To date (Nov 18, 2014), AACE International's RPs includes the following documents:COST ENGINEERING TERMINOLOGY RP 10S-90

(Rev. Nov 14, 2014)AACE International Recommended Practice No. 10S-90TCM Framework: General ReferenceThis document provides terms commonly used in all facets of cost engineering and in total costmanagement. Unless otherwise noted, all terms contained in this document have been developed byvarious AACE International technical subcommittees, special interest groups, or project teams. All termshave been subject to a thorough review process, followed by approval by the AACE InternationalTechnical Board.

REQUIRED SKILLS AND KNOWLEDGE OF COST ENGINEERING RP 11R-88(Rev. June 18, 2013)AACE International Recommended Practice No. 11R-88TCM Framework: General ReferenceThis recommended practice has the following purposes: 1.) define what core skills and knowledge of costengineering a person is required to have in order to be considered a professional practitioner, and indoing so, 2.) establish the emphasis of core subjects for AACE International education and certificationprograms.It is also hoped that enterprises will find this useful as a reference or guide for developing their owncompetency models. Knowledge is an understanding gained through experience or study, and skills areabilities that transform knowledge into use. Core subjects are those whose usage is occasional tofrequent and are considered by AACE International as being required for professional practitioners of costengineering to know and be able to use.This recommended practice lists these core subjects and provides general performance statements (i.e.,be able to describe, perform, etc.) to represent the level of proficiency expected in each subject area.These statements are representative or guiding examples only.

MODEL MASTER'S DEGREE PROGRAM WITH EMPHASIS IN COSTENGINEERING RP 12R-89(Rev. November 1990)AACE International Recommended Practice No. 12R-89TCM Framework: General Reference

RECOMMENDED METHOD FOR DETERMINING BUILDING AREA RP 13S-90(Rev. November 1990)AACE International Recommended Practice No. 13S-90TCM Framework: 7.3: Cost Estimating and Budgeting

RESPONSIBILITY AND REQUIRED SKILLS FOR A PROJECT PLANNING ANDSCHEDULING PROFESSIONAL RP 14R-90(Rev. September 19, 2006)AACE International Recommended Practice No. 14R-90TCM Framework: 7.2: Schedule Planning and Development

PROFITABILITY METHODS RP 15R-81(Rev. July 16, 2008)AACE International Recommended Practice No. 15R-81TCM Framework: 3.3: Investment Decision Making 6.1: Asset Performance AssessmentScopeThis Recommended Practice (RP) of AACE International defines specific practices for determining theprofitability of investments. The methods offered are general, since not all profitability techniques can orshould be included in an RP. In its broadest sense, profitability is a measure of value added. Increasedprofitability thus reflects greater economic good for society. There is no economic progress withoutprofitability.

PurposeThis RP is intended to provide broad guidelines, not standards, for profitability methods that mostseasoned practitioners in most industries would consider to be reliable and would generally endorse.Profitability methods with less general applicability, e.g., the revenue requirement technique used byelectrical utilities or the benefit-cost ratio used in the public sector, are not included in this RP.BackgroundProfitability methods are critical tools for assessing asset performance and making effective investmentdecisions. These processes are central to portfolio and program management in that selecting the rightcapital or maintenance projects can be as important to enterprise success as effectively executing anyparticular project.

CONDUCTING TECHNICAL AND ECONOMIC EVALUATIONS: AS APPLIEDFOR THE PROCESS AND UTILITY INDUSTRIES RP 16R-90(Rev. April 1991)AACE International Recommended Practice No. 16R-90TCM Framework: 3.2: Asset Planning 3.3: Investment Decision Making

COST ESTIMATE CLASSIFICATION SYSTEM RP 17R-97(Rev. November 29, 2011)AACE International Recommended Practice No. 17R-97TCM Framework: 7.3: Cost Estimating and Budgeting

COST ESTIMATE CLASSIFICATION SYSTEM: AS APPLIED INENGINEERING, PROCUREMENT, AND CONSTRUCTION FOR THE PROCESSINDUSTRIES RP 18R-97(Rev. November 29, 2011)AACE International Recommended Practice No. 18R-97TCM Framework: 7.3: Cost Estimating and BudgetingThe Cost Estimate Classification System provides guidelines for applying the general principles ofestimate classification to asset project cost estimates. Asset project cost estimates typically involveestimates for capital investment, and exclude operating and life-cycle evaluations. The Cost EstimateClassification System maps the phases and stages of asset cost estimating together with a genericmaturity and quality matrix that can be applied across a wide variety of industries.17R-97 provides a generic methodology for the classification of project cost estimates in any industry,while 18R-97 provides extensions and additional detail for applying the principles of estimateclassification specifically to project estimates for engineering, procurement, and construction (EPC) workfor the process industries.An intent of the guidelines is to improve communication among all of the stakeholders involved withpreparing, evaluating, and using project cost estimates.

ESTIMATE PREPARATION COSTS: AS APPLIED FOR THE PROCESSINDUSTRIES RP 19R-97(Rev. June 19, 1998)AACE International Recommended Practice No. 19R-97TCM Framework: 7.3: Cost Estimating and BudgetingThis recommended practice presents benchmark information on the costs to prepare cost estimates (forengineering, procurement, and construction) in the process industries. It includes qualitative andquantitative lessons that cost engineers and estimators can use to benchmark their cost estimatingexperiences against. The data on preparation costs was used to develop a parametric cost model thatcan be used to estimate the cost of preparing estimates. The effort or cost to prepare a cost estimate is asecondary characteristic of a cost estimate classification. This Recommended Practice supports AACEInternationals Recommended Practice 18R-97 Cost Estimate Classification System - as Applied inEngineering, Procurement, and Construction for the Process Industries.

PROJECT CODE OF ACCOUNTS RP 20R-98(Rev. January 27, 2003)

AACE International Recommended Practice No. 20R-98TCM Framework: 7.1: Project Scope and Execution Strategy Development 7.2: Schedule

Planning and Development 7.3: Cost Estimating and BudgetingThis guideline establishes the basic principles of codes of accounts (COA) for projects in any industry. Itexamines key characteristics including usage, content, structure and format and describes benefits ofestablishing standard COAs. Topics such as activity-based costing and work breakdown structures asthey relate to COAs are addressed. The issues of properly defining a WBS and how it should bestructured are outside the scope of this guideline. COAs are applicable to all phases of the asset lifecycle, however, this guideline specifically addresses the project execution phases of asset designdevelopment through to start of normal operation.A project code of accounts is a coded index of project cost, resource and activity categories. A completeCOA includes definitions of the content of each account code and is methodically structured to facilitatefinding, sorting, compiling, summarizing, defining and otherwise managing information the code is linkedto. The information is used to support total cost management practices such as cost estimating, costaccounting, cost reporting, cost control, planning and scheduling. Other names used for COAs are codingmatrices, coding structures, charge accounts, asset or material classification accounts, value categories,cost elements, work breakdown structures, resource breakdown structures and activity breakdownstructures.

PROJECT CODE OF ACCOUNTS: AS APPLIED IN ENGINEERING,PROCUREMENT, AND CONSTRUCTION FOR THE PROCESS INDUSTRIESRP 21R-98(Rev. January 27, 2003)AACE International Recommended Practice No. 21R-98TCM Framework: 7.1: Project Scope and Execution Strategy Development 7.2: Schedule

Planning and Development 7.3: Cost Estimating and BudgetingThis guideline is an industry-specific addendum to AACE International's generic guideline for project codeof accounts (Recommended Practice No. 20R-98). This document describes recommended practices forcodes of accounts (COA) as applied to engineering, procurement, and construction (EPC) projects in theprocess industries. "Process industries" are those with facilities whose main function is to perform aprocess. This includes chemical, petrochemical, hydrocarbon, pulp and paper, pharmaceutical, powergeneration, thermal, metallurgical, assembly, fabrication, and other processing. The primary characteristicof these industries, as it relates to codes of accounts, is that process or manufacturing equipment is thecore or primary physical component of the facility. Equipment differentiates these projects fromcommercial construction and infrastructure where the core component is a structure, from softwaredevelopment projects where the core component is programming code, and so on.COAs are applicable to all phases of the asset life cycle, but this guideline specifically addresses the EPCfor creation, modification, or termination of a process facility. This guideline does not apply to code ofaccounts to support ongoing operations of process facilities. Properly defining a work breakdownstructure (WBS), and other project structures, and deciding how they should be structured are outside thescope of this document.A project code of accounts is a coded index of project cost, resource, and activity categories. A completeCOA includes definitions of the content of each account code and is methodically structured to facilitatefinding, sorting, compiling, summarizing, defining and otherwise managing the project information that islinked to the code. The information is used to support total cost management practices such as costestimating, cost reporting, cost accounting, planning, and scheduling. Refer to 20R-98 for a morecomplete description of the principles of COAs.

DIRECT LABOR PRODUCTIVITY MEASUREMENT: AS APPLIED INCONSTRUCTION AND MAJOR MAINTENANCE PROJECTS RP 22R-01(Rev. April 26, 2004)AACE International Recommended Practice No. 22R-01TCM Framework: 9.2: Progress and Performance MeasurementThis recommended practice of AACE International describes a direct method to measure, monitor andoptimize construction and maintenance project labor productivity. The method described is statisticalsampling of the work process, or: work sampling. The work process is made up of steps and activities thattake input resources, add value, and produce the completed project. Understanding the capability of the

process, or 'management system,' to produce efficiently is important for project planning and control.Sampling is a cost-effective way to provide information about the performance of the work process, i.e.,about 'how' the work is done, and how to do it better. Work sampling complements conventional projectmanagement methodology, which typically tracks 'what' work is done.Sampling provides project managers, supervisors, and the workforce with objective feedback re: theefficiency of the work process (not of individual workers, which is part of the foreman's job): and the abilityto respond quickly to adjust. In addition, it provides a measure of management's ability to effectively plan,coordinate, and control project execution. Analysis of the sampling data allows for prompt removal orreduction of roadblocks, optimizing the construction work process through redesign and innovation.Streamlining the work process ensures that performing productive work is made more convenient for theworkforce, ensuring that, at all times, crafts and technicians have all the necessary tools, materials, parts,supplies, information, supervisory support and personal needs readily available. Work sampling, properlyapplied, recognizes that productivity results from an optimal work process, i.e., from 'managing smarter,'not from people working harder.Construction labor productivity is a measure of work process efficiency. It can be defined as the ratio ofthe value labor produces to the value invested in labor. Productivity increases as needed labor resourcesare minimized and wasted efforts eliminated from the work process. This definition and the practicecovered here treats productivity as a direct, absolute measure to be optimized.

IDENTIFICATION OF ACTIVITIES RP 23R-02(Rev. May 3, 2007)AACE International Recommended Practice No. 23R-02TCM Framework: 7.2: Schedule Planning and DevelopmentThis recommended practice is for use by the project team members involved in the schedule planningprocess for any project type and in any industry. Many individuals contribute in the identification ofactivities, and having an experienced planner coordinate the process improves final quality and addsvalue to the planning process.As a recommended practice of AACE International, identification of activities in schedule planning anddevelopment provides guidelines for the conversion of scope definition to specific activities and tasksrequired to complete a program or project. Identification of activities is a key planning step that takesplace early in the schedule planning and development process which also includes estimating durations,determining and defining resources, and identifying external project constraints.The scope definition of a program or project is generally described in various planning and technicaldocuments, databases, or other deliverables. To begin the planning process, information in the scopedocuments must first be translated into manageable activities. For example, the scope may include theinstallation of a length of pipeline. Installing that pipeline may require designing, procuring, cutting,welding, erecting, and inspection activities. This process of expanding the high level scope or functionaldefinition into the detailed work required for completion is the practice of "identification of activities".

DEVELOPING ACTIVITY LOGIC RP 24R-03(Rev. March 26, 2004)AACE International Recommended Practice No. 24R-03TCM Framework: 7.2 Schedule Planning and DevelopmentAs a recommended practice of AACE International, development of activity logic (also called networklogic) in planning and scheduling provides guidelines for the sequencing of activities in a logical waygenerally before duration estimating can be performed. Logic is generally determined before durationsare considered. Logic development methods include precedence diagramming, or arrow diagrammingmethods. Logic is the set of activities and dependency relationships between them. Logic dictates theplanned sequencing of activities. A network diagram is often used to illustrate the logic.Planning and scheduling are not the same. Planning is determining how the work will be done, whilescheduling is the analysis and calculation of start and finish dates.Logic enables the combination of activities to be arranged in one of the aforementioned formats so that acompletion date can be established. Logic also enables backward passes to arrive at optimal overallschedule duration.This recommended practice is for use by project team members involved in planning process, a

continuation of activity identification process (reference TCM Framework section 8.2). As in identificationof activities, many individuals contribute to the development of activity logic. Having an experiencedplanner coordinate the process improves final quality, and adds value to the planning process.

ESTIMATING LOST LABOR PRODUCTIVITY IN CONSTRUCTION CLAIMSRP 25R-03(Rev. April 13, 2004)AACE International Recommended Practice No. 25R-03TCM Framework: 6.4 Forensic Performance AssessmentThis Recommended Practice focuses on identification of various methods for estimating lost laborproductivity in construction claims. Often the claim is the result of one or more change order requests thatcannot be fully resolved to capture their full and final effect on the entire project cost and schedule.Specifically, this Recommended Practice examines the issue in terms of claims for cost recovery of lostproductivity. Therefore, the purpose of the Recommended Practice is to

Identify Lost Productivity Estimating Methodologies: That is, survey as many of the variousmethodologies employed in litigation throughout North America as can be identified;

Rank Order the Methodologies: That is, based on reliability, professional acceptance, case lawand construction claims literature, rank the identified methodologies from most to least reliablewith respect to documenting estimating damages in claim situations. While it may not bepossible to state with certainty which methods are absolutely most or least reliable, it can bestated that under certain sets of circumstances some methods are generally considered morereliable than others. (CAUTION: This Recommended Practice was prepared on the basis of theauthor's understanding of Canadian and U.S. case law. It is recommended that anyonepreparing a lost productivity claim seek appropriate legal advice on the methodology to be used.This is especially true if the claim is being pursued under national law other than Canada or theUnited States.)

Define and Discuss Each Methodology: That is, discuss the method and how it is employed.Also, when possible, discuss the strong and weak points of each method;

Identify Selected Studies Applicable to Each Methodology: Herein, identify as many studies andprofessional or technical papers as possible which will help the practitioner in learning moreabout and/or employing a particular method.

It needs to be noted that this Recommended Practice does not define in detail how one should properlyperform the various analytical methods identified herein. The Recommended Practice gives a briefdescription of each method only in an effort to help claimants properly identify the method. That is,different claimants may have differing nomenclature for the same methodology. In this case, the briefdescription of each method is intended to help overcome this situation.

SCHEDULE CLASSIFICATION SYSTEM RP 27R-03(Rev. November 12, 2010)AACE International Recommended Practice No. 27R-03TCM Framework: 7.2 Schedule Planning and DevelopmentThis recommended practice (RP) is intended to serve as a guideline, not a standard. As a recommendedpractice of AACE International, the intent of the guideline is to improve the understanding and thecommunication among stakeholders involved with preparing, evaluating, and using project schedules.Various enterprises often misinterpret the quality and value of the information available to prepareschedules and the various methods employed during the scheduling process. It is understood that eachenterprise may have its own project scheduling processes and terminology, and may classify schedulesin their own particular ways. This guideline provides a generic and generally acceptable classificationsystem that can be used as a basis of comparison. If an enterprise or organization has not formallydocumented its own schedule classification system, then this RP guideline can be used to provide anacceptable basis.This recommended practice introduces a schedule classification system, which provides the guidelinesfor applying the general principles of schedule classification to project schedules. A scheduleclassification system maps the phases and stages of scheduling with a generic maturity and qualitymatrix that can be applied across a wide variety of industries. It is intended to be applied to any schedulein any industry, and across all stakeholders including government and academia.

A separate recommended practice provides a guideline for describing the specific use of schedule levelsto project schedules. Schedule levels provide the details necessary to recognize the characteristics ofeach of the schedule levels for the purposes of communicating, executing (controlling and monitoring)and reporting the specific details of the project. Schedule levels consider reporting requirements for eachof the stakeholders and the appropriate amount of information necessary for effective communication anddecisions.This recommended practice has been developed such that it:

Provides common understanding of the concepts involved with classifying project schedulesregardless of the type of enterprise or industry

Fully defines and correlates the major characteristics used in classifying schedules so thatenterprises may determine how their practices compare to these guidelines

Uses degree of project definition as the primary characteristic to categorize schedule classes Reflects generally accepted practices in the cost engineering profession

This classification guideline is intended to help those involved with project schedules to avoidmisinterpretation of the various classes of schedules and to avoid their misapplication andmisrepresentation. Improving communications about schedule classifications reduces business costs andproject cycle times by avoiding inappropriate business and financial decisions, actions, delays, ordisputes caused by misunderstandings of schedules and what they are expected to represent.

DEVELOPING LOCATION FACTORS BY FACTORING: AS APPLIED INARCHITECTURE, ENGINEERING, PROCUREMENT AND CONSTRUCTIONRP 28R-03(Rev. October 19, 2006)AACE International Recommended Practice No. 28R-03TCM Framework: 7.3: Cost Estimating and Budgeting 10.4: Project Historical Database

ManagementThis recommended practice provides a generic method of developing location factors in support of theTotal Cost Management (TCM) cost estimating and budgeting and database management processes forconstruction related projects. The method applies to construction projects of all types including buildings,infrastructure, utilities, process plants, and so on. This generic method provides a basis for users to tailortheir own detailed process around their own needs and computing capabilities. Location factors are usedduring preliminary project evaluations (i.e., Class 5 or 4 estimates). They are not intended to be usedwhen preparing appropriation-quality estimates (i.e., Class 3 or better estimates).

FORENSIC SCHEDULE ANALYSIS RP 29R-03(Rev. April 25, 2011)AACE International Recommended Practice No. 29R-03TCM Framework: 6.4: Forensic Performance AssessmentThe purpose of the AACE International Recommended Practice 29R-03 Forensic Schedule Analysis isto provide a unifying reference of basic technical principles and guidelines for the application of criticalpath method (CPM) scheduling in forensic schedule analysis. In providing this reference, the RP willfoster competent schedule analysis and furnish the industry as whole with the necessary technicalinformation to categorize and evaluate the varying forensic schedule analysis methods. The RPdiscusses certain methods of schedule delay analysis, irrespective of whether these methods have beendeemed acceptable or unacceptable by courts or government boards in various countries around theglobe.This RP is not intended to establish a standard of practice, nor is it intended to be a prescriptivedocument applied without exception. Therefore, a departure from the recommended protocols should notbe automatically treated as an error or a deficiency as long as such departure is based on a consciousand sound application of schedule analysis principles. As with any other recommended practice, the RPshould be used in conjunction with professional judgment and knowledge of the subject matter. While therecommended protocols contained herein are intended to aid the practitioner in creating a competentwork product it may, in some cases, require additional or fewer steps.

IMPLEMENTING PROJECT CONSTRUCTABILITY RP 30R-03(Rev. May 20, 2009)AACE International Recommended Practice No. 30R-03

TCM Framework: 11.5: Value Management and Value Improving Practices (VIPs)Constructability is the integration of construction expertise into all phases of the project to benefit cost,schedule, quality, and overall project objectives. The successful use of construction knowledge andexpertise improves for and probability of project success. Constructability reviews (CRs) should beconducted at key points in the project life cycle: in the planning phase, early in the design phase, prior tothe procurement phase and again prior to the mobilization phase for construction. CRs should hold true tothe designer's intent, and the design concept is easiest molded to good constructability early in the designphase.Constructability, as addressed in this RP, is applicable to projects in any industry in any location (e.g.,architectural, process plant, transportation, utilities, offshore, etc.) that include construction work of anyscope. In total cost management (TCM), constructability is one of many value improving practices (VIPs)such as manufacturability analysis; reliability, availability and maintainability (RAM) analysis; and so on.[9]Constructability is also useful as a risk management practice that supports risk mitigation. However, theseother VIPs and risk management practices are not directly included in this RP.AACE is not the sole or even primary steward of recommended constructability practice; there are severalleading organizations included in the reference section. However, constructability is a skill and knowledgearea of cost engineering because, as a VIP, constructability practices require the assessment of cost,schedule, risks and other project attributes for which AACE is the leading organization. This RP highlightsthe role of cost engineering in the practice.This RP will discuss how to implement a constructability program in order to maximize the positive impacton the project. It also provides project examples illustrating the success of those properly implementedefforts. Integrating constructability into project plans can result in better safety, lower costs, betterproductivity, earlier completion and start-ups for ultimately better projects.

REVIEWING, VALIDATING, AND DOCUMENTING THE ESTIMATE RP 31R-03(Rev. May 12, 2009)AACE International Recommended Practice No. 31R-03TCM Framework: 7.3: Cost Estimating and BudgetingScopeThis Recommended Practice (RP) of AACE International defines the basic elements of and providesbroad guidelines for the cost estimate review, validation and documentation process. Estimate review anddocumentation is a step in the cost estimating and budgeting process of the Total Cost Management(TCM) Framework. This RP is applicable to all estimate types for any industry and is intended for thoseresponsible for and/or participating in an estimate review. Expert knowledge is not required to understandor use this RP.PurposeThis RP is intended to provide guidelines (i.e., not a standard) for reviewing, validating and documentingestimates. Most practitioners would consider these guidelines as good and reliable practices. It isrecommended to consider using these guidelines where applicable.BackgroundCost estimates typically represent a complex compilation and analysis of input from many projectstakeholders. To ensure the quality of an estimate, budget or bid, a review process is required to ensurethat the estimate meets project and organization requirements. The project plan typically requires that thecost estimate:

Reflect the project strategy, objectives, scope and risks Be suitable for a given purpose (e.g., cost analysis, decision making, control, bidding, etc.) Address the stakeholders financial and performance requirements Ensure that all parties agree on and understand the estimates basis, content and outcome,

including the estimates probabilistic characteristics (e.g., range, cost distribution, etc.).DETERMINING ACTIVITY DURATIONS RP 32R-04

(Rev. January 14, 2012)AACE International Recommended Practice No. 32R-04TCM Framework: 7.2: Schedule Planning and DevelopmentThis recommended practice (RP) for Determining Activity Durations is intended to provide a guideline and

a resource, not to establish a standard. As a recommended practice of AACE International, it providesguidelines for the project scheduler to determine schedule activity durations and understand thelimitations and assumptions involved in such determination as part of the total cost management (TCM)project planning, scheduling forecasting, and change management processes (7.2).This recommended practice provides information about determining the original durations for activities fordeveloping the project schedule and general considerations related to the establishment of remainingdurations while updating the project schedule. Specific considerations regarding the topic of establishingthe activities remaining durations for schedule performance assessment are not within the scope of thisRP. Therefore the information presented here generally applies to determining original activity durations;and general considerations for the establishment of remaining durations be provided only as appropriate.This recommended practice offers methods for determining original activity durations through the analysisof past project data with anticipated future performance data. It also incorporates an iterative effect-analysis of constraints on activity duration.

BASIS OF ESTIMATE RP 34R-05(Rev. May 2, 2014)AACE International Recommended Practice No. 34R-05TCM Framework: 7.3: Cost Estimating and BudgetingAACE Internationals Total Cost Management (TCM) Framework identifies a basis of estimate (BOE)document as a required component of a cost estimate. As a recommended practice (RP) of AACEInternational, the template outlined in the following sections provides guidelines for the structure andcontent of a cost basis of estimate.In the TCM Framework, the BOE is characterized as the one deliverable that defines the scope of theproject, and ultimately becomes the basis for change management. When prepared correctly, any personwith capital project experience can use the BOE to understand and assess the estimate, independent ofany other supporting documentation. A well-written BOE achieves those goals by clearly and conciselystating the purpose of the estimate being prepared (i.e. cost study, project options, funding, etc.), theproject scope, pricing basis, allowances, assumptions, exclusions, cost risks and opportunities, and anydeviations from standard practices. In addition the BOE is a documented record of pertinentcommunications that have occurred and agreements that have been made between the estimator andother project stakeholders.A well prepared basis of estimate will: Document the overall project scope. Communicate the estimators knowledge of the project by demonstrating an understanding of scope andschedule as it relates to cost. Alert the project team to potential cost risks and opportunities. Provide a record of key communications made during estimate preparation. Provide a record of all documents used to prepare the estimate. Act as a source of support during dispute resolutions. Establish the initial baseline for scope, quantities and cost for use in cost trending throughout theproject. Provide the historical relationships between estimates throughout the project lifecycle. Facilitate the review and validation of the cost estimate.This RP is intended to be a guideline, not a standard. It is understood that not all organizations thatprepare estimates employ the same processes and practices, and therefore, may opt to use thisinformation either in part or in its entirety.

DEVELOPMENT OF COST ESTIMATE PLANS AS APPLIED FOR THEBUILDING AND GENERAL CONSTRUCTION INDUSTRIES RP 35R-09(Rev. Oct 23, 2013)AACE International Recommended Practice No. 35R-09TCM Framework 7.3: Cost Estimating and BudgetingThis recommended practice (RP) is a guideline for the development of cost estimate plans for the buildingand general construction industry. With reference to the Total Cost Management (TCM) Framework, thisdocument addresses the need to develop effective estimate plans.

This RP is intended to provide a guideline (i.e., not a standard) for establishing and communicating howto prepare, review and approve an estimate plan.The basic principles of cost estimate plans can be applied to various contracting strategies, projectexecution approaches and asset owner configurations in the building and general construction industries.Some key principles are: Preparation of an estimate plan helps to ensure successful estimate completion in an effective andtimely manner. Engaging key stakeholders in estimate planning prior to starting the estimate improves the likelihood ofmeeting estimate objectives. The estimate plan defines what information is required from who and when. An approved estimate plan provides a duly

DEVELOPMENT OF COST ESTIMATE PLANS AS APPLIED INENGINEERING, PROCUREMENT, AND CONSTRUCTION FOR THE PROCESSINDUSTRIES RP 36R-08(Rev. June 12, 2009)AACE International Recommended Practice No. 36R-08TCM Framework: 7.3: Cost Estimating and BudgetingPurposeThis recommended practice (RP) of AACE International (AACE) is a guideline for development of costestimate preparation plans for engineering, procurement and construction (EPC) projects in the processindustries. The purpose of a cost estimate preparation plan (herein referred to as estimate plan) is toestablish and communicate how the preparation, development, review and approval of the estimate willbe completed.BackgroundAACE Internationals Total Cost Management (TCM) Framework section 7.3.2.1 Plan for Cost Estimatingand Budgeting highlights the need to develop estimate plans. This RP delineates industry specificpractices for development of an estimate plan as they are applied to EPC projects in the processindustries. (A future AACE International RP will provide a guideline for development of a generic costestimate plan.) Cost estimating in the hydrocarbon processing industries (e.g.; chemical, refining,petroleum production facilities, etc.) has evolved to a relatively advanced state over more than fourdecades of application. These industries have developed many common practices and identified industry-specific best practices through benchmarking and knowledge-sharing. The practices reflected in thisdocument are a result of compiling notes made by industry practitioners, lessons learned and publiclyavailable documents.ScopeWith reference to the TCM Framework, this document addresses the steps before and after the Plan forEstimating and Budgeting step to the extent necessary for an effective estimate plan. This document isprimarily focused on estimates prepared for project sanction purposes of land-based facilities. Typically,project sanction is based on a Class 3 estimate. Estimate plans for other classes of estimates may beadapted from this document. The basic principles are applicable to all contracting strategies and assetowner (herein referred to as owner) configurations. For example, contracting strategies may be in theform of reimbursable engineering with fixed price procurement and construction and/or EPC alliances,etc. Owner configurations may include self-perform, partnerships with a named operating company orconsortiums responsible for managing the project/program and so on. Some key principles are:

Preparation of an estimate plan helps to ensure successful estimate completion in an effectiveand timely manner.

Engaging key stakeholders in the estimate planning process prior to the start of the estimatedevelopment process, improves the likelihood of meeting estimate objectives.

The estimate plan defines what information is required from who and when. An approved estimate plan provides a duly authorized basis to proceed with the estimating

effort, clarifies requirements and responsibilities.SCHEDULE LEVELS OF DETAIL -- AS APPLIED IN ENGINEERING,

PROCUREMENT AND CONSTRUCTION RP 37R-06(Rev. March 20, 2010)AACE International Recommended Practice No. 37R-06

TCM Framework: 7.2: Schedule Planning and DevelopmentPurposeThis recommended practice (RP) is intended to serve as a guideline, not a standard for owners andcontractors to establish a common frame of reference and understanding when describing the level ofdetail for any construction project schedule. This RP identifies four schedule formats based on level ofdetail, and provides descriptions of schedule levels and the intended use of these schedules by projectparticipants.BackgroundThis recommended practice provides descriptions of the schedule levels methods with the intent toimprove the understanding and communication among project participants and stakeholders involved withpreparing and using project schedules. This recommended practice (RP) describes the schedule levelmethods that are prevalent in the construction industry today for reporting and communicating projectschedule plans, results and forecast or "to-go" data to respective stakeholders. This RP excludes "turn-around projects", and does not necessarily apply to line of balance or linear scheduling applications.

DOCUMENTING THE SCHEDULE BASIS RP 38R-06(Rev. June 18, 2009)AACE International Recommended Practice No. 38R-06TCM Framework: 7.2: Schedule Planning and DevelopmentScopeThis recommended practice (RP) provides an outline and describes a format for the various elements ofinformation that may be included in the schedule basis document. This RP describes the importantelements of schedule information that may be included to document the basis and assumptions of thisproject management tool. This recommended practice includes a checklist in the appendix that can beused to confirm that all elements of the basis document have been considered. The schedule basis is adocument that defines the basis for the development of the project schedule and assists the project teamand stakeholders in identifying any key elements, issues and special considerations (assumptions,exclusions, risks/ opportunities, etc.). The project schedule represents the complete logical time-phasedrepresentation of the project plan. The schedule basis document may accompany the submittal of theproject baseline schedule. The schedule basis further substantiates the confidence and degree ofcompleteness of the project schedule in order to support change management, reconciliation, andanalysis. This document also doubles as a tool for assisting any personnel who are transitioning into theproject and may be used in claims situations to illustrate a change of scope.PurposeThis AACE International recommended practice is intended to provide a guideline, not to establish astandard for documenting the schedule basis for the planning of projects. This recommended practice iswritten and intended primarily for use on construction projects by the project team members andstakeholders involved in the planning and scheduling of the project work activities. These RP guidelinesmay be applicable to many other types of projects. The focus of this recommended practice is ondocumenting the necessary elements of the schedule basis. Many project individuals and groupscontribute to the planning and development of the project schedule. By documenting the schedule basis,the project team captures the coordinated project schedule development process, which is by natureunique for most construction projects. This improves the final quality and adds value to the projectbaseline schedule, which serves as the time management navigation tool to guide the project teamtoward successful project completion. The schedule basis also is an important document used to identifychanges during the schedule change management process.BackgroundThe requirement to document the basis of the schedule has been an established procedure for severalyears with many large corporations, and some federal agencies. This recommended practice describesthe important elements of schedule information that may be included to document the basis andassumptions of this project management tool.

PROJECT PLANNING - AS APPLIED IN ENGINEERING AND CONSTRUCTIONFOR CAPITAL PROJECTS RP 39R-06(Rev. December 8, 2011)AACE International Recommended Practice No. 39R-06

TCM Framework: 3.1 Requirements Elicitation and Analysis 3.2 Asset Planning 4.1 ProjectImplementation 7.1 Project Scope and Execution Strategy Development 7.2 Schedule Planning and Development 7.3 Cost Estimating and Budgeting 7.4 Resource Planning 7.5 Value Analysis and Engineering 7.6 Risk Management7.7 Procurement Planning 8.1 Project Control Plan Implementation

PurposeThis recommended practice (RP) to project planning provides guidelines developed primarily forengineering and capital construction projects.AACE International Recommended Practices are intended to provide guidelines, not to establishstandards. This recommended practice is intended to be a guide for the many project team membersinvolved in the planning and scheduling of their work process and can be adapted for any type of projector program where planning is required.This recommended practice is intended to focus on the elements of project planning: who, what, where,when, and how. It also focuses on the actions required by members of the project team in order totranslate that planning effort into a useful project plan that will serve as a management navigation tool toguide the project team to successful project completion. This RP will focus on the actions required by theengineering and construction project team AFTER the development of the clients business requirements,business case, alternatives and assumptions.

CONTINGENCY ESTIMATING: GENERAL PRINCIPLES RP 40R-08(Rev. June 25, 2008)AACE International Recommended Practice No. 40R-08TCM Framework: 7.6: Risk ManagementScopeThis Recommended Practice (RP) of AACE International defines the expectations, requirements, andgeneral principles of practice for estimating contingency, reserves and similar risk funds (as defined in RP10S-90) and time allowances for project cost and schedule as part of the overall risk managementprocess (as defined in TCM Framework Section 7.6). The RP provides a categorization framework andprovides a foundation for, but does not define specific contingency estimating methods that will becovered by other RPs.This RP does not address the general risk management "quantification" steps as might be used forscreening or ranking risks in terms of their probability or impact. While the quantification methods ofcontingency estimating may be similar to those used for screening, the application often differs.PurposeThis RP is intended to provide guidelines (i.e., not a standard) for contingency estimating that mostpractitioners would consider to be good practices that can be relied on and that they would recommendbe considered for use where applicable. There is a broad range of contingency estimating methodologies;this RP will help guide practitioners in developing or selecting appropriate methods for their situation.BackgroundThis RP is new. It is based on discussions of the AACE Decision and Risk Management committee.There is no one best way to quantify risks or to estimate contingency; each method has its advocates.However, there is general agreement that any recommended practice should be in accordance with firstprinciples of decision and risk management as described here.

RISK ANALYSIS AND CONTINGENCY DETERMINATION USING RANGEESTIMATING RP 41R-08(Rev. October 27, 2008)AACE International Recommended Practice No. 41R-08TCM Framework: 7.6: Risk ManagementScopeThis Recommended Practice (RP) of AACE International describes the process known as rangeestimating, a methodology to determine the probability of a cost overrun (or profit underrun) for any levelof estimate and determine the required contingency needed in the estimate to achieve any desired levelof confidence. The process uses range estimating and Monte Carlo analysis techniques (as defined in RP10S-90). The RP provides the necessary guidelines for properly applying range estimating and MonteCarlo analysis to determine probabilities and contingency in a reliable manner using any of a number of

commercially available risk analysis software packages.The RP does not recommend any particular software. Rather it describes the factors that the analyst mustconsider when using risk analysis software for probability and contingency determination.PurposeThis RP is intended to provide guidelines (i.e., not a standard) for risk analysis using range estimatingthat most practitioners would consider to be a good practice that can be relied on and that they wouldrecommend be considered for use where applicable.This RP is also intended to improve communication as to what the practice called "range estimating" is.Many of the methods found in industry that are being called this are not in accordance with this RP.Practitioners should always make sure that when someone uses the term "range estimating", that theyare talking about the same practice recommended here.BackgroundThis RP is new. It is based upon the successful efforts of many companies to evaluate project risk andcontingency using the range estimating techniques originally developed by Michael W. Curran[1,2,3].Users should be aware that the principles outlined in this RP must be rigorously followed in order toachieve the desired results. Failure to follow the RP's recommendations will likely lead to significantmisstatements of risk and opportunities and of the amount of required contingency. In the great majorityof cases, contingency and bottom line uncertainty are understated when the RP's recommendations arenot followed.It is AACE's recommended practice that whenever the term "risk" is used, that the term's meaning beclearly defined for the purposes at hand. In range estimating practice as described in this RP, risk means"an undesirable potential outcome and/or its probability of occurrence", i.e. "downside uncertainty (a.k.a.threats)." Opportunity, on the other hand is "a desirable potential outcome and/or its probability ofoccurrence", i.e, "upside uncertainty." The range estimating process for risk analysis quantifies the impactof uncertainty, i.e. "risks + opportunities".

RISK ANALYSIS AND CONTINGENCY DETERMINATION USINGPARAMETRIC ESTIMATING RP 42R-08(May 26, 2011)AACE International Recommended Practice No. 42R-08TCM Framework: 7.6 Risk ManagementThis recommended practice (RP) of AACE International (AACE) defines general practices andconsiderations for risk analysis and estimating cost contingency using parametric methods. Parametricmethods are commonly associated with estimating cost based on design parameters (e.g., capacity,weight, etc.); in this case, the method is used to estimate contingency based on risk parameters (e.g.level of scope definition, process complexity, etc.). This RP includes practices for developing theparametric methods and models (generally empirically-based). Recommended practice 43R-08 providesexample process industry parametric models (including software) [12]. For scheduling applications, thereis less research and reference material available; therefore schedule duration risk and contingency will becovered in future revisions of the RP.

RISK ANALYSIS AND CONTINGENCY DETERMINATION USINGPARAMETRIC ESTIMATING EXAMPLE MODELS AS APPLIED FOR THEPROCESS INDUSTRIES RP 43R-08(Rev. December 28, 2011)AACE International Recommended Practice No. 43R-08TCM Framework: 7.6 Risk ManagementClick here for Microsoft Excel Example Models for 43R-08This recommended practice (RP) is an addendum to the RP 42R-08 titled Risk Analysis and ContingencyDetermination Using Parametric Estimating. It provides three working (Microsoft Excel) examples ofestablished, empirically-based process industry models of the type covered by the base RP; two for costand one for construction schedule. The example models are intended as educational and developmentalresources; prior to their use for actual risk analysis and contingency estimating, users must study the

reference source documentation and calibrate and validate the models against their own experience.This RP summarizes three landmark empirically-based models; the Hackney model, first presented inJohn Hackneys 1965 text Control and Management of Capital Projects (later expanded on in 1992, andnow an AACE publication-reprinted 2002), and the later two RAND models. The RAND cost model isfrom 1981 research by Edward Merrow et al. for which Mr. Hackney was a consultant. The RANDconstruction schedule model is from 1986 research by Christopher Myers et al. building on the 1981 costresearch. These models posit plausible causal relationships between cost growth (i.e., contingencyusage) and schedule slip and various risk systemic drivers such as the levels of development of processand project scope information and the level of process technology. They present similar empirical andquantitative analysis of the reasons for inaccurate estimates of capital costs and schedule duration andprovide tools to improve assessment of the commercial prospects of projects at early stages of scopedevelopment and/or using advancing technologies. Prior to these models, the literature on the causes ofcost and schedule growth for process plants provided little consensus about the relative contribution ofvarious risk factors. Therefore, the authors of the source documents measured the factors and statisticallyassessed their relative influence on cost and schedule growth for process plant projects undertaken inNorth America. The results of their work had a significant impact on the practice of cost engineering andthe evolution of project management phase-gate scope development systems (i.e., these studies are abasis of AACEs RP on classification of cost estimates; RP 18R-98).While this document attempts to summarize the basis of the models, it is highly recommended that usersreview the source documents before using the tools as a basis for their own study or development.Instructions for using the tools themselves are included in worksheets.

RISK ANALYSIS AND CONTINGENCY DETERMINATION USING EXPECTEDVALUE RP 44R-08(Rev. December 4, 2012)AACE International Recommended Practice No. 44R-08TCM Framework: 7.6 Risk ManagementThis recommended practice (RP) of AACE International (AACE) defines general practices andconsiderations for risk analysis and estimating cost contingency using expected value methods. This RPapplies specifically to using the expected value method for contingency estimating in the riskmanagement "control" step (i.e., after the risk mitigation step), not in the earlier risk assessment stepwhere it is used in a somewhat different manner for risk screening.

SCHEDULING CLAIMS PROTECTION METHODS RP 45R-08(Rev. June 1, 2009)AACE International Recommended Practice No. 45R-08TCM Framework: 6.4: Forensic Performance Assessment 7.2: Schedule Planning and

Development8.1: Project Control Plan Implementation

PurposeThis recommended practice (RP) is intended to serve as a guideline, not establish a standard forschedule claims protection. The RP is intended to provide the scheduling practitioner with an overview oftopics related to schedule delays as well as the various schedule practices and procedures that should beconsidered when developing and managing the project schedule. This RP will explain items to considerwhen creating and maintaining a critical path method (CPM) schedule in order to be prepared forpotential delay claims. This RP begins by describing schedule delay terminology and outlining potentialcauses and required actions related to schedule delays. The sections following are related to some of theplanning considerations recommended when developing a project schedule, plus good practices relatedto the management and control of the schedule throughout the project.

REQUIRED SKILLS AND KNOWLEDGE OF PROJECT COST ESTIMATINGRP 46R-11(Rev. January 16, 2013)AACE International Recommended Practice No. 46R-11TCM Framework: General ReferencePurposeThis recommended practice (RP) is intended to serve as a guideline, not a standard. As a recommendedpractice of AACE International, the intent of the guideline is to define the required skills and knowledge to

perform project cost estimating. It serves as the foundation of the skills and knowledge of an AACECertified Estimating Professional (CEP).

Project cost estimating requires knowledge of all elements of cost from project conception to completion.This includes: direct material and labor costs, indirect costs, general administration costs, profit, financecost, owners costs and startup costs. This may also include operations and maintenance costs forselection of project alternatives.

COST ESTIMATE CLASSIFICATION SYSTEM AS APPLIED IN THE MININGAND MINERAL PROCESSING INDUSTRIES RP 47R-11(Rev. July 6, 2012)AACE International Recommended Practice No. 47R-11TCM Framework: 7.3: Cost Estimating and BudgetingPurposeAs a recommended practice (RP) of AACE International, the Cost Estimate Classification Systemprovides guidelines for applying the general principles of estimate classification to project cost estimates(i.e., cost estimates that are used to evaluate, approve, and/or fund projects). The Cost EstimateClassification System maps the phases and stages of project cost estimating together with a genericproject scope definition maturity and quality matrix, which can be applied across a wide variety of processindustries.This addendum to the generic recommended practice provides guidelines for applying the principles ofestimate classification specifically to project estimates in the mining and mineral processing industries,excluding upstream oil and gas projects. This addendum supplements the generic recommended practice(17R-97) by providing:

a section that further defines classification concepts as they apply to the mining industries a section on the geopolitical nature and investment regulation of mining projects that impact on

the estimating process and its basis definition deliverables a chart that maps the extent and maturity of estimate input information (project definition

deliverables) against the class of estimate.As with the generic RP, the intent of this addendum is to improve communications among all of thestakeholders involved with preparing, evaluating, and using project cost estimates, specifically for themining and mineral processing industries.The overall purpose of this recommended practice is to provide the mining and mineral processingindustry definition deliverable maturity matrix which is not provided in 17R-97. It also provides anapproximate representation of the relationship of specific design input data and design deliverablematurity to the estimate accuracy and methodology used to produce the cost estimate. The estimateaccuracy range is driven by many other variables and risks, so the maturity and quality of the scopedefinition available at the time of the estimate is not the sole determinate of accuracy; risk analysis isrequired for that purpose.It is understood that each enterprise may have its own project and estimating processes and terminology,and may classify estimates in particular ways. This guideline provides a generic and generally acceptableclassification system for the mining industries that can be used as a basis to compare against. Thisaddendum should allow each user to better assess, define, and communicate their own processes andstandards in the light of generally-accepted cost engineering practice.As a final note regarding purpose, users must be aware of the industrys well documented history ofchallenges with overruns of feasibility estimates [6 to 9]. An intent of this RP is to help improve upon thispast performance.

SCHEDULE CONSTRUCTABILITY REVIEW RP 48R-06(Rev. August 28, 2009)AACE International Recommended Practice No. 48R-06TCM Framework: 7.2: Schedule Planning and Development 11.5: Value Management and Value

Improving Practices (VIPs)Purpose

This recommended practice (RP) is intended to serve as a guideline, not establish a standard forschedule constructability reviews. This recommended practice describes the schedule constructabilityreview (SCR) process and some of the recommended planning that should be considered whendeveloping a construction project execution-phase schedule. This recommended practice includes asuggested review process for the construction project schedule. This RP was written as a stand alonedocument however it can be used as a companion guideline with the AACE Recommended Practice 30R-03 Implementing Project Constructability.

IDENTIFYING THE CRITICAL PATH RP 49R-06(Rev. March 5, 2010)AACE International Recommended Practice No. 49R-06TCM Framework: 7.2: Schedule Planning and Development 9.2: Progress and Performance

Measurement 10.1: Project Performance Assessment 10.2: ForecastingPurposeThis recommended practice (RP) for Identifying the Critical Path is intended to serve as a guideline and aresource, not to establish a standard. As a recommended practice of AACE International it providesguidelines for the project scheduler when reviewing a network schedule to be able to determine thecritical path and to understand the limitations and assumptions involved in a critical path assessment.Such a determination is a part of the total cost management (TCM) project planning, schedulingforecasting, and change management processes.

TIME IMPACT ANALYSIS: AS APPLIED IN CONSTRUCTION RP 52R-06(Rev. October 19, 2006)AACE International Recommended Practice No. 52R-06TCM Framework: 6.4: Forensic Performance Assessment 7.2: Schedule Planning and Development

10.2: Forecasting 10.3: Change ManagementThis Recommended Practice for Time Impact Analysis (TIA) is intended to provide a guideline, not toestablish a standard. This recommended practice of AACE International on TIA provides guidelines forthe project scheduler to assess and quantify the effects of an unplanned event or events on currentproject completion. While TIAs are usually performed by a project scheduler and can be applied on avariety of project types, the practice is generally used as part of the Total Cost Management (TCM)change management and forecasting processes on construction projects.

SCHEDULE UPDATE REVIEW: AS APPLIED IN ENGINEERING,PROCUREMENT, AND CONSTRUCTION RP 53R-06(Rev. August 14, 2008)AACE International Recommended Practice No. 53R-06TCM Framework: 9.2: Progress and Performance Measurement 10.3: Change ManagementThis Recommended Practice for Schedule Update Review is intended to provide a guideline, not toestablish a standard. As a recommended practice of AACE International, this document providesguidelines for the project scheduler to create a professional schedule update or assess thereasonableness of changes to be made in a schedule due to a change of project status and progress.This recommended practice is associated with the Total Cost Management (TCM) progress andperformance measurement, and change management processes on construction projects.

RECOVERY SCHEDULING - AS APPLIED IN ENGINEERING,PROCUREMENT, AND CONSTRUCTION RP 54R-07(Rev. November 19. 2010)AACE International Recommended Practice No. 54R-07TCM Framework: 10.2: Forecasting 10.3: Change ManagementThis recommended practice (RP) for recovery scheduling is intended to provide a guideline, not toestablish a standard. As a recommended practice of AACE International, this document providesguidelines for the project scheduler to create a professional recovery schedule or assess thereasonableness of a recovery schedule necessary due to a change of project status and progress thatforecasts late completion.

ANALYZING S-CURVES RP 55R-09(Rev. November 10, 2010)AACE International Recommended Practice No. 55R-09TCM Framework: 10.1: Project Performance AssessmentAACE International Recommended Practice No. 55R-09 TCM Framework: 10.1: Project Performance

Assessment This recommended practice (RP) for analyzing S-curves is intended to serve as a guideline,not to establish a standard. As a recommended practice of AACE International, analyzing S-curvesprovides guidelines for stakeholders of a project to evaluate the current status and trends of a project in asimple graphical format.S-curves are usually developed by a project scheduler or cost engineer and can be applied on a varietyof project types. The product is generally used as a project management and/or total cost management(TCM) tool for graphic representation of project performance.The RP provides descriptions of S-curves with the intent to improve understanding and communicationamong project participants and stakeholders when preparing and analyzing graphics based upon projectschedule information. The RP describes different types of S-curves that may be generated from aschedule provided the proper information is loaded into the schedule and the status of the information ismaintained throughout the duration of the project.

COST ESTIMATE CLASSIFICATION SYSTEM - AS APPLIED FOR THEBUILDING AND GENERAL CONSTRUCTION INDUSTRIES RP 56R-08(Rev. December 5, 2012)AACE International Recommended Practice No. 56R-08TCM Framework: 7.3 Cost Estimating and BudgetingAs a recommended practice of AACE International, the Cost Estimate Classification System providesguidelines for applying the general principles of estimate classification to project cost estimates (i.e., costestimates that are used to evaluate, approve, and/or fund projects). The Cost Estimate ClassificationSystem maps the phases and stages of project cost estimating together with a generic project scopedefinition maturity and quality matrix, which can be applied across a wide variety of constructionindustries.This addendum to the generic recommended practice (17R-97) provides guidelines for applying theprinciples of estimate classification specifically to project estimates for the building and generalconstruction industries. It supplements 17R-97 by providing:

a section that further defines classification concepts as they apply to the building and generalconstruction industries;

a chart that maps the extent and maturity of estimate input information (project definitiondeliverables) against the class of estimate.

As with the generic recommended practice, the intent of this addendum is to improve communicationsamong all of the stakeholders involved with preparing, evaluating, and using project cost estimatesspecifically for the building and general construction industries.The overall purpose of this recommended practice is to provide the building and general constructionindustry definition deliverable maturity matrix which is not provided in 17R-97. It also provides anapproximate representation of the relationship of specific design input data and design deliverablematurity to the estimate accuracy and methodology used to produce the cost estimate. The estimateaccuracy range is driven by many other variables and risks, so the maturity and quality of the scopedefinition available at the time of the estimate is not the sole determinate of accuracy; risk analysis isrequired for that purpose.This document is intended to provide a guideline, not a standard. It is understood that each enterprisemay have its own project and estimating processes and terminology, and may classify estimates inparticular ways. This guideline provides a generic and generally acceptable classification system for thebuilding and general construction industries that can be used as a basis to compare against. Thisaddendum should allow each user to better assess, define, and communicate their own processes andstandards in the light of generally-accepted cost engineering practice.

INTEGRATED COST AND SCHEDULE RISK ANALYSIS USING MONTECARLO SIMULATION OF A CPM MODEL RP 57R-09(Rev. June 18, 2011)AACE International Recommended Practice No. 57R-09TCM Framework: 7.6 Risk ManagementThis recommended practice (RP) of AACE International defines the integrated analysis of schedule andcost risk to estimate the appropriate level of cost and schedule contingency reserve on projects. The

main contribution of this RP is to include the impact of schedule risk on cost risk and hence on the needfor cost contingency reserves. Additional benefits include the prioritizing of the risks to cost, some ofwhich are risks to schedule, so that risk mitigation may be conducted in a cost-effective way, scatterdiagrams of time-cost pairs for developing joint targets of time and cost, and probabilistic cash flow whichshows cash flow at different levels of certainty.The methods presented in the RP are based on integrating the cost estimate with the project schedule byresource-loading and costing the schedule's activities. The probability and impact of risks/uncertaintiesare specified and the risks/uncertainties are linked to the activities and costs that they affect. Using MonteCarlo techniques one can simulate both time and cost, permitting the impacts of schedule risk on cost riskto be calculated.These methods can be used both by the contractor and the owner. The contractor usually has a moredetailed schedule and understanding of resource allocations used to put the costs into the schedule. Theowner may use a more summary schedule and summary notion of resources, but still is able to put thecosts into the schedule at a summary level. In fact there are many risks to the owner that do not affect thecontractor as risks. Also, the contractor will not know about some of the owner's risk, such as havinginsufficient resources. In the case of joint venture owners the JV is often a marriage of convenience ofdisparate organizations with risks arising from different goals and methods.This RP is consistent with the Total Cost Management (TCM) Framework Section 7.6 Risk Management.In particular, the entry in the TCM Section 7.6.2.2 Identify and Assess Risk Factors, highlights thefundamental "risk factors (or drivers) are events and conditions that may influence or drive uncertainty(i.e., either opportunities or threats) in asset or project performance." This RP uses the same approach,starting with the RP section Simulating Using Risks as Drivers and illustrating the method in the casestudy.

ESCALATION ESTIMATING PRINCIPLES AND METHODS USING INDICESRP 58R-10(Rev. May 25, 2011)AACE International Recommended Practice No. 58R-10TCM Framework: 7.3 Cost Estimating and Budgeting 7.6 Risk ManagementThis recommended practice (RP) of AACE International defines basic principles and methodologicalbuilding blocks for estimating escalation costs using forecasted price or cost indices. There is a range ofdefinitions of escalation and escalation estimating methodologies; this RP will help guide practitioners indeveloping or selecting appropriate methods for their definitions and situation. Other RPs are expected tocover methods that do not involve indices, that cover specific examples of fully elaborated methodologiesfor specific project situations, technologies, industries, and probabilistic applications. Also, while the RPdiscusses the relationships of escalation estimating to other risk cost accounts (namely contingency andcurrency exchange), dealing with those costs is not this RPs focus.Escalation estimating is an element of both the cost estimating and risk management processes.Like other risks escalation is amenable to mitigation, control, etc. However, this RP is focused onquantification, not on escalation treatment (i.e., how it is addressed through contracting, bidding,schedule acceleration, hedging, etc.) or control. In terms of cost estimating, this RP covers practicesapplicable to all classification of estimates. The examples in the RP emphasize capital cost estimating,but the principles apply equally to operating, maintenance and other cost.

DEVELOPMENT OF FACTORED COST ESTIMATES - AS APPLIED INENGINEERING, PROCUREMENT, AND CONSTRUCTION FOR THE PROCESSINDUSTRIES RP 59R-10(Rev. June 18, 2011)AACE International Recommended Practice No. 59R-10TCM Framework: 7.3 Cost Estimating and BudgetingAs identified in the AACE International Recommended Practice No. 18R-97 Cost Estimate ClassificationSystem As Applied in Engineering, Procurement, and Construction for the Process Industries, theestimating methodology tends to progress from stochastic or factored to deterministic methods withincrease in the level of project definition.Factored estimating techniques are proven to be reliable methods in the preparation of conceptual

estimates (Class 5 or 4 based on block flow diagrams (BFDs) or process flow diagrams (PFDs)) duringthe feasibility stage in the process industries, and generally involves simple or complex modeling (orfactoring) based on inferred or statistical relationships between costs and other, usually design related,parameters. The process industry being equipment-centric and process equipment being the cost driverserves as the key independent variable in applicable cost estimating relationships.This recommended practice outlines the common methodologies, techniques and data used to preparefactored capital cost estimates in the process industries using estimating techniques such as: capacityfactored estimates (CFE), equipment factored estimates (EFE), and parametric cost estimates. However,it does not cover the development of cost data and cost estimating relationships used in the estimatingprocess.All data presented in this document is only for illustrative purposes to demonstrate principles.Although the data has been derived from industry sources, it is not intended to be used for commercialpurposes. The user of this document should use current data derived from other commercial datasubscription services or their own project data.

DEVELOPING THE PROJECT CONTROLS PLAN RP 60R-10(Rev. December 21, 2011)AACE International Recommended Practice No. 60R-10TCM Framework: 8.1 Project Control Plan ImplementationThis recommended practice is intended to serve as a guideline, not a standard. As a recommendedpractice of AACE International, the intent of the guideline is to improve the communication amongstakeholders involved with preparing, evaluating, and using project controls information. Thisrecommended practice (RP) of AACE International defines the overall development, implementation andmanagement of a project controls plan. This deliverable can be included as part of an overall projectexecution plan (PEP), or considered a stand alone document that describes specific approaches thateach functional entity will use (engineering, procurement, construction, safety, quality, etc.).The project controls plan describes specific processes, procedures, tools and systems that guide andsupport effective project control. The plan is a narrative or qualitative representation of the project controlprocess, while the estimate, budget, schedule, etc. represent the quantitative aspects. Organizations mayuse this RP to develop a fit-for-use template as a model document, which is further customized for eachspecific project.

SCHEDULE DESIGN AS APPLIED IN ENGINEERING, PROCUREMENT ANDCONSTRUCTION RP 61R-10(Rev. Oct 11, 2013)AACE International Recommended Practice No. 61R-10

TCM Framework4.1 Project Implementation 7.1 Project Scope and Execution StrategyDevelopment 7.2 Schedule Planning and Development 7.3 Cost Estimatingand Budgeting 7.4 Resource Planning 7.5 Value Analysis and Engineering 7.6 Risk Management 7.7 Procurement Planning 10.3 Change Management

This recommended practice (RP) for schedule design is intended to provide a guideline, not to establish astandard. As a recommended practice of AACE International, this document provides guidelines for theproject scheduler to start the planning for developing a baseline schedule and is applicable only as aprecursor to the development of the baseline schedule.This recommended practice is oriented to critical path method (CPM) schedule design. Thisrecommended practice does not address schedule development but instead provides the framework toenable an efficient and accurate facilitation of the schedule development process. All scheduledevelopment should be done after this schedule design process is complete since the completion ofdesign is necessary before a good schedule development process can progress effectively.

IDENTIFICATION AND QUALITATIVE ANALYSIS RP 62R-11(Rev. May 11, 2012)AACE International Recommended Practice No. 62R-11TCM Framework: 7.6 Risk ManagementThis recommended practice (RP) of AACE International defines the expectations, requirements, andpractices for identifying and qualitatively analyzing risk drivers as part of the overall risk management

process. It expands on TCM Framework section 7.6.2.2 Risk Assessment, sections a) Risk Identificationand b) Qualitative Risk Analysis, covering common practices and tools such as brainstorming, interviews,and checklists. It also covers documentation for and the deliverables from the process step (e.g., riskregister). It does not cover quantification of risks or risk treatment planning.In TCM, the risk management process is applied in the strategic asset management and project controlprocesses. In the strategic arena, the risk focus tends to be on the state of the current asset, the businessenvironment, and other issues that differentiate alternative asset solutions (e.g. varying levels of scopedefinition). In project control, the risk focus expands to more specific project conditions, plans,deliverables, and events affecting a defined project scope while strategic risks remain. This RP isintended to be generic to either any focus area and any project scope.Risk identification may require skills and knowledge of behavioral psychology because methods such asbrainstorming and Delphi must deal with participant biases.This RP is intended to provide guidelines, not a standard, for developing a process to identify project risksand perform qualitative risk analysis that most practitioners would consider to be practices that can berelied upon and that they would recommend be considered for use. It provides a foundation fordeveloping risk treatment plans as described in RP 63R-11, Risk Treatment. Ideally, the risk managementprocess provides an opportunity for all stakeholders and contracting parties to work together and manageproject risk for their collective benefit. The implementation of all or part of this RP will depend on the sizeand complexity of the project but the basic processes described should be used in all cases.This RP outlines the processes and practices but is not a detailed "how-to" in each case. In that respect itwill most benefit those that are new to risk management or to decision and risk managementprofessionals who want to refresh their knowledge of recommended practices.

RISK TREATMENT RP 63R-11(August 23, 2012)AACE International Recommended Practice No. 63R-11TCM Framework: 7.6 Risk ManagementScopeThis recommended practice (RP) of AACE International defines the expectations, requirements, andpractices for risk treatment. This RP follows the steps identified in RP 62R-11, Risk AssessmentIdentification and Qualitative Analysis. In this process, an action owner is assigned who, working with therisk team, is responsible for devising and implementing risk response plans for those risks that were notdeem acceptable in the qualitative analysis screening step. It expands on TCM Framework section7.6.2.3 Risk Treatment and leads into 7.6.2.4 Risk Control.In TCM, the risk management process is applied in the strategic asset management, as defined in RP10S-90, Cost Engineering Terminologyand project control processes. In the strategic arena, the projecthas not yet been selected, so the treatment focus tends to be on devising alternative asset or projectsolutions that mitigate the risks while meeting business objectives and requirements. In project control,the risk treatment focus is more on tactical refinements (per TCM 3.3.1.4 - identify creative alternativesolutions, leveraging value engineering for example, and, through a formal quantitative analysis process)of project scope, conditions, plans and deliverables as well as developing contingency plans. This RP isintended to be generic to either focus area or any project scope.PurposeThis RP is intended to provide guidelines, not a standard, for including risk management during theplanning of a project or asset management that most practitioners would consider to be good practicesthat can be relied on, and would recommend for use. It will provide a foundation for risk control.This RP will outline the processes and practices but is not a detailed how-to. In that respect it will mostbenefit those that are new to risk management or decision and risk management professionals who wantto refresh their knowledge of recommended practices.

CPM SCHEDULE RISK MODELING AND ANALYSIS: SPECIALCONSIDERATIONS RP 64R-11

(May 2, 2012)AACE International Recommended Practice No. 64R-11TCM Framework: 7.6 Risk ManagementThis recommended practice (RP) of AACE International defines general practices and considerations forthe various aspects of conducting a project schedule risk analysis using a critical path method (CPM)network of activities and Monte Carlo methods to estimate contingency and/or to understand the projectsbehavior in consideration of risk. This RP does not present a standalone methodology, but is anextension of other RPs that present CPM-based approaches to schedule risk analysis and contingencyestimating. This RP discusses key procedural, analytical and interpretive considerations in preparationand application of a CPM model; considerations that were not covered in the broader methodologicalRPs.A quantitative schedule risk analysis is an important aspect of risk management on a project. It can helpproject teams understand how project risks and uncertainty may impact the project schedule and whenkey milestones will be achieved. The analysis should be conducted by a skilled risk analyst. This analysisis typically performed during project development prior to key approval points, but can also be usedduring project execution to assess the current status of the project schedule risks.Most schedule risk analyses utilize a CPM network as the base tool for conducting a Monte Carlo typesimulation of project schedule variability. The CPM model for risk analysis must be properly constructedand realistically reflect how the identified risks may impact the project activities and overall duration. Theidentified schedule risks may be linked to the activities in the model in a variety of ways, depending onthe software used and user preference. Regardless of how the risks are linked to activities in thesoftware, the analysis needs to be based on a comprehensive list of schedule risks and an understandingof how they may impact the project. Understanding the compromises, assumptions and basis of theanalytical methods and what the resulting schedule risk analysis means are key to developingappropriate risk treatment plans, contingency estimates, and making well supported value adding projectdecisions.This RP is applicable to any industry or project where the CPM approach is used. It addressesconsiderations for risk analysis as they relate to the CPM model and not to any integration with cost riskanalysis.

INTEGRATED COST AND SCHEDULE RISK ANALYSIS AND CONTINGENCYDETERMINATION USING EXPECTED VALUE RP 65R-11(May 2, 2012)AACE International Recommended Practice No. 65R-11TCM Framework: 7.6 Risk ManagementThis recommended practice (RP) of AACE International (AACE) defines general practices andconsiderations for integrated cost and schedule risk analysis and estimating contingency using expectedvalue methods.This RP is intended to provide guidelines, not standards, for contingency estimating that mostpractitioners would consider to be good practices that can be relied upon and that would be recommendfor use where applicable. There is a range of useful risk analysis and contingency estimatingmethodologies; this RP will help guide practitioners in developing or selecting appropriate methods fortheir situation.This RP is an extension of 44R08, Risk Analysis and Contingency Determination Using ExpectedValue, that addresses using expected value methods only for cost. However, integrated cost andschedule methods are generally recommended; this RP for expected value methods, or 57R09,Integrated Cost and Schedule Risk Analysis Using MonteCarlo Simulation of a CPM Model, forCPMbased methods.

SELECTING PROBABILITY DISTRIBUTION FUNCTIONS FOR USE IN COSTAND SCHEDULE RISK SIMLUATION MODELS RP 66R-11(August 24, 2012)AACE International Recommended Practice No. 66R-11TCM Framework: 7.6 Risk ManagementScope

This recommended practice (RP) of AACE International provides guidance for selecting probabilitydistribution functions (PDFs) for use in probabilistic decision and risk management (DRM) simulationmodels within cost engineering and total cost management (TCM)[1]. These DRM models are used toanalyze asset and project cost, schedule, profitability and similar measures in consideration of risks.While AACEs definition of risk is fully defined elsewhere[2], this RP uses the term risk to address boththreats and opportunities.PurposeThis RP will describe the basic characteristics of commonly used PDFs and define their advantages anddisadvantages for use in typical probabilistic modeling. It is intended to provide practical advice for non-statisticians who are applying risk analysis tools such as Monte Carlo modeling. In this area of practice,the data inputs are generally subjective; they are not based on sampling of data about a population orstatistical analysis of empirical data. In that regard, this RP does not cover the topic of curve fitting orstatistical analysis of empirical data such as linear regression. The goals of this RP are to help users findPDFs: a) with an inferred goodness of fit to the opinions and perceptions of participants in risk analysisexercises; and b) that are reasonably simple to apply, understand and communicate. It does not covermethods to elicit these opinions and perceptions.

CONTRACT RISK ALLOCATION AS APPLIED IN ENGINEERING,PROCUREMENT, AND CONSTRUCTION RP 67R-11(January 14, 2014)AACE International Recommended Practice No. 67R-11TCM Framework: 7.6 Risk ManagementThis recommended practice (RP) of AACE International defines the contract risk allocation principles as applied inengineering, procurement and construction (EPC). Such principles address for example; contract basics, legal riskallocation principles, general risk allocation principles, typical contract forms, common contract risks, and quantitativecontract risk assessment. Much of the discussion focuses on construction; however, the principles apply to contractsfor any element of an EPC project.This RP is intended to provide guidelines for making equitable contract risk allocations that reduce the potential fordisputes and enhance the likelihood for project success.This RP summarizes and clarifies contract risk allocation practices in the context of the TCM Framework and riskmanagement processes. It has been developed as a reference or overview document and may not be relied upon aslegal or specific risk action advice. In addition, it is recommended to seek the advice and input of experts incontracting, claims, and dispute resolution as appropriate.

ESCALATION ESTIMATING USING INDICES AND MONTE CARLOSIMULATION RP 68R-11(May 2, 2012)AACE International Recommended Practice No. 68R-11TCM Framework: 7.6 Risk ManagementThis recommended practice (RP) of AACE International defines basic principles and methodologicalbuilding blocks for estimating escalation using forecasted price or cost indices while also addressinguncertainty using Monte Carlo simulation. The methods in this RP are an extension of the principles andmethods in RP 58R-10, Escalation Estimating Principles and Methods Using Indices, from a probabilisticand scenario/sensitivity viewpoint. This RP will guide practitioners in developing or selecting appropriatemethods for their definitions and situation. While this RP discusses the relationships of escalationestimating to other risk cost and schedule accounts (namely contingency), dealing with those cost typesis not the focus of this RP. This RP assumes that practitioners are already familiar with Monte Carlosimulation as typically applied in spreadsheet applications.Escalation estimating is an element of both the cost estimating and risk management processes. Likeother risks, escalation is amenable to mitigation, control, etc. However, this RP is focused on escalationquantification, not on treatment (i.e., how it is addressed through contracting, bidding, scheduleacceleration, hedging, etc.) or control. In terms of cost estimating, this RP covers practices applicable toall classes of estimates. Escalation uncertainty is partly driven by schedule risk; therefore this RP alsoreferences AACEs RPs on integrated cost and schedule risk analysis and contingency estimating. Theexamples in this RP emphasize capital cost estimating and scheduling, but the principles apply equally to

operating, maintenance and other cost and time evaluations. While a model such as that covered in thisRP could be used for schedule optimization in consideration of escalation, optimization is not coveredhere.As with RP 58R-10, Escalation Estimating Principles and Methods Using Indices, this RP recommendssegregating escalation versus exchange rate impacts and their estimation for projects with resourcespriced in currencies other than the base currency.

COST ESTIMATE CLASSIFICATION SYSTEM AS APPLIED INENGINEERING, PROCUREMENT, AND CONSTRUCTION FOR THEHYDROPOWER INDUSTRY RP 69R-12(January 25, 2013)AACE International Recommended Practice No. 69R-12TCM Framework 7.3 Cost Estimating and BudgetingAs a recommended practice of AACE International, the Cost Estimate Classification System provides guidelines forapplying the general principles of estimate classification to project cost estimates (i.e., cost estimates that are used toevaluate, approve, and/or fund projects). The Cost Estimate Classification System maps the phases and stages ofproject cost estimating together with a generic project scope definition maturity and quality of inputs matrix, which canbe applied across the hydropower industry.This addendum to the generic recommended practice (17R-97) provides guidelines for applying the principles ofestimate classification specifically to project estimates for engineering, procurement, and construction (EPC) or othercontractual arrangements and execution venues, both for owners and service providers, and their related work indeveloping hydropower projects. This addendum supplements the generic recommended practice by providing: a section that further defines classification concepts as they apply to the hydropower industry and their uniquedifferences to other industries a section on the regulatory requirements and resulting impacts that are specific to hydropower projects a chart that maps the extent and maturity of estimate input information (project definition deliverables) against theclass of estimate.As with the generic recommended practice, the intent of this addendum is to improve communications and consensusamong all of the stakeholders involved with preparing, evaluating, and using project cost estimates specifically for thehydropower industry.The overall purpose of this recommended practice is to provide the hydropower industry with a definition deliverablematurity matrix which is not covered in 17R-97. This RP provides an approximate representation and logical linage ofthe relationship of specific design input data and design deliverable maturity to the estimate accuracy and methodologyused to produce the cost estimate.The estimate accuracy range is driven by many other variables and risks, so the maturity and quality of the scopedefinition available at the time of the estimate is not the sole determinate of accuracy; risk analysis is required for thatpurpose.This document is intended to provide a general guideline, not a standard. It is understood that each enterprise mayhave its own project and estimating processes and terminology, and may classify estimates in their own particularways. This guideline provides a generic and generally acceptable classification system for the hydropower industry thatcan be used as a starting point for the basis of comparison. This RP should allow each user to better assess, define,and communicate their established and developed procedures and standards in light of generally-accepted costengineering practice.

REQUIRED SKILLS AND KNOWLEDGE OF DECISION AND RISKMANAGEMENT RP 70R-12(Rev. October 16, 2013)AACE International Recommended Practice No. 70R-12TCM Framework 7.2 Schedule Planning and Development 7.6 Risk ManagementThis