SAMPLE AACE International Skills and Knowledge of Cost Engineering Skills and Knowledge of Cost Engineering Sixth Edition Dr. Makarand Hastak, PE CCP, Editor 2015 Skills and Knowledge of Cost Engineering Sixth Edition Copyright © 1987-2015 by AACE® International 1265 Suncrest Towne Centre Drive, Morgantown, WV 26505-1876, USA Phone: +1.304.2968444 | Fax: +1.304.2915728 | E-mail: [email protected] | Web: web.aacei.org SAMPLE 1 AACE International Skills and Knowledge of Cost Engineering A Publication of Skills and Knowledge of Cost Engineering Sixth Edition Dr. Makarand Hastak, PE CCP, Editor A continuing project of the AACE International Education Board 2017- 2018 Education Board Chair: Michael R. Nosbisch, CCP PSP FAACE [email protected] Vice President - Education Board: Martin R. Darley, CCP [email protected] Members: Dr. Nakisa Alborz Michael Bensussen B. Steven Feng, II Andrea Georgopolous Omar Nava Mazzaoui, P. Eng. Bryan Payne, PE CCP CFCC Julianne Richards Marina Sominsky, PSP SAMPLE Contributing Members: Nelson E. Bonilla, CCP FAACE Trevor X. Crawford, CCP FAACE Clive D. Francis, CCP FAACE Hon. Life Kenneth W. Larison Thomas L. Long Neil D. Opfer, CCP CEP PSP Stephen O. Revay, CCP CFCC FAACE Debbie Richards, CCT PSP Brian Wilcox James G. Zack, Jr. CFCC FAACE Hon. Life AACE Headquarters Liaison: Teri Jefferson, CMP, Manager Education +1 (304) 296-8444 x. 1120 [email protected] 3 AACE International Skills and Knowledge of Cost Engineering 2015/2016 Education Board Members: Peter W. Griesmyer, FAACE (Chair) Dr. Nadia Al-Aubaidy Dr. Baabak Ashuri, CCP DRMP Michael Bensussen Chris A. Boyd, CCP CEP Dr. John O. Evans III, PSP Dr. Makarand Hastak, PE CCP Marina G. Sominsky, PSP James G. Zack Jr., CFCC, FAACE AACE Hon. Life, VP – Education Board Contributing Members: Nelson E. Bonilla, CCP FAACE Mark T. Chen, PE CCP FAACE AACE Hon. Life Clive D. Francis, CCP FAACE AACE Hon. Life John Jeffrey Hannon, CEP Katherine Hull Marlene M. Hyde, CCP EVP FAACE Donald F. McDonald Jr., PE CCP PSP FAACE Ekaterina Pujanova Neil D. Opfer, CCP CEP PSP FAACE Sunu M. Pillai, Esq. CCP EVP PSP Stephen O. Revay, CCP CFCC FAACE AACE International Publications Staff: Formatting and Layout: Marvin Gelhausen, Managing Editor Cover Design: Noah Kinderknecht, Noah Kinderknecht Design Cassandra LoPiccolo, Business Development Coordinator SAMPLE Editorial Team: Editor: Dr. Makarand Hastak, PE CCP Associate Editors: Chris A. Boyd, CCP CEP Mark T. Chen, PE CCP FAACE AACE Hon. Life Dr. John O. Evans III, PSP Clive D. Francis, CCP FAACE AACE Hon. Life Peter W. Griesmyer, FAACE Sean T. Regan, CCP CEP FAACE Rohit Singh, PE CCP James G. Zack, Jr., CFCC FAACE AACE Hon. Life 4 AACE International Skills and Knowledge of Cost Engineering Table of Contents PREFACE ......................................................................................................................................................... 7 The History of This Publication .................................................................................................................................................. 7 This Edition ............................................................................................................................................................................... 8 How to Use This Publication ...................................................................................................................................................... 8 INTRODUCTION ............................................................................................................................................. 11 SECTION 1 - COST .......................................................................................................................................... 13 Chapter 1―Cost Elements ....................................................................................................................................................... 15 Chapter 2―Pricing & Cosng ................................................................................................................................................... 25 Chapter 3―Materials .............................................................................................................................................................. 31 Chapter 4―Labor .................................................................................................................................................................... 39 Chapter 5―Engineering Role & Project Success ....................................................................................................................... 55 Chapter 6―Machinery, Equipment, & Tools ............................................................................................................................. 63 Chapter 7―Economic Costs ..................................................................................................................................................... 79 Chapter 8―Acvity Based Cost Management .......................................................................................................................... 89 SECTION 2 – COST ESTIMATING ..................................................................................................................... 99 Chapter 9―Cost Esmang ................................................................................................................................................... 101 Chapter 10―Process Product Manufacturing ........................................................................................................................ 143 Chapter 11―Discrete Part Manufacturing ............................................................................................................................. 167 SECTION 3 – PLANNING AND SCHEDULING .................................................................................................. 183 Chapter 12―Project Planning ................................................................................................................................................ 185 Chapter 13―Scheduling ........................................................................................................................................................ 201 SECTION 4 – PROGRESS AND COST CONTROL ............................................................................................... 225 Chapter 14―Earned Value Overview ..................................................................................................................................... 227 Chapter 15―Performance & Productivity Management ....................................................................................................... 235 SECTION 5 – PROJECT MANAGEMENT .......................................................................................................... 253 Chapter 16―Project Management Fundamentals ................................................................................................................. 255 Chapter 17―Project Organizaon Structure .......................................................................................................................... 263 Chapter 18―Project Communicaons ................................................................................................................................... 267 Chapter 19―Project Labor Cost Control ................................................................................................................................ 277 Chapter 20―Leadership & Management of Project People ................................................................................................... 289 Chapter 21―Quality Management ........................................................................................................................................ 299 Chapter 22―Value Engineering ............................................................................................................................................. 313 Chapter 23―Contracng for Capital Projects ......................................................................................................................... 321 Chapter 24―Strategic Asset Management ............................................................................................................................ 337 Chapter 25―Change Management Praccal Guide ................................................................................................................ 347 Chapter 26―Overview of Construcon Claims & Disputes ..................................................................................................... 353 SECTION 6 – ECONOMIC ANALYSIS, STATISTICS, PROBABLILITY AND RISK ..................................................... 367 Chapter 27―Financial & Cash Flow Analysis .......................................................................................................................... 369 Chapter 28―Praccal Corporate Investment Decision-Making Guide .................................................................................... 383 Chapter 29―Stascs & Probability ...................................................................................................................................... 407 Chapter 30―Opmizaon ..................................................................................................................................................... 421 Chapter 31―Risk Management