May 2005

2005

The AACE International Journal of

Cost Estimation, Cost/Schedule Control, and Project Management

Promoting the Planning and

Management of
Cost and Schedules

IN
IN THIS
THIS ISSUE
ISSUE
• Technical Article -
Design/Build Selection
Process — Art or
Science?
• Technical Article -
Using Earned Value
Management Indexes
as Team Development
Factor and a
Compensation Tool
• Technical Article -
The Goalposts for
Project Success Have
Moved — A Marketing
View
• Executive Article -
The Art of
Compromise

• Education Board News -

AACE
AACE International’s
International’s 2005
2005 2005 Update on
ANNUAL Globalization of
ANNUAL MEETING
MEETING ISSUE
ISSUE Educational Materials
• Certification Corner -
Study Groups

• Special Feature -
Earned Value
Professional
Certification on Track
for New Orleans
Premier

The Association for the Advancement of

Cost Engineering International
Visit our website at www.aacei.org

AACE International
Board of Directors
President
Clive D. Francis, CCC
Black & Veatch, MI
734-622-8543/fax: 734-622-8700
e-mail: president@aacei.org
President-Elect
Philip D. Larson, CCE PSP
WinEstimator, WA
253-395-3631/fax: 253-395-3634
e-mail: preselect@aacei.org
Past President
Ozzie F. Belcher
Belstar, Inc., VA
703-645-0280/fax: 703-645-0286
e-mail: pastpres@aacei.org
Vice President-Finance
Robert B. Brown, PE
PMA Consultants of Illinois, LLC, IL
312-920-0404/fax: 312-920-0405
e-mail: vpfinance@aacei.org
Vice President-Administration
William E. Kraus, PE CCE
B & C Project Services, CO
970-206-0947/fax: 970-226-1818
e-mail: vpadmin@aacei.org
Vice President-Regions
Marvin Woods, CCE
Project Controls Group, Inc., MO
314-838-4987/fax: 314-389-8957
e-mail: vpregions@aacei.org
Vice President-TEC
James G. Zack Jr.,
Fluor Daniel, CA
949-349-7905/fax: 949-349-7919
e-mail: vptec@aacei.org
Director-Region 1
Mustansir H. Raj, CCE
Bantrel, Calgary, Canada
403-282-6545/fax: 403-290-5050
e-mail: dirregion1@aacei.org
Director-Region 2
Charles E. Bolyard Jr., PSP
McDonough Bolyard Peck, Inc., VA
703-641-9088/fax: 703-641-8965
e-mail: dirregion2@aacei.org
Director-Region 3
Robert E. McCoy, CCC
BWXT Y-12, LLC, TN
865-482-7658
e-mail: dirregion3@aacei.org
Director-Region 4
Jeffrey D. Kursave, CCC
SAIC., MO
314-770-3006/fax: 314-344-4349
e-mail: dirregion4@aacei.org
Director-Region 5
Stephen W. Warhoe, PE CCE
303-740-2665
e-mail: dirregion5@aacei.org
Director-Region 6
Mark G. Grotefend, CCC
253-835-8081
e-mail: dirregion6@aacei.org
Interim Executive Director
Charla Miller
e-mail: cmiller@aacei.org
The AACE International Journal of
Cost Estimation, Cost/Schedule Control, and Project Management
ESTABLISHED 1958
Depar tments
President’s Message ................................3 Special Feature ....................................26
In Our Estimation ..................................5 Professional Services Directory ..............38
Letters to the Editor................................8 AACE International Bulletin ..............39
Education Board News ........................10 Article Reprints and Permissions ..........43
Calendar of Events ..............................44
Certification Corner ............................11
Executive Article ..................................13
Featured Ar ticles
Design/Build Selection Process — Art or Science? 14
Talal Abi-Karam, PE CCE
Although Design/Build is one of the most popular integrated alternative delivery methods, it does not have well-
established contractor selection procedures. The selection of a Design/Builder can be based solely on qualifi-
cation, solely on price, or a combination of price/qualification. Even with qualification-based selection (QBS),
the selection process may be subjective, since various state agencies (DOT's) and municipalities have different
selection criteria for pre-qualifying and evaluating bids of the perceptive Design/Build teams. This article exam-
ines the various selection methods of Design/Build teams in the public works sector. It addresses the legal
framework for selecting Design/Build teams, including qualification-based selection (QBS), selection criteria,
and weighting of criteria.
Using Earned Value Management Indexes as 20
Team Development Factor and a Compensation Tool
Ricardo Viana Vargas
The objective of this article is to present the main components of the development of a project team and the
motivational characteristics inherent to team work. It also looks at an interrelation proposal between the earned
value analysis and team development through the SPI and CPI indexes. These are obtained by tool use and
team development models and the compensation and reward in the project. This reduces the subjectiveness
of humans resource in the project evaluation. The article presents a brief report about team development and
compensation policies, as well as an introduction to the earned value concept, aiming to align the approached
concepts.
The Goalposts for Project Success Have Moved — 28
A Marketing View
P.S. Kupakuwana and G.J.H. van der Berg
Traditionally, a successful project was seen as one in which the triad of time, budget, and specification was com-
plied with at a profit. Current project literature places more emphasis on customer satisfaction as a fourth
important success parameter. This article discusses project management services and focuses on what consti-
tutes project success. This type of project is named the new project in this article and a set of new project rules
is arrived at. The article also takes a services marketing view and examines the customer's motivation in appoint-
ing a project manager.
In This Issue
Board of Directors Contact List ........................1 Index to Advertisers ......................................38
AACE Certification Exams ..........................11 AACE International HQ Contact List ........42
On the Cover: New Orleans is ready to welcome AACE International members and guests to our 49th
Annual Meeting, June 26-29. Register by May 27, and save $100.
COST ENGINEERING AACE International Headquarters
Vol. 47, No.5/May 2005
209 Prairie Avenue, Suite 100
Managing Editor - Marvin Gelhausen Morgantown, WV 26501
e-mail: mgelhausen@aacei.org
ph: 800.858.COST
Graphic Designer/Editor - Noah Kinderknecht
e-mail: nkinderknecht@aacei.org fax: 304.291.5728
Policy concerning published columns, features, and articles -
Viewpoints expressed in columns, features, and articles published in Cost Engineering journal are solely those of the authors and do not represent an official position of AACE
International. AACE International is not endorsing or sponsoring the author’s work. All content is presented solely for informational purposes. Columns, features, and articles not
designated as Technical Articles are not subject to the peer-review process.
Cost Engineering (ISSN: 0274-9696) is
published monthly by AACE International,
Inc, 209 Prairie Ave., Suite 100, Morgantown,
P resident’s
P resident’s Message
WV 26501 USA. Periodicals postage paid at
Morgantown, WV, and at additional mailing
office. POSTMASTER: Send address
Clive D. Francis, CCC
changes to AACE International; 209 Prairie President
Ave., Suite 100, Morgantown, WV 26501
USA. Single copies: US$8 members/ US$12
nonmembers (both +shipping), excluding
special inserts available to AACE members
only. Subscription rates: United States,
Our Association Continues to Change
US$65/year; all other countries, US$82/year.
Overseas airmail delivery is available at
s I sit to write this message, it is hard earned value analysis, and who work on con-

A
US$99. Subscriptions are accepted on an
annual-year basis only. Copyright © 2005 by
AACE International, Inc. All rights reserved. to believe that there have been nine struction and other claims. With the strategic
This publication or any part thereof may not messages which have preceded this plan, we will have a guide to help us define
be reproduced in any form without written
permission from the publisher. AACE one, and I look forward to recognize that who we are and where we need to be in the
assumes no responsibility for statements there are only two more to go. The elections next few years.
and opinions advanced by the contributors
to its publications. Views expressed by them have been completed, and the makeup of the What else is new? We have introduced
or the editor do not necessarily represent next year’s Board of Directors (BOD) is truly and successfully completed two Beta tests of
the official position of Cost Engineering, its
staff, or AACE International, Inc. Printed in exciting. The elections have brought to the new Earned Value Professional (EVP) certifi-
York, PA, USA. Cost Engineering is a BOD three new persons who have never cation. The certification gives AACE
refereed journal. All technical articles are
subject to review by a minimum of three been on the BOD. They will bring new ideas International professionals who perform
experts in the field. To submit a manuscript
for peer review, please e-mail it to
and energy to your association and provide a earned value analysis as part of their daily
editor@aacei.org. Cost Engineering is new outlook and ideas to make us grow. work activities the recognition for the work
indexed regularly in the Engineering Index.,
Cambridge Scientific Abstracts, by EBSCO
The other exciting action to come from they do. The certification was developed by a
Publishing, and in the ABI/Inform database. the elections was the overwhelming vote to dedicated group of professionals who devel-
Cost Engineering is available online, via the
ProQuest information service; on microform; change the method of voting for your associ- oped questions, developed processes, and
electronically on CD-ROM and/or magnetic ation executives. Our votes in this election developed the criteria.
tape from Bell & Howell Information and
Learning, PO Box 1346, Ann Arbor, MI 48106. were decided by only 15 percent of our mem- Also, by the time you read this message
Photocopy permission : Authorization to bership. I recently voted for new directors our Interim Executive Director, Andy Dowd,
photocopy articles herein for internal or
personal use, or the internal or personal use and other issues for another group via elec- will have returned to his life before working
of specific clients, is granted by AACE tronic voting method. This was so easy and at AACE International Headquarters. Andy
International, Inc., provided that the base
fee of US$4.00 is paid directly to Copyright quick and I am sure brought out a much has served the Association well over the last
Clearance Center, 222 Rosewood Drive, higher percentage of those eligible to vote. eight months. As Interim Executive Director,
Danvers, MA 01923 USA. Telephone:
978.750.8400. For those organizations that The Association will implement electronic Andy chose to take the high road and to make
have been granted a photocopy license by
CCC, a separate system of payment has
voting for all members, hopefully by the improvements in operations, to guide the
been arranged. The fee code for users of the 2006 election. staff, helping to mentor them, and to be the
transactional reporting service is ISSN-
0274-9696/02 US$4.00. This permission to
By the time you read this, the April conscience to the Board of Directors. All that
photocopy does not extend to any Cost Board meeting will be history. I am going to Andy did was dedicated to improving the
Engineers’ Notebook, AACE Recommended
Practices supplements, or membership this meeting with a lot of anticipation and Association's operations. Andy also chose to
directories published in this magazine hope for an exciting new process for AACE be our representative with other associations.
and/or special inserts. Payment should be
sent directly to CCC. Copying for other than International. The plan is for us to spend a All of us at AACE International owe Andy a
personal or internal reference use without portion of the Board of Directors meeting special thanks for his contributions. From a
the express permission of AACE is
prohibited. Address requests for permission developing an outline for a new AACE personal point of view, I believe that Andy
on bulk orders to the editor. ADVERTISING International Strategic Plan. The new plan was there when needed and I could depend
COPY: Contact Network Publications Inc.,
Executive Plaza 1, 11350 McCormick Road, Suite will be our guide for the next two to three on him to be there as a guide, mentor, and
900; Hunt Valley, MD 21031. Telephone: 410.584.1966. years. The expectation is that the strategic more importantly, as a friend. ◆
E-mail: aace@networkpub.com for rates.
Advertisers and advertising agencies assume plan will be reviewed each year and used as a
liability for all content (including text, guide for the coming year. At the same time,
representation, and illustrations) of
advertisements printed and also assume we would expect that, after each two year
responsibility for any claims arising
therefrom made against the publisher. The
interval, it would continue to serve as a guide
publisher reserves the right to reject any for further updates and become the blueprint
advertising that is not considered in keeping
with the publication’s mission and
for the following two year interval.
standards. The publisher reserves the right So why do we need a strategic plan? It
to place the word advertisement with copy
which, in the publisher’s opinion, resembles has become very evident over the last couple
editorial matter. All advertising accepted for of years that we need to spend time to deter-
publication in Cost Engineering is limited to
subjects that directly relate to the cost mine who we are and where we want to be in
management profession. Current rate card the future. The whole profession of cost engi-
available on request. COST ENGINEERING
DEADLINES : Submissions for Cost neering has changed over the years. The pro-
Engineering must be received at least 7 fession is no longer a group dealing only with
weeks in advance of the issue date. Send to:
Editor, 209 Prairie Ave., Suite 100, numbers. We are now a group of profession-
Morgantown, WV 26501 USA. Deadlines do als who also deal with schedules, who provide
not apply to technical papers.

Cost Engineering Vol. 47/No. 5 MAY 2005 3

 I Inn Our
Our Estimation
Estimation
AACE International Board Adopts
New Vision and Mission Statements
n my way to work today, I passed the time of the 30
O minute drive by listening, as I do most mornings, to
National Public Radio. I was intrigued with the inter-
view on NPR's Morning Edition with Microsoft Chairman Bill
Gates. That interview jump started my thought process of recent
activities with AACE International and its Board of Directors.
During the interview, Bill Gates was asked his opinion about
the problem with the reduced number of science and engineer-
ing students in the US and whether the problems were with the
educational system or a problem of the US culture. Here is what
Bill Gates had to say:
"The Chinese are clearly inculcating the idea that sci-
ence is exciting and important and that's why they, as a
whole, are graduating four times as many engineers as
we [the US] are. That's just happened over the last 20
years. We see drop offs in terms of interest in this at
every level of the educational system, particularly for
women and minorities, but as a whole. So we have got
to work on that in every stage."
So you may be reading this and saying to yourself, "Self, what
on earth does this have to do with AACE International?" Or you
could be thinking that this girl at AACE Headquarters is a little
wacky…I'll address the question on how Bill Gates' comments
relate to AACE International, and leave you to judge the level of
my sanity for yourself.
At the AACE International Board of Directors meeting, April
21-22, in Toronto, Ontario, Canada, the Board conducted a
strategic planning session for the first time in a few years. The
newly adopted vision and mission statements for AACE
International, I believe, help to define the Association to the pro-
fession at large. Although there is still more work to be done in
the area of strategic planning, many of the issues and goals that
were discussed in this day-long session touched on those com-
ments made by Bill Gates.
I believe that, like in Bill Gates' statement, AACE
International should be instilling the idea that the work being
done by our members is exciting and important.
I am always fascinated to learn of many of the works and pro-
grams of our members, both historical and current. I recall that
just a few days ago, while touring Toronto's CN Tower with fellow
Headquarters Staffers Christian Heller, Teri Jefferson, and Charla
Miller, we saw a display on the Seven Wonders of the Modern
World (according to our friends at the American Society of Civil
Engineers) which include the Channel Tunnel, CN Tower,
Empire State Building, Golden Gate Bridge, Itaipu Dam,
Netherlands North Sea Protection Works, and the Panama Canal.
Cost Engineering Vol. 47/No. 5 MAY 2005
Jennie Amos
Manager, Marketing and Meetings
AACE International's Vision:
To be the recognized technical authority in cost
and schedule management for programs, proj-
ects, and products.
AACE International's Mission:
To provide technical programs, research, recom-
mended practices, and professional development
and expertise through technical programs, con-
tinuing education, and professional certification.
It was then that I learned that a former AACE International
President, Chris Walker, had been a project manager on the
Channel Tunnel—how exciting that must have been! During
my tenure at AACE International, I have also learned of members
working on projects like the NASA Space Shuttle facilities,
Disney's Epcot Center, and let's not forget AACE International
President-Elect, Phil Larson, CCE PSP's, work as lead scheduler
on Bill Gates' residence!
These few examples and the many current projects AACE
International members perform on a daily basis are just scratch-
ing the surface of a typical AACE member’s work. These could
not have been done without some stimulation and notion that the
work they were doing was not only difficult and technical, but
exciting and important as well.
With the good work being done by our dedicated members
on our Board of Directors, TEC Boards, Technical Committees
and SIGs, Sections, and our membership as a whole, AACE
International will be the recognized technical authority in cost
and schedule management for programs, projects, and products.
I hope by this point, assuming that you haven't already decid-
ed that I'm a little too nuts for you and have stopped reading this
article, you are asking yourself, "Self, what can I do right now to
help ensure that AACE International is able to achieve it's vision
and mission?"
With the 49th Annual Meeting just around the corner, I
hope you will be supporting our efforts for technical programs,
continuing education, and professional certification offered
there!
AACE International is extremely thankful to one of our
Sections, Genesee Valley, for their fifth year in sponsoring the
Annual Meeting (they are the only section in recent years to have
done so)! This year, the Genesee Valley section is also sponsor-
ing the attendance of one of their members to the Annual
Meeting! I think this is quite a feat for a section of only 40 mem-
5
 bers! Section Leaders, won't you consider matching support of
AACE International like your friends at Genesee Valley have
done for several years to help support AACE International's vision
MONEY SAVING TIPS
and mission? for
for the
the
As an individual member, there are a number of ways you
can help AACE International demonstrate its vision and mission 2005 ANNUAL MEETING
by making your own contribution: get a friend to join AACE
International, attend the Annual Meeting, brush up on your skills TIP 1 - Stay in the AACE International Host
with the Professional Practice Guides, participate in a Technical Hotel, Sheraton New Orleans, and save $100 off of
Committee or SIG, attend a Continuing Education Seminar,
take a Distance Learning Course, sign up to be an Approved your Technical Program Registration. If you are tak-
Education Provider, or get AACE International certified: CCC ing a Continuing Education Seminar, you can receive
(Certified Cost Consultant), CCE (Certified Cost Engineer), $100 on one or both by staying at the Sheraton New
ICC (Interim Cost Consultant), PSP (Planning and Scheduling Orleans as well!! Just make sure to enter your confir-
Professional), or EVP (Earned Value Professional).
AACE International is helping you to do your exciting and
mation number on your annual Annual Meeting
important work, but your input and involvement is, as it has been for Registration Form.
the last 49 years, vital to these overall efforts of the Association! ◆
TIP 2 - Register before the Early Registration Cut-
Off Date, May 27th, and save an additional $100!

6 Cost Engineering Vol. 47/No. 5 MAY 2005

 LLetters to the Editor
etters to the Editor
All,
I was on the telephone recently with a gentlemen who has
the Planning & Scheduling Professional (PSP) Certification
through AACE International. This individual is also a testifying
expert in the area of construction scheduling. He just completed
testifying in a jury trial in Northern California. Since he had
recently achieved his PSP Certification, he had briefed the attor-
ney he was working with on the implications of having a PSP
Certification, as well as the requirements to attain such certifica-
tion. His attorney asked all the "right questions" during voir dire
(the qualifying process for an expert witness in Court) and the
judge readily admitted him as an expert.
Opposing counsel was unable to keep him off the stand as an
expert. Additionally, it was noted during the trial that the oppos-
ing expert did not have this certification.
The outcome of the trial was a settlement very much in favor
of this individual's client. Now, it cannot be said that the PSP
Certification was the only reason this happened or even the pri-
mary reason. I'm pretty confident that facts, law, contract lan-
guage, analysis and presentation skills had something to do with
the outcome also. But, the point is, having the PSP Certification
made it much easier to be admitted as a testifying expert in the
area of construction scheduling, at least in this case.
You may want to pass this information along to those you
know who are schedulers and who either are, or want to become,
testifying experts in this area. This certification is starting to pay
off -- at least for this individual.
James G. Zack, Jr.
Executive Director
Corporate Claims Management
Fluor Corporation
One Enterprise Drive, S3-148
Aliso Viejo, CA 92656-2606
Hello AACE Colleagues,
As many of you know, I am in the process of researching my
Ph.D. thesis: “Is Project Management a Profession? And If Not,
What is it?” under the supervision of Dr. Christophe N. Bredillet,
Lille Graduate School of Management, Lille, France.
Accordingly, I would be very appreciative if my AACE col-
leagues were to register your opinions on how you perceive and
define what we do for a living. I am especially keen to make cer-
tain I get the input from as many PE’s as possible. I think the per-
spective of how PE’s perceive project management is going to be
very interesting.
Please take about 1.5 hours of your time to fill in my cus-
tomer survey, and earn 2 PDU’s in the process. (You will receive
a personal copy of the results and the analysis as soon as I com-
plete it) OR you can earn one of our famous “Project
Management- Art?, Science? Or Bull…..?” T-shirts as a reward for
your efforts. Just visit, http://FreeOnlineSurveys.com/rendersur-
vey.asp?id=76670
Many thanks in advance and look forward to sharing the
8 Cost Engineering Vol. 47/No. 5 MAY 2005
Marvin Gelhausen, Editor
results of this research with you in the coming 9 months or
so…….
And for those of you thinking about getting your Ph.D., I can-
not think of any better distance learning program than the Ph.D.
in Project/Program Management offered by Professor Bredillet at
ESC-Lille. www.esc-lille.com . And rumor has it that a distance
learning Masters degree from ESC-Lille in Program/Project
Management may be in the works as well.
BR,
PDG, Jakarta
Dear ICEC Members and Delegates:
Many of you have submitted payments for your 2005 ICEC
Subscriptions and we trust that those who have not yet done so
will arrange payment soon.
As indicated in the instructions previously sent to you for
handling payments, if bank transfers are used, it is preferred that
they be sent to the ICEC office in Australia, not to our United
States bank account.
Unfortunately, the United States Federal reserve system has
changed the manner in which bank transfers are handled. When
transfers are sent to the United States they are simply credited to
accounts and no identification of who sent the funds is provided.
Everything is done electronically. We have received several wire
transfers and do not know who sent them. We must know when
you send payments so that we can identify them. Even if you
inform us of the amount transferred, because of fees charged on
transactions, the amount credited to our account will not match
the amount sent. This makes it very difficult for ICEC to identify
who sent the payment and to properly credit the sender. This
problem does not occur with transfers to the Australian bank.
If you have sent a transfer to the United States, or if you send
one in the future, always send an e-mail to kenh@icoste.org pro-
viding us with the details of your transmittal including the name
of your bank and the name of the US correspondent bank which
they used to handle the transfer so that we may properly identify
your payment. Otherwise we may not know that you have made
payment.
We have received several payments this month which we
cannot identify. If one of them is yours, please provide the
requested information so that we can properly identify your pay-
ment.
Thank you.
Kenneth K. Humphreys
Secretary-Treasurer
International Cost Engineering Council
1168 Hidden Lake Drive
Granite Falls, NC 28630, USA
http://www.icoste.org
Reply to: kenh@icoste.org
Consulting “101” International; ASPE; PMI; SAVE) and agencies (among them:
Two years ago, when I was, “selected to participate in a force AGC; ASA;NFIB; et.al.) where further networking could be
reduction,” many emotions were felt. Since several lay-offs had achieved. There are numerous societies where one can share in
occurred in previous quarters, one emotion was relief—removing knowledge and potential contracts.
the uncertainty of the effects of market conditions on one’s daily Be prepared to spend many hours in the up-front efforts of
employment. networking, marketing, planning, and research. And, yes, there
The most prominent emotion, however, was that of optimism are up-front costs associated with licenses, equipment, supplies,
and opportunity. I had always had the notion planted in the far advertising, and much more that require the need to be planned
reaches of my mind that “one day,” after retirement, I would like for—and addressed in your business plan.
to become an independent consultant. Above all, dream your dream. Contact others in the consult-
I consider it extremely fortunate that, as one of the out-place- ing field to be appraised of pitfalls to avoid, hurdles to overcome,
ment benefits provided by my former employer, I was able to par- and rewards to be gained.
ticipate in the “Fast Trac New Venture” program of the Ewing If you choose this route, best wishes in your endeavors!
Marion Kauffman Foundation. The materials provided me with
the information and tools needed to research and develop busi- Bruce A. Martin ◆
ness plans, marketing plans, and to establish realistic goals for a
successful entrepreneurial adventure.
Hoping to springboard off my years of experience in the Cost
Engineering profession, I filed the necessary forms to license with
my state, acquire my FEIN, and register with the business associ-
ations.
As many will tell you, networking is essential in “getting the
word out” that your shingle is now flapping in the breeze. Letters
of introduction were mailed to colleagues, former coworkers, pro-
fessional association affiliations, potential clients, and (yes) fami-
ly members.
With a background in estimation, budget management,
value engineering, and process improvement, I subscribed to var-
ious publications and journals dealing in entrepreneurship, new
partnerships, and new projects where these skills could be
applied. I sought out associations (among them AACE

Cost Engineering Vol. 47/No. 5 MAY 2005 9

 EEducation
ducation Board News
Dr. Sean T. Regan, CCE

2005 Update on Globalization of Educational Materials

n 2004, I shared my thoughts with you on the benefits of involved in international projects, thus increasing membership

I globalizing our educational materials. In a world that is con-

tinually changing, and constantly blending, it is my belief
that our success in the international arena is dependent on shared
and participation in our vision.
Now that there is a core group of volunteers to support our
vision of "globalization," we invite other members who would like
knowledge that is mutually understood among all nations. to contribute their time and talents, as well as start a charter. The
The goal: to create translations that truly transcend our his- committee's mission will be the continual translation of papers,
toric language barriers. books, manuals, and presentations in languages that help outside
Having children from two culturally diverse marriages, I have firms to develop their own dual (or multi) language programs.
witnessed first hand how language barriers can introduce conflict As the Association comes to its golden anniversary, the intro-
and misunderstanding. However, the beauty of translation also duction and use of multiple languages and exams within our
means that it is possible to transcend those barriers and commu- organization, will keep the association in the forefront for anoth-
nicate freely and effectively. While my three sons from my first er 50 years.
marriage are of US descent, they are eagerly learning Russian If you would like to provide a paper, recommend a text, be a
words and phrases and are now communicating with their two presenter, or donate your time to translate a chapter from the
younger brothers who are of Russian lineage. They may not be Skills & Knowledge of Cost Engineering, please feel free to send
fluent, but they have learned the importance of embracing their an e-mail to stregan@revolutionst.com and I will be happy to add
dual cultures. This same consideration must be adopted in our you to our pioneer committee on globalization education. ◆
international arena if we are to be an effective Association both
educationally and professionally.
The Education Board is proud to acknowledge that we will
be embracing this process by offering multi-language translations
of a chapter on scheduling; specifically Chapter 13 of Skills and
Knowledge of Cost Engineering - 5th Edition. The document
has already been successfully translated into Russian, and we are
working diligently to complete the Spanish, Japanese, and
Mandarin translations as well. The goal is to have at least three of
the languages available for sale at our Annual Meeting in New
Orleans in June 2005.
In order to fully understand and appreciate the time and sup-
port that it takes for these translations to take place, I share the fol-
lowing insights with you. From one culture to another, words and
phrases have different meanings. Therefore, we take the following
approach when translating our documents.

• A single individual translates the document.

• The translated document is reviewed by a second group of
peers for content and subject matter.
• After the group comes to an agreement that the translation
meets the context of the original document, we then "reverse
translate" to verify that the meanings have not changed.

The initial chapter, "Scheduling", was translated by volun-

teers who are practicing professionals, not a paid firm. These vol-
unteers translated while working a full time job, managing their
own educational pursuits, and family commitments. And, while
the primary goal of translating this document was done under the
premise of supporting a globally cohesive community, we offer
them "for sale" so that the monies earned may support further
translation of other vital materials. In addition, the income gen-
erated from these sales can also be used to train more individuals

10 Cost Engineering Vol. 47/No. 5 MAY 2005

 C
Cer tification
ertification Corner
Valerie Venters, CCC, Certification Board Member

Study Groups
ou want to become certified, but don't know how to get cepts and material.

Y started. I know what you are thinking. . .its has been a

long, long, time since you poured over exam material and
really studied for a test. Then the burning question is, “What if I
don't pass?”
Let me offer a suggestion for how to get started—join a study
group. The study group approach may not work for you, but your
ultimate goal is to improve your skills and get certified. One of
the best places to get questions answered about confusing or diffi-
cult concepts or problems is in a study group.
Oftentimes, individual group members have more expertise
in the material covered in one of the exam sections than another,
and can teach the material to the other members in the group. . .
all learn together. Taking turns teaching and explaining helps
build confidence for each of the members. The study group also
provides a support group. All of us feel discouraged and over-
whelmed at times, but a study group can refuel your motivation
and make studying more productive.
Let me give you an example. At one of our local section
meetings, several members indicated an interest in becoming cer-
tified. The idea of forming a study group began to take shape.
We needed presenters who were experienced project controls pro-
fessionals. We recruited an experienced scheduler to present the
scheduling material, an experienced cost engineer to present the
cost material, and an experienced estimator to present cost esti-
mating material. Other volunteers helped present contracts,
earned value, and behavioral science. An eight week program
was mapped out. At the beginning of each class, the first few
minutes are spent reviewing the paper requirements and answer-
ing any questions. The rest of the class is focused upon exam con-
Our group agreed to meet once a week immediately after
work for two hours. We divided the chapters of Skills and
Knowledge into blocks of material: scheduling, cost engineering,
estimating, earned value, and other related material. The pre-
senter for that block of material would prepare his/her presenta-
tion, assemble work problems on the subject, and lead an open
question/answer discussion at the end of the evening. The open
discussion at the end is very important. This is where real life
examples from the workplace are tied to the presentation materi-
al.
The results have been extremely successful. Six project con-
trols professionals applied and sat for the exam. All six were suc-
cessful. As word spread through our local section that a project
controls study group was happening, many other members began
to attend the classes. The concepts and material presented not
only benefited the people interested in taking the exam, but also
was a great benefit to less experienced project controls profes-
sionals who were new to our profession.
We can sum it up this way by quoting one of our study group
members: "Procrastination has always been a problem for me,
but studying with others kept me motivated and excited about
learning. Telling a co-worker that I would meet them at the study
group meeting tonight ensured that I would actually be there. If
I had studied alone, I would have procrastinated and started
tomorrow. I would never have become certified at that rate. I
just received my letter—I passed!!!"
There is no time like the present to get started. Gain confi-
dence in your abilities, improve your skills, and set yourself apart
from the crowd—Become Certified!! ◆

AACE International Certification Exams

The Second Quarter (2Q) 2005 Saturday, July 16, 2005 Kansas City
CCC/CCE, PSP, and ICC Final Registration for Exam -May Moscow
Certification Exams will be 20, 2005 Nevada
given at the following AACE New Mexico
Atlanta Niagara Frontier
International sites -
Caribbean Oklahoma
Catawba Valley Rattlesnake Mountain Section
Saturday, June 25, 2005 Central Savannah River Rocky Mountain
New Orleans, LA only - Right Chinook-Calgary St. Louis
before AACE International’s Dubai, United Arab Emirates South Africa
Annual Meeting. The new Earned Delaware Valley Southwest Ohio
Value Professional (EVP) East Tennessee Tennessee Valley
Certification Exam will also be Genesee Valley
offered on this exam date. Great Lakes
Register online at www.aacei.org Hawaii

The Final Deadline for submitting an examination application is May 20, 2005

Cost Engineering Vol. 47/No. 5 MAY 2005 11

EExecutive Ar
xecutive Article
ticle
Dr. Barton Goldsmith

The Art of Compromise

ompromise may be the most important and most under- About the Author

C used word in modern business. Webster defines com-

promise as a settlement of differences by consent,
reached by mutual concessions. Put in simple terms, you've got
Barton Goldsmith, Ph.D., is a highly sought after speaker
and business consultant, US syndicated author, and radio talk
show host. He presents to numerous companies, associations and
to give a little to get a little, with the understanding that just leaders worldwide. His articles have appeared in more than 500
because you don't get what you want, doesn't mean you won't get publications and he has given over 2,000 professional presenta-
all you need. tions. He can be contacted through his web site at:
For a business to be successful, leaders and team members www.BartonGoldsmith.com or at (818) 879-9996. ◆
need to learn how to engage in this beneficial behavior. And it's
not as hard as you might think.
The first thing to remember is that in a business deal, you
won't be comfortable unless the other company (or person) is
comfortable as well. For some reason, compromising can be HAVE YOU MOVED?
looked at as a loss, caving in or even being a doormat. The real Be sure to let AACE International Headquarters know your
truth is that if you have any of these sensations you are not really new address. You can update your information by contacting
compromising. For there to be a real meeting of the minds, both AACE International Headquarters at 800-858-COST,
people have to feel good about the end result. e-mailing info@aacei.org, or sending your information to:
Getting everything you want every time you want it is not
realistic. Those are the desires of a spoiled child, not an adult who AACE International, 209 Prairie Avenue, Suite 100,
wants to be in a successful business environment. Ask yourself Morgantown, WV, 26501.
something, if you get everything you want, and your client is feel-
ing like they got the fuzzy end of the lollipop (and not at all happy
about it), can you really see this deal being successful? Do you
think this client will be back for more?
To become willing to compromise you have to understand
that it benefits everyone involved. If you are truly business part-
ners then what is good for one should be good for the other. Try
looking at the big picture and do what you can to make it bal-
anced. The closer you come to equality, the more successful both
of you will be. If either one of you feel that the deal is unbal-
anced, then something isn't working properly.
Once you've agreed to a set of ground rules for your business
relationship, if one of you decides to make drastic changes, for
example you or your client want to change the financial terms, it
can make future negotiations difficult. Before you do anything
that changes the foundation of your agreements, you need to talk
with your client or team mate and closely examine how this deci-
sion will change things.
Most compromise issues are far less drastic than this, but the
process for achieving a balanced situation is the same. Talk,
examine and take some time to see how the changes will effect
everyone involved. Getting the best terms possible is an appropri-
ate business decision. However, if this is a new direction, you
need your client to be willing to compromise and make the
changes necessary so that both of you can feel comfortable and
safe.
Compromise is an art form that successful leaders have mas-
tered. The key is understanding that you're not giving up or giv-
ing in—you're just seeking balance.

Cost Engineering Vol. 47/No. 5 MAY 2005 13

 T ECHNICAL A RTICLE
The perceived disadvantages of
Design/Build include the following.
Design/Build Selection Process — • the owner needs to hire a third party to
Art or Science? •
watch for his/her interests;
substitution of lower quality material
and equipment;
• the owner must give up control over
Talal Abi-Karam, PE CCE
the process; and
ABSTRACT: The Design/Build method is an innovative project delivery system that is revolu- • the owner must have a clear design
tionizing the delivery of private and public works projects. Advantages include a reduced proj- criteria package (DCP).
ect delivery time, costs, and reduced claims. The selection of a Design/Builder in the public
works sector is a complex process that has required a number of US states to modify their pro- Design/Build is not a new project
curement laws, state statutes, and licensing laws. Although Design/Build is one of the most pop- delivery method. The Design/Build
ular integrated alternative delivery methods, it does not have well-established contractor selec- method (i.e., turnkey, performance
tion procedures. The selection of a Design/Builder can be based solely on qualification, solely
contracts, etc.) has been used for delivering
on price, or a combination of price/qualification. Even with qualification-based selection
(QBS), the selection process may be subjective, since various state agencies (DOT's) and domestic (pulp and paper, industrial,
municipalities have different selection criteria for pre-qualifying and evaluating bids of the per- hydroelectric) and international projects
ceptive Design/Build teams. This article examines the various selection methods of around the world for the last 50 years [2].
Design/Build teams in the public works sector. It addresses the legal framework for selecting Design/Build allows the owner to
Design/Build teams, including qualification-based selection (QBS), selection criteria, and acquire goods and services with a single-
weighting of criteria. source of responsibility and a single-source
of accountability. Despite popular
KEY WORDS: Bidding, cost, Design/Build, fixed budget, and project delivery systems misconceptions, Design/Build does not
eliminate risk and claims. In fact, one
he delivery method of the majority New delivery methods will require could still advance the same types of

T of public works projects has been

the traditional hard bid method.
While this method results in the lowest
price for the construction of a project, it
also carries a high degree of risk.
In the hard bid process, the owner is
faced with the risk that the low bid is not
within the budget allocated, and may hire
an unknown contractor whose goals and
interests are in direct conflict with the
owner’s interests.
Trends in the 1990s showed a sharp
increase in the volume of litigation in
public works construction. This increase
was primarily because of an increase in the
volume of construction put in place, while
using the competitive bidding method [1].
Stiff competition caused contractors to
cut their margins to gets jobs, and forced
them to seek claims to make up profits.
The increase in claims led all parties to
seek alternative delivery methods.
Public works owners were searching
for alternative project delivery methods to
reduce the risk of project overruns and
prolonged litigation. The Design/Build
project delivery method has emerged as the
most attractive alternative.
Moving into the new millennium, the
engineering and construction community
recognized the limitations of the
procurement process that supports the
traditional design-bid-build method.
new procurement processes to properly
allocate risks and to provide public owners
with value and quality of goods and
claims, whether using the AIA, EJCDC,
FAR, or DBIA model contract documents.
Owners switching to the Design/Build
services. The transition to a new method must examine their procurement
procurement process will require a laws, state statutes, and licensing laws to
fundamental change and modifications to ensure that they can legally engage in
current legislation, procurements laws, US Design/Build.
state statutes, and licensing laws at the US
federal, state, and local levels. DESIGN/BUILD
LEGAL ENVIRONMENT
THE DESIGN/BUILD METHOD
The Design/Build method is an The rapid increase in the use of
integrated, project delivery technique Design/Build is fueled by the passage of
whereby an owner contracts directly with a key legislation at the US federal and state
single entity (Design/Builder) to deliver the levels that allow public owners to legally
project (see figure 1). engage in Design/Build.
Advantages of Design/Build, as listed
by W. Friedman, include the following
[6].
• the selection is based on qualification,
and definitive performance criteria;
• the contractor is involved early in the
design phase;
• allows for reduction in the design, and
construction phases;
• allows for a single source of
responsibility; and
• eliminates the adversarial relationship
between contractors, owners, and
engineers.
Figure 1— Design Builder

14 Cost Engineering Vol. 47/No. 5 MAY 2005

 The successful passage of this
legislation is primarily because of an
aggressive lobbying, marketing, and
educational campaign by the Design Build
Institute of America (DBIA).
The Institute was founded in 1993,
with the purpose of influencing US federal
and state licensing laws to facilitate the use
of Design/Build.
The following are key milestones and
events that helped the use of Design/Build
in the public works sector.
Brooks Act - 1972
In 1972 the Brooks Act required the
segregation of design and construction for
public works projects (40 U.C.S. Section
541). This act essentially limited the
delivery options of publicly funded projects
to the competitive bidding method (lowest
price). One consequence of this is that US
federal and state agencies alike were forced
to assume direct responsibility for the
planning, designing, maintaining and
operating of infrastructure projects.
Federal Acquisition Reform Act (FARA) -
1996
The Federal Acquisition Reform Act
was promugulated in 1996, giving US
federal agencies the legal authority to
engage in Design/Build.
In 1997, the Civilian Agency
Acquisition Council and the Defense
Regulation Council agreed on a final rule
to amend the US federal acquisition
regulation (FAR) to implement two-step
procedures for Design/Build contracting.
With the implementation of the
amendment to (FAR) and the FARA of
1996, Design/Build has become a
prevalent method for US federal
contracting.
Florida Law: Qualification-Based
Selection (QSB) - 1997
A Florida law that took effect in Oct.,
1997, (FS 287.055 sec 10 (c)) provides an
alternative to the competitive bidding
process and could greatly reduce the time
needed to select a Design/Build team.
Under this law, most public agencies
in the state of Florida can use qualification-
based selection (QBS) when awarding
Design/Build projects.
The FARA of 1996, reinforced by
(QBS) in Florida, has opened the door for
the formal and legal acceptance of the
Design/Build method in the public works
sector, and changed past practices, giving While the private sector has the option
municipality's legal authority to award jobs to negotiate directly with a single
based on qualification criteria rather than participant, the public sector typically
low price. requires a competitive selection process.
The selection of a Design/Builder can
Transportation Equity Act (TEA-21) - be solely based on qualifications, solely on
1998, 2003 price, or on a combination of price and
A final rule, published Dec. 10, 2003, qualifications [7]. Many public works
allows but does not require, Design/Build agencies are using forms of competitive
to be used on projects valued at $50 selection that fall between qualification-
millions or more (23CFR, Part 636). based and a low-bid selection. This is
The new rule permits state and local accomplished through the use of
agencies to take full advantages of the prequalification and complex bid
Design/Build method. This final rule was evaluation system.
effective Jan. 9, 2003. The rule was Although bid evaluation systems are
required under the provision of the fairly standardized, objective scoring of the
Transportation Equity Act for the 21st proposals varies from agency to agency.
Century (TEA-21), which allowed states to Since scoring involves human effort,
use Design/Build on an experimental objectivity may not be fully achieved.
basis. Section 1307(c) of the TEA-21 Act, Most selection processes for a public-sector
enacted June 9, 1998, allowed Design/Builder involves prequalification.
Design/Build on an experimental basis. Prequalification serves to shorten the list of
prospective bidders, and to increase
SELECTION OF A competition among the providers.
DESIGN-BUILDER Prequalification also streamlines the
selection process, helps agencies manage
Public works owners and municipal the selection process, and helps to reduce
managers are entrusted with public funds. the amount of stipends paid to prospective
They are consistently challenged to put bidders. The following are the three
public dollars to their maximum use. At primary methods of Design/Build
the same time, public owners are looking procurement [7].
for more quality and value in the goods and
services they acquire. • the one-step method;
Value is created by finding the best • the two-step method; and
combination of cost, quality and schedule. • qualification-based Design/Build.
It is believed that alternative project
delivery methods, including Design/Build, The one-step and the two-step
are the frontier where value is created and methods are procedures that fit into the
maximized. larger category of best value selection. Best
Competition affords public value procurement is one that is structured
accountability and protects the public from to consider price and other relevant factors
exuberance. Public owners who elect to in making the bid selection to provide the
use alternative project delivery methods owner the greatest value for the money.
must ensure that the method chosen is The one-step and the two-step
properly and fairly used to serve the public methods are also considered to be
interest with quality, cost effectiveness, and competitive selection methods.
timely delivery of goods and services. Qualification-based selection is purely
Whatever methods used, the selection based on the qualification of the
process for Design/Build services must be respondents. It is typically used when
consistent, open, competitive, and most there are limited numbers of qualified
importantly legal. bidders, or when a government agency is
not regulated by the FARA (US Postal
Selection Methods Services, some state agencies).
The traditional design-bid-build Since price is not part of the
method uses the fixed-price, sealed-bid evaluation, most public procurement laws
system, as required by the Brooks Act. prohibit this form of selection, and it is
Price is the only consideration, and mostly used in the private sector.
projects are awarded to the lowest bidder. Qualification-based method fits into the
category of negotiated selection [4].
Cost Engineering Vol. 47/No. 5 MAY 2005 15
 Figure 1— The One Step Method

Regardless of the method used, the • the technical proposal is then scored; In scoring the technical proposals, the
cost of preparing proposals by a • scores below a pre-determined selection committee may assign a weight
Design/Builder can be very significant. threshold are deemed non-responsive; factor for each of the criteria. The
Some proposals are comprehensive and • scores above the threshold are deemed following table is an example of a
include detailed designs, construction responsive; selection/evaluation scenario with weight
sequences, baseline schedules (CPM), cost • price envelops for the responsive factors.
estimates, material selection, process bidders only are opened; and Scores for criteria 1-5 are compiled
equipment, and prices. • the committee selects the lowest (including the weight factor). Compiled
The cost of preparing proposals could bidder. scores above the threshold (responsive
amount to 2-5 percent of the overall project bidders) are only considered. Then, the
costs, and will require resources, technical The selection committee may include price envelops for the responsive bidders
expertise, and commitment from vendors members from across the owner's only are opened, and the cost envelop of
and subcontractors. Some transportation organization such as, engineering, those bidders who do not score a
agencies, such as the Florida Department purchasing, legal, operation and predetermined number will not be opened.
of Transportation (FDOT), have maintenance (O&M). The committee At this stage, the agency can simply
recognized this burden, and allow for a may include voting members and non- select the lowest price proposal of the
stipend to be paid to perspective bidders. voting members. responsive bidders and award the project.
However, this stipend is fixed and often Non-voting members may be Some agencies compile a composite price
limited to the direct labor hours spent on technology advisors or average citizens score that takes into account the score from
the proposal, and does not include any from the district, whose presence is to the technical evaluation and the score from
allowance for overhead, expenses and ensure that the process is competitive and the price evaluation and awards the project
profits. working as required. The selection to the bidder with the lowest composite
committee evaluates and scores the price.
THE ONE-STEP METHOD technical proposal on a wide range of Other agencies have used an index
The one-step procedure (single stage criteria, including the following. value which is equal to the ratio of the
contractor selection) involves the
evaluation of the technical proposal in • innovations of designs and
addition to price at the same time (one construction;
package, see figure 2). • meet owner's needs;
This procedure will provide for • prior experience in this specific type of
competitive evolution of the technical projects; price score divided by the technical score
proposal with the contract award decision • management criteria such as, quality (see equation 1), and the project is awarded
based on best value to the agency for the control, supervision, and management to the Design/Builder with the lowest
combination of evaluated technical merit approach; and index.
and associated price, but not necessary to • project schedule (deliverables, CPM).
the lowest cost. The one-step method is
mainly used for simple Design/Build
projects. The evaluation process is
primarily a low-bid selection. This process Evaluation Criteria: Weight Factor (percent)
is recommended where the following 1. Understanding of the project 20 %
procedure is required. 2. Design and construction approach 10 %
3. Delivery of the work 10 %
Procedure
• owner issues an invitation for bids 4. Management of the services 10 %
(IFB); 5. Qualifications and experience of the team 10 %
• D/B teams submit a proposal Total 60 %
containing separate technical proposal
Compile Technical Score
and a price proposal at the same time
(separate envelopes); 6. Cost of the project 40 %
• the technical proposal is evaluated by Compile Price Score
the selection committee;
Table 1— Sample Selection/Evaluation Scenario

16 Cost Engineering Vol. 47/No. 5 MAY 2005

Figure 3 — The Two-Step Method
THE TWO-STEP METHOD
(COMPETITIVE SELECTION)
The two-step method is the most
commonly used in the pubic sector. It
separates the price from the qualification
process. The two-step method involves
prequalification of firms through a request
for qualification (RFQ), and then
evaluation of the price and proposal [3].
First, technical proposals are received
and qualified D/B teams are pre-qualified
(short listed), next the qualified teams
submit bids, and the award is based either
on price or best value.
The two-step method is used for large,
highly complex projects, requiring only
firms with financial strength, experience,
and technical expertise to deliver the
project. It limits the final competitors to
the most pre-qualified firms by examining
their financial strength and organizational
resources (see figure 3).
Procedure
• owner analyzes current and future
facility requirements;
• owner establishes the project, needs,
facility size, requirements and
performances;
• owner requests letter of interest (LOI);
• interested D/B teams submit letter of
interest (LOI);
• owner issues request for qualification
(RFQ);
• D/B teams submit statement of
qualification (SOQ);
• owner pre-qualifies and short-lists 3-5
finalists;
• owner conducts interviews and
presentations; and
• owner selects a team and negotiates a
contract.
Prequalification
The purpose of prequalification is to
evaluate the capabilities of interested firms,
in terms of financial assets, track records,
equipment resources, and human
resources.
Since the efforts and cost involved in
bid preparation are enormous, the number
of qualified, short-listed bidders is limited
to three to five teams. This number of pre-
qualified bidders allows the agency to
conduct comprehensive and detailed
analyses of the bidders to avoid any
subsequent failures and other risks.
Pre-qualifying more than five bidders
undermines the credibility of the
prequalification process, and discourages
high quality proposals.
Bid Evaluation
Normally, pre-qualified and short-
listed bidders are asked to submit two
proposals, namely a technical proposal and
a price proposal. These two proposals are
evaluated separately.
Members of the technical evaluation
team evaluate the technical proposal based
on approved criteria. Similarly, the
financial evaluation team evaluates the
price proposal and allocates scores for the
price bids.
The technical and price scores are
then combined based on an approved
proportion or by using a formula/equation
to decide the best bids considering the best
value for the money.
These formulas and equations are
often devised based on owner's specific
experience, or based on the opinions of
advisory teams. While these equations and
formulas are standardized, they may not be
applicable to every situation, and may not
fit an agency's specific needs.
Cost Engineering Vol. 47/No. 5 MAY 2005
SELECTED EVALUATION
METHODS
There are numerous bid evaluation
methods. Some state agencies such as the
FDOT have modified standard evaluation
methods to fits their specific needs. For
example, the value-of-time factor (VTF)
adjustment is based on the proposed
numbers of days to complete the project
(schedule) multiplied by a value per day
established by FDOT [8]. The value per
day is derived from the benefits that users
get by using a bridge or by having a bridge
open that day. The following is a list of
selective evaluation methods [4].
• Weighted criteria, (assign a weight
factor for each criteria);
• Adjusted low bid, (adjusted score
Design/Build ASDB);
• Equivalent design, low-bid, (design
changes and price amendment);
• Fixed budget best design, (owner states
the price in the RFP);
• Meeting criteria low bid, (low bid
Design/Build, FDOT); and
• Emergency, (safety, national emergency).
Weighted Criteria
After Design/Build teams are
shortlisted, the owner issues a request for
proposal (RFP). D/B teams submit their
proposal which usually encompass a
qualification part and a price proposal.
Typically, qualification proposal
includes a management plan, firm
experience, and design solutions. A price
proposal includes the price for performing
the contract.
Proposals are evaluated and scored.
Price may account for 40 percent, and
qualification accounts for 60 percent, for a
total of 100 percent (refer to table 1). In
evaluating a team's qualification, each
17
 criterion is provided with a weight factor, lowest price proposal. The role of the meet with neighborhood associations,
based on its relevance or importance to the selected team is to complete the design listen to what they are looking for in the
owner. This weighting system ensures that established earlier in the DCP rather than project, and bring all stakeholders on
each criterion get its proper rating (score) to propose and provide innovation. board with the proposed solution.
based on its utility to the overall project. A Fixed Budget, Best Design This will ensure their support, and will
maximum price score is assigned to the As the title indicates, the owner help buy-in of the solution by the agency.
lowest price. Selection and award are then establishes a fixed budget for the project. This can be critical on a large bridge
made to the team with the highest Selection and initial prequalification steps crossing where adjacent property owners
combined score. are used in same manner as other methods. and homeowners associations are affected
Shortlisted teams submit their qualitative at both bridge approaches and by the
Adjusted Low Bid proposals which contain their design overall appearance and aesthetics of the
This method follows the process of concepts. The owner conducts oral bridge.
prequalification, short listing, RFP, and the presentations, evaluates qualitative There have been numerous studies
proposal. The qualitative proposals are (weighted) items, and scores the proposals. about the effect of the chosen method on
scored on a scale of 1 to 100 expressed in Award is based on the best qualitative project performances and potential costs
decimals (example a score of 80 is 0.80). score, and price is not a factor in the growth and cost overrun. K.R. Moolenaar,
Price envelops are opened and listed. selection. in 1999, studied the following performance
The adjusted price for a team is variables under the one and two-step
calculated by dividing the price score by Emergency method [7].
the qualitative score for an adjusted price This method is used in case of
(refer to equation 1). Award is made to the emergencies when public safety and • cost and time growth;
team with the lowest adjusted price. Please welfare are paramount. Examples of these • project quality;
note that lowest adjusted price is not the emergencies include floods, hurricanes, • conformity to expectation;
contract price for the project. acts of terrorism, and national security • administrative burden; and
matters. Under these circumstances, • owner satisfaction,
Equivalent Design, Low-Bid contracting agencies negotiate and award
This method is similar to the weighted Design/Build contracts with the best In general, the two-step method
criteria and adjusted low bid methods. All qualified team available at that time. resulted in better cost and time
the steps involved in prequalification, performance. Projects under this method
short-listing, RFP, and proposal are EFFECT of the were closer to the schedule and budget
followed. SELECTION METHOD better than under the one-step method and
Design proposals submitted by various under the purely qualification procedures.
teams are evaluated and critiqued by the There are many factors that that must The study also concluded that
owner. The owner returns the design be considered when choosing the qualification-based selection has a
comments and provides a deadline for all appropriate selection method. Owners substantially lower administrative burden
participants to respond with specific design must be aware of their capabilities and cost than both the one-step and the two-
changes and any applicable limitations during the request for proposal steps method. Obviously, the two-step
changes/amendment to the price proposal (RFP) stage, and how much information is method requires more time and resources
submitted earlier. provided in the design criteria packages to analyze and rank the proposals.
The owner evaluates the revised (DCP). The question of value is always
designs and revised price proposals. The Under the one-step method, simple present. Will the owner get more value for
award is then made based on both the new projects may be developed up to 50 the money under the one-step, two-step, or
price and original price. This method percent design completion. On the other the qualification-based method? The
allows the owner to customize design hand, under the two-step method, a design answer to this question is not simple since
concepts, to create equivalent designs, and criteria package may be developed up to there are many measured benefits, as well
make the award based on the lowest price. the 20 percent or 30 percent level. The as non-tangible negatives in the process.
higher the design level in the DCP, the How do you measure value? Will the
Meeting Criteria, Low-Bid lower are the innovations in the proposed measure be objective?
The essence of this method is to list solutions. Regardless of the method chosen to
stringent, definitive criteria in the design Another factor to consider is the time select a Design/Builder, public owners will
criteria package (DCP). The RFP and and resources required for evaluating all of be involved in negotiations. This represent
design criteria will outline very specific the proposals (technical and financial). An a dramatic shift since public owners tends
performances and designs concepts that element of public-sector Design/Build to avoid negotiations because of the
must be followed. There is little or no selection is the public (stakeholders). following.
creativity allowed in the process. While the process is mostly controlled
D/B teams submit their proposal based by the agency, the proposed selection • it appears to contradict the philosophy
on the criteria listed. Since the playing method and solution will daily affect many of open competition;
fields are made equal among participants stakeholders and users. A Design/Build
the selection and award is made to the team should take the time to visit the site,

18 Cost Engineering Vol. 47/No. 5 MAY 2005

• it is very difficult to maintain
confidentiality during negotiations
and most importantly; and
• public owners and utility managers are
answerable to the public and their
governing bodies to justify the
selection and evaluation methods used
in the process.
esign/Build procurement
D provides opportunities
integration, innovation, and
efficient delivery of projects. While the
for
Design/Build process is becoming more
popular, the selection of a Design/Builder
remains a mysterious process. Is it an art?
Is it a science? Or is it a combination of
both?
There are many standard models for
selecting a successful Design/Builder in
the public works sector. The one-step
method, the two-step method, and the
qualification-based method are all
established procedures in the marketplace.
These methods focus on pre-qualifying of
bidders and evaluating bids that provide
the best combination of costs and value for
the owner.
There are several standardized
published evaluation techniques in the
market. These statistical techniques
involve formulae and equations that strive
to systematically search for best value.
Also, the composition of the selection
committee, the hidden agenda of its
members, and the subjectivity of
participants, may taint the results. Owners
AACE International’s Chicago Midwest Section’s
“CHAMPIONS of PROJECT CONTROLS — 2nd Edition”
E-mail: don_giegerich@URSCorp.com
seeking to use the Design/Build must
evaluate their procurement laws, state
statutes, and licensing laws to ensure that 6.
they can legally engage in design/ build. ◆
REFERENCES
1. Abi-Karam, T. Project Delivery Trends
in the Water and Wastewater Market,
Proceedings of the Water
Environment Federation, WEFTEC
2003, 76th Technical Exhibition and
Conference, Los Angeles Calif.
Published by WEF, 601 Wythe Street,
Va., 22314. (Oct. 11-15, 2003).
2. Abi-Karam, T., (1999). Design/Build-
The Professional Services Race,"
Proceedings of 43rd Annual Meeting
of AACE International, Denver, Co.,
editor: Marvin Gelhausen, AACE
International, Morgantown, WV,
(June 1999).
3. Design/Build Institute of America,
The Design/Build Process—
Utilizing Competitive Selection. A
publication by the Design/Build
Institute of America (DBIA),
Washington, D,C. (DBIA 2003, a).
4. Design/Build Institute of America,
The Design/Build Process—
Utilizing Negotiated Selection. A
publication by the Design/Build
Institute of America (DBIA),
Washington, D.C. (DBIA 2003, b).
5. Florida State Statutes, (1997). FS
287.055 Sec. 10 (c). Applicability to
Design/Build Contract.
ANNUAL SEMINAR
Friday May 20, 2005
Birmingham, Alabama
INFORMATION:
Don Giegerich
Cost Engineering Vol. 47/No. 5 MAY 2005
(Qualification Based Selection, QBS),
(Oct. 1997).
Friedman, W. Construction
Marketing and Strategic Planning,
McGraw-Hill, Inc., New York, NY.
(1984): 172-173.
7. Molernaar, K.R., A.D. Songer, and M.
Barash, Public Sector Design/Build
Evolution and Performance, ASCE
Journal of Management in
8.
Engineering,
(March/April 1999).
Palaneeswarn,
ASCE
E., M.
15(2),
M.
Kumaraswamy, and P.W.M. Tam,
Comparing Approaches to Contractor
Selection for Design/Build Projects,
Proceeding, Joint Triennial
Symposium on Customer Satisfaction:
A Focus for Research and Practice, P.
Bowen and R. Hindle, Eds, Vol 3,
(1999): 936-945.
ABOUT THE AUTHOR
Talal Abi-Karam,PE CCE, is an
associate with Hazen & Sawyer, PC, 4000
Hollywood, Blvd., Suite 750 North,
Hollywood, Fla., 33021. He can be
contacted by sending e-mail to: tabi-
karam@hazenandsawyer.com,
Technical Articles - Each month, Cost
Engineering journal publishes one or more peer-
reviewed technical articles. These articles go
through a blind peer review evaluation prior to
publication. Experts in the subject area judge the
technical accuracy of the articles. They advise the
authors on the strengths and weaknesses of their
submissions and what changes can be made to
improve the article.
19
 T ECHNICAL A RTICLE
• Organizational planning—identify,
document and assign project roles,
Using Earned Value Management responsibilities, and the reporting
relationships.
Indexes as Team Development • Staff acquisition—make the required
human resources be designed and

Factor and a Compensation Tool •

work in the project.
Team development—develop
individual and group skills to increase
Ricardo Viana Vargas project performance.
ABSTRACT: The objective of this article is to present the main components of the development
of a project team and the motivational characteristics inherent to team work. It also looks at an Figure 1 provides an overview of the
interrelation proposal between the earned value analysis and team development through the processes according to each project phase.
SPI and CPI indexes. These are obtained by tool use and team development models and the These processes interact with each other
compensation and reward in the project. This reduces the subjectiveness of humans resource in and with the process in the other
the project evaluation. The article presents a brief report about team development and com- knowledge areas. Each process may involve
pensation policies, as well as an introduction to the earned value concept, aiming to align the effort from one or more individuals, or
approached concepts. groups, depending on the needs of the
project.
KEY WORDS: Analysis, earned value management, human resources, and projects
Team development, as outlined in this
article, involves an increase of the
he project human resources area is the processes required to make the most

T
one of the PMBOK Guide 2000
knowledge areas that managers and
project teams have requested be given
more attention [6].
As reported in the Guide, human
resources project management includes
effective use of the human resources
involved with the project. It includes all
project stakeholders: sponsors, customers,
individual contributors and others. The
main processes include the following.
capability of the involved parties to
contribute individually, as well as an
increase of people capable of working as a
team. Individual growth (managerial and
technical) is the basis required to develop
the team. This becomes crucial to the

Figure 1— Human Resources Management Processes Distributed Throughout the Project Phases.

Figure 2— Performance Change Factors

20 Cost Engineering Vol. 47/No. 5 MAY 2005

Figure 3— Reward Policies and Bonuses (G. Parker, J. McAdams and D. Zielinski, [5])

success of projects and becomes a key for Equity Theory, people get motivated when
the organization to accomplish its goals. they are treated in an equitable, impartial,
According to J. Fitz-Enz, each and fair way [8].
organization and each project is led by a
combination of strengths and internal and Professional Compensation (Reward)
external factors. These factors are the ones Some of the main tools available to
that make the organization unique, increase performance are compensation
describing collectively how and why the and reward policies. These, according to
organizational processes PMI, are the formal actions that promote
influence
performance improvement. The internal or reinforce desired behavior [6]. To be
factors are the ones determined by an effective, such a system should make the
link between performance and reward
organization and its project goals, while the
clear, explicit, and achievable.
external objectives are those determined by
the external business environment in According to G. Parker, J. McAdams
which the company and projects are and D. Zielinski, the reward models are
inserted (See figure 2). designed to create a focus on specific goals Figure 4— Team and Individual Performance
According to S.W. Flanes and Ginger or to celebrate and reward individuals or Extent (Based on Shuster, [7])
Levin, performance problems that impede teams with diversified performance. To
be earned initially by an activity is the value
the team members to perform their them, the reward models should meet
budgeted for it. As each activity or task of a
individual, team and organization needs
activities successfully can be divided into
project is performed, the initial budgeted
the following. [5]. See the model shown in figure 3.
value for the activity starts to constitute the
H.D. Shuster, said the bonuses always
earned value of the project.
• problems related to technical need to satisfy the individual and the team.
These concepts are based upon a 1997
competency; If team satisfaction is neglected to satisfy an
Earned Value Implementation Guide
• problems related to relationship and isolated individual, this process naturally
from the US Department of Defense
communication; and generates dissatisfaction and demotivation.
(DOD )[1] and on norm ANSI/EIA 748 of
• problems related to time management A higher reward can only be achieved
the American National Standards Institute.
and work habits [3]. when high team and individual
To formalize the concepts, a specific
performances are achieved, (see figure 4).
terminology was created. It is based on
Because of these problems, it is
forecasted and actual costs, as well as
fundamental to have an impartial and Earned Value Analysis
earned value. The basic three elements of
objective performance evaluation process Earned value is focused on the
the earned value analysis include the
that besides addressing the mentioned relationship between incurred actual cots
following.
problems, allows improvements in and the work performed on the project in a
individual skills, team behavior, and given time period. The focus is on
• BCWS (Budget cost of work
individual and team competencies. performance obtained in comparison to
scheduled)—is the value that indicates
This impartial model directly reduces what was spent to get it. [4]
the budget portion that should be
the subjectiveness of performance Earned value is the evaluation
spent, taking into account the activity
evaluation and increases the team between what was actually spent and what
budget base line cost, allocation, or
motivation. According to the Adam's was budgeted, proposing that the value to
resource. BCWS is calculated as the

Cost Engineering Vol. 47/No. 5 MAY 2005 21

 budget base line cost divided into
phases and cumulative up to the status
date, or current date. It is the budgeted
cost.
• BCWP (Budget cost of work
performed)—is the value that
indicates the budget portion that
should be spent, taking into account
the work performed up to the moment
and the budget base line cost for the
activity, allocation, or resource.
BCWP is also called earned value.
• ACWP (Actual cost of work
performed)—is the value that shows
actual costs incurred from the work
already performed by a resource or
task up to the status date or project
current date from financial inputs.
Once these three parameters are
determined, the outcome analysis is
obtained based on the correlation between
values found for each one in a given status
date, (See figure 5).
The correlation among BCWS,
BCWP, and ACWP values allows one to
rate project outcomes and to proceed with
evaluations and future final cost forecasts.
To treat the ratio among BCWP and
BCWS and ACWP parameters, there are
the following indexes.
• SPI (Schedule Performance Index)—
Division between the earned value
(BCWP) and the budgeted base line cost
(BCWS). SPI shows the conversion rate of
the budgeted value in the earned value,
(See equation 1).
An SPI equal to 1, indicates that the
budgeted value was completely earned to
the project. An SPI lower than 1, indicates
that the project is being performed at a
conversion rate lower than scheduled. In
other words, the financial amount
scheduled to be earned in the period was
not achieved and the project is late. An SPI
higher than 1, indicates that the project is
earning outcomes in a speed higher than
scheduled, i.e., it is advanced.
• CPI (Cost Performance Index)—
Division between the earned value
(BCWP) and the actual cost and (ACWP).
CPI shows the conversion between the
actual values spent by the project and the
22
Figure 5— BCWS, BCWP, and ACWP Graphic Example Throughout the Time for a Given
Project
earned values in the same period, (See index, while at the end of project occurs an
equation 2). inversion in the participation of indexes,
once the SPI tends to 1 (BCWP ? BCWS)
with the termination of the project.
The resulting formula is shown in
equation 3.
A CPI that equals 1, indicates that the HPI =%c x CPI + (1-%c) x SPI
value spent by the project was completely (equation 3)
earned to the project (project in the
budget). A CPI lower than 1, indicates that Where CPI = Cost performance index
the project is spending more than SPI = Schedule performance index
scheduled up to the moment. If the CPI is %C = Project complete physical percentage
higher than 1, this indicates that the
project is costing less than scheduled up to Figure 6 shows the participation of the
that moment. indexes in the HPI composition along the
project.
Human Performance Index and From the creation of this index, it is
Professional Evaluation Models required to evaluate the HPI´s. This is for
In order to allow the team to do not only the individual work outcome, but
evaluation and for project professionalism, also the team work. It’s in the team work in
a new index, called human performance which the resource is an integral part of the
index (HPI), was developed. This index project as a whole. Creating a final HPI
consists of the relationship between the
CPI and SPI, allowing the creation of an
index that evaluates the accomplishment of
the schedule and budget of the activities
executed by the resources simultaneously.
In developing this article, the author
studied several types of relationships
between indexes (sum, average, product,
etc.). However, because the nature of the
two indexes differs from the complete
percentage of the project, the composition
of the indexes with complete percentages
was chosen. The participation of schedule
performance index in the beginning of the
project is higher than the cost performance Figure 6— Participation of the Indexes
According to Project Complete Percentage
Cost Engineering Vol. 47/No. 5 MAY 2005
that is the weighed average of these three
indexes as shown in equation 4.
HPIFinal can be obtained from
different strategies, starting from a strong
focus on individual outcomes up to a
balanced focus among the individual, team
and project. A model of weight Figure 7— Example of a Proposal of Weight Distribution for the HPI Resource Composition
composition for different focuses is shown
in figure 7.
It is important to emphasize that the
resource, team and project HPI´s are not
obtained from CPI and SPI´s work
packages, but from the sum of the BCWS,
BCWP and ACWP's resource activities
and later from the formula application,
CPI=BCWP/ACWP and SPI = BCWP (equation 4)
/BCWS.
Where: CPIIndividual = Cost performance index of the work packages where the
Example evaluated resource was involved
To illustrate index development, SPIIndividual = Scheduled performance index of the work packages where
consider a project composed of 20 different the evaluated resource was involved
work packages to be performed by five
resources in two teams. Resources 1, 2, and CPITeam = Cost performance index of the team work packages of which the
3 belong to Team A and the resources 4 evaluated resource is participant
and 5 to Team B, respectively. In figure 8, SPITeam = Schedule performance index of the team work packages of
a distribution of the resources in the work which the evaluated resource is participant
packages is shown. CPIProject = Cost performance index of the project
At a given time period, the project the
package performance inputs were SPIProject = Schedule performance index of the project
evaluated. The results are shown in figure WeightIndividual = Contribution of resource HPI in the HPIFinal
9, with BCWS, BCWP and ACWP inputs
for each work package. WeightTeam = Contribution of team HPI in the HPIFinal
From the crossing of each package WeightProject = Contribution of project HPI in the HPIFinal
with resources used in them, the HPI of
each one of the resources was obtained, as %C = Project complete physical percentage
well as the HPI of each one of the teams,

Figure 8— Resource Distribution to be Used in the Work Packages

Cost Engineering Vol. 47/No. 5 MAY 2005 23

 and the total HPI of the project. This is
shown in figure 10.
Each resource belongs to a given team.
However, the following individual results
are shown in figure 11.
If you combine the results of figure 11
with the ones of figure 7, you can obtain
the final HPI of each resource from the
individual, team, project focus, and the
balance focus among the three parameters.
These results are shown in figure 12.
From these values, one can determine
the outcomes of each one of the resources
and its contribution for the project and
team outcome. An example of this is shown
in figure 13.
In this example, resources 1 and 3
showed a performance lower than their
team and project; resource 2 showed a
higher individual performance. However,
in analyzing its team, its performance was

Figure 9— Example of Data Collected for a Project With Determined BCWS, BCWP, and ACWP

Figure 10— Project and Resource HPI Outcomes

Figure 11— HPI Results of Each Resource

Figure 12— Resource HPI Final for Each One of the Profiles of the Analysis Focus

24 Cost Engineering Vol. 47/No. 5 MAY 2005

Figure 13— Comparative Graphic of the Focuses Among the Individual, Team, and Project for the Five Evaluated Resources
damaged by a weak performance of
resources 1 and 3. Resources 4 and 5 had
high performance, increasing the
performance of Team B. The project
performance was lower than the 4 and 5
resources performance and Team B. This
was because the members of Team A
lowered the global performance by their
weak individual performances.
he main objective of this article was
T to present an evaluation of the
human resources and teams
through a more direct mathematical model
than the subjective evaluation by the
project manager. Besides, bonuses and
reward policies may be directly connected
to the indexes causing a more transparent
mechanism of the distribution of project
outcomes
However, some cautions have to be
taken in using this kind of evaluation. First,
when the executer is not responsible for
overseeing the budget, he/she can have
his/her performance compromised by, as
an example, weak performance of the
procurement team. Secondly, this
mathematical model may not be
deterministic, i.e., the only one to represent
the truth of the work outcome of the
project resource. Once they are completely
mathematical, they may not evidence
subjective human aspects inside the team 8.
work. ◆
REFERENCES
1. DOD Earned Value Management
Implementation Guide. Washington:
United States of America Department
of Defense, (1997).
2. Fitz-Enz, J. The ROI of Human
Capital: Measuring the Economic
Value of Employee Performance.
New York; AMACOM, (2000).
3. Flanes, S. W. and G. Levin, People
Skills for Project Managers. Vienna:
Management Concepts, (2001).
4. Fleming, Q. W. and J. M. Koppelman,
Earned Value Project Management,
2nd Ed. Newton Square: Project
Management Institute, (1999).
5. Parker, G., J. McAdams, and D.
Zielinski, Rewarding Teams: Lesson
from the Trenches. San Francisco:
Jossey-Bass, (2000).
6. PMI. A Guide to the Project
Management Body of Knowledge.
Newton Square: Project Management
Institute, (2000).
7. Shuster, H. D. Teaming for Quality:
The Right Way for the Right Reason.
Newton Square: Project Management
Institute, (2000).
Cost Engineering Vol. 47/No. 5 MAY 2005
Verma, V. K. Human Resource Skills
for the Project Manager, Vol. 2.
Upper Darby: Project Management
Institute, (1995).
ABOUT THE AUTHOR
Ricardo Viana Vargas is a professor at
the Getulio Vargas Foundation in Brazil.
He is chair of the Grupo A&C in Brazil.
He can be contacted by sending e-mail to:
ricardo.vargas@uol.com.br or to: rvar-
gas@aec.com.br.
Technical Articles - Each month, Cost
Engineering journal publishes one or more peer-
reviewed technical articles. These articles go
through a blind peer review evaluation prior to
publication. Experts in the subject area judge the
technical accuracy of the articles. They advise the
authors on the strengths and weaknesses of their
submissions and what changes can be made to
improve the article.
Did You Know?
All AACE International members who
attend the 49th Annual Meeting or
Continuing Education Seminars will
receive Continuing Education
Credits/Professional Development Hours
for their attendance. Continuing
Education Seminar credits slightly vary for
each course and are listed on AACE’s web-
site. Attendees of the 3-day technical pro-
gram will receive 20 PDHs / 2.0 CEUs.
25
 SSpecial Feature
pecial Feature
Jennie Amos, Manager Marketing and Meetings

Earned Value Professional Certification on Track

for New Orleans Premier
ACE International's certification programs have been operat-

A ing since 1976, and offer applicants who meet the eligibility
requirements the ability to successfully take a text and attain
certification through the Association. The Certified Cost Consultant
(CCC)/Certified Cost Engineer (CCE) programs are accredited by
the Council of Engineering Specialty Board (CESB) and the
International Cost Engineering Council (ICEC). In 2000, AACE
developed an interim certification program, Interim Cost
Consultants (ICC). The ICC certification program is accredited by
ICEC. In 2004, AACE began offering its first specialty certification,
Planning & Scheduling Professional (PSP) which has been met with
great interest.
With the first official examination scheduled for the Annual
Meeting in New Orleans, AACE International is gearing up to offer
its second specialty certification, Earned Value Professional (EVP).
Jennie Amos, Manager, Marketing and Meetings, repre-
senting the Cost Engineering journal, recently talked with Nick L.
Kellar, CCC, and Jonathan P. (Jon) Mihalic, CCC, Chair and Co- Earned Value Professional (EVP) Task Force Committee Members
Chair, respectively, of the Earned Value Professional task force to dis- (pictured from left to right, top to bottom)
cuss the process in which the task force has undergone to create the • Nicholas L. Kellar, CCC (Chair); Alyeska Pipeline Service Co.;
newest certification program. • Jonathan P. Mihalic, CCC (Co-Chair); Booz Allen Hamilton;
• Donald J. Cass, CCE, The Cass Group;
CE journal: This is a major undertaking—creating a valid certifica- • Ann Marie Cox, ARES Corporation;
tion program from the ground up. Tell us about the overall process • Dan J. Demangos, PSP; Booz Allen Hamilton;
for creating the EVP certification. • Michael B. Fisher, CCC; Parametrix, Inc.;
• Tia Okwesa; Booz Allen Hamilton;
Kellar: Our process followed a time line of creating a competency • Ruthanne Schulte, Welcom; and
model, writing and documenting each component of the competen- • Cheryl Johnson (not pictured); Booz Allen Hamilton.
cy model, and then writing a complete outline for each component
that described—a definition, how it is applied, what a professional
should know about the topic, what areas of competency that a candi- ment, large and small companies in most every type of business sec-
date must demonstrate specific knowledge, and finally, a matrix to tors [IT, consulting, research, oil and gas, construction, manufactur-
which questions in the database are tied to the topic. ing, etc.] we often found that we had different views on most topics.
This diversity, though, really became our strength and the key to a
CE journal: Can you expand on the actual creation of the exam? well developed exam that was not industry specific.
Probably the most challenging issue that the task force had
Kellar: Sure. After the competency model, we started question to over come was the structure of the competency model itself. In its
development. Then we compared questions to the competency early stages, the model followed AACE international's earlier out-
model to identify areas where more questions were needed. After the lines of project management components. The task force really strug-
initial questions were developed, we finalized the format of the exam gled with the first model and approach because we all knew that the
to coincide with AACE International's other certification exam struc- model would have to be one that was universally accepted. After
tures (a 4-part exam, each part lasting 1 hour, 45 minutes for a total much debate, a decision was made to follow the ANSI standard (748)
of a 7 hour exam.) for earned value. Once this decision was made, we knew we were on
the right track for this certification.
CE journal: So everything went smoothly with the task force in the
creation of the exam? CE journal: You held a beta exam, right? Can you explain how this
Kellar: When ever you bring together a group with this much talent helped the overall process in creating the EVP exam?
and experience, your going have a few exciting times. But I think that
the thing that impressed me the most was the professionalism and a Kellar: We didn't hold a beta exam—we held beta one in four dif-
commitment that this task force maintained toward the earned value ferent locations on the weekend of March 5, with a total of 20 par-
project and the goals that AACE International has for this certifica- ticipants. Beta one used a lot of open ended questions to have the
tion. Because the backgrounds of the task force ranged from govern- beta testers write their answers and rational. After Beta one, we

26 Cost Engineering Vol. 47/No. 5 MAY 2005

revised the exam with information supplied during that test to create
Beta two. Beta two was scheduled for the weekend of April 9, in
eight different locations with a total of 84 participants. We wanted a
large number of beta testers to really see how the exam applied to dif-
ferent levels of experiences, industries, backgrounds, and education.
CE journal: The EVP Task Force was comprised of nine profes-
sionals in the field, how did you get everyone together on the same
page to undergo this very considerable task of creating a specialty cer-
tification program?
Kellar: Our meeting approach was to conduct weekly Thursday
meetings where we followed an agenda review of our schedule and
priority tasks. We only had one meeting face to face in Las Vegas in
January, but what happened in Vegas did not stay in Vegas. We
pushed on hard and had the first beta exam only five weeks after our
Vegas meeting and conducted our second beta four weeks later. We
used technology effectively and had everyone on the task force using
the same software, and passed electronic data back and forth weekly.
CE: Aside from the difference in ages and work-related back-
grounds, what helped make the Task Force member's diversity so
vital to the overall experience?
Mihalic: Each individual approached the task with their own idea on
what it should look like and what it should be used for. Some want-
ed a certification that can help them find skilled earned value pro-
fessional for hiring; others just want earned value to have a great
meaning in the project management world. These varying
approaches provide the opportunity to mode a professional certifica-
tion that met most, if not all needs.
CE journal: And you'll be ready for June 25th in New Orleans?
Kellar: We'll be ready. We are on schedule to turn over this exam a
full three months ahead of schedule.
CE journal: Then what?

CE journal: So aside from the great distance and time zone issues Kellar: We'll finalize the exam after it is given in New Orleans, and
faced by the Task Force (Nick lives and works in Alaska, Jon in then turn it over to the Certification Board. ◆
McLean, Virginia, just outside of Washington, D.C.—other Task
Force members in California, Texas, and Washington) what were the
other differences in the make up of the Task Force.

Kellar: The composition of task force—Ages ranged from the 20's to

the 60's, and areas of expertise was also varied with government, com-
mercial, software developers, and many industries including IT,
manufacturing, operations, consulting, construction, and education.

Mihalic: The team members also include skill sets and experience
ranging for true implementer of EV systems to experts in analysis.

Cost Engineering Vol. 47/No. 5 MAY 2005 27

 T ECHNICAL A RTICLE

The Goalposts for Project Success

Have Moved — A Marketing View
P.S. Kupakuwana and G.J.H. van der Berg

ABSTRACT: Traditionally, a successful project was seen as one in which the triad of time, budg-
et, and specification was complied with at a profit. Current project literature places more
emphasis on customer satisfaction as a fourth important success parameter. This article discuss- Figure 2— Contractual Relationships [3]
es project management services and focuses on what constitutes project success. This type of However, as far as project success is
project is named the new project in this article and a set of new project rules is arrived at. The
concerned, it is traditionally accepted that
article also takes a services marketing view and examines the customer's motivation in appoint-
ing a project manager. a project that is completed on time, on
budget, and to specifications is a success.
KEY WORDS: Customers, deliverables, financial, profit, project management, scope, and value Although true in the majority of instances,
if a more market-oriented view is taken, the
converse can, and should be, true as is
rofessional project management has

P become an industry of its own.

Many organizations buy the services
of project managers, especially where the
illustrated by:

• Project 1—Completed on time, on

budget and to specification, but the
needed technical expertise does not exist in
customer is not entirely happy.
the buyer's company or where temporary
• Project 2—Overspent the budget,
peaks exist in activities. Even professional Figure 1— Typical Management Structure [14]
exceeded the time frame, but the
engineers, architects, surveyors, and other Project management services are fairly customer is happy.
professionals really render project common in the South African market and
management services. typically are rendered by various This idea was summarized by Ruskin
companies to other companies. This has and Estes [12] who stated, "The single
R. Nobbs [1] argues that architects caused competition to increase and project
most important responsibility of the project
have, "always had to be schizophrenic" in managers have to differentiate themselves
manager is to ensure customer satisfaction.
that they have to act both as their in the market—currently mostly on an area
If the project is successful in every respect
employer's agent in supervising the works of specialization basis.
in terms of meeting its stated objectives,
and as an independent certifier. The increased competition in turn schedule, and budget, but the customer is
The Arbitration Act of 1950 ensured forces project managers to take a closer
somehow not satisfied, then the job was not
that the architect, "could not act as final look at their services for increased
done well enough . . ."
arbiter," because of doubts about his effectiveness and ways in which business
This statement, however, is not an
impartiality and relationship with the growth and profitability can be improved.
absolute rule. It applies in specific
employer. The concept of what constitutes a circumstances where the customer
However, Nobbs [10] adds, "Although successful project must also be closely
requires a result that is not well specified,
the 1950 act changed the law as far as an examined.
or it may be a function of the project
architect also acting as a final arbiter was The unique characteristics of project objectives being not well defined.
concerned, it did not affect the position in management services must be investigated
It is believed that the current
relation to an architect's independent and service characteristics must be kept in
overemphasis on project success as
certifying function." mind. For instance, when supplying the achieving time, budget, and quality targets,
A. Howarth [6] quotes another author service, the sale is concluded before the
is equivalent to the overemphasis on
as stating that the origins of project service is provided and in a sense the
production rather than market focus in a
managers date back to the decline of service provider works with a captive
manufacturing company.
architect's as leaders of building projects customer. It also is an ideal opportunity for
This article aims to arrive at a better
and the advent of the Labor government's relationship marketing as the contract
definition of project success, and to explain
private financing Initiatives (PFI), which normally is of a relatively long term and
the circumstances where the conventional
has seen increasingly complex joint performance during the contract will
success goal posts do not apply. It also aims
venture groups bidding for the design and determine whether work will be expanded
to provide a theoretical viewpoint to justify
build of a development. With so many and/or continued. The project team, who
the deviations from the more established
different companies involved on one job, all relate with the customer's personnel,
values, and it describes the new rules that
demand has risen for project managers should be targeted for internal marketing,
combine to form the project manager's
who can coordinate the work of everyone. as they in turn will influence the
new project environment.
(See figure 1). customer's perceptions of the project
organization.

28 Cost Engineering Vol. 47/No. 5 MAY 2005

 LITERATURE REVIEW
Project Success Parameters
Project Success
There is a general trend in project
management literature toward greater
customer focus and customer satisfaction.
It is also believed that there is too much
emphasis on the traditional measures of
project success i.e., the triad of on time, on
budget, and to specification (see figure 3).
Rigorously sticking to these yardsticks can
in certain circumstances actively detract
from project success.
Eric Verzuh [15] defines a successful
project as one in which the project
objectives were reached on time, on
budget, and with a product of high quality.
Quality in turn would be measured by
functionality and performance. At the
same time, however, he stresses that a
successful project must meet stakeholders'
expectations (see figure 4).
Verzuh [15] lists the five project
success factors as the following.
• agreement among the project team,
the customer and management on
project goals;
• a project plan that shows the overall
path and clear responsibilities;
Figure 3— The Triangle of Project Objectives
(adapted from Barnes and Wearne, 1993)
Figure 4— Primary and Secondary
Stakeholder Map [14]
• constant and effective communication;
• a controlled project scope; and
• management support.
Jack R. Meredith and Samuel J.
Mantel recognizes the same three
traditional items for project success, but
they state that the triple constraints of time,
budget, and specification are rapidly being
replaced by a new model that invokes a
fourth hurdle for project success: client
satisfaction [9].
D. Baccarini distinguishes between
the components of project success as being
the following.
• project management success; and
• product success.
Project management success focuses
on the project process and the successful
accomplishment of cost, time, and quality
objectives. Product success in turn focuses
on the effect of the project's final product
[1]. It was noted that project managers
largely interpreted successful projects as
meeting the project management criteria
such as budget and schedule, whereas
customers interpret successful projects as
those meeting product success criteria such
as response time and reliability. Project
managers therefore tend to focus more on
short-term criteria relating to the project
process, but customers focus more on the
longer-term criteria relating to the project's
product.
If the project manager bears the
customer's interest at heart, as he or she
should, the manager must place traditional
project success indicators lower on the
importance scale than the customer's
overall interest. The project must also
appear successful from the customer's
point of view.
Belout stated that a synonym for
success is effectiveness, i.e., the degree of
achievement of objectives [2]. The
customer typically employs the project
manager as a tool to improve or optimize
his or her own profitability. That is the
customer's overriding objective and to be
successful, the project manager should be
effective in helping the customer achieve
his or her objectives.
The PMBOK Guide, by PMI, confirms
that all projects should be supportive of the
performing organization's strategic goals. It
is therefore imperative for project
managers to understand the business
Cost Engineering Vol. 47/No. 5 MAY 2005
environment and view their project as part
of the customer company's struggle for
competitive advantage, revenues, and
profit.
To complicate matters further, A.J.
Shenhar, O. Levy and D. Dvir suggested
that the relative importance of project
success dimensions change with time 13].
As in a relationship, different periods bring
different expectations. In the early stages,
internal dimensions (meeting schedule,
budget, and specifications) are most
important. Later in the project cycle,
external dimensions (customer needs and
satisfaction) become more important. To
the project manager it has special
significance as it is in the later stages of the
project that the customer decides on re-
appointment or an increase in the scope of
work.
A.J. Shenhar, O. Levy and D. Dvir
deal specifically with those projects that are
perceived as successful by persons involved
in their implementation, yet are poorly
received by their customers [13]. They
draw attention to the importance of
viewpoints in defining project success and
report that success can only be meaningful
if considered from the following two
vantage points.
• the degree to which the project's
technical performance objective was
attained on time and within budget;
and
• the contribution that the project made
to the strategic mission of the
enterprise.
It was suggested to push the definition
of project success even further by including
the level of satisfaction of the following
four different groups of stakeholders.
• the customer organization;
• the developing organization;
• the project team; and
• the end-user.
This viewpoint turns all of the project
stakeholders into customers that must be
satisfied.
The Customer—Procurer of Project
Management Services
The trend in project literature toward
greater customer satisfaction is clear. The
project manager should therefore turn his
or her focus toward the customer and their
29
 needs. A project is not only about providing
an end product, but is also a service
product in and of itself. The processes of
service delivery should be taken note of
and service delivery best practices
integrated into project management.
In terms of the customer organization,
it was found that business managers see the
success of their units as comprising the
following four separate dimensions.
• profitability level;
• level of sales and new orders;
• generating new opportunities for new
products and markets; and
• preparing the scientific and
technological infrastructure for the
development and production of future
products.
In order to be supportive of the
customer organization's objectives, project
managers must be aware of these four
dimensions.
In Transaction Cost Economics,
authors C. Berggren, J. Soderlund and C.
Anderson investigates the boundaries of a
firm, for instance when an activity should
be performed in-house or contracted out
[3].
If a project is associated with a low
frequency of purchase, if uncertainty and
degree of uniqueness is high, the preferred
way should be to obtain the service in the
market, rather than the organization
performing the work itself. The customer
therefore avoids risk by transferring project
execution to a professional project
management organization, but typically
pays a premium for this experience.
During project execution the
customer may notice the price premium,
(he or she could do it less expensively on
their own) but may forget the risk that they
are avoiding, especially if the project is
executed smoothly. This aspect must be
accommodated and benefits achieved by
the customer must be brought to his or her
attention to ensure that a negative feeling
toward the project manager does not
develop.
C. Berggren, J. Soderlund and C.
Anderson discuss the problem found in
large engineering contracts where the
customer appoints various consultants, e.g.,
for design, for project management, and
even as financial controllers/advisors [3].
Such instances create unique management
30
problems and may even involve an absent
customer.
In the case of an absent customer, the
intermediary/consultant may become the
project manager's real customer. This of
course changes all the rules as the
intermediary may have his or her own set of
goals (e.g., a long term appointment from
the customer), which may not necessarily
include the end customer's best interest. In
this case, the incentive chain is deformed
and adapting solutions to real customer
needs becomes difficult.
The Project as a Service Product
The project management organization
sells its services to the customer and only
after completing the sale is the service
rendered.
Theodore Levitt relates the service
provider/customer relationship to a
marriage, the sale consummates the
courtship and the marriage begins [7].
The quality of the marriage is then
based upon continued and expanded
business or there will be trouble and
divorce.
In a marriage, what is good for one
partner will also benefit the other and by
working in his or her customer's interest,
the project manager will benefit himself in
the long run. The customer procured the
services of the project management
organization as a tool with which to
produce items to yield a profit.
C. Berggren, J. Soderlund and C.
Anderson state, "the maxim about
customers as kings assumes the customer
has a long term interest in the service
delivery and that he or she is approachable
and negotiable" [3]. They warn that the
same rules do not always apply. If it is
known that a once off transaction is entered
into, then the customer is king rule is not
necessarily true.
Christopher H. Lovelock defines a
valued relationship as one in which the
customer finds value because the benefits
received from the service significantly
exceed the associated cost of obtaining it
[8].
To a firm, a valued relationship is one
that is financially profitable over time.
Lovelock also states that in a healthy and
mutually profitable relationship, both
parties have an incentive to ensure that it
extends for many years.
For the seller, the profit potential lies
mainly in the following three items.
Cost Engineering Vol. 47/No. 5 MAY 2005
• profit from increased purchases;
• profit from reduced operating cost;
and
• profit from price premium.
We are therefore in a paradoxical area
—a project is short term by its very nature,
but for real success a long-term view has to
be taken by both the project manager and
the customer.
For the seller of the (project
management) service, Lovelock states that
creating a competitive position is vital for
success and identifies the following four
principles to achieve this:
• the company (or project manager)
must establish a position in the minds
of its targeted customer;
• the position should be singular,
providing one consistent message;
• the position must set the company
apart from its competitors; and
• the company cannot be all things to all
people; it must focus its efforts [8].
In a project management
environment, the problem of demand and
capacity is a very real one and virtually the
only certainty is that there will be periods
in which demand will exceed capacity and
vice versa. Lovelock states that strategies for
managing demand must be developed and
he says that one of the most direct ways to
reduce excess costs is to charge customers
more money during peak periods. An
alternative also would be to change
product elements.
On the importance of technology,
Lovelock states that the real power of
technology is not in making old processes
work better, but rather in enabling
organizations to break old rules and create
new ways of working.
To become an effective service
provider, project management
organizations have to make full use of
technology to inform and astound their
customers and apply new ways of
communicating and supplying information
as it is developed.
The project environment provides an
ideal situation for relationship marketing
with valuable relationships forming and
internal marketing playing an important
role to all the project team members.
Proposed Project Success Yardsticks
There is no getting around it—for the
new project, the customer will play a most
important role.
The traditional three project success
parameters of on time, in budget, and to
specification will not disappear, but they
will be relegated to a secondary position
behind customer satisfaction. Faultless
project execution will always remain
important but long-term customer
satisfaction will be the main target.
Long-term customer satisfaction,
however, cannot be measured in the short
term and a degree of faith in the project
outcome will have to be involved.
In the mean time, the project may run
behind schedule and over budget and be
unsuccessful by all the old yardsticks. This
will have to be compensated for by
introducing all possible excellent service
delivery tools available to the project
group. It will require greater leadership
from the project manager to form a vision
of the project outcome and marketing skills
as he or she will have to sell the idea of,
"what can be" to the customer rather than,
"what is." Communication at all levels will
have to be excellent with internal
marketing required to get the project team
to believe in the vision.
Financial factors also play an
important role. In general it can be said
from a financial perspective that the project
is a success if;
• the customer gets a profitable result
from the project (if not in the short
term, at least measurable in some •
financial terms e.g., internal rate of
return method (IRR) or some capital
expenditure valuation technique); and
• to the project manager the project
must have been profitable to execute.
Figure 5— Components of Activity Cost [4]
THE NEW PROJECT AND
SUCCESSFUL PROJECTS
Project Success—A Services and
Relationship Marketing View
From a services and marketing
viewpoint the project can only be a success
if the customer is happy. By executing the
project correctly with aspects such as on
time, on budget, to specification, etc.,
chances are greatly increased for customer
satisfaction although it is not guaranteed.
Other non-product related factors that will
ensure customer satisfaction include, but
are not limited to, the following.
• good relations between the customer
and project management personnel;
• providing a service that meets or
exceeds the customer's expectations
even in areas not falling within the
project's objectives;
• professional appearance of the project
managers staff—prompt response to
crises, good presentations, factual
information supply;
• the project organization's image of
success;
• taking the customer with or through
the process (i.e., keeping him or her
informed, and making the customer
understand the logic behind
decisions);
• making the customer’s life easy (for
instance if motivations have to be done
for additional funds—provide the
customer with all the required backup
information); and
professional reports and presentations
(a good professional report leaves a
positive image even if the project is not
that well executed—the customer
forms an impression from the report
that is in front of him or her).
Note that in many of the above,
communication plays an important role
whether verbal or written—the importance
of good communication cannot be over
emphasized.
The Role of the Project Manager as a
Tool to the Customer
As mentioned earlier, the end
customer uses the project manager as a tool
to achieve his or her own objectives. This is
a position where the distinction becomes
blurry, especially where project objectives
are not clearly specified. Is it better to
Cost Engineering Vol. 47/No. 5 MAY 2005
execute the customer's wishes to the letter
and thus become exactly the tool he or she
requested, or is it better to follow his or her
intent and deviate from the letter of the
instruction?
Traditionally, it was seen that intent or
strategic factors fell outside the scope of the
project team—the team should function
purely in an executing mode and leave
interpretation or strategy to a more senior
level of management. So the question is—
should the project management team act
as a dumb tool and purely execute, or
should a more intelligent route be followed
where the customer's intention is
interpreted and anticipated?
The "intelligent tool" option is
definitely more risky, but also is the one
with the most potential benefits. It is most
likely the only way in which the customer
can get more than asked for, which is the
way to provide a successful service—by
astounding the customer and giving him
more than expected.
The Tables are Turned—When the
Conventional Rules Do Not Apply
In smaller projects with an easily
definable scope, e.g., install 20 lampposts
for the local municipality, the traditional
success parameters of on time, on-budget,
and to specification certainly still apply.
Unnecessary time and effort should not be
expended in trying to second-guess the
customer (whose project control
representative may in any case not hold a
strategic view).
However, for instance if the project
concerns a multi-million de-bottlenecking
of a large chemical plant, the new project
rules should apply. If the customer's scope
specifically requires f a 50 percent increase
in throughput (in a minimum time and at
a minimum cost) opportunities abound for
new project rules. The customer will
certainly give friendly consideration to any
project extensions that can decrease his or
her maintenance cost, increase plant yield,
decrease operating costs (utilities) or labor
cost if the economic viability can be
proven. It is therefore vital that the project
manager understands the customer's
business—not only the technical or
operational aspects, but also the financial
and business aspects.
The money value of time must be
taken into consideration. Depending on
the project profitability it may be
worthwhile to more than double the cost of
31
 the project if it can halve the execution
time. In order to take this type of decision
the business aspects must be clearly
understood and a financial model rather
than the project manager's gut feel should
determine the outcome.
On the negative side—beware of
misbehaving customers. New project rules
assume a logical/rational customer who is
willing to participate in a win-win
transaction. The likelihood exists that a
powerful win-loose type customer is
encountered at which time it may be better
to switch back to old project rules and to do
exactly as the customer asks. Such a
relationship may in any case not be worth
pursuing in the longer term.
Figure 6— Time/Cost Approximation [3]
Achieving Customer Buy-in in the
Changed Rules
The customer starts the project with a
pre-conceived idea of what it is he wants to
achieve. This concept should ideally be
defined in the project objectives. In an
ideal world, the project team should
exactly execute these objectives. However,
we do not live in an ideal world.
To deviate from these objectives, the
new plan will have to be sold to the
customer. For such a sale to take place the
customer will have to have a high degree of
trust in the project manager. Any change in
plans will have to be very well documented
and technically and financially motivated.
The customer's project representative
will have to sell the idea to his own senior
management. If he can start with a well
documented case, it will make his internal
sales job that much easier. It would also be
better to have the transaction sold on a
number of different levels (each person in
the project organization to his customer
counterparts) as we know that in
organizational buying, decisions are
influenced from many different levels.
The more the customer's involvement
in the process, the better the chances are
that he or she will buy into the idea. It is
not a good idea to spring the idea on the
32
customer and expect an immediate positive
result. In the ideal situation, the customer
must believe it is his or her own idea that
will now be implemented. It is likely that
the customer will have a deep-lying
knowledge of his or her business and may
have the best ideas of how to solve any
problems. The method of achieving good
results is not as important as the results
itself.
The customer wants value for his or
her money and net value equals perceived
benefits—perceived outlays. If the
customer is on the winning side, it would
be irrational not to proceed with the plan.
But, the customer must have proof (even in
the form of projected figures) and he or she
must not spend too much effort in
gathering the proof —it must be provided.
The progress Meeting as a Critical
Service Encounter
On most projects there are standard
periodic progress meetings attended by the
customer and other professionals. The
customer’s perceptions of project success
will most likely be equally formed by what
is happening in practice and by
impressions formed in the meeting. The
hardware, or actual project performance,
therefore only makes up approximately half
of the service experience.
By all service definitions, the project
meetings are critical service encounters, as
the customer's perception of the service
received will most likely largely be formed
there. Project performance is not always
within the project manager's control (it
may be dependent on the performance of
subcontractors, weather, deliveries by
suppliers, etc.), but the execution of project
meetings are definitely in his or her
control.
Care should however be taken not to
do such a good sales job that the customer
is happy until he leaves the meeting,
connects with the real world, and then feels
duped. The project manager's integrity
should not be doubted and he or she
should not be selling leases to castles in the
sky. A professional presentation backed up
by hard facts and good motivations should
convince even difficult customers, and
unrealistic expectations will not be
encouraged.
It is also at this type of meeting that
customer complaints would surface.
Complaints should be invited, as research
Cost Engineering Vol. 47/No. 5 MAY 2005
has shown that only a relatively small
percentage of customers complain even if
they are unhappy. If the project manager is
perceived as an expert, the likelihood of
complaints diminishes even further,
Lovelock states [8]. Effective problem
resolution techniques should then be
followed—e.g., act fast, admit mistakes,
and do not be defensive, show you
understand the problem, clarify steps
needed to solve the problem, and keep the
customer informed of progress.
Negative critical incidents that are
satisfactorily resolved have great potential
for enhancing loyalty, as it demonstrates to
the customer that the project manager
really cares about him or her.
The receipt of complaints and
corrections to the source, allows the
opportunity to make changes that can
really improve service delivery. Customer
complaints traditionally are invited at the
project close-out meeting. This meeting is
too late in the process for problems to be
brought to light, as at this stage very little
remedial action can be taken.
Back to Project Management Principles
Does this mean that old project
management principles can be discarded
and we must just do an excellent sales job?
The answer is a definite no. Indeed, the
better the project is executed, the easier the
sales job should be. The project manager
must make use of all the tools and
technology within his or her reach to
execute an excellent project by all project
success standards.
The seed of project success is planted
in the planning phase. The old maxim of
an ounce of prevention is worth a pound of
cure still applies and the following project
rules remain as valid as ever.
• work is to be planned as thoroughly as
possible;
• think of every possible eventuality;
• break the work down into as small
tasks as possible;
• schedule realistically;
• plan not only for the work, but also the
staffing;
• ensure that the right people are used
in the right positions;
• ensure that responsibilities are clearly
spelled out;
• empower project personnel to go out
and get the job done; and
• do not forget about infrastructure
requirements for the project team—
make sure that their physical,
communication, and administrative
backup requirements are met.
Figure 7— Planning and Control Cycle [14]
Communication is a vital requirement
for project success and communication via
cellular phones and e-mail. Having a
project information Internet or intranet
website can largely help to alleviate this
problem. To update the old maxim
somewhat—a digital photograph can be
worth a thousand words and such
photographs can be easily and widely
dispersed electronically.
The principle should be followed of—
when in doubt, supply too much
information too widely. Communication
should not only flow between the project
manager and the customer, but also within
the project management group. Without
effective internal information not only will
the work execution be more difficult, but
the sales job will be limited to the project
manager where the whole project team can
and must act as new salesmen.
Verbal communication should not be
underestimated and will probably remain
the most important communication media
of all.
Figure 8— The Main Information Channels [4]
Back to Marketing Principles
The marketing concept means that an
organization aims all its efforts at satisfying •
its customers—at a profit, says E.D.
Perrault [11]. To have a market orientation •
means the organization is trying to carry
out the marketing concept. This entails the
following three basic ideas.
• customer satisfaction;
• a total company effort; and
• profit—not just sales as the objective.
In the competitive service
environment it is necessary for the project
management organization to differentiate
its services from that of the competition,
and it must do so in ways that are
meaningful to customers. When defining
the service, two main components must be
considered—i.e., the core product and the
core delivery process. The core product
should be to provide the customer with an
item or tool, which he in turn can use to
generate his own profits. The core delivery
process should be a project managed as a
service delivery product by all the
standards of service excellence.
A project management service can be
seen as a business product, which is treated
differently than a consumer product.
Organizations buy things to satisfy
their own customers and typically focus on
economic factors when they make
purchase decisions. Many different people
influence purchase decisions. Again it is
quite clear that the real people that must be
satisfied are the customer's customers.
For the project manager to sell his own
service effectively, it must be sold on many
levels to many different people—from the
key decision makers to the influencers of
the key decision makers. In this, the value
of a good customer relationship should not
be underestimated.
Back to Financial Principles
For the project manager the basic •
equation is simple—i.e., work = income.
The specifics, however, are not that simple
and in practice most project managers live
by the following, often paradoxical rules.
• work or income does not equal profit;
• the project management organization •
demands profit as a non-negotiable;
• giving the customer more than what
he asked for has cost implications that
the customer may not be prepared to
Cost Engineering Vol. 47/No. 5 MAY 2005
pay for. This will negatively affect the
project manager's profits;
long-term smaller profits are normally
better than short-term higher profits.
keeping an existing customer is much
more cost-effective than winning a
new customer;
• a satisfied customer increases the
chances for long-term profits.
• invoicing the customer what is due
may dissatisfy the customer and reduce
long-term prospects;
• a satisfied customer may accept over-
invoicing;
• over invoicing is not in the customer's
best interest—and as stated before, to
be really effective the project manager
must work in the customer's best
interest;
• salaries are likely the project
organization's biggest single expense
and therefore the main destroyer of
profit;
• good salaries attract good staff and are
seen as incentives to perform; and
• conversely—paying peanuts attracts
monkeys and is a sure road to project
failure
All in all, rocky waters to navigate for a
project manager, and a golden middle way
has to be, and is typically found on the
majority of projects.
However, new project rules that can
change the above scenario can luckily be
added, including the following.
• innovative extras to the end product
can add more value than what is
consumed by the extra effort;
• if convinced of higher value received,
the customer may be prepared to pay
for it;
• smaller profits per item (or project)
with higher throughput (more
projects) can generate a higher total
profit;
most, if not all, project decisions have
a financial implication, a scheduling
implication, or both. However,
commonly available financial and
schedule/implementation modeling
tools are available to determine the
effect of decisions;
even apparently "schedule only"
changes have financial applications for
both the customer and the project
manager. For the customer the longer
time-to-market of a highly profitable
33
 product may be the most expensive
item of all;
• appropriate use of technology can •
reduce costs; and
• pricing can be based on value
delivered and therefore does not
always need to be market related.
The services marketing sphere—the
service-profit chain, according to Lovelock
offers the following [8].
• profit and growth are stimulated
primarily by customer loyalty;
• satisfaction is influenced by the value •
of services provided to the customer;
• value is created by satisfied, loyal, and
productive employees; and
• employee satisfaction in turn results
primarily from high-quality support •
services and policies that allow them to
perform.
As noted above, all but the smallest
projects should however be executed in
terms of a financial model. This would take •
the guesswork out of many project
decisions
The Ideal Project
To summarize, for a new project to be
successful it must result in the following.
• a satisfied end customer;
• a profitable product for the customer
(or at least the customer must be in a
position to develop profitable products
as a result of the project); and
• the execution of the project must have
been profitable for the project
management organization.
For a new project the following is
recommended.
• as far as possible, always work in the
customer's interest;
• turn customer orientation into the
project management organization's 2. Bergren, C., J. Soderlund, C.
competitive advantage;
• always maintain a long-term
outlook—this project is important, but
the aim is to get many future projects.
• know the technical aspects of the
project, and, just as importantly, know
the business background to the 3. Belout, Anonymous, (1998).
project;
• the project manager must be a strong
leader to convey the mission—
34
whether a natural or a taught leader
does not matter;
maintain excellent relations with the
customer and keep him fully informed
of all aspects of the project, and
maintain integrity to ensure a trusting
relationship;
• on all project decisions take note of
financial implications of decisions—
make extensive use of schedule and
financial modeling to determine the
full impact of the decision, because
information empowers the project
team;
communicate extensively— make full
use of technology, e-mail, intranet and
internet, to keep all project
participants informed, and do not
neglect verbal communication;
make utmost use of service delivery
techniques, treat periodic project
meetings as critical service encounters,
invite complaints, and pay special
attention to the fast and effective
resolution of these complaints;
make the customer's life easy—it will
add to his perception of receiving
value;
• the project team mainly delivers the
project service, so look well after these
persons and ensure they are properly
supported and operate within an
empowering environment.
Project management can be likened to
an orchestra (project) where a conductor 15.
(project manager) directs every participant
(player/professional) to play his/her tune
(deliverable) as expected of him/her, to the
satisfaction and delight of the audience
(external customers) and all involved Technical Articles - Each month, Cost
(internal customers). ◆
REFERENCES
1. Baccarini D, The Logical Framework
Method for Defining Project Success,
Project Management Journal; 30, 4
25-32.
Anderson. Clients, Contractors and
Consultants: The Consequences of
Organizational Fragmentation in
Contemporary Project Environments,
Project Management Journal, 32, 3
(2001): 39-48.
4. College of Estate Management
(CEM) (1), Diploma In Surveying,
Lecture Notes on construction
Cost Engineering Vol. 47/No. 5 MAY 2005
contracts (QS), Paper 3722, Level 3,
Block A, (2000).
5. College of Estate Management,
(CEM)(2), Diploma In Surveying,
Lecture notes on management
information and quality systems,
Papers 0965, Level 3, Block A, 2000.
6. Howarth A, Arbitration (UK)—
Contradiction in the Role of
Architects, (Nov. 4, 2002).
7. Levitt, Theodore. After the Sale is
Over, Harvard Business Review
paperback No 90056, (1995): 64.
8. Lovelock, Christopher H. Services
Marketing—People, Technology,
Strategy, (Fourth Edition). Prentice
Hall, 2001.
9. Meredith, Jack R. and Samuel J.
Mantel Jr. Project Management—A
Managerial Approach, New York:
John Wiley & Sons Inc., 2000.
10. Nobbs, R. Architectural Schizophrenia,
Building, (Oct. 25, 2002): 56
11. Perrault, E.D, E.J. McCarthy, Basic
Marketing—A Global and
Managerial Approach, 12th Ed,
Richard D Irwin, (1996).
12. Ruskin and Estes, Anonymous, 1995.
13. Shenhar, A.J., O Levy, D. Dvir,
Mapping the Dimensions of Project
Success, Project Management
Journal, (1997): 5-13.
14. Smith N.J, Engineering Project
Management, Second Edition,
Blackwell Science, (2002).
Verzuh, Eric, The Fast Forward MBA
in Project, Management. New York:
John Wiley & Sons Inc., publishers,
1999.
Engineering journal publishes one or more peer-
reviewed technical articles. These articles go
through a blind peer review evaluation prior to
publication. Experts in the subject area judge the
technical accuracy of the articles. They advise the
authors on the strengths and weaknesses of their
submissions and what changes can be made to
improve the article.
ARTICLES AVAILABLE - Articles from
previous editions of the Cost Engineering
journal may be purchased through the
AACE International Online Bookstore,
www.aacei.org. The cost per article is
US$7.50 for nonmembers and US$5.00
for members of AACE International. If you
are interested in purchasing additional
copies of articles appearing in this issue
please refer to the Article Reprint and
Permissions information on page 43.
Cost Engineering Vol. 47/No. 5 MAY 2005 35
 The 2005 Annual Meeting

Registraistopen
ion
Photo courtesy of the New Orleans CVB & Richard Nowitz

Keynote Speaker
Joel M. Koppelman, CEO,
Primavera Systems, Inc.

Register online at:

www.aacei.org
Save by staying at the host hotel - Sheraton New Orleans!
Call 800 325-3535 for reservations!

JUNE 26-29, 2005

The Big Easy Way to Project Effectiveness

Earn 20 PDHs/2.0 CEUs during our many technical programs and seminars!
 For Your
Information:
AACE International
Membership
now has a single e-mail
address for all of your
Membership assistance
needs.
Please contact us at:
membership@aacei.org

Cost Engineering Vol. 47/No. 5 MAY 2005 37

 P rofessional S er vices D irector y

Index to Adver tisers Missing

Administrative Controls, this page
ARES Corporation, back cover
Calpine Planning Solutions, this page
Computer Guidance Corp., page 2
eBid Systems, page 35
EOS Group Inc, page 37
Hanscomb Faithful & Gould, page 7
George Washington University, page 10
KAS - Estimating, page 41
McDonough Bolyard Peck, page 27
Meridian Systems, page 4
PMA Consultants, page 35
PMO Link, page 12
Primavera Systems, Inc., inside cover
out?
Rider Hunt, page 9
Call 410.584.1966 today
to reserve exhibit space at
Ron Winter Consulting, page 42 the next annual meeting, to place your
Skire, Inc., page 13 ad in Cost Engineering, or to be a part
U.S. Cost, inside back cover of the AACE International website!
University of Texas at Dallas, page 37
Vertigraph, Inc., page 9
Warner Construction Consultants, page 35 Professional Services
Win Estimator, page 6
Join the Directory
Placing your business card in the hands of
For information about the listed advertisers or about thousands of corporate leaders every month is
advertising with us, please phone Chris Martin at
Network Publications, (410) 584-1966, or e-mail an opportunity you shouldn’t pass up!
him at cmartin@networkpub.com phone: 410.584.1966

AACE International Provides Internet Learning

Opportunities through www.aacei.org
Check out the new courses in AACE International’s
on-line distance learning catalog.
There's something for every skill level.

These courses are available to start any time – These 10-week courses start on June 27, 2005:
An Applied Framework for Project Management • Construction Blueprint Reading (CEI)
Fundamental Skills and Knowledge of Cost Engineering • Oral and Written Communications for Construction
Writing for Results Supervisors (CEI)
Handling Personal Interactions • Contract Documents and Construction Law (CEI)
Working in Teams • Planning and Scheduling (CEI)
Communicating on the Job
• Estimating and Bidding 2 (CEI)
Presenting Ideas
Being an Effective Leader Learn more about these courses at:
Finding the First Job www.aacei.org/education/distancelearning
Finding the Next Job
Entrepreneurial Cost Engineer
Introduction to Construction Estimating Complete information on all courses can be accessed
at: w w w.aacei.org/education/distancelearning

38 Cost Engineering Vol. 47/No. 5 MAY 2005

 TThe Bulletin
he AACE International Bulletin
Atlanta Section
Anthony Dixon of IAC was the speaker at the Atlanta
Section’s March meeting. He provided an update on the MH
Jackson International Terminal project. At the April 13 meeting,
Dr. Khalid M. Siddiqi, chairman of the Southern Polytechnic
State University, spoke on, “Opportunities in Construction
Management Education.” He worked on development of a strate-
gic technology policy for the US Army’s global readiness, worked
with the US Army Environmental Policy Institute, has experi-
ence with project planning and monitoring, served as a consult-
ant on World Bank projects and was the director of a master plan
for Karachi, Pakistan, a city of over 10 million people.
Cascade Section
The Cascade Section was treated to an excellent presenta-
tion on the water infrastructure rebuilding program in Iraq and
the extreme conditions facing this effort in a war zone. Les
Brown, Human Resource Director, IDC - previously assigned as
HR Director for the CH2M HILL/Parsons, Joint Venture in
Baghdad, was the speaker. It was truly a most informative and
enlightening presentation. The Cascade Section holds it's regu-
larly scheduled dinner meetings on the second Thursday of the
month through June at the University Place in downtown
Portland. In April, the topic wase a panel discussion on, The Cost
of Building Green, Does It really Cost Less? This was a joint meet-
ing with ASPE. For further information, refer to the Section’s
website at www.aacei-cascade.org or contact our President, Rob
Edgerton at 503-423-3998 x22119.
Submitted photo
Guest speaker, Les Brown, above left, HR Director for CH2M HILL IDC,
is shown with Cascade Section Vice-President, Greg Baker at the March
dinner meeting of the Cascade Section. The program featured a presenta-
tion on the water infrastructure rebuilding program in Iraq.
Cost Engineering Vol. 47/No. 5 MAY 2005
Central Savannah River Area Section
The Central Savannah River Area (CSRA) Section had a
joint April meeting with the American Society of Mechanical
Engineers - CSRA Chapter. The meeting included an excellent
presentation, by Donald McDonald, PE PSP, on senior manage-
ment review of project CPM schedules. Mr. McDonald's presen-
tation also covered various aspects of design engineering and con-
struction management that contribute to cost efficiency and over-
all project success. Included in the discussion were various valu-
able tools that are available to ensure efficient project manage-
ment and effective multi-disciplinary communication. The goal
of the presentation focused on what level of detail is necessary to
communicate; analysis of trends and control recommendations;
communication details to prove analysis and recommendations;
and understanding internal and external elements of scheduling.
The CSRA Section hosted an EVP/PSP Workshop in
Augusta, Georgia on Saturday, May 5. This proved an excellent
opportunity for participants to prepare for the certification exam
for the AACE International Earned Value Professional (EVP)
and/or Planning & Scheduling Professional (PSP) certification.
Professionals who obtain certification achieve industry recogni-
tion and increase the value of their work to their clients and their
employers.
Chicago Midwest Section
The Chicago Midwest Section met April 18 in a joint meet-
ing with ASPE, the American Society of Professional Estimators.
The meeting program looked at the estimating process that W.E.
O’Neil Construction used in bidding on such projects as a foun-
tain at Millennium Park and the relocation of a submarine at a
museum. The Chicago Midwest Section will hot its annual sem-
inar program on Friday, May 20. The theme will be, “Champions
of Project Controls, 2nd edition. Contact Don Giegerich at
don_giegerich@urscorp.com.
Chinook-Calgary Section
About 150 Chinook-Calgary and PMI members and guests
heard Jamie Cool of Kildrummy do a presentation at the Telus
Convention Centre in March on using standardization to assist in
training new participants in cost estimating, scheduling and proj-
ect management reporting. Such new participants will be better
able to continue in cost engineering as the current 48- 50 year old
experienced workers reach retirement age.
Submitted photo
Two Chinook-Calgary
scholarship winners
were recently honored.
Shown at left are
Yashie Sukhu (recipi-
ent), Cindy Striekland
(Scholarship Director),
and Sushil Peres-da-
Silva (recipient.)
39
 More than 80 members and guests attended the April
Chinook-Calgary Section’s joint meeting with the quantity sur-
veyors. The record attendance at the joint dinner meeting heard
various definitions and discussions of contingency from owners,
contractors and quantity surveyors. Although the percent contin-
gency is always open to discussion on a project, owners still have
to pay the costs of a project, in order to place a facility into pro-
duction to generate revenue for a return on capital invested.
Submitted photo
Chinook-Calgary Section’s
April Dinner Meeting panel
discussion was on
“Contingency Management.”
Participants, shown right from
left to right, included:
Trevor Smith, director of the
local chapter of CIQS;
John Croft, director project
controls for Suncor Energy; Peter Ripley, President of the Chinook Calgary
Section; and Ross Clark, manager of project controls for Bantrel.
East Tennessee Section
The March 28 meeting of the East Tennessee Section was at
the Outback Steakhouse in west Knoxville. The guest speaker was
D. Wayne Loveday, Director of Plants and Collection System,
Knoxville (TN) Utilities Board (KUB). He is responsible for
operation and maintenance of KUB's wastewater treatment
plants and water treatment plant, as well as the operation, plan-
ning and maintenance of the wastewater collection system total-
ing 1,200 miles. Mr. Loveday gave an very informative 30-minute
presentation on KUB's recently begun 10-year project to upgrade
a significant portion of the Knoxville, TN wastewater and
stormwater system. There were 37 section members in atten-
dance at this meeting (maybe our best-attended section meeting
ever—we're checking our records). Three non-members pushed
the total attendance that evening to 40. That's right, 40 !!! For fur-
ther information about the East Tennessee Section, visit our web-
site at http://www.aace-ets.org/.
Genesee Valley Section
The Genesee Valley Section will be providing a matching
scholarship to a student from SUNY Environmental Science and
Forestry at Syracuse NY. The presentation will be made at the
May Section meeting. The section will be hosting a coffee hour
at the New Orleans' meeting. This is the fifth year in a row the
the section has provided sponsorship for the annual meeting. As
always we challenge all AACE International sections, especially
our wealthier fellow sections to follow suit and give back to the
Association.
The Genesee Valley Section made a $1000 donation to the
Red Cross for tsunami relief effort. The Genesee Valley section
approved of sponsoring a representative to the Annual Meeting
from our BOD's. Attending the Annual Meeting is seen by the
Section as a great way to bring cost engineering knowledge to our
membership. The Board member will be reporting back, to both
the Board and to the individual members at a section meeting,
about what they learned at the Annual Meeting.
Doug Leo conducted a full day seminar on conceptual and
strategic estimating on April 20. All participants at the seminar
40 Cost Engineering Vol. 47/No. 5 MAY 2005
received PPG#13 Parametric and Conceptual Estimating as part
of their registration. All Section members attending the Annual
Meeting will be serving as presentation room hosts. The Section
will be represented at the Section Orientation Meeting in New
Orleans.
New Jersey Section
The February meeting of the New Jersey Section was on Feb.
16, at the KatManDu Restaurant in Trenton, NJ. Scotty Riemer,
NJ section treasurer, was the host of the meeting, representing
Joseph Jingoli and Son. Iftikhar Madni, CCE, NJ section presi-
dent, was the speaker for the evening. He presented several cost
engineering problems to the attendees. The goal of this session
was to introduce the type of problems that are on the certification
exam, work through solutions to those problems, and encourage
people to begin the process of exam preparation. Gaurav (Gary)
Lamba, PE, CCE, was acknowledged for recently his passing the
certification exam.
The March meeting of the New Jersey Section was on
March 16, at the Lone Star Restaurant in Bridgewater, NJ. Brian
Tighe, NJ section corresponding secretary, was the host of the
meeting, representing Skanska USA Building Inc. Debbie
Dempsey, NJ section vice president, and Mike Bolhofer, NJ sec-
tion membership director, were the speakers for the evening.
They presented several engineering economics problems to the
attendees. The goal of this session was to introduce sample prob-
lems concerning the time value of money, and review the formu-
las, tables, and methodologies to solve such problems.
Submitted photo
Iftikhar Madni, CCE, New Jersey Section President, receives a certificate
of appreciation from Debbie Dempsey, New Jersey Section Vice-President.
Mr. Madni presented the Section’s February program on cost engineering
problems as preparation for the certification exam.
Rocky Mountain Section
The speaker for the March meeting of the Rocky Mountain
Section was Ron Rowbottom, manager of health, safety and work-
ers compensation at Ball Packaging Corporation. He spoke on
the Costs and Value of Health and Safety in Impacting the
"Bottom Line." Mr. Rowbottom looked at the cost potentials and
the cost reduction impacts that derive from a proactive, realistic
approach to health and safety. In addition, he overviewed the
current health and safety landscape to look at both traditional and
newer innovative approaches to providing a safe and healthy work
environment.
 HOW TO SUBMIT SECTION NEWS TO THE
COST ENGINEERING JOURNAL
All submissions should be e-mailed to editor@aacei.org.
Information may be included in the body of the e-mail or as an
attachment. Microsoft Word files are the preferred format.
All photos should be sent as PC tiff or jpg files at 300 dpi. If
submitting at only 72 dpi, please send the photo as large as
possible as conversion will reduce its size. Include the names and
titles of each person shown in any photos.

Note on Section identification in submissions:

Submitted photo
Ron Rowbottom talks about “The Costs and Value of Health and Safety in
Impacting the ‘Bottom Line’” at the March meeting of the Rocky
Mountain Section.
In the write ups submitted to AACE International for the
Bulletin section of Cost Engineering journal, as well as in
Section newsletters and website articles, many times AACE
International Sections are referred to as chapters. The correct
reference should always be to a Section. AACE International
does not have chapters. Please do not refer to Sections as
chapters.

South Central California Section Note on the listing of dates:

The newly formed South Central California Section con-
ducted its first formal meeting on April 13. In addition to many
of our founding members, a number of new people attended.
This was quite an exciting event for all of those who worked
toward board approval of the new section petition. A social hour
with much networking and introductions was followed by dinner
and the technical presentation. The speaker was Zartab Z.
Quraishi, PE CCE, who is a director with C.A. Rasmussen, Inc.
of Simi Valley, CA. He has 24 years of experience in the engi-
neering and construction field, held responsible positions in
planning, scheduling, estimating, claims analysis, litigation sup-
port, and teaches at UCLA extension. His presentation discussed
the most acceptable method of performing construction project
delay analysis. He also described some of the faulty critical path
delay analysis techniques that have been employed. This pres-
entation addressed both contractor and owner concerns with
respect to delay.
If an event is during the month of publication, it will be
listed as an upcoming event even if members will not receive
their journal in the mail until after the listed event. The journal
goes to press about a month in advance of delivery, the issue date
is always the first of each month, and the electronic version
should be posted by that date.
AACE International reserves the right to edit all submissions
and to refuse to publish any submissions determined by the
editor or executive director to not meet the standards of the
journal.
Anyone with questions on submitting copy or photos may
contact Managing Editor Marvin Gelhausen at
mgelhausen@aacei.org, or Graphic Designer/Editor Noah
Kinderknecht at nkinderknecht@aacei.org.

Submitted photo
On April 13, Zartab Z.
Quraishi, PE CCE, shown
left, presented the first pro-
gram at the newly formed
South Central California
Section. Mr. Quraishi is a
director with C.A. Rasmussen,
Inc. of Simi Valley, CA.
Submitted photo
To celebrate the first formal
meeting of the newly formed
South Central California
Section, a drawing was con-
ducted for a copy of the newly
revised ‘Skills and Knowledge
of Cost Engineering.’ Meeting
facilitator Daniela Andrade is
shown presenting the prize to
winner Melvin Earley.

Cost Engineering Vol. 47/No. 5 MAY 2005 41

 AACE International
Headquarters Contact List
209 Prairie Avenue, Suite 100
Morgantown, WV 26501
ph: 800.858.COST fax: 304.291.5728
Interim Executive Director
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e-mail: cmiller@aacei.org

Staff Director, Education and

Administration
Charla Miller
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Staff Director, Technical Operations

Christian Heller
e-mail: cheller@aacei.org

Manager, Finance
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e-mail: crogers@aacei.org

Assistant Manager, Finance

Paola Tomasiak
e-mail: ptomasiak@aacei.org

Manager, Marketing and Meetings

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e-mail: tjefferson@aacei.org Get more than a 25% discount
by purchasing the paper versions
Administrator, Certification and Education
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Administrator, Membership and Section Certification Study Guide, 2nd
Services
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Bought separately, these books
Customer Service Assistant would cost: $104.00 for mem-
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42 Cost Engineering Vol. 47/No. 5 MAY 2005

 A r ticle Reprints and Per missions

Cost Engineering Journal, Volume 47/Number 5, May 2005

Pages 14-19 Pages 22-25

Design/Build Selection Using Earned Value
Readers of the Cost Engineering
journal can purchase copies of selected
Process — Art or Science? Management Indexes as Team
articles that are published with an
Talal Abi-Karam, PE CCE Development Factor and a
The Design/Build method is an innova-
AACE International reference number tive project delivery system that is revolutioniz- Compensation Tool
at the end of the article. Articles can be ing the delivery of private and public works Victoria A. Flores, CCE and Gary E. Chase
delivered in print form or in Adobe projects. Advantages include a reduced project The objective of this article is to present
Acrobat (PDF) format. delivery time, costs, and reduced claims. The the main components of the development of a
Please refer to the AACE selection of a Design/Builder in the public project team and the motivational characteris-
works sector is a complex process that has tics inherent to team work. It also looks at an
International reference number when
required a number of US states to modify their interrelation proposal between the earned
contacting our Publications Sales procurement laws, state statutes, and licensing value analysis and team development through
department. laws. Although Design/Build is one of the most the SPI and CPI indexes. These are obtained
popular integrated alternative delivery meth- by tool use and team development models and
To Order ods, it does not have well-established contrac- the compensation and reward in the project.
Contact: AACE International Publications tor selection procedures. The selection of a This reduces the subjectiveness of humans
Sales at pubsales@aacei.org Design/Builder can be based solely on qualifi- resource in the project evaluation. The article
cation, solely on price, or a combination of presents a brief report about team development
price/qualification. Even with qualification- and compensation policies, as well as an intro-
Reprint Prices: based selection (QBS), the selection process duction to the earned value concept, aiming to
Quantity Member/Non-Member may be subjective, since various state agencies align the approached concepts.
1-9 copies $5.00/$7.50 (DOT's) and municipalities have different Reprint 21069
10-49 $4.50/$7.00 selection criteria for pre-qualifying and evaluat-
50-79 $4.00/$6.50 ing bids of the perceptive Design/Build teams.
Pages 28-34
80-99 $3.50/$6.00 This article examines the various selection
methods of Design/Build teams in the public The Goalposts for Project
100-499 $3.00/$5.50
works sector. It addresses the legal framework Success Have Moved —
for selecting Design/Build teams, including
To Contact Us qualification-based selection (QBS), selection A Marketing View
AACE International criteria, and weighting of criteria. P.S. Kupakuwana and G.J.H. van der Berg
209 Prairie Avenue, Suite 100 Reprint 21068 Traditionally, a successful project was
Morgantown, WV 26501 seen as one in which the triad of time, budget,
USA and specification was complied with at a profit.
Phone: 304.296.8444 Current project literature places more
emphasis on customer satisfaction as a fourth
Fax: 304.291.5728
important success parameter. This article
discusses project management services and
For Information On Other Reuse focuses on what constitutes project success.
Requests This type of project is named the new project
If you are seeking permission to in this article and a set of new project rules is
copy, quote, or translate into another arrived at. The article also takes a services
language any material from any issue of marketing view and examines the customer's
motivation in appointing a project manager.
the Cost Engineering journal, please
Reprint 21070
contact our Managing Editor, Marvin
Gelhausen at mgelhausen@aacei.org

Cost Engineering Vol. 47/No. 5 MAY 2005 43

 C
Calendar of Events
alendar of Events
May 2005
9-13 Comprehensive 5-Day Training
Program for Business Energy
Professionals, The Association of Energy
Engineers (AEE), Hyatt Rosemont,
Chicago, IL
Contact: www.aeecenter.org/seminars
15-17 PTI’s Fourth Annual Conference
& Exhibition, The Post Tensioning
Institute (PTI), Westin Tabor Center,
Denver, CO
Contact: www.post-tensioning.org
20 Annual Seminar- “Champions of
Project Controls - 2nd Edition”, AACE
International’s Chicago Midwest Section
Contact: Don Giegerich
e-mail: don_giegerich@URSCorp.com
23-25 Fundamentals of Indoor Air
Quality: Core Skills for the Building
Professional, The Association of Energy
Engineers (AEE), Crowne Plaza Atlanta
Buckhead, Atlanta, GA
Contact: phone (770) 925-9633
fax (770) 381-9865
www.aeecenter.org
23-27 Short Courses, The American
Society of Mechanical Engineers (ASME)
and the American Institute of Chemical
Engineers (AIChE), Toronto, Canada and
Houston, TX
Contact: ASME Information Central
phone 1-800 843-2763 or
(201) 882-1167
fax (201) 882-1717 or
(201) 882-5155
e-mail: infocentral@asme.org
29-31 Kuwait First Annual Value
Engineering Conference and Exhibition,
Promedia International, Kuwait
Contact: www.kuwaitve.com
AACE International, 209 Prairie Avenue, Suite 100, Morgantown, WV 26501 USA phone: 304-296-8444
fax: 304-291-5728 e-mail: mgelhausen@aacei.org or nkinderknecht@aacei.org
44
June 2005
20-23 Ecobuild America the
Environmental Systems Technology
Conference & Exhibition, Ecobuild
America, Disney’s Coronado Springs
Resort, Orlando, FL
Contact: www.ecobuildamerica.com
23-26 AACE International Education
Seminars, AACE International,
New Orleans, LA
Contact: info@aacei.org
www.aacei.org
26-29 AACE International’s 49th
Annual Meeting, AACE International,
New Orleans, LA
Contact: info@aacei.org
www.aacei.org
30-31 AACE International Education
Seminars, AACE International,
New Orleans, LA
Contact: info@aacei.org
www.aacei.org
July 2005
16 AACE International’s 2nd Quarter
(2Q) Certification Exam
Contact: info@aacei.org
www.aacei.org
25-29 12th ISPE/CE2005 International
Conference on Concurrent
Engineering:Research and Application
(CE2005), the International Society of
Productivity Enhancement, Renaissance
Worthington Hotel, Fort Worth/Dallas, TX
Contact: www.ce2005.org
September 2005
14-16 World Energy Engineering
Congress (WEEC), Association of Energy
Engineers (AEE), Austin Convention
Cost Engineering Vol. 47/No. 5 MAY 2005
Center, Austin, TX
Contact:www.energy-
congress.com
20-23 ISEC-03 - Third International
Structural Engineering and Construction
Conference, Tokuyama College of
Technology and ISEC, Tokuyama College
of Technology, Shunan, Japan
Contact:www.tokuyama.ac.jp/english/ind
ex.html
November 2005
5-11 2005 ASME International
Mechanical Engineering Congress and
Exposition, The American Society of
Mechanical Engineers (ASME), Walt
Disney World Swan & Dolphin Hotel,
Orlando, FL
Contact:Kim Punter
phone (212) 591-8258
e-mail punterk@asme.org
April 2006
23-26 Ist ICEC and IPMA Global
Conference on Project Management, The
International Cost Engineering Council
(ICEC) and the International Project
Management Association (IPMA) ,
Cankargev dom, Congress Center,
Lujubljana, Slovenia
Contact:www.icec-ipma2006.org
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future calendar listings at least 60 days
in advance of desired publication.
website: www.aacei.org