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Warm-Up

Warm-Up. Rules of Engagement Office hours are in the afternoons, unless you have made other arrangements. If the door is open, I’m in the area come look for me – you’ll hear my voice. If the door is closed, I’m not there or I’m “not receiving” visitors ( uncivil engineering, go away.)

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Warm-Up

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  1. Warm-Up • Rules of Engagement • Office hours are in the afternoons, unless you have made other arrangements. • If the door is open, I’m in the area come look for me – you’ll hear my voice. • If the door is closed, I’m not there or I’m “not receiving” visitors (uncivil engineering, go away.) • If you expect me to “multiprocess” (you interrupt me whilst I’m busy) 90% of the time you will get a rather rude, NO! • If you want a YES, you should ask me when I can focus my attention on your question and give it some thought.

  2. Successive or Parametric Estimating Module 01.2 Revised: January 16, 2003

  3. Purpose • Illustrate a technique used by many owners to establish cost and schedule estimates, to the desired level of accuracy, for large projects before detailed design is actually completed.

  4. Learning Objectives • Be able to develop sq-ft estimates on their own initiative. • Be able to break complex projects into systems and sub-systems for estimating purposes. • Be able to develop cost and schedule estimates to data from the R. S. Means Manual.

  5. RAT 02.2 • Take out a piece of paper, etc. • Write 1 sentence on each of the following. • Why is Machiavelli’s, The Prince, important reading for project managers? Part of Wednesday’s background lecture. • What is the R. S. Means Manual? I asked you to look at the excerpted parts on the Web for last Wednesday.

  6. Usual Sequence for PS&E • Needs Assessment • Conceptual Designs • Feasibility and Fiscal Studies • Selection of Design Alternative • Detailed PS&E • Constructor Selection Process • Negotiate Construction Cost Now you finally know the Cost?

  7. Why Is this Unsatisfactory? • You are to have some idea of the cost before you can ask for or borrow the money. • ? • ? • ? • ?

  8. Why Is This Technique Useful? • What is the normal cost of a detailed design in percentage terms? • What is the general format of a detailed design? CSI? Uniformat? • When do we usually ask for the money? • Before the Design? • What is the impact of changes? • What is the implication for Fast-Tracking and other innovative techniques?

  9. Successive (or Parametric) Estimating • Project Level: Cost/Unit • Building Level: Cost/square-foot • System Level: Function of Component Costs • System Component Level: Function of the range of component costs “It is better to be approximately right, than to be absolutely wrong.” Warren Buffett

  10. Typical Building System Level Components • Site Development: Access, Utilities, Etc. • Foundations: Slab, Piers, Basement • Structural Frame: Concrete, Steel • Roof: Composition, Paved • Exterior Walls: Brick, Precast • Interior: Walls, Ceilings, etc. • Furnishings & Movable Equipment • Electrical, Mechanical, Conveyances

  11. 1. Site Development • Street Access • Parking • Utilities • Landscaping • ? • ?

  12. 2. Foundations • TAMU Standard? • Other Options? • ? • ? • ?

  13. 3. Structural Frame • TAMU Standard? • Other Options? • ? • ? • ? • ?

  14. 4.Roof System • What is TAMU Standard? • Other Options? • ? • ? • ?

  15. 5. Exterior Walls • Brick on Shelves – TAMU Standard • Precast Panels • Combination

  16. 6. Interior Walls, etc. • TAMU Standard? • Other Options? • ? • ? • ?

  17. 7. Interior Furnishings & Movable Equipment • Desks and Chairs • Tables • Laboratory Benches • Computers • Laboratory Equipment

  18. 8. Mechanical, Electrical, and Conveyances • Plumbing • HVAC • Power • Network • Elevators • Escalators

  19. Class Exercise • Assign Systems to Teams and Have Them Brainstorm Components and Alternatives • Get a Brief Oral Report Back From Each

  20. Estimate Total Cost • Total: Direct System Costs: Labor, Materials and Equipment • Add: The Project Indirect Costs • Add: Company Wide G&A • Add: Profit • It not quite that easy because of construction’s inherent variability.

  21. Each System will Vary According to the Components • Most Optimistic (least cost or time) • Most Probable (the most likely or mode) • Most Pessimistic (largest cost or time) There will be a range of estimates for each System and/or Subsystem. That is, all of you will have a different number.

  22. Apply some Voodoo Statistics • Expected or Mean Cost = (Low+4*ML+High)/6 • Expected Variation or Risk = (High-Low)/6 Note: These are unbiased estimates for the mean (x-bar) and the standard deviation (sigma) of a near normal distribution.

  23. How close to approximately right do we need to be? • Compute the %Risk by dividing the Risk by the Mean for each system • Calculate the %Mean of each System by dividing the Mean of each system by the total project cost. • For each, multiply the %Risk by the %Mean to determine the Risk adjusted computation. • Put more estimating effort into the large numbers to decrease the impact of variation in the estimate.

  24. For Example Based upon this analysis, you probably want to put more effort into the foundation and exterior design.

  25. Summary • During the Alternative design stage you are looking for approximate estimates. • If the cost of being wrong is high, you need to get as close as you can while expending as few resources as possible. • Parametric / successive estimating is a technique for reducing risk at the early stages of the process.

  26. Assessment • Take out a piece of paper. • Write 1 sentence on the “muddiest” topic on successive estimating.

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