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Risk-Based Cost Estimating
RISK-BASED COST ESTIMATING enterprise Project Management Office
Risk-Based Cost Estimating
Outline
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Introduction
Quiz
Risk-Based Estimating Overview
Process Stages
Goals and Benefits
Next Steps, Summary, and Questions
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Risk-Based Cost Estimating
Risk-Based Cost Estimating
True or False: Through the use of complex tools and sophisticated modeling, an estimator can
determine the bid amount.
False
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Risk-Based Cost Estimating
Risk-Based Cost Estimating
True or False: Contingency is an estimate of costs associated with identified uncertainties and risks.
True
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Risk-Based Cost Estimating
Risk-Based Cost Estimating
True or False: It is better to start an estimate from scratch at every new phase of work.
False
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Risk-Based Cost Estimating
What is the Risk-Based Cost Estimating Initiative?
Risk identification and uncertainty analysis techniques to forecast project contingency
Developing a Risk-Based Cost Estimating Reference Guide
Pilot workshops with six districts
Utilizing best practices from TxDOT, other DOTs, and national guidance
Principles can be applied to other project management areas
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Risk-Based Cost Estimating
Risk-Based Cost Estimating
The Framework
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Determine/Update Basis of Estimate
5 Prepare/Update Base Estimate
Determine Risk and Set Contingency
Review and Approve Estimate
Communicate Estimate
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STAGES
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Risk-Based Cost Estimating
Risk-Based Cost Estimating Goals
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Improved Cost Estimation, Risk Management, and Cost Management During the pre-construction phases of project development
Accountability
Document scope Document
assumptions Risk-based
contingency
Transparency
Estimate “matures” from phase to phase to another
Consistency between estimators
Consistency
Standard allows improvement over time
Reconciliation process
Continuous Improvement
Estimate development
Estimate review Estimate
approval
Risk-Based Cost Estimating
Plan ahead
Make your DE look good!
Features and Benefits
Improve project management
Compare “apples to apples”
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Risk-Based Cost Estimating
Next Steps
Work with districts to test the guidance and tools on projects
Gain feedback and train all districts on the process and tools
Ongoing assistance from ePMO on implementation – contact your ePMO Field Agent
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Risk-Based Cost Estimating
Summary
Development of risk-based cost estimating guidance – Accountability, – Transparency, – Consistency, and – Continuous improvement
Holistic process Contingency is calculated based on the risk
and uncertainty of the project Additional work is planned to test the
guidance and train staff 11
Risk-Based Cost Estimating 12
Questions