The annual meeting of the Cost Engineering Committee (CEC) took place September 19-20, 2023 in McLean, VA, with 37 member companies in attendance. The annual meeting provides an opportunity for members to gather and discover the latest IPA research and industry trends; receive cost engineering tools, models, and metrics; and network and exchange practices with fellow cost engineering professionals.
IPA established the CEC in 1998 to advance the owner cost engineering and project controls capabilities of the world’s leading industrial companies in capital-intensive sectors. As part of the CEC 2023 meeting agenda, we shared new research on the following topics in support of this objective:
Market Trends in Capital Projects
IPA provided a state of the industry in terms of the overall macroeconomic conditions and observed escalation on capital projects. We also discussed procurement trends based on IPA’s proprietary database and shared the industry perceptions on supply chain and escalation trends from the IPA Bi-annual Market Trend Survey.
Project Control Organizations
This study, entitled Structure and Staffing of Project Controls Organizations, characterizes industry norms for Project Controls Organizations (PCO) with data collected directly from interviews with PCO teams, as well as insights gleaned from IPA’s proprietary database. Past IPA research has shown the effects of PCO quality, and this presentation will provide guidelines on the strengths and weaknesses of different organizational structures, staffing strategies, and hierarchies.
A strong basis of estimate (BoE) is critical to ensure the cost-efficiency of capital projects. IPA conducted a study in 2017 that established some Best Practices to achieve ±15 percent accuracy for Class 3 estimates. This study is an extension of the previous study that uses data collected at FEL 2 stage and FEL 3 stage evaluations. Study provides accuracy norms observed in the industry as well as the robustness of BoEs at FEL 2 and FEL 3 stage estimates.
This study provides a more robust measurement of schedule quality by quantifying the effects good schedule practices have on project outcomes. In our research, we have aggregated individual schedule quality metrics into an overall Schedule Quality Index (SQI) that links to improved schedule predictability and competitiveness.
Early Estimating & Scheduling: Past Study
IPA has received feedback from owner companies about their struggles with early (conceptual) estimating, especially for FEL 1/AACE Class V estimates. These estimates are generally prepared based on very limited information and subsequently have wide accuracy ranges. These FEL 1/Class V estimates are prepared for any number of strategic business planning purposes, such as market studies, assessment of initial viability, evaluation of alternate schemes, project screening, project location studies, evaluation of resource needs & budgeting, long-range capital planning, etc. This CEC 2023 study focuses on building tools that Industry can use in developing more centered estimates for cost and schedule as well as a better characterization of the estimate ranges, with the ultimate purpose of giving businesses the best information to make more effective decisions.
CEC Metrics & Tools
Additionally, IPA reviewed the latest cost and schedule metrics packages and tools, including focused sessions on each of the following:
- Schedule Duration Metrics & Tool
- Schedule Practice Metrics
- Cost Predictability Metrics
- CEC Cost Tools & Framework
- CEC Web Applications
How to Join the CEC
The CEC is open to owner companies interested in improving the cost engineering function within their organizations to ultimately improve business results. Complete the form below to request information on how to join the CEC.