of months) 15 follow-on research projects 1 HEALTH/QUALITY OF LIFE POSITIVE IMPACTS percent of population receiving benefit from transfer 50% *monetized metrics
Table 2 Plasma Spray Impact Profile

ECONOMY POSITIVE IMPACTS Jobs created 475 Successive Business Users 4 *Cost\Benefit ratios (cost = knowledge production and transfer costs) @ 5% 1:37 @ 7% 1:33 @ 9% 1:30

TECHNOLOGY/INFORMATION POSITIVE IMPACTS new publications 34 citations new publications 68 new computer algorithms/software 2 incremental product improvement 1 successful problem solving 2 follow-on research projects 1 HEALTH/QUALITY OF LIFE POSITIVE IMPACTS percent of population receiving benefit from transfer 100% worker accidents prevented 3260 worker fatalities prevented 36 *monetized metrics
Table 3 Diamond Drill Impact Profile

his article began by acknowledging the increasing pressure to justify further funding of public sector research and development. Justification and optimization of public sector research and development will be better realized when the impacts of both completed and proposed projects are accurately and thoroughly reported. The fullest accounting of R&D may not be accomplished until a decade or two after the completion of the project, so it is important to plan to conduct both retrospective and prospective analyses to satisfy the need for greater accountability and efficacy in public R&D. Research scientists should recognize that well done evaluation will most often be a positive marketing tool, perhaps even a necessity for earning the privilege of conducting research and that the ultimate goal is to clearly identify the impact of technology transfer from their laboratories in a manner that can be useful in the resource allocation process. Generally, the impact profile evaluation method is sound for assessing costs and benefits accruing from technology transfers, based as it is on standard assumptions of a well known and widely-applied set of cost-benefit analysis principles. However, the following issues need further consideration: the validity of experts estimates, the sequence of profile preparation, the choice of indicators, the cost calculation, the boundaries of the transfer, and the economic contribution of knowledge. In many instances, the application of the method will require the use of experts estimates. The nature of retrospective analysis is such that either the type of financial and nonfinancial data needed was either not recorded in the first place, not published, or records are no longer available. If this type of assessment were to become more routine, records that would facilitate its execution might be more commonly maintained and filed. For future impact profiles, the more efficient sequence of impact profile preparation is to first spend sufficient time up front to understand the technology and to obtain all available information from published sources. The next important step is to use this understanding and information to ensure that, if at all possible, the specific indicators for which data will be sought for the profile and appropriate scales of measurement are identified and compiled into standardized questionnaires specific to the sector (ie., a questionnaire for each type of industry involved, for SNL managers, for university scientists, etc.). If these two steps are taken

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prior to interviews with experts, the interviews will be more efficient. Progress was made toward identifying what the parameters of an assessment (choice of indicators) of the impact of transferred technology might be. Yet, questions remain whether the four areas are comprehensive or narrow enough, whether the measures chosen within each area are appropriate and sufficient, and whether there can be any uniformity between the scales of the measures from one technology transfer to another. As was intended, the two transfers were different enough to pose singular issues in regard to the measurement of each indicator. This method can provide a point of departure for the R&D evaluation community to move toward identifying what the areas of greatest importance are, what should be measured, and what acceptable practice in measurement might be. While there can be no simple recipe for conducting impact studies because the technologies and industries differ greatly, impact profiles provide a framework to guide future studies. It is important, as far as possible, to provide common points of comparison and to encourage that current projects be archived in ways to facilitate future research on impacts. The great range in return-on-investment indicators is chiefly owing to different approaches to calculating costs. Clearly, there is no one-best-way. It is vital, however, that one be aware of the great differences depending upon cost calculation. A primary concern, in the case of technology transfer impacts, is the extent to which one charges as a cost, the amount spent on the direct mission objectives of the laboratories. In all likelihood, the most sensible approach is to develop some type of discounted overhead investment figure to use in the calculations. This will require further research and more information about laboratories accounting and overhead. In a more direct, hand-to-hand transfer (e.g., Fisher-Barton, Inc.), the setting of boundaries is not troublesome. But in more diffuse transfers, the parsing out of credit remains a problem. It is difficult to know just where the benefit lines should be drawn. The best approach, perhaps, is just to make sure one is clear in communicating assumptions. Each transfer examined here yielded not only tangible economic benefit but a stock of knowledge as reflected in the technology /information area. Arguably, that contribution is not fully captured by examining the economic use to which the information is put. The economic benefits are understated by the lack of quantification of the contribution of knowledge in dollar values. In the first place, the information may have inherent value beyond its economic use. Second, the economic appropriation of the information may occur at various points in time by various parties, including, perhaps, some in the

intermediate-range and distant future. There is likely to always be an undercounting of the benefits of any scientific and technical knowledge not subject to immediate and direct appropriation. Collaborative research (consortia, partnerships, etc.) among government, university, and industry laboratories is a component of the R&D system that embodies the synergy of R&D in an institutional form. In both official and unofficial collaborative interactions, the goals and orientation unique to each sector can enhance the timeliness, creativity, and thoroughness of the research. In this study, a high degree of synergism was observed between the laboratories, industry, and universities. The diversity represented by these elements is important to preserve and further encourage. As the laboratories start to work increasingly with industry, questions of fairness and equal access become more pressing. One way to enable fairness is to foster consortia that enables entire industries to benefit. In a sense the PDC drill bit transfer fits this model, although no formal consortia existed. In future studies it might be appropriate to include an early formal consortium. However, an alternative viewpoint of consortia held by some researchers is that it is a good theory that only works well in rare cases for the following reasons. Positive aspects of consortia include: a broader constituency enabling a broader base of support; more productive for precompetitive research; foster breakthrough research if participants are committed and agree on licensing; more stable over time; and it is less subject to criticism of unfairness or advantage to one firm. Negative aspects of consortia include: extremely timeconsuming and difficult to form because of cost; resistance because of competitiveness pressures; unwillingness to assign top researchers to work on; unwillingness to work on cutting edge technology because of competitiveness pressures; and unwillingness to make time (long term) and effort commitments. In contrast, individual companies in partnership agreements with the laboratories anticipate greater and more exclusive return and therefore commit resources more willingly and effectively. Appendix A The US Department of Commerces Bureau of Economic Analysis (BEA) has provided published multipliers, listed by state, available at no cost and will calculate multipliers for specific industries in specific counties or regions on a fee basis. If budget and time restrictions apply, the published Regional Input Output Modeling System (RIMS II) input output multipliers could be used. Although the published multipliers are not as current as those obtainable for a fee, they are reasonable and conservative for the

estimation of the regional economic impacts of the introduction of a new technology. Appendix B The following example is included to illustrate one alternative method (to cost benefit analysis) of calculating R&D economic impact. Consider an electric utility faced with a choice of either purchasing scrubbers to remove sulfur from stack gas emissions or purchasing emissions permits that give the utility the right to emit one unit of sulphur per permit. Assume that the utilitys process normally emits 100 units of sulphur and that it must use one permit for each unit over 15 that it emits. Assume further that permits can be purchased at a constant cost of $10 per permit, or $850 if the firm wanted to rely strictly on permits. Scrubbers each reduce stack gas emissions by one-half. Hence, the first scrubber reduces emissions from 100 units to 50 units, the second to 25 units, and the third to 12.5 units (below the threshold of 15). For the present, assume that each scrubber costs $80. The utility thus compares the cost of buying scrubbers with that of buying permits. For $240 it can meet its emissions reduction responsibilities by buying three scrubbers. Moreover, it saves $610 by doing so. Using these assumptions no combinations of permits and scrubbers would yield greater savings. Note that the value of the scrubbers to the utility is significantly different from their costs. The first scrubber reduced sulphur emissions by 50 percent, yielding a savings over permits of $420 ($500 - $80). The firm would have been willing to pay up to $500 for the first scrubber given its alternatives but did not need to do so. The second scrubber reduced sulphur emissions by 25 percent with a savings of $170 ($250- $80). Again, the willingness of the utility to pay for the scrubber was up to $250. The third scrubber reduced emissions by 12.5 percent, for a savings of $20 ($100 - $80; note that the emissions requirement was 15 necessitating a purchase of only 10 permits). Overall, a savings of $610 occurred. This value is sometimes termed consumer surplus. In this example, the demand derives from the nature of the scrubber technology and the price at which permits can be purchased. For a household considering a similar decision, it would be necessary to calculate the household demand function to estimate willingness to pay. In general, the net benefit, otherwise known as consumer surplus, accruing to an innovation is measured by difference between the willingness to pay (expressed by the current cost of the least cost substitute) and the actual cost of the innovation (assuming that it is produced at constant rather than increasing cost). Were the target of analysis an entirely new product for which there are no substitutes there would be no alternative but to calculate the demand function for the innovation, a

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difficult task. Fortunately, when there are close substitutes, as scrubbers and permits, the cost savings (net benefit or consumer surplus) can be approximated much more easily. Suppose, in this case, a new alloy reduced the cost of the scrubber by $20. Thus, the annual savings from the innovation would be $60, $20 each for three scrubbers. By estimating the overall number of scrubbers purchased and the effective life of the innovation, a present value for the innovation could be calculated. Note that by design, this example yielded an easy calculation. If the scrubber originally cost $110, rather than $80, the firm would have only purchased two scrubbers and used permits to achieve the remainder of its emissions target. If a cost saving innovation reduced the cost below $100 (the cost of permits), the firm would purchase three rather than two scrubbers. Suppose that the innovation reduced the cost from $110 to $90. Then the savings would be $40 from the first two scrubbers and an additional $10 from the third scrubber. In general, the bench scientist will not know the exact demand curve and will therefore not calculate an exact benefit (the values will be approximate). However, if substitutes exist for the innovation, we believe this approach approximates the savings well enough for the purpose at hand. Whenever a process innovation occurs that lowers the cost of producing a product, this method provides a close approximation of the net benefits up to the point at which the lower costs attract additional purchases, and there is no need to estimate a demand function. In the case above, the process innovation improving the scrubber only affected cost and hence willingness to pay for the old scrubber and the improved scrubber was identical. Hence, willingness to pay for the two types of scrubbers nets out and benefits are estimated as reduced costs. For virtually all process innovations and most product innovations, net benefits can be calculated in this manner as a close approximation. x ACKNOWLEDGMENT The authors would like to thank Glenn Kuswa, Sandia National Laboratories, and all project participants for their assistance in this research.
REFERENCES 1. Bozeman, B., M. Papadakis and K. Coker. (1995) Industry Perspectives on Commercial Interactions With Federal R&D Laboratories Report to the National Science Foundation, Research on Science & Technology Program, Contract No. 9220125, January. Cozzens, S., S. Popper, J. Bonomo, K. Koizumi, and A. Flanagan. Methods for Evaluating Fundamental Science. RAND draft series: DRU-875/2-CTI. For an overview of current R&D evaluation techniques see











volume 18:1 issue of Evaluation Review, A special issue on research impact assessment. Chubin, D. (1994) Grants Peer Review in Theory and Practice, Evaluation Review. 18:1. 20-30. Islam, T. and N. Mead (1997) The Diffusion of Successive Generations of A Technology: A More General Model Technological Forecasting and Social Change 56, 49 60. Mahajan, V. and E. Muller (1979) Innovation Diffusion and New Product Growth Models in Marketing Journal of Marketing 43, 55 68. Manchester, GB: Prest and M. Callon, P. Laredo, V. Rabeharisoa, T. Gonard and T. Leray. The Management and Evaluation of Technological Programmes and the Dynamics of Techno-Economic Networks: The Case of AFME Research Policy. 21:21536, (1992). Munda, G., P. Nijkamp, and P. Rietveld Information Precision and Multi-criteria Evaluation Methods in Efficiency in the Public Sector: The Theory and Practice of Cost-Benefit Analysis. Edited by A. Williams and E. Giardina. Cambridge: University Press (1993). Narin, F., Olivastro, D., and Stevens, K.. Bibliometrics/Theory, Practice, and Problems, Evaluation Review. (1994):18:1, 65-76. Norton, J. and F. M. Bass. Evolution of Technological Generations: The Law of Capture. Sloan Management Review (Winter of 1982): 66-77. Swann, P. The Economic Value of Publicly Funded Basic Research: A Framework for Assessing the Evidence. January, 1996. Rappold, K. Industry Pushes Use of PDC Bits to Speed Drilling, Cut Costs, Oil & Gas Journal. (Aug. 14, 1995) 12-15. SEAB Visit of the Secretary of Energy Advisory Board (SEAB) Task Force on Alternative Futures for the DOE National Laboratories, August 16, 1994, Sandia National Laboratories' Itinerary.

Books For Review:

If you are interested in providing a detailed review of any of the following books, please contact AACE International. Current titles include: A Guide to Cost Engineering, Adek Apfelbaum, 2002, ISBN 1-4033-0328-22003 Identifying and Managing Project Risk, Tom Kendrick, 2003, ISBN 0-8144-0761-7 The first request in will have the item shipped to them. Reviewers are given a month or more to read the book and draft a review. All books are to be shipped back to headquarters for inclusion in the AACE International Technical Library.

ABOUT THE AUTHORS Santa Falcone is an associate professor, School of Public Administration, University of New Mexico in Albuquerque, New Mexico. He can be reached by e-mail at David Bjornstadt is a chief economist with the Oak Ridge National Laboratory at Oak Ridge, Tenn. REVIEWER COMMENT As a FYI, one of the reviewers of this article noted that, Some Cost Engineering readers may not understand the issue of having to justify estimates for R&D projects. By way of explanation, the reviewer said, R&D projects are very different from the traditional capital construction projects, but similar to operation-type projects.


Technical Articles - Each month, Cost Engineering journal publishes one or more peerreviewed technical articles. These articles go through a blind peer review evaluation prior to publication. Experts in the subject area judge the technical accuracy of the articles. They advise the authors on the strengths and weaknesses of their submissions and what changes can be made to improve the article.


Cost Engineering Vol. 45/No. 12 DECEMBER 2003

S Feat Special pecial Feature

Sean Maggard of Edelman Agency

Salt Lake Citys Organizing Committee Receives the 2003 Project of the Year Award from Project Management Institute

Submitted photo

The 2003 PMI Project of the Year award was received by the Salt Lake Organizing Committees Olympic Winter Games of 2002. Muck work went into planning and management of the games. Shown above are colorful banners, downtown Salt Lake City and some of the constructed facilities.

ALTIMORE, MDThe Project Management Institute (PMI), on Sept.20, announced the Salt Lake Organizing Committees Olympic Winter Games of 2002 (SLOC) as the winner of its 2003 PMI Project of the Year Award. Following an extensive selection process, SLOC was selected among a host of successfully completed projects around the world, including the two other finaliststhe Pentagon Phoenix Project (Pentagon Renovation Program), run by the Office of the Secretary of Defense and the North Pailin Gas Development Project run by Unocal (parent company of 76). Since 1989, PMI has recognized and honored the accomplishments of organizations and companies around the globe and their project teams for superior performance and successful execution of large-scale, complex initiatives. The Project of the Year Award Criteria involves specific requirements about a projects budget, originality of applied project management techniques and project complexity.. Past award winners include the Hawiyah Gas Plant Project by Saudi Aramco (2002), the Mozal Smelter Project (2001), the Trojan Reactor Vessel and Internals Removal Project (2000); the Qatargas Liquified Natural Gas Plant (1999); and the Mars Pathfinder Project (1998). At the PMI Global Congress 2003-North America, this years award was presented to Matthew Lehman, SLOC Project Manager and Managing Director of Operations Planning and Management, David Cummins, SLOC Quality Assurance and Director of Operations Planning and Management, and Robert Kenniston, SLOC Assistant Project Manager and Director of Operation Planning and Management. Receiving this award is a great tribute to the members of our team and reflects the critical role of project management in our complex environment of managing 42 integrated functions, commented Matthew Lehman, SLOC Project Manager and Managing Director of Operations Planning and Management. We believe the Olympic example dispels the myth that project management philosophies, methodologies, and practices are

only useful for defined scope projects, but rather equally applicable to fluid non-traditional applications. When asked about how project management practices and tools were critical to the success of the 2002 Olympic Winter Games project, D. Fraser Cullock, Chief Operating Officer of the SLOC team said, SLOC fully embraced project management making it the cornerstone of Olympic planning efforts, quality management programs, and games-time operations. These programs were essential to the games. The SLOC managed the $1.9 billion (USD) project that encompassed the entire planning and operations of the 2002 Olympic Winter Games and the Paralympic Winter Games under a single schedule. Initiated in 1997, the projects scope consisted of the construction of 22 venues, the acquisition and training of a 47,886-member staff, expansion of a highway and interchanges, the coordination and integration of 77 nations, including the US military and Special Forces, US Secret Service (USSS), the US Federal Bureau of Investigation (FBI), the US Federal Emergency Management Agency (FEMA), and the National Guard. The Salt Lake Olympic Winter Games of 2002 also included the coordination of the participation of 8,730 media, 1.6 million spectators, 2,399 athletes and National Olympic Committees from 77 countries, among many others. The overall planning and operation of the games was directed by a group of 18 managing directors, each representing several functions. Each managing director was accountable for the management of their departments specific project plans under the direction of a master games schedule. The Salt Lake City Organizing Committee joins a long line of winners who represent project management practices at their best, said Gregory Balestrero, CEO of PMI. This years field was especially competitive, with entries from around the world. Every project management practitioner strives for the level of skill that these entries reflect.x

Cost Engineering Vol. 45/No. 12 DECEMBER 2003


P rofessional

S er vices D irector y
2004 Editorial Calendar
Cost Engineering journal is announcing its 2004 Editorial Calendar. Monthly themes are tentative and subject to change. However, the current schedule includes the following.
January Information Technology February Scheduling March Productivity April Project Controls May Project Management June Dispute Resolution July Economic and Financial Analysis August Project Management September International Projects October Cost and Schedule Control November Planning and Scheduling December Information Technology

Index to Adver tisers

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These themes primarily reflect the subject areas of papers that have been accepted for and passed the peer review process.

AACE International Provides Internet Learning Opportunities through

Are you looking for intensive training in communication skills? Contracts and construction law? Estimating and bidding? Check out the Distance Learning area of the AACE International website for 10-week internet courses on these topics and others to advance your skills and knowledge.

Course List Includes:

Introduction to Construction Estimating Supervisory Training Program On-Line (9 courses)

Classes - starting January 12, 2004

Construction Blueprint Reading Oral and Written Communications for Construction Supervisors Contract Documents and Construction Law Planning and Scheduling Estimating and Bidding 2

Want to give a new employee an introductory estimating course? Introduction to Construction Estimating is a self-paced course that can be started at any time. It covers such topics as types of estimates, elements of an estimate, quantity take-off techniques, pricing techniques, and more.

Classes - starting April 5, 2004

Construction Blueprint Reading Accident Prevention & Loss Control Project Management for Construction Supervisors Construction Productivity Improvement Estimating and Bidding 1

And thats not all! Courses in Planning and Scheduling, Contract Documents and Construction Law, and Oral and Written Communications for Supervisors will be held periodically, as will Construction Productivity Improvement, Project Management for Construction Supervisors, and Accident Prevention and Loss Control.

Complete information on all courses can be accessed at: http://w w


Cost Engineering Vol. 45/No. 12 DECEMBER 2003

T AACE I The he AACE International Bulletin

Aurora-Edmonton Section The November Aurora-Edmonton Section meeting, Innovationthe key to best value over the life cycle of a project, was presented by Dev Fraser. Innovation affects the cost, schedule, quality and performance of a project dramatically. How to promote innovation in the design, construction and maintenance aspects of projects was the focus of the talk, using lessons learned from other countries and examples from PCLs extensive project history. Mr. Fraser, Vice President and General Manager, Corporate Services, PCL Constructors Inc., has over 25 years experience in the North American construction industry. He is a civil engineer and in his current role with PCL, Mr. Fraser oversees and guides PCLs corporate departments of human resources, systems and technology, operational support, and the PCL College of Construction. He is active with PCLs continuous improvement process, PCLs QUEST. Cascade Section The November Cascade Section presentation was by Bob Elliott, from Kiewit Pacific Construction. He is a project manager on the $200 million dollar third Tacoma Narrows Bridge project and was a project manager on the construction of the Crooked River Gorge Bridge. The new bridge required 7,865 cubic yards of concrete. It will use 132 miles of 1 diameter reinforcement bar, and over 4.5 miles of high-tension cable. Over 28,000 cubic yards of rock were removed from the cliff faces. The project began on Nov. 1, 1998, and was officially opened Sept. 16, 2002. During Mr. Elliotts first several years with Kiewit, he focused on Powerhouse work and hydroelectric projects, Terror Lake, Opal Springs, and Stewart Mountain. Bridge projects have included nearly every type of bridge construction, cast in place post tensioned box girder, simple tee beam bridges, pre-cast cast girder bridges, super concrete girder bridges, segmentally cast arch bridges supporting a box girder deck, cast in place segmental bridges, pre-cast segmental bridges, steel girder bridges, orthotropic tub steel bridges, simple steel tub bridge, cable-stayed bridges and he is currently sponsoring the towers and anchorages for the new design-build Tacoma Narrows project, suspension bridge. He had a two year assignment off the coast of Newfoundland, responsible for a GBS structure HIBERNIA.

Submitted photo

Chinook-Calgary Sections October dinner meeting panel speakers were (from left to right) Wally Strutt, Murray Mortson, Dan Garon, Peter Bickham, Bryan Boyer, and Bob McTague Chinook-Calgary Section An array of project and construction performance techniques were discussed by a Chinook-Calgary Section panel of construction experts representing a broad range of experience from the Alberta Energy Project Construction marketplace. Some key elements discussed were: project performance metrics, productivity measurement and control, construction front end planning to set EP priorities setting design priorities to meet construction needs, construction input into procurement sequencing jobsite material management methods, short interval scheduling for optimum labor deployment, optimizing jobsite infrastructure layout. Some 73 individuals attended the Nov. 19 Chinook-Calgary Section presentation that discussed the unique opportunity for Alberta to play a vital role as a supplier of secure oil to the US and reduce its dependence on oil imports from geopolitically challenged areas of the world, such as the Middle East. A The presenter, Abdul Harji, P.Eng., has over 30 years experience in process technology and engineering with both operating and EPC companies in Europe and Canada. He has participated in projects in North America, Europe and the Middle East. Since 1980, he has participated in numerous strategic studies and projects related to processing bitumen derived from oil sands and oil refining. Recent client companies have included Petro-Canada, Canadian Natural Resources, Husky Energy, Shell Canada, and Co-Op Refineries Ltd. Chicago Midwest Section Joe Orczyk, PE, CCE, was the guest speaker at the Oct. 2 Chicago Midwest Section meeting. The purpose of his presentation was to describe graduate education at Purdue Universitys Department of Building Construction Management. The presentation helped section members become familiar with a source of future employees. Also, members learned of Purdues efforts to engage with the construction industry. Questions centered on what is being taught to todays graduate construction management students and how the section members could benefit from Purdues engagement with the construction industry. East Tennessee Section The East Tennessee Section presented its 23rd successful Fall Seminar, Oct. 20-22, in Knoxville. Over 85 project and cost professionals attended the three separate sessions. Mondays symposium featured a keynote address by Joel Koppelman, CEO of Primavera Systems and eight technical papers presented in two separate tracks. Skills and knowledge workshops - risk analysis and competitive edge: project management - were conducted Tuesday and Wednesday to sharpen the talents and expertise of the participants. In addition to the

Submitted photo

Cascade Section President, Ted Downen, above left, presents guest speaker Bob Elliott of Kiewit Pacific Co., a certificate of appreciation for speaking on the Crooked River Gorge and Tacoma Narrows Bridge Construction at the Nov. 13 dinner meeting.

Cost Engineering Vol. 45/No. 12 DECEMBER 2003


professional training afforded the participants, the Fall Seminar is the funding source for the sections scholarship program. Also at the Fall Seminar, a TCM award, an award of excellence for distinguished and extended service to the cost engineering profession and the local sections goals, was presented to Wiley Byers,CCC.

training to project teams. The message was that Six Sigma has less to do with statistical tools than it does with leadership and cultural change. If you can control variation, you can achieve remarkable business results. Six Sigma can be used again and again to improve or design processes to align with changing customer needs with Six Sigma providing a common language for continuous improvement. Montreal Section The Montreal Section has had a lively start to its 2203- 2004 program year with a special presentation entitled, Highlights of Key Papers from the 2003 AACE International Annual Meeting, as well as latest news from the Association. The meeting briefly showcased several technical presentations of special interest selected by members of the local section who had attended the conference in Florida, including Guy Germain and George Baram of SNC-Lavalin, Inc., and Yves Lafrance of Dessau-Soprin, Inc. Les McMullan of SNC-Lavalin emceed the event and much interest was expressed in repeating this next year. Another outstanding evening in late October was a forum entitled, The Management of Contingency and its Risk on EPC Projects. The panel members represented the views of the main stakeholders of owner, consultant and contractor. The panel included Dr. O Moselhi of Concordia University, Rick Geren of Aluminerie Alouette, Adam Malhhassian of SNC-Lavalin and Haitham Kamil of Hatch Associates. George Barmam was the moderator. With much interest from the student section of Concordia University and other local members, a certification readiness seminar is being planned as one of the upcoming events. Joint meetings are also planned with PMI and the Association of Quantity Surveyors. New England/Boston Section The New England/Boston Section is now on-line. The website is; give us a visit, and let us know of any improvements we can make, and get in touch with any news or resources that youd like us to post. Thanks to all members who supported the web-site initiative. New Jersey Section The New Jersey Section met Sept. 17. The program was presented by Bob Thomas, AIA, with Campbell Thomas & Co. His topic was green architecture. Mr. Thomas started his business with five other architects in 1972, just as interest in green architecture started to rise. He talked about and showed handouts of some of the firms work; and discussed different types of neighborhoods. Mr. Thomas also brought along his folding bicycle, which he uses to commute to train stations and it is convenient to carry onto the trains. Cost Estimates- Renovations, Retrofits and Revamps, was the topic of the Oct. 15 New Jersey Section meeting. Maureen C. Cronin, PE, was the speaker. Members were asked if they wanted to prevent cost and budget overruns on renovations, retrofits, and revamps? Members learned tips for establishing the scope and estimating the costs for these type of projects. Maureen Cronin drew from her experiences on design and engineering and construction projects. She is a past president of the New Jersey Section and has served AACE International on the association level as vice-president financial and Region 2 Director. She is a partner in Cronin Development Company of Mountainside, NJ. North Florida Section Leon Newton with Society of Cost Estimators and Analysts was the guest speaker at the North Florida Sections monthly meeting on Nov. 18, at the Orlando Radisson Hotel. Mr. Newtons discussion topic was, Certification Programs for the Society of Cost Estimators and Analysts. Mr. Newton is retired after 38 years with the Lockheed Martin Company where he served in the contracts and procurement area. Mr. Newton now teaches at various Central Florida colleges.

Submitted photo

Wiley Byers, CCC, is presented the TCM award by Bob Briest, CCC, at the fall seminar of the East Tennessee Section. Genesee Valley Section The Genesee Valley Section hosted a very successful breakfast meeting at the Rochester Airport Holiday Inn on Sept. 23. Rick Brienzi, Executive VP and CFO of LeChase Construction spoke on, Risk Management in the Construction Industry. The presentation drew over 50 local contractors, firms and corporations all eager to hear the latest on reducing the risk of doing business in the construction field. In April 2004, the Genesee Valley Section will host its annual conference. The full day event will prove valuable to a diverse group of attendees. In a unique format, speakers will take on risk management and claims dispute resolution issues. Morning sessions offer two complementary tracks focusing on issues of construction claims with sessions on identifying, evaluating, preparing, and presenting claims. After lunch, attendees will witness first hand results of good and bad project management in the dispute resolution portion of the event. Speakers will cover tactical issues of remediation and arbitration. The days topics will culminate into a mock trial where defendants and plaintiffs will argue their case in front of a judge. The conference will provide valuable methods and techniques on how to mitigate the risk of a claims dispute. Houston Gulf Coast Section Jim Whiteside, a cost engineering consultant at ConocoPhillips, presented Advanced Topics in Cost Estimating; a collection of tools used to help improve productivity, understanding, and accuracy for the Houston Gulf Coast Sections Fall Workshop. Mr. Whiteside has over 25 years of design engineering and project controls experience in chemical and petroleum facilities. He holds six US patents in the refining industry. He has made several of these presentations at recent AACE International Annual Meetings and Aspentech conferences. The Nov. 11, meeting was by Bruce Hutchison and Andy Whitehead who discussed, Tax-Exempt Financing for Qualified Environmental FacilitiesCorporate Engineering as a Profit Center. Kansas City Section The Kansas City Section met on Oct. 21, with the Section hosting a pizza party membership drive at a local restaurant. The meeting featured guest speaker Craig Connell, of Black & Veatch, on the topic of Six Sigma. Mr. Connell is a black belt within Six Sigma and provides


Cost Engineering Vol. 45/No. 12 DECEMBER 2003

Northern West Virginia Section Novembers technical program of the Northern West Virginia Section was presented by Don Williams, construction engineer, West Virginia Department of Highways, District IV. He spoke at a section meeting last September about many of the key highway projects in the immediate area, such as the new Star City Bridge, and plans for the Mon Valley Expressway interchange at Cheat Lake. He presented another update on the many on-going and planned highway projects in this district of the state. His emphasis on this presentation was the Fairmont Connector and the current condition of the Star City Bridge. Rocky Mountain Section The November meeting of Rocky Mountain Sections presentation topic was, The past and future of cost engineering from an academic perspective, by Dr. Keith R. Molenaar. Construction materials and methods have changed little over the centuries. Structures are still built from stone and mortar with the sweat of human workers. The presentation discussed if cost engineering methods evolved at this same glacial pace or have new technologies and new contracting methods enabled cost engineers to come of age as valued professionals? Seattle Section The November Seattle Section presentation was by Stephen Jacobson, Agency Project Control Manager for Sound Transit and Karl R. Haberl, Critical Path Systems Consultants. Upon Steve Jacobsons arrival at Sound Transit in April 2002, one of the areas of improvement identified was the Agency Progress Report. The challenge was both improving the content, format, and production of the report; as well as aligning a diverse group of stakeholders on what constitutes a well prepared report. Mr. Jacobson has over 20 years of experience with expanding organizations contributing expertise in operations, project management, strategic planning, annual capital budgeting and cost engineering. He is a Certified Cost Consultant and is the current Technical Committee Chair for Project and Cost Control.

Karl Haberl is the President of Critical Path Systems Consultants, and is currently completing a multi-layered project cost integration project for Sound Transit, tying a tier one ERP financial system to a fullfeatured contract administration software product. Southern California Section Terri Randolph, a project controls manager, was the guest speaker at the Oct. 22, Southern California Section meeting. She spoke on the transportation expansion (T-REX) project in Denver. When completed, the system will connect to Denvers downtown light rail and carry 33,000 riders, while highway capacity will increase by about 50 percent. The project is 50 percent complete and on schedule for completion two years ahead of the originally planned 2008 opening. The project is considered by many to be the first time theres been a truly integrated highway and transit construction at this level Tony Grissim, from Cyra Technologies provided an overview and demonstrated the benefits of 3D laser-scanning for projects, at the November Southern California Section meeting. He included projectspecific metrics illustrating cost savings realized as a result of reduced project durations. The Southern California Section will meet Dec. 5, at Stevens Steakhouse for a Section holiday party. St. Louis Section The St. Louis Sections October meeting was a spotlight on one of St. Louis oldest engineering companies, Sverdrup Corporation, that was purchased by one of the nations largest engineering companies, Jacobs Engineering. Mr. Gary Brasser, Jacobs Sr. Vice-President, led the Jacobs presentation. He discussed Jacobs past and present projects of significance, as well as their core values. Since this was a joint meeting with the local groups of CMAA, (Construction Management Association of America), and Primavera User Group, attendance was very good at 27 people. Thanks to Jacobs and all the attendees! x

In Memory Of
Jim Slattery, (1925-2003) VICTIORIA, AustraliaJim Slattery graduated with a bachelor of civil engineering degree in 1951, and worked for the SA Engineering and Water Supply Department as a field engineer. In 1956, he joined Utah Australia as a senior engineer. He transferred to Fluor in June 1969. As executive engineer for Fluor in Australia, he had responsibility for corporate planning, overhead monitoring and consolidated project reporting. AACE and ACES Activities He has been regarded for many years as the doyen of cost engineers in Australia. He had been a member of the Australian (Melbourne) Section of AACE International from July 1980 to the present, and was the single most important person in the survival of the Melbourne Section in the early years, by dint of his energy, persistence and persuasiveness. He was elected president on his joining and re-elected annually. He was named an AACE Fellow in 2000. He was the prime mover in the establishment of the Australian Cost Engineering Society in 1996, was the founding national chairman and remained national chairman till 1999, and continued to serve as in roles including national secretary/treasurer. He was an exemplary citizen. He was noted for his professional skills, his capacity to fit so much into a day, and his diversity of interests. His activities outside the profession included a deep involvement in baseball as player, coach, club president, life member and umpire, for which he received a Commonwealth of Australia Sports Medal. Jim Slattery died unexpectedly on 22 November 2003, to the sorrow of his many friends and colleagues and the profession generally. He was active up until his last day.x

Cost Engineering Vol. 45/No. 12 DECEMBER 2003


A r ticle

Reprints and Per missions

Cost Engineering Journal, Volume 45/Number 12, Dec. 2003

Pages 22-24

Pages 29-37

Project Uncertainty Management

By Maruboyina Ramgopal, CCE Readers of the Cost Engineering journal can purchase copies of selected articles that are published with an AACE International reference number at the end of the article. Articles can be delivered in print form or in Adobe Acrobat (PDF) format. Please refer to the AACE International reference number when contacting our Publications Sales department. To Order Contact: Nancy Merrifield, Administrator, Publications Sales at Reprint Prices: Quantity Member/Non-Member 1-9 copies $5.00/$7.50 10-49 $4.50/$7.00 50-79 $4.00/$6.50 80-99 $3.50/$6.00 100-499 $3.00/$5.50 To Contact Us AACE International 209 Prairie Avenue, Suite 100 Morgantown, WV 26501 USA Phone: 304.296.8444 Fax: 304.291.5728 For Information On Other Reuse Requests If you are seeking permission to copy, quote, or translate into another language any material from any issue of the Cost Engineering journal, please contact our Managing Editor, Marvin Gelhausen at
This article argues that all current project risk management processes induce a restricted focus on the management of project uncertainty, because the term risk encourages a threat perspective. The article discusses the reasons for this view, and argues that a focus on uncertainty rather than risk could enhance project risk management, in terms of designing desirable futures and planning how to achieve them. Current comprehensive project risk management processes are compatible with a focus on uncertainty, but warrant some modification to reflect a more helpful uncertainty management paradigm.

Research Project Impact Analysis

By Santa Falcone and David Bjornstadt
Sandia National Laboratories (SNL) funded a study at the University of New Mexico to revisit two examples of technology transfer from SNL for the purpose of measuring their full social return and to develop a standard method for making such evaluations. This article describes the comprehensive and systematic template composed of seven steps developed to measure the impact of R&D and reports the findings of the study, providing insight into the social value of research. The cost benefit ratio for society, when counting the cost of developing one technology at SNL for defense related purposes, was 1:4 and, using the most conservative estimates, for the second technology, the ratio was 1:30.

Reprint 20792 Pages 26-28

A Fast Track Value Analysis Methodology for Major Design-Build Construction Projects
By William F. Brouillard Jr., CCC
Use of the value analysis (VA) methodology as an integral part of the design/build process, will eliminate unnecessary functions (The basis of VA methodology), will reduce initial and life cycle costs, compress construction schedules (saving time and money) while retaining the core principals of preserving value and function. The fast track VA session described in this case study will illustrate that the concepts and methods used for the Orange County Convention Center, Phase V Expansion, further reinforces the need for continued use and even increased use of the VA methodology in the design-build concept.

Reprint 20794
Cost Engineering Submission Guidelines
Cost Engineering is a peer-reviewed technical journal. All technical articles undergo a blind peer-review evaluation. Certification articles are forwarded from the Certification Committee and reflect selections from among the top 10 percent of graded submittals. Feature articles are not peer reviewed and are selected by an AACE International Headquarters committee. All submittals for possible publication should be e-mailed to All technical paper submissions for peer-review should be between 1,500 and 4,000 words in length. An electronic file is required and can either be an e-mail (with the text included within the e-mail or as an attachment) or on an IBM-compatible disk that is mailed. Authors should remember that all figures, graphs, and tables will be printed black and white and should therefore avoid using color coded bar charts, etc., as the differentiating color distinctions will be lost in the printed version. Figures, graphs, and tables can be included where they should fall within the text, or reference tagged with instructions to insert here. Individual electronic copies of all figures should be included as a separate file or files. No more than 12 small graphic items should be used with any submission. This is a combined total for figures, graphs, and tables. No item larger than 8.5 x 11 should be used and full page or multiple page figures, graphs, and tables should be avoided. A notarized Publication Agreement, signed by each author, is required for all submittals and should be included when the submission is first sent. If you have any questions or need additional assistance, please send an e-mail to or visit our website at

Reprint 20793


Cost Engineering Vol. 45/No. 12 DECEMBER 2003

C Calendar alendar of Events

December 2003 1-2 Congrs Francophone du
Management de Projet 2003, Paris, France

February 2004 4-6 The Association of Energy

Engineers Fundamentals of Indoor Air Quality three-day seminar. Radisson Deauville, Miami Beach Miami, FL
Contact: Contact: Susan Wooden phone 410-704-5297

April 2004 17-21 ICEC 4th World Congress 2004, International Cost Engineering Council (ICEC), Cape Town, South Africa

7 Submittal Deadline for the February

2004 issue of the Cost Engineering Journal.

5-6 ASCE will sponsor a continuing

education seminar, Leadership Development for the Engineer at Las Vegas, NV Contact:

16-21 Optics and Photonics in Global

Homeland Security, The International Society for Optical Engineering, Renaissance Washington DC Hotel, Washington DC
Contact:phone 1.360.676.3290, fax 1.360.647.1445

18-19 A/E/C Systems Annual Tradeshow and Conference, A/E/C Systems- Technology for Design and Construction, Orange County Convention Center, Orlando, FL
Contact: Hanley-Woods Exhibitions phone 972-536-6380, fax 972-536-636,

21-23 CABA, the Continental Automated Buildings Association will sponsor The TFM ShowTM Building Automation Pavilion, co-located with the CSI ShowTM at McCormick Place in Chicago. Illinois

January 2004 6 The AACE International Second

Quarter (3Q) 2003 Certification Exam, AACE International.
Contact: AACE International 304-296-8444,

June 2004 13-16 AACE Internationals 48th Annual Meeting, AACE International, Washington DC

24 PGI, the PVC Geomembrane Institute

will sponsor a landfill design conference at the Radisson South in Bloomington, MN Contact: Chris Smith 217-333-3929

8-9 Mid-Atlantic Land Use / Land Cover

Conference at Towson University Townson, MD

18-21 18th IPMA World Congress on Project Management, Budapest, Hungary

March 2004 16-19 Pipeline Automation + Control

Conference at Munich, Germany

21-23 Buildings for Advanced

Technology Workshop II Mesa Centennial Conference Center Mesa, AZ

November 2004 24-26 AICE Forum of the Society, Associazione Italiana di Ingegneria Economica (AICE), Bocconi University, Milano, Italy
Contact: phone 39-024982411, fax 39-024982593 Editors Note: Please submit items for future calendar listings at lease 60 days in advance of desired publication.

31 Deadline to Submit Technical

Papers for the 2004 AACE International Transactions

22-26 TUgis Annual Geographic Information Sciences Conference, Planning, Prevention, and Response: GIS and Homeland Security, Center for Geographic Information Sciences, Towson University, Towson University Campus,Towson, MD

AACE International, 209 Prairie Avenue, Suite 100, Morgantown, WV 26501 USA phone: 304-296-8444 fax: 304-291-5728 e-mail: or website:
44 Cost Engineering Vol. 45/No. 12 DECEMBER 2003