The Use of Professional Credentialing in Helping to Establish a Cost Estimating Capability

1. The Use of Professional Credentialing in Helping to Establish a Cost Estimating Capability Michael R. Nosbisch, CCC, PSP President - Elect

2. Outline • Introduction • Speaker • AACE International • Professional Credentials/Certification • Definition and attributes • Certification vs. licensure • General types of certifications • Specific examples of estimating-based certifications (all associations) • The Role of the PMO • Conclusion

3. Introduction • Speaker Background • General • More than 22 years of project management/controls experience • Named contributor to GAO Cost Guide • Specific • Currently hold multiple professional certifications • Member of task force that developed both an internal (Parsons) and external (AACE) certification • Currently President – Elect of AACE International • Will [soon] have responsibility for administration of 6 existing certifications • Management of development process in relation to any new certifications

4. Introduction • AACE International (Association for the Advancement of Cost Engineering) • Founded in 1956, currently largest global organization dedicated to furthering concepts of total cost management and cost engineering • 8 regions • 91 sections • 7,708 members • According to 2010 Membership Survey, 22% of respondents were Estimators by primary job function

5. AACE International • Cost Engineering defined as the collective set of practice areas that includes the following: • Business and program planning • Cost estimating • Economic and financial analysis • Cost control • Program and project management • Planning and scheduling • Cost and schedule performance measurement • Change control • Total Cost Management (TCM) is the "process" through which these practices are applied • Encompasses multiple “Recommended Practices” related to estimating, including “Cost Estimate Classification System: As Applied in [EPC] for the Process Industries” (JAN 2011)

6. AACE International • DOE Relationship • Cooperative agreement first signed in 1997 • Reauthorized in 2002 and 2007 • Current DOE “sponsor” is OECM • Key elements: • Advance “state-of-the-art” of TCM through increased communication and dialogue • Apply established cost engineering/cost management principles, proven methodologies, and latest technology • Develop new cost engineering/cost management methodologies and technology in pursuit of optimum resource utilization • Encourage utilization of cost management standards and practices and their continual improvement/advancement

7. Professional Credentials/Certification • Definition • A designation earned by a person to assure qualification to perform a job or task • Attributes • Most are created, sponsored, or affiliated with professional associations, trade organizations, or IT vendors interested in raising standards • In general, must be renewed periodically, or may be valid for specific period of time • As part of renewal process, common for individual to show evidence of continued learning (PDUs, CEUs, etc.)

8. Certification vs. Licensure • Licensure is when demonstration of ability or knowledge is required by law before being allowed to perform a task/job • In U.S., professional licenses are usually issued by state agencies (e.g. professional engineer) • Certifications are usually earned from a professional society or educational institute, not the government • For some organizations, certification assessment process is very similar or even same as licensure • May differ only in terms of legal status • Independent “accreditation” often times sought to strengthen validity of process • American National Standards Institute (ANSI) • Council of Engineering & Scientific Specialty Boards (CESB)

9. General Types of Certifications • Internal certifications • Developed by a company/corporation for internal purposes • Limited “portability” to other companies/corporations • Examples: • Corporate • CAM certification for specific projects/contracts with EVMS • Parsons Project Controls Management certification program • Government • DoD’s DAWIA certification for acquisition professionals • Tri-Service Cost Engineering Certification Program • DOE’s PMCDP for FPD certification

10. General Types of Certifications (cont’d) • Product-specific certifications • More involved, since they are intended to be referenced to a product across all applications • Portable across locations, but not across other products • Very prevalent in information technology (IT) industry, where personnel are certified on a version of software or hardware

11. General Types of Certifications (cont’d) • Profession-wide • Most “general” type of certification • Intended to be portable to all places a certified professional might work • This generalization increases the cost of such a program, since the process to establish legally defensible assessment of an entire profession is very extensive • 3 types prevalent in project/cost management profession • Knowledge-based • Experience-based • Competency-based In U.S. most are a combination of these two

12. Estimating-based Certifications • General • Certified Cost Consultant/Certified Cost Engineer (CCC/CCE) • First offered by AACE in 1976 • Accredited by CESB • Focuses on estimating as component of cost engineering • Project* Management Professional (PMP) • First offered by Project Management Institute (PMI) in 1984 • Accredited by ANSI • Focuses on estimating as component of project management • Certified Construction Manager (CCM) • First offered by Construction Management Association of America (CMAA) in 1995 • Accredited by ANSI • Focuses on estimating as component of construction management

13. Estimating-based Certifications • Specific • American Society of Professional Estimators (ASPE) • Certified Professional Estimator (CPE) • First offered in 1976 • Accredited by CESB • Targeted specifically at construction estimators • Process consists of educational workshop, writing a 2,500 word acceptable technical paper on estimating, and completing two examinations (general knowledge and discipline-specific) • To be eligible to sit for exam, applicant must have at least five years experience in one discipline of professional estimating (mechanical, electrical, landscaping, etc.)

14. Estimating-based Certifications • Specific (cont’d) • Society of Cost Estimating and Analysis (SCEA) • Certified Cost Estimator/Analyst (CCE/A) • First offered in 1990 • Body of knowledge required includes estimating in all fields of engineering, not just construction • Exam focuses on various methods of analyzing cost of project, as well as estimating models like parametric estimating and comparison estimating • To be eligible to sit for exam, applicant must fall within one of three categories: • College degree heavy in cost estimating/analysis and two years experience in cost estimating/analysis • Associate’s degree and five years experience as described above • Seven years of experience with submission of biographical sketch demonstrating education, experience and relevant performance

15. Estimating-based Certifications • Specific (cont’d) • International Society of Parametric Analysts (ISPA) • Certified Parametric Practitioner (CPP) • First offered in 2002 • Provides professional recognition of practitioner’s education, job experience, knowledge, and skills in parametric estimating/analysis • To be eligible to sit for exam, applicant must have either: • College degree in field of study directly related to parametric analysis and two years experience performing parametric analysis • Associate degree and five years of experience in parametric analysis • Seven years of experience in parametric analysis with submission of brief biographical sketch demonstrating applicant’s ability or knowledge to pass examination

16. Estimating-based Certifications • Specific (cont’d) • AACE International (Association for the Advancement of Cost Engineering) • Certified Estimating Professional (CEP) • First offered in 2008 • CESB accreditation in process • Not specifically targeted toward construction estimators, but majority of examples are construction-oriented • To be eligible to sit for exam, applicant must: • Have at least 8 full years of professional experience, of which up to 4 years may be substituted by college/university degree • Agree to adhere to the AACE Canon of Ethics

17. The Role of the PMO • Project Management Office (PMO) defined • Organizational entity chartered to perform in capacity that achieves one or more operational objectives of project management • Oversight • Control • Support • Ideally, should encompass all people, processes, and tools that manage or influence project performance • Help PM and “relevant organization” understand and apply professional practices of project management • Relevant organization is business unit or department influenced by PMO functions & in receipt of direct business benefits from PMO operations • What about for an LLC?

18. The Role of the PMO • Development of Certification Program • Should be priority of PMOs as key component of career development • Both external and internal certifications should be considered when defining what will be pursued • External serves to obtain third-party validation of professional competency against widely accepted standards • Internal allows PMO to consider industry-specific issues as well as applicable organizational and business interests • In some organizations, both forms are used

19. Role of the PMO • PMO’s contribution to development process* • Define relevance of certification • What will certification do for the individual? • How will it benefit the relevant organization? • Specify certification program target group • For whom is certification mandatory? • Who is eligible for optional entry into program? * Will likely be done in collaboration with HR or Training Department

20. Role of the PMO • PMO’s contribution to development process (cont’d) • Determine certification program implementation approach • Individual completion time limits or constraints • Multiple and repeat attempts at certification • Options for any “grandfathering” (if mandatory) • Construct certification criteria • For internal certifications only • Definition of body of knowledge • Skill and performance objectives to be achieved by individuals • Other business or professional qualifications required for individual participation

21. Role of the PMO: Some Practical Applications • Offering incentives for achieving specific external certifications • Spot bonus • Salary increase • Limited number of certifications or not? • Requiring achievement of external/internal certification within a set amount of time • Often times one year period from date of hire/promotion is used • Challenge is not only defining what penalty will be for non-compliance, but actually enforcing it • Requiring internal certification, but allowing external certification to be substituted for certain elements • Converse (and more difficult) is requesting that an internal certification be substituted for certain elements of a sought after external certification

22. Conclusion • Subject of certification was discussed extensively at recent meeting of EFCOG Cost Estimating Subgroup • No real consensus on level/scope of what should be required vs. recommended as best practice • Bob Raines of OECM then concluded the discussion with following observation: • “Similar to how a P.E. is required to stamp a construction design, then so should a certified estimator be expected to sign off on a [complex] construction estimate” • Do you agree?

23. Association/Certification Websites • AACE International: www.aacei.org • PMI: www.pmi.org • CMAA: www.cmaanet.org • ASPE: www.aspenational.org • SCEA: www.sceaonline.org • ISPA: www.ispa-cost.org