Estimating, Budgeting and Value Engineering Skills


Date Venue Fees(US$)
25 Oct - 5 Nov Amsterdam 8900
6 - 17 Jun 11 Amsterdam 8900
5 - 16 Dec 11 London 8900



The Course

Increasingly limited capital budgets force management to make effective, early decisions regarding project investments. As potential projects are considered, management requires costs estimates of high accuracy. Determining which estimation method to use, at each stage of project development, depends on the information available at the time of preparation, the end use of the estimate, and its desired accuracy. Besides, decisions regarding optimising project costs without sacrificing quality or functionality are highly dependent on the use of a set of systematic and logical procedures and techniques to enhance the whole-life project value.

This 10-day course is, therefore, designed to provide the candidates with all what they need for accurately estimating the total cost of their proposed projects, eliminating unnecessary costs, linking cost estimates to selected procurement methods, and enhancing the overall value of project design and delivery. The first Module of the Course focuses on the fundamentals of cost estimating techniques, whereas the second Module presents and examines the implementation of the Value Engineering (VE) concept for maximizing project functionality, reliability and quality at the lowest possible cost. Value Engineering is the process of analyzing the functional benefits a client requires from the design, and providing a creative procedure operating on the relevant aspects of the value process through the project lifecycle.

Fundamental and advanced concepts and tools of cost estimating and VE techniques are introduced. Practical applications are also covered in detail, along with presentations of case studies designed to help delegates master the course materials.

This comprehensive programme consists of two modules which can be booked as a 10 Day Training event, or as individual, 5 Day courses.

Module 1 - Project Cost Estimating Skills: Planning for Performance Excellence - II

Module 2 - Value Engineering Skills: Planning for Performance Excellence - III

The Delegates

This course is designed for all those who want to master cost estimation techniques and also wish to be familiar with the VE methodology and its benefits as related to the design and execution of projects. Cost Estimators, Cost Controllers, Engineers, Designers and Project Staff will find this 10-day course highly relevant. The course should also be of interest to anyone involved in project initiation, engineering design, and critical assessment of project cost proposals.

The Process

The course is a mixture of speaker input, case studies and practice exercises which will be used to facilitate group discussion. Delegates will gain detailed knowledge of cost estimation and value engineering concepts and techniques by active participation in the exercise/training sessions. Through lectures, case studies and practical exercises, delegates will focus on key concepts, terms, and principles neces¬sary for realistically estimating, controlling and optimizing project costs.

The Goals
Following the completion of this course, delegates will:
  • Gain knowledge of techniques used in project estimating, from the conceptual stage to the final detailed estimate
  • Understand the different types of estimates used to accurately and progressively estimate project costs
  • Understand the different types of contracts based on the distribution of risk between contracting parties
  • Effectively apply incentive arrangements to get the best results from the contract
  • Gather and organize information and cost relevant to the design aspects of the project
  • Demonstrate better understanding of the key functions performed by key components of the design
  • Critically assess and evaluate the relationships among key attributes such as cost, value and function
  • Report effectively to top management and project stakeholders in the context of proposing new design alternatives that improve the overall project value
  • Demonstrate proficiency in applying life-cycle costing principles
  • Objectively present a convincing case in support of certain design alternatives
The Benefits

Individuals and organisations will be better prepared in relation to how to manage the cost and design of their projects according to best practices. Individuals will learn how to adopt and apply a structured approach to cost estimation, budgeting and value engineering. This in turn will lead to having a consistent and streamlined cost and design management processes across the organisation.

The Results
Delegates attending this 10-day course will be able to:
  • Integrate all relevant project elements into a cohesive and comprehensive cost estimate
  • Prepare budget estimates that will enable the owner-organization to make informed decisions as to the feasibility of a potential project
  • Compare the costs of alternative strategies or technical approaches to ensure the most economical project at the desired level of quality
  • Structure the contract compensation arrangement to provide the highest level of incentives to complete the project on schedule and within the determined budget
  • Keep accurate control of the progressive budgeting process based on the various stages of design
  • Prepare accurate budget estimates through the programming phase, the schematic design phase, and finally the design development phase
  • Manage the interface between many value-adding initiatives and senior management expectations
  • Apply systematic and innovative methodology with multi-disciplinary approach to achieve better value and cost optimization for projects
  • Spread cost-consciousness among project team members
  • Focus on function and thereby develops creative thinking towards cost reduction
The Core Competencies
Delegates attending this course will enhance their competencies in the following areas:
  • Developing an initial project budget for the owner
  • Determining project feasibility
  • Designing the project within the owner's budget
  • Evaluating alternative design concepts and project components
  • Preparing bids
  • Preparing cost proposals
  • Establishing project budgets
  • Determining the cost impacts of change orders
  • Developing appreciation of how to frame decisions and to develop decision hierarchies
  • Bringing Value Engineering into the organization’s business planning process
  • Identifying major roadblocks to creativity, and ways to mitigate them
  • Evaluating the results of a brainstorming session to develop the best value-adding scenario
  • Adhering to a structures sequence of logical steps to solve problems that eliminate unnecessary costs without compromising quality or functionality

Programme Content


Module 1:

Project Cost Estimating Skills: Planning for Performance Excellence - II

Day One

Cost Estimating Basics

  • The estimating life cycle
  • Phases of the Design Process
    • Programming phase
    • Schematic design
    • Design development
    • Construction documents
  • Estimating accuracy by phase
  • Conceptual Cost Estimates
    • Rough Order of Magnitude Estimates (Broad Scope Estimates)
    • Assemblies cost estimates
    • Cost indices
    • Semi-detailed Estimates (Narrow Scope Estimates)
    • Definitive Estimates (Detailed Scope Estimates)
  • Quantity take-off
    • Basic procedures
  • Types of construction contracts
    • Lump-sum contracts
    • Unit-price contracts
    • Cost-plus contracts
    • Cost-plus contract with guaranteed maximum price (GMP)
    • Time-and-materials contracts
  • Procurement methods
    • Bid method
    • Negotiated method
  • Pre-construction services
  • Risk analysis and contingencies

Broad Scope Cost Estimating Techniques

  • Adjustments to Project Cost for Broad Scope Estimates
  • PERT Project Cost Analysis
    • PERT Unit Cost Estimates
      • Formulae for Cost Estimating
      • The Normal Distribution Curve
      • Z-Value Table
      • The Probability of Project Completion within Budget
      • Estimating Project Unit Cost by Using the Standard Deviation
      • Estimating the Project Unit Cost at a Required Probability
      • The Probability of Completing the Project at a Required Cost
      • PERT vs Standard Deviation & Z-Values
      • Adjustments to Estimates Based on Previous Projects
    • Adjustments for Time
      • Review: Future Value of Money
      • Review: Present Value of Money
      • Equivalent Annual Interest Rate
      • Index to Adjust for Time
      • Equivalent Compound Interest
    • Adjustments for Location
      • Location Index for Construction
    • Adjustments for Size
    • Combined Adjustments
    • Economic Price Adjustment
    • Unit-Cost Adjustments
    • Learning Curves
      • Estimating Durations based on the Learning Curve Effect
      • Estimating Costs based on the Learning Curve Effect
Day Two

Budget Estimating Process

  • Estimating by design phase
    • Programming budget estimates
    • Schematic design budget estimates
    • Design development budget estimates
  • Estimating pre-construction services
    • Request for proposal
    • Development of pre-construction services estimate
    • Pre-construction services contract
    • Budget control log

Bid Contract Estimating Process

  • Pre-estimate activities
    • Estimating process
    • Solicitation of lump-sum bids
    • Order-of-Magnitude estimates
    • Work Breakdown Structure
    • Estimating team
    • Scheduling the estimating work
    • Subcontractors and major suppliers
    • Estimating forms
    • Accuracy and error prevention
  • Pricing self-performed work
    • Recap sheet
    • Materials
    • Labour
    • Applying pricing factors
    • Summary recap
  • Estimating subcontractor work
    • Subcontractor work
  • Estimating General Conditions
    • Project summary schedule
    • Alternative techniques
    • Elements of the general conditions estimate
  • Completing the estimate
    • Final document review
    • Completing the bid summary
    • Final mark-ups
    • Sales tax
    • Validating the estimate
Day Three

Unit Price Estimates

  • Unit price bid forms
  • Direct cost estimation
    • Materials
    • Labour
    • Indirect labour
    • Subcontractors
    • Recap summary sheet
    • Direct-to-indirect cost factor
  • Mark-up determination
  • Variation-in-quantity contract provision
  • Risk analysis
  • Bid finalisation

Negotiated Contract Estimating

  • Guaranteed Maximum Price Estimates
    • Contract procurement process
    • Documents
    • Strategies
    • Estimating process
    • Contingencies
  • Fee determination for negotiated contracts
    • Reimbursable versus Non-reimbursable costs
    • Home office overhead
    • Risk evaluation
    • Fee structure
    • Cost savings split
  • Cost proposals for negotiated contracts
    • Strategies for responding to the Request for Proposal
    • Documents to be included with the Request for Proposal
    • General Contractor interview and selection process
    • Negotiated subcontracts
Day Four

Contract Types and Compensation Arrangements

  • Risk distribution in contracting
  • Project risk profiles
  • Contract types according to risk distribution
  • Fixed Price Contracts
    • Firm Fixed Price
    • Fixed Price with Economic Adjustment
  • Incentive Contracts
    • Fixed Price Incentive
    • Cost Plus Incentive
  • Cost-Plus Contracts
    • Cost Reimbursement
    • Cost Plus Award Fee
    • Cost Plus Fixed Fee
  • Time-and-Materials
Day Five

Narrow Scope Cost Estimating Techniques

  • Power-sizing techniques (Capacity Ratios)
  • Factor estimates
  • Cost estimating relationships (CER)
  • Design-to-cost-estimates
  • Target cost estimates
  • Adjusting for Project Type and Quality Level
  • Features Determining the Quality Level (Grade) of a Structure
  • Adjusting for Quality Level by Using a Costing Publication
  • Economic Constraints
  • Parametric Cost Estimating
  • Analysis of Estimating Accuracy

Module 2:

Value Engineering Skills: Planning for Performance Excellence - III

Day Six

Overview of Value Engineering

  • What is Value Engineering? Why is it important?
  • Defining Value Engineering concepts and principles
  • Purpose of Value Engineering and Value Analysis
  • Strengths and Weaknesses of Value Engineering
  • Life-cycle costing techniques
  • Identifying relationships between Value, Cost and Worth
  • How and When is Value Engineering applied?
  • Initiating Value Engineering Process
  • Overview of Different Value Engineering Phases
  • The Information Phase – steps and procedures
  • Developing Value Engineering Job Plan
Day Seven

The Function Analysis Phase

  • The need for Function Analysis
  • Pre-requisites
  • Function-Cost-Worth Analysis
  • Developing FAST Diagrams
  • The Technical FAST Model
  • Critical Ratios
  • Team membership and their dynamics
  • Multi-disciplinary Team-based approach
Day Eight

The Creative Phase

  • Creativity and Creative thinking
  • Individual vs. Group thinking
  • Creativity Techniques
  • Going beyond traditional solutions
  • Blocks to creativity
  • Brainstorming
  • Reaching consensus
  • Perceptions of risk
  • Delphi technique
  • Force-field analysis
  • Problem solving techniques
  • Output of the Creative Phase
Day Nine

The Evaluation Phase

  • Evaluation Methods
  • Ideas screening
  • Quantitative evaluation
  • Subjective evaluation – criteria weighting
  • Revisiting Life-cycle costing analysis
  • Incorporating inflation
  • Risk Life-cycle cost simulation modelling
  • Pitfalls associated with the use of existing economic models
  • Incremental benefit-cost analysis
  • Effective Decision-making
  • Output of the Evaluation Phase
Day Ten

The Planning and Reporting Phases

  • Develop and assess VE proposals
  • Develop Action Plans
  • Reporting VE findings to Senior Management and project stakeholders
  • Oral presentation techniques & Interpersonal skills
  • Strategies for implementation
  • Follow-up Activities
  • Incorporating VE into the early phases of the design process
  • Integrating VE with Continuous Improvement Techniques
  • Wrap-up


AZTech
PO Box: 89522, Dubai, UAE
Tel: (+971) 4 3678288
Fax: (+971) 4 3661042
Email: info@aztech.ae