I’m working on a Management question and need guidance to help me study.
There are two person’s opinion about the discussion board questions. i have to reply them separately.
just give your opinion.
reply for person 1 post……
reply for person 2 post….
Person 1 Post: (Ashly)
I selected cost estimating for my topic this week.
Article: Challenges in Cost Estimating with Building Information Modeling
Author: Louise Sabol
The paper starts by stating that Building Information Modeling (BIM) can provide accurate and automated quantification and assist in significantly reducing variability in cost estimates. Costing exercises can be conducted throughout the project life cycle with BIM. The level of detail in the model will vary depending on the project phase. Firms employing BIM will need to develop methods and standards for object development that support the level of detail required for useful estimates, as well as provide a framework for providing consistent information for the BIM components tallied by cost estimators. (Sabol, 2008, p.2)
The author continues that cost estimation for building projects traditionally starts with quantification, a time-intensive process of tallying components from printed drawings sets, or most recently CAD drawings. From these quantities, estimators utilize methods from spreadsheets to costing applications to produce the project cost estimate. This process is prone to human error and tends to propagate inaccuracies that creep into the tallies. Currently, quantification is also time-consuming, it can require 50% to 80% of a cost estimator’s time on a project. BIM offers the capability to generate takeoffs, counts, and measurements directly from a model. This provides a process where information stays consistent throughout the project and changes can be readily accommodated. Building information modeling supports the full project lifecycle and offers the capability to integrate costing efforts through all project phases. The information in a model and type of cost estimate needed depends on the phase of the project, ranging from high-level schematic models during preliminary phases, to detailed estimates as projects enter construction. (Sabol, 2008, p.2)
During traditional project development, accurate, actionable costing information has been difficult to define during preliminary project phases. Greater project efficiencies and more accurate scheduling can be developed based on realistic costing feedback early on. Preliminary costing is generally based on templates from past project experience, or on standard square foot costs based on project type, region, or type construction. Preliminary estimates, unlike those created during later stages, are prepared using concepts and avoid counting of individual pieces. Standard CAD and now BIM applications have the capability of modeling data far in excess of what is needed at preliminary project phases. (Sabol, 2008, p.3)
During project development, objects in a BIM model need to be populated with sufficient data to allow a costing application to accurately classify the materials and assign costs. Commercial BIM costs estimating applications work in various ways to enhance the detail associated with a BIM object in order to generate cost estimates, often enhancing object tags or text fields with detailed assembly or material descriptions. (Sabol, 2008, p.11)
In conclusion, the author states that BIM offers the capability to develop project cost information with more accuracy throughout the entire building lifecycle. The key to the successful use of BIM-based costing will be the development of processes and methods within organizations. The level of detail required in a building model will vary depending on project phases, from preliminary costing models to very detailed models required for micro-costing activities during the construction phase. Professionals using BIM costing applications will need to select a method depending on the project phase and the detail required and develop in-house standards and procedures for aligning their models with the estimating processes. Professionals using BIM will have to adopt strategies to integrate and change as these technologies mature. As a new technology, BIM assisted cost estimating will not obsolete estimators; rather, it promises to free them to focus on higher-value tasks than counting, returning increased value to project processes. (Sabol, 2008, p.14)
I think BIM offers a great opportunity to further develop best practices for cost estimating in projects. As the PMBOK Guide discusses in multiple areas, cost estimating is an important part of the project planning process, and using cost estimating can expose potential risks to the project that can then be fixed. BIM is a great example of how emerging technology is improving project success by making cost estimating more efficient.
Project Management Institute. (2017). A Guide to the Project Management Body of Knowledge (PMBOK guide) 6th edition. Newtown Square, PA: Project Management Institute.
Person 2 post: (Tayo)
Article: Project Cost Estimating Tools & Techniques
Author: Michael A. Martinez, PMP
The article I chose is on the ‘estimate costs’ process of project cost management. Martinez, M. A. (n.d.) noted that estimating project costs involves uncertainties which scares project managers and the estimators because they are concerned about being wrong and being taken to task by upper management. Pinto, J. K. (2020) supported that view by stating that “cost estimation is a natural first step in determining whether a project is viable” (p. 298). The process determines if the project can be done profitably and helps to determine the budget allocated for it.
Martinez, M. A. (n.d.) described some factors that contribute to the cost estimation uncertainties as below:
1. Experience with Similar Project – Cost estimation is easier if you have prior experiences managing similar projects. The PMBOK Guide (6th ed.) has that listed as an input to the process in the form of a lesson learned register (p. 242).
2. Planning Horizon & Project Duration – The author noted that cost estimating is easier and more accurate when being done for what is about to happen rather than for activities farther down in the horizon. The same goes for longer projects, where it becomes more difficult to account for most of the future costs. There are enterprise environment factors (EEFs) like market demand/supply conditions, exchange rate and inflation that will affect cost estimation accuracy for large projects that extend multiple years (PMBOK Guide, 6th ed., p. 243).
3. People – The author stated that the number of people involved in cost estimation and their skill levels are paramount to the process. Not identifying all the stakeholders during planning increases the uncertainty of the cost estimates. The PMBOK Guide (6th ed.) agrees, calling for costs to be “estimated for all resources that will be charged to the project”, including labor, materials, equipment, and facilities (p. 241).
Martinez, M. A. (n.d.) delved into some of the tools and techniques used by project managers to develop cost estimates:
1. Expert Judgement – Experiences of experts who have been involved on similar projects is beneficial, but it can be biased. On my projects, I always include the experts from each department that have contributed effectively on previous projects.
2. Analogous Estimating – Historical data from similar projects is used in the cost estimation. Used in the early phases and is less accurate. I find this approach very easy to use in cost and schedule estimating.
3. Parametric Estimating – Historical data of key cost drivers, like price/square footage, are used in the estimation in a process known as statistical modeling.
4. Bottom-Up Estimating – More accurate cost estimate involving adding up the costs of individual work packages.
5. Three-Point Estimates – Calculated by using a weighted average of three estimates in a range of most likely (Cm), optimistic (Co), and pessimistic (Cp). The formula is: Cost Estimate = (Co + 4Cm + Cp) / 6.
6. Reserve Analysis – Used to account for cost uncertainty, it helps determine how much contingency reserve, if any, should be allocated to the project.
7. Cost of Quality (COQ) – This is the money allocated for failure avoidance and to correct quality failures if they happen.
8. Project Management Estimating Software – Cost estimating software is a great alternative that could be used. Others are application, spreadsheets, and statistical software tools.
9. Vendor Bid Analysis – Bids submitted by vendors are compared and used in estimating what a project would cost.
The course reading materials covered the same tools and techniques. In addition to reserve analysis and COQ, alternative analysis, a technique used to evaluate identified options in order to select which option to use to execute and perform the project work is covered in the PMBOK Guide (6th ed., p. 245). Decision making is also a technique used to estimate cost whereby voting is used to improve estimate accuracy and obtain commitment when there are multiple alternatives (PMBOK Guide, 6th ed., p. 246). In Pinto, J. K. (2020), analogous estimating is referred to as top-down budgeting (p. 314).