W13_PieroAnticona_ Best Practices for Estimating

1)    Step 1- Problem or Opportunity Statement

During the life cycle of an asset, it is required to determine if the budget estimated to build it will be enough or it might require more funds. A good estimate is a result of a good process for estimating. How can we guarantee that the Estimating Process chosen can be validated?  

We can determine which Cost Estimating and Budgeting Process Map used in the project management sector offers a better approach to guarantee a good outcome.   

2)    Step 2 – Feasible Alternatives

We have chosen the following entities:

-       AACE International: Cost Estimating and Budgeting Process Map from Total Cost Management Framework

-       Guild of Project Controls: Overall Cost Estimating and Budgeting Process Map

-       Government Accountability Office: Cost Estimating Process

-       American Society of Professional Estimators: Standard of Practice

3)    Step 3- Develop the outcomes for each alternative

Total Cost Management from AACE International suggests the following Process for Cost Estimating and Budgeting:

           

           Guild of Project Controls suggest the following process map

GAO suggests the following Cost Estimating Process

                       

ASPE suggest the following Process Map:

                              

4)    Step 4- Selection of the acceptable criteria.

The desired result is better when activities and related resources are managed as a process. A process according to ISO 9000:2000 is a “set of interrelated or interacting activities that transform inputs into outputs”.

For the current analysis, the point of view is from the Owner’s perspective. An Owner elaborates a concept and starts developing the concept until the definition of the best alternative that responds to the optimum return of the investment and then the asset is built. The Cost Estimate should integrate all cost and resources required to cover all these phases. 

The processes map above should help us to get as a result a Cost Estimate that allows to manage main constraints in a project, which are:

-       Scope

-       Time

-       Cost

-       Resources

-       Quality (Meet Client’s/Owner’s/Users’ requirements or product/service specifications)

It might also take into consideration potential events that might occur and could impact time, cost or quality of the project. In this case, a risk analysis should be part of the process.

A good project estimate requires validation. It is recommendable to do an estimate with independent estimators therefore, it does not bias the assessment of the preliminary results.

In addition, a Cost Estimate should have a structure that the project team could control during the execution of activities.

We will assess which entity might guarantee a better process that meets the following criteria:

-       Owner Perspective

-       Scope

-       Time

-       Cost

-       Resources

-       Owner’s/Client’s/User’s requirements

-       Risk Analysis

-       Cost Estimate Structure

-       Independent Review    

5)    Step 5- Compare the outcomes from each alternative analysis done in Step 3 against the minimum acceptable criteria from Step 4.

We have summarized all the processes in the follwoing table 

We are going to  assess each process and determine if they meet most of the criteria selected. The author will not go into detail of each process. Only an assessment of the process described as shown in the Processes Map. 

The following matrix are shown as a result of the analysis.

          

6)    Step 6- Selection of the “best”.

     As shown previously the best option is Guild of Project Controls which complies with most of the criteria.

According to the assessment and watching the matrix, the main differentiator is Process called “Validating Horizontal and Vertical Traceability Cost”, which in addition to others processes reinforce that all processes previously executed contribute to a Cost Estimate that might guarantee an optimum investment.   

7)    Step 7- How to plan on tracking/reporting on recommended choice. 

      Another assessment can be done to determine which Process Flow suggests a better control of the Cost Estimate during the project’s execution. Besides, which process' map also help to obtain a better feedback and database of real cost when future assets with similar features are going to be built. 

8)    REFERENCES.

1.    Guild of Project Controls. (2015, October 03). 08.01 Introduction to Managing Cost Estimating Budgeting Rev 1.03. Retrieved September 15, 2018, from http://www.planningplanet.com/guild/gpccar/introduction-to-managing-cost-estimating-budgeting   

2.    H. Lance Stephenson. (2015). Total cost management framework: An Integrated Approach to Portfolio, Program, and Project Management (2nd ed.). Morgantown, WV: AACE International. Page 176  

3.     GAO Cost Estimating and Assessment Guide- Best Practices for Developing and Managing Capital Program Costs. Page 8.

4.    American Society for Quality. (2001, December). The process approach to QMS in ISO 9001 and ISO 9004. Retrieved from http://asq.org/quality-progress/2001/12/standards-outlook/the-process-approach-to-qms-in-iso-9001-and.html