(PUBLIC REVIEW DRAFT) 10S-90: Cost Engineering Terminology (Rev. April 18, 2024)

 View Only
  • 1.  (PUBLIC REVIEW DRAFT) 10S-90: Cost Engineering Terminology (Rev. April 18, 2024)

    Posted 04-18-2024 12:09 PM

    (PUBLIC REVIEW DRAFT – Open until June 2, 2024) 10S-90: Cost Engineering Terminology (Rev. April 18, 2024)

    The following new and revised terms and definitions are being considered in this update:

    New)                     KEY QUANTITY

    (New)                   TOTAL INVESTMENT COST

    (New)                   TOTAL INSTALLED COST

    (Revised)             RISK APPETITE

    (New)                   RISK CAPACITY

    (Revised)             RISK TOLERANCE

    (Revised)             ISSUE

    (Revised)             PERT (PROGRAM EVALUATION AND REVIEW TECHNIQUE)

    (New)                   PERT CRITICAL PATH

    (New)                   PORTFOLIO SCHEDULE

    (New)                   PROGRAM SCHEDULE

    (Revised)             PROGRAM

    (Revised)             PORTFOLIO

    You may provide your comment by either:

    ·         Posting a message in this thread directly

    ·         Providing mark-up in the PDF file and posting it in this thread

    ·         Providing your comment in the "REVIEWER" columns of the Excel file and posting it in this thread



    ------------------------------
    Christian Heller
    Director of Technical Guidance
    AACE International
    cheller@aacei.org
    ------------------------------

    Attachment(s)



  • 2.  RE: (PUBLIC REVIEW DRAFT) 10S-90: Cost Engineering Terminology (Rev. April 18, 2024)

    Posted 05-02-2024 05:49 PM
      |   view attached

    Comments posted on behalf of David Hulett.



    ------------------------------
    Christian Heller
    Director of Technical Guidance
    AACE International
    cheller@aacei.org
    ------------------------------



  • 3.  RE: (PUBLIC REVIEW DRAFT) 10S-90: Cost Engineering Terminology (Rev. April 18, 2024)

    Posted 05-30-2024 04:44 PM
      |   view attached

    Enclosed you will find my comments and proposed changes to several of the definitions proposed in PR_10S-90_Rev2024-04-18

    All comments were included in the attached Comment Log Excel file.

    Appreciated,

    LH



    ------------------------------
    Luis Henrique Martinez, Ph.D.
    Director Project Controls
    Clearway Energy
    Chandler AZ
    ------------------------------



  • 4.  RE: (PUBLIC REVIEW DRAFT) 10S-90: Cost Engineering Terminology (Rev. April 18, 2024)

    Posted 05-31-2024 11:27 AM

    Luis,

    Thanks for getting involved with the PERT definition changes. 

    I have been advocating this change for a couple of years now because the existing definition showed a lack of understanding of the method that was used in the 1960s and forward until software that performs Monte Carlo simulation became available to all.  I am concerned that someone reading the existing definition would conclude that AACE International was ignorant of the process because it just deals with a 3-point estimate (AACE has correctly decommissioned range estimates as a recommended practice).  The existing definition does not recognize (1) that the analysts at the time could calculate a probability of the scheduled finish date and a date that provides the desired degree of certainty (the cumulative distribution of dates can be found), and (2) because PERT ignored all paths except the PERT-critical path it was ignorant of the "merge bias" so potentially would underestimate the schedule risk. This last point was made in the early 1960s by MacCrimmon and Ryavek (Rand Corporation) but is still ignored by some.  

    I think that a serious professional association needs to put its best foot forward even if PERT the concept is no longer in much use.



    ------------------------------
    David Hulett [Ph.D., FAACE]
    Principal
    Hulett & Associates, LLC
    Sedalia CO
    (310) 283-3527David
    ------------------------------



  • 5.  RE: (PUBLIC REVIEW DRAFT) 10S-90: Cost Engineering Terminology (Rev. April 18, 2024)

    Posted 05-31-2024 11:54 AM

    David,


    Thank you for your comments. I completely agree. That's why it was important to separate the definition into the different uses of the term.

    The first one honors the original concept and methodology and, as you may have noticed, I included the changes you proposed.

    The second one refers to the use of the word PERT for risk analysis and statistics (I had to separate the use of it further for cost risk analysis and schedule risk analysis). Obviously, it should not be the intent of our Cost Engineering Terminology to have an exhaustive treaty of each term. That's why I wrote it as concisely as possible. 

    Note: I found a typo in the sentence: "The PERT distribution is a technically a special case of...".  This should be corrected to: "The PERT distribution is technically a special case of..." 

    Appreciated,

    LH



    ------------------------------
    Luis Henrique Martinez, Ph.D.
    Director Project Controls
    Clearway Energy
    Chandler AZ
    ------------------------------