Ce11 12

www.aacei.
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ENGINEERING
December 2011
THE JOURNAL OF AACE INTERNATIONAL -
THE AUTHORITY FOR TOTAL COST MANAGEMENT
TM
COST COST COST
PRESIDENTS MESSAGE
MY FIRST [FULL]
BOARD MEETING
CAN A CONTRACTOR HAVE A
CRITICAL PATH DELAY
WHEN THE GENERAL
CONTRACTOR DOES NOT?
CURRENCY FLUCTUATION
AND INFLATION IMPACT
ON INTERNATIONAL MEGA PROJECTS:
A MEXICAN CASE STUDY
CURRENCY FLUCTUATION
AND INFLATION IMPACT
ON INTERNATIONAL MEGA PROJECTS:
A MEXICAN CASE STUDY
1 COST ENGINEERING DECEMBER 2011
CONTENTS
COST ENGINEERING
TECHNICAL ARTICLES
11 Currency Fluctuation and Inflation
Impact on International Mega Projects:
A Mexican Case Study
Dr. Carla Lopez del Puerto, CCC
This article examines the challenges of accurately estimating construction costs for in-
ternational projects. A case study is used to illustrate the challenges that construction projects
in Mexico faced with the 2009 devaluation of Mexican currency. It presents a hypothetical ex-
ample and a case study of the Durango-Mazatlan highway; finds that the construction costs of
highway Durango-Mazatlan in Mexico increased by 20 percent because of cost increases tied to
the peso-dollar parity; analyzes the impact to the project and discusses strategies that cost en-
gineers can use to minimize the risk of economic loss in international construction projects re-
sulting from political and economic instability. The study concludes that using cost reimbursable
contracts, transferring the risk of cost uncertainty to the owner, maintaining contact with local
subcontractors and suppliers and maintaining international project databases minimize the risk
resulting from currency fluctuations on international mega-projects. This article was first pre-
sented at the 2011 Annual Meeting as CSC-558.
19 Can a Contractor Have a Critical Path Delay
When the General Contractor Does Not?
Christopher W. Carson, PSP; Mark Boe, PE; and Shannon L. Campbell, PSP
To prove entitlement to delay damages, it has been reasonably established (by best
practices, as well as case law) that a contractor must show a critical path delay to project com-
pletion. But, what happens when an owner-impact extends the time a subcontractor must re-
main on the job, but doesnt extend the project completion date? Shouldnt the owner be liable
for any damages to the subcontractor? If not the owner, wouldnt the GC have some risk? What
type of analysis would be required to prove entitlement to these subcontractor delays? Does
current case law have any answers? This article will discuss the issues, examine existing case
law, establish how experts analyze and prove subcontractor delays, and provide an example of
an analysis for this condition. This article was first presented at the 2011 Annual Meeting as
CDR-635.
5 Presidents Message
My First [Full] Board Meeting
8 Women in
Project Controls
Spotlight on Anita Zenger
28 The AACE
International Bulletin
Section News from Around the World
4 AACE International Board of Directors
4 Cost Engineering Journal Information
18 AACEs 2012 Annual Meeting
27 Professional Services Directory
27 Index to Advertisers
34 The AACE International Online Store
CONTENTS
DEPARTMENTS
ALSO FEATURED
COST ENGINEERING
33 Article Reprints
and Permissions
Sharing our Articles and Experience
36 Calendar of Events
AACE International Events and More
THE AACE INTERNATIONAL ONLINE BUTTON - This editon
of the Cost Engineering journal has access to additonal ma-
terial on the AACE Internatonal website, www.aacei.org.
Anytme you see the symbol at center, there is additonal
content online associated with that artcle or feature. Direct
your browser to www.aacei.org and look for the online but-
ton to access additonal resources. If you are already reading
the electronic version, just click the online buton directly.
COSTENGINEERING
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CONTENTS
AACE INTERNATIONAL
BOARD OF DIRECTORS
PRESIDENT
Michael R. Nosbisch, CCC PSP
562.733.2472 / president@aacei.org
PRESIDENT-ELECT
Marlene Hyde, CCE EVP
303.940.3200 / preselect@aacei.org
PAST PRESIDENT
Stephen O. Revay, CCC CFCC
403.777.4900 / pastpres@aacei.org
VICE PRESIDENT-ADMINISTRATION
Martin Darley, CCC FRICS
713.372.2426 / vpadmin@aacei.org
VICE PRESIDENT-FINANCE
John J. Ciccarelli, PE CCE PSP
609.497.2285 / vpfinance@aacei.org
VICE PRESIDENT-TEC
George Whyte, CCC CEP EVP
301.957.7434 /vptec@aacei.org
VICE PRESIDENT-REGIONS
Julie Owen, CCC PSP
213.922.7313 / vpregions@aacei.org
DIRECTOR-REGION 1
Ginette Basak, P.Eng. FAACE
403.708.7674 / dirregion1@aacei.org
DIRECTOR-REGION 2
John C. Livengood, CFCC PSP
DIRECTOR-REGION 3
James H. Carson, CCC CEP
DIRECTOR-REGION 4
Duane R. Meyer, PE CCE
513.241.1230 x 620 / dirregion4@aacei.org
DIRECTOR-REGION 5
Earl J. Seabrook, III, CCC
DIRECTOR-REGION 6
Nicholas Kellar, CCC EVP PSP
dirregion6@aacei.org
DIRECTOR-REGION 7
Philips Tharakan Mulackal, CCE EVP
+971.50.631.4830 / dirregion7@aacei.org
DIRECTOR-REGION 8
Keith Webb
+61.8.93485045 / dirregion8@aacei.org
EXECUTIVE DIRECTOR
Dennis G. Stork
304.296.8444 / dstork@aacei.org
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Vol. 53, No.12/December 2011
AACE International - The Authority for Total Cost Management
TM
OUR VISION - To be the recognized technical authority in cost and schedule management
for programs, projects, products, assets, and services.
OUR MISSION - The members of AACE
enable organizations around the world to achieve

thier investment expectations by managing and controlling projects, programs, and port-
folios; we create value by advancing technical knowledge and professional development.
M
y rst full Board of Directors meetng as
President is now behind me, and I
thought it was very successful on many
levels. First of all, we contnued the re-
vival of a past AACE traditon by holding
it in Morgantown, WV, where our head-
quarters oce is located. Not only does doing so on an annual
basis allow us to expand our relatonships with headquarters
sta, but this tme it was even more signicant in that we were
able to see the new oce we moved to this past summer. In
additon to being more convenient for several sta members,
both in terms of commute and parking, the new locaton really
does provide for a more professional setng that is denitely
appropriate for where the Associaton is headed in the near
term future.
A few other key developments that came out of the BoD
meetng in Morgantown are as follows:
We reviewed the pre-nal draf of our operatng budget for
2012, a process that has been shepherded by VP Finance,
John Ciccarelli, in conjuncton with our Controller Carol Sue
Rogers. The current version of next years budget once again
provides a sound basis to achieve a contributon to surplus next
year. Even more importantly, it does so while providing for a
signicant equity adjustment to the salaries and benets of our
excellent headquarters sta, allowing us to move toward more
compettve compensaton when compared to similar types of
PRESIDENTS MESSAGE
Michael R. Nosbisch, CCC PSP, President
MY FIRST
[FULL]
BOARD
MEETING
MY FIRST
[FULL]
BOARD
MEETING
My rst full Board of Directors
meetng as President is now be-
hind me, and I thought it was very
successful on many levels.
organizatons and associatons in similar markets.
Afer an excellent presentaton by the Chair of the Interor-
ganizatonal Liaison Commitee, Alexia Nalewaik, the Board
unanimously approved a recommendaton to renew the ac-
creditaton of our certcatons by the Internatonal Cost Engi-
neering Council (ICEC). The Board also approved the
nominaton of Past President Steve Revay as our ICEC Repre-
sentatve. Steve has commited to enhancing and improving
our relatonship with ICEC in the near term future, which the
entre Board thought was extremely important in light of our
decision to end our ocial relatonship with the Royal Insttu-
ton of Chartered Surveyors (RICS) due to inconsistencies in the
way our memorandum of understanding (MOU) was being in-
terpreted in dierent geographical regions.
Steve Revay also presented, along with Region 2 Director
John Livengood, some inital consideratons that have been de-
veloped by the Governance Task Force that Steve chairs. Even
though formal recommendatons from the Task Force are not
due untl next year, it was truly impressive that so much early
thought and eort had already been put into ways that the As-
sociaton can do things beter in the future. John Livengood
(who contnues to be one of the most actve members on the
Board) also presented a new cooperatve agreement for my sig-
naturethis one with the American Bar Associaton (ABA).
Specically, the agreement is with the ABAs Forum Commitee
on the Constructon Industry (Please see or visit,
(htp://www.americanbar.org/groups/constructon_industry.ht
ml), and promises to lead to focused interacton between our
two groups that will no doubt add value to both.
One of my own responsibilites was to nominate a chair
for the Ethics Commitee that will formally be formed afer the
rst of the year, and I was extremely happy that Donald Mc-
Donald was unanimously approved the Board to assume this
role. Unfortunately, this means that Donald will no longer be
able to support the Educaton Board, where he has truly been
a driving force for the past several years. I have been assured
by the current Educaton Board chair, Pete Griesmyer, however,
that he is already executng a succession plan to ensure that
Donalds multple responsibilites are backlled, especially in
relaton to the recently unveiled Seminar in a Box program
that is really startng to take o in support of our Sectons.
On a personal level, one of the most satsfying results of
my rst full BoD meetng was the fact that, despite a slow start,
we were actually able to adjourn a half hour early on the nal
daya fact that is crucial for someone that got their start in
project scheduling a long tme ago. Now if I could only learn
those pesky Roberts Rules of Order!
EDITORS NOTE: To engage in other discussions, check out AACE
Internationals Online Forums at www.aacei.org/forums.
2012 Electon Preparatons Are Underway
A new program, enttled Ask Your Candidates, will allow
individual members, untl Dec. 31, 2011, to post a queston
online to candidates running for a 2012 board of directors po-
sitons. Afer the Dec. 31 deadline, the Nominatng Commitee
will review the submited questons and post a maximum of
10 questons for each candidate by Jan. 11, 2012. The ques-
tons will be posted in a Discussion Forum on the AACE Inter-
natonal website, set up for this partcular purpose.
Candidates will have untl Jan. 30, 2012, to develop their
responses to each queston. All candidate responses will be
posted in the Discussion Forum on Jan. 31, 2012, on the AACE
Internatonal website. Ballotng for the electons opens on Feb.
1, 2012 and closes at 4 p.m. Eastern US tme on March 15. All
candidates for a similar positon will be asked the same ques-
tons.
According to Steve Revay, Chair of the Nominatng Com-
mitee, The commitee is of the opinion that this recommen-
daton oers a potental method of increasing membership
interest in the electon process while allowing members an
opportunity to get a beter understanding of their candidates
views.
To submit a queston for the candidate review process,
send an email with the text of the queston and to which can-
didate positon it should be addressed to. All emails should be
sent no later than Dec. 31 to: pastpres@aacei.org.
AACE Board Recommends Amendment to Consttuton
The AACE Internatonal Board of Directors voted Oct. 16
to recommend to the membership to approve an amendment
to the Associatons consttuton to require that the process to
amend the Consttuton be the same as the requirement for a
Bylaws amendment. The proposal was a recommendaton
that came from the Governance Task Force chaired by Past
President Steve Revay.
Currently, the AACE Internatonal Consttuton states: An
armatve vote of three-fourths of the valid votes cast shall
be required for adopton of an amendment to the Consttu-
ton. Currently, the Bylaws state: An armatve vote of two-
thirds of the valid votes cast shall be required for adopton of
an amendment to the Bylaws.
According to Revay, The inconsistency between the Con-
sttuton and the Bylaws has the potental of creatng a situa-
ton where amendments aectng both documents could be
approved to change the Bylaws, but fail to reach the threshold
to amend the Consttuton. The Governance Task Force be-
lieves that requiring the two/thirds armatve vote of all votes
cast to amend the Consttuton and the Bylaws provides safe-
guards to assure a consensus exists while giving the Associa-
ton reasonable exibility to adapt its governing documents to
new opportunites and challenges in the future.
Revay noted that a review of similar professional associa-
tons revealed that most organizatons require two-thirds, not
three-fourths, to amend their consttuton and bylaws.
ANNOUNCEMENTS FOR THE AACE INTERNATIONAL 2012 ELECTION
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I
f theres a theme to Anita Zengers career, it is the
drive to optmize, whether it be an opportunity, an
eort to get the best deal, nding the best route or
ensuring project operatons. Anita found her passion
for optmizaton thanks to an electve class in Oper-
atons Research she took as a senior at the University
of Illinois, Urbana-Champaign, where she earned a Bachelor
of Science in Civil Engineering.
Afer graduatng, Anita followed in her fathers footsteps
as a U.S. Naval ocer in the Civil Engineer Corps (CEC). During
her 5 years of service in the Navy, Anita gained experience in
a variety of roles. Her last assignment was as an Assistant Res-
ident Ocer in Charge of Constructon. In this te period she
also obtained her Professional Engineer license. Following her
service in the U.S. Navy, Anita and her young family moved
from Charleston, SC, to Livermore, Calif., where she started
working for her current employer Lawrence Livermore Na-
tonal Laboratory (LLNL), an applied science natonal defense
laboratory.
Her rst positon at LLNL was Constructon Subcontract
Administrator, allowing her to contnue optmizing solutons
as she negotated and awarded constructon contracts. A few
years later, Anita joined the Project Management Division. This
was a partcularly busy tme in Anitas life. Married, a mother
of three daughters, and working full-tme, Anita had to learn
how to balance and optmize her work and home life. Opt-
mizaton appears to be a family trait. Two of her daughters
have completed college and are working in their elds of study,
engineering and accountng. Her youngest daughter is cur-
rently a sophomore and studying mechanical engineering.
Anita was a project manager for more than 15 years. The
last constructon project she managed was the Terascale Sim-
ulaton Facility, a $91 million facility that houses some of the
worlds most powerful supercomputers. Anitas past experi-
ence with the Navy gave her an early introducton to schedul-
ing and earned value. Anita contnued to develop her
expertse in project controls and project management through
professional organizatons such as AACE Internatonal. Anita
has her Earned Value Professional (EVP) certcaton from
AACE and Project Management Professional certcaton from
PMI. She used this knowledge, along with her passion for op-
tmizaton, to successfully complete the TSF project within the
scope, budget, and schedule baseline.
WOMEN IN PROJECT CONTROLS
SPOTLIGHT ON
ANITA
ZENGER
ANITA
ZENGER
Julie Owen, CCC PSP
Anita has found the training and
seminar opportunites, certca-
tons, technical products and net-
working opportunites available
through AACE extremely valu-
able. Since her organizaton is
over 70 percent women, Anita is
especially excited about AACEs
focus group Women in Project
Controls another opportunity
she fully intends to optmize.
At the completon of the project, Anita was asked to estab-
lish a project controls organizaton at LLNL. It was very easy for
her to answer YES! Anita enjoys talking and teaching project
controls ideas, especially earned value and risk management.
With this new assignment, she is now able to help spread the
word and teach the techniques of project controls to others.
For the past 7 years, Anita has led the growth and matura-
ton of the project controls organizaton. She and her team have
supported the ANSI 748B Compliant Earned Value Management
System at LLNL, as well as providing peer review support to
other sites. She is grateful for the mentoring provided by her
supervisor and has tried to pass it on, serving as a mentor to
her sta.
Anita spends a great deal of tme and eort working both
one-on-one and in teams providing growth and learning oppor-
tunites for her sta. She encourages the members of her team
to use all resources available to contnue on a life-long learning
journey, and to constantly work on maintaining a strong work-
life balance.
Anita has also found the training and seminar opportuni-
tes, certcatons, technical products and networking opportu-
nites available through AACE extremely valuable. She is actve
with several AACE LinkedIn groups. Since her organizaton is
over 70 percent women, Anita is especially excited about AACEs
focus group Women in Project Controls another opportunity
she fully intends to optmize.

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AACE Internatonals Member-Get-A-Member campaign
contnues to be a great success with the third random draw-
ing, and a $250 gif card to Lands End for AACE logo mer-
chandise being awarded to the winner.
This quarters winner is Thomas Mac Sumrall, Lead
Project Estmator for Southern Nuclear Company out of
Birmingham, Alabama.
The random drawing was made from among all AACE
members who recommended at least one new member who
joined the associaton during the third quarter of 2011.
Members from 36 US states, 7 Canadian provinces, and 32
other countries were eligible in this rst drawing.
Theres stll tme to enter the contest, which will con-
tnue throughout 2011 with one more drawing for a $250 gif
card from Lands End. The contest will culminate with a grand
prize being awarded at the end of the year. The grand prize
is a trip to the 2012 Annual Meetng in San Antonio, Texas
(including airfare, hotel, meetng registraton, and meals). It
will be awarded to one individual who recommended at least
one new member during 2011.
Join your colleagues in recruitng new
members to AACE Internatonal, and
you, too, may be a winner!
For more informaton on the Member-
Get-A-Member Program go to
www.aacei.org/mbr/get-a member.shtml
CONGRATULATIONS TO
THOMAS MAC SUMRALL
THE AACE INTERNATIONAL THIRD
QUARTER MEMBER-GET-A-MEMBER
CAMPAIGN WINNER
D
eveloping a practical estimate of
a large construction project is a
daunting task for even the most
experienced estimators in the
construction industry; this is
compounded by the fact that todays
estimators are required to take into
account a multitude of nontraditional
factors when developing estimates.
Developing a practical estimate of a
large construction project is a daunting
task for even the most experienced
estimators in the construction industry;
this is compounded by the fact that
todays estimators are required to take
into account a multitude of
nontraditional factors when developing
estimates.
One of these factors that can
intensify this task even further is the
effect inflation has on materials, labor,
and equipment rentals [11]. In addition
to inflation, a job that is located outside
of the US must take into account currency
fluctuations which are often unstable
because inflation is not steady in a global
economy [17].
Inflation is defined as the general
change in prices caused by debasement
of the value of currency [7] and tends to
fluctuate erratically making it difficult to
predict for any period of time. Even
though inflation has been evident
throughout history, the construction
industry believes the effects of inflation in
the current economic climate, as many
common construction materials have
outpaced inflation many times over [13].
Estimators must keep themselves
informed on current pricing information
by staying in contact with suppliers and
subcontractors and appropriately
adjusting allowances for inflation [11].
As technology becomes a larger
factor in the construction industry more
companies are reaching farther across
the globe for projects which open up an
entirely new set of logistical challenges
involved with procuring materials and
equipment. Currency fluctuations have
long been recognized as an important
factor in projects involving the global
economy [17].
Many estimators are capable of
pricing construction projects based on
previous experiences, provided that the
work is similar in nature, size, and
demographics. However, the estimator
must take into consideration factors such
as the currency exchange rate if the
project is located outside of the US, and
the differing rate of inflation if such a
change has occurred.
In some cases, a fluctuation in the
exchange rate between the US dollar and
an international currency may occur
during the negotiation phase leading to a
difference in the estimate [17]. This
fluctuation may or may not be
temporary; there is no way to definitely
tell.
The estimator may not be able to
predict a change in currency fluctuation
or inflation, increasing the projects risk
and in most cases a percentage of money
is added to the budget to offset these
potential costs [11].
Owners in todays economic climate
are more cautious with funding than in
recent years. Inflationary pressures and
increased construction activity are
causing many building projects to come in
well over owners budgets.
Incidences of building projects
coming in over budget are not expected
to cease [18]. Under certain
circumstances a potential solution to this
unquantifiable risk to the contractor is
the use of cost reimbursable contracts.
These have many advantages for both the
owner and the contractor. One is a
reduction of the effect inflation has on
capital cost by allowing a fee to be paid as
a percentage of incurred cost.
Cost reimbursable contracts are used
in situations vulnerable to rapid change
to allow for flexibility to deal with the
diverse demands of the owners and
contractors [8].
When analyzing construction costs,
materials have a huge effect on the
overall cost of the project. This is true
regardless of the type of contract being
used. With the construction boom in
China creating a worldwide demand for
materials, prices are even more volatile.
This has pushed owners and contractors
to look for more efficient ways of
obtaining materials [13].
Currency Fluctuation and
Inflation Impact on
International Mega Projects:
A Mexican Case Study
Abstract: This article:
examines the challenges of accurately estimating construction costs for in-
ternational projects. A case study is used to illustrate the challenges that con-
struction projects in Mexico faced with the 2009 devaluation of Mexican currency.
Presents a hypothetical example and a case study of the Durango-Mazatlan
highway. The project consists of 143 miles of highway, 115 bridges and 63 tun-
nels.
Finds that the construction costs of highway Durango-Mazatlan in Mexico in-
creased by 20 percent because of cost increases tied to the peso-dollar parity.
Analyzes the impact to the project and discusses strategies that cost engi-
neers can use to minimize the risk of economic loss in international construction
projects resulting from political and economic instability.
The study concludes that using cost reimbursable contracts, transferring the
risk of cost uncertainty to the owner, maintaining contact with local subcontrac-
tors and suppliers and maintaining international project databases minimize the
risk resulting from currency fluctuations on international mega-projects. This ar-
ticle was first presented at the 2011 Annual Meeting as CSC-558.
Key Words: Construction costs, devaluation, estimation, inflation, international
and risk
TECHNICAL ARTICLE
Procurement of both materials and
equipment in the global economy
increases exposure to natural disasters
and transport incidents. Contractors face
these challenges when trying to secure
materials without having to pay an
excessive price, as a result of inflation
and currency fluctuations [17].
Inflation is not uncommon and
people have come to expect it as a fact of
life [13]. It is still difficult to predict, and
one tool estimators may use to help
mitigate the risk is the creation of a cost
database. It is especially important for
cost databases to be updated regularly in
order to be effective against potential
inflation and currency fluctuations when
estimating the cost of international
projects outside your own country [6].
When developing and maintaining a
cost database, the project should be
analyzed in regards to its size, year being
built, inflation rate, local market
condition, complexity, procurement
method, and site conditions. This is in
order to obtain an applicable and up-to-
date inflation index, and current
exchange rates for international
currencies [1].
Some countries react to inflation by
devaluating their currency, making their
exported materials cheaper and
therefore more attractive for other
markets to purchase in large quantities.
This may temporarily boost the countrys
growth, but in actualitydevaluation
aggravates inflation and causes the
currency rate to be even more erratic
[16]. The main goal is typically to boost
a countrys economy, not damage
others buying power, but devaluation
creates more harmful effects than good
outcomes [5].
When it comes to developing an
estimate for an owner, project
estimators have no control over
inflation, or over the fact that building
construction is at risk of much higher
material cost increases than the general
rate of inflation [13]. In a perfect global
economy, money would not be
susceptible to inflation or deflation and
every country would have equal buying
power [10]. All construction projects are
susceptible to the effects of inflation and
estimating the cost of international
projects is even more complex as it
involves working in international
currencies [6].
The effects of inflation and currency
fluctuations are particularly hard on
countries such as Mexico. For example,
Mexico experienced an unprecedented
devaluation between 2008 and 2009.
The exchange rate reached MX$15 per
dollar (see figure 1). This led to an
inflation increase of 40 percent,
compared to the previous year [4].
Mexicos Public Works and Related
Services Law
In order to address cost fluctuations
in Mexico, and to eliminate speculation
about the costs of construction projects
resulting from inflation and currency
fluctuations, Mexicos Public Works and
Related Services Law allows for costs to
be increased or reduced.
Article 56 of the Public Works and
Related Services Law states that costs
can be adjusted after proposals have
been submitted when the work has not
been performed according to the agreed
to schedule by both the owner and the
contractor.
The three possible cost adjustments
procedures, as stated in Article 57,
include the following.
Review of each contract price to
obtain the adjustment.
Review per price group, which
multiplied by the corresponding
volume of works to be performed,
represents at least 80 percent of the
total remaining amount of the
contract. And,
In the event of works where the
proportion in which the elements
participating in the total direct cost
thereof is set out, the corresponding
adjustment may be determined by
updating the cost of the elements
participating in such proportion. (p.
37) [9].
As stated in article 58, work that has
been delayed, according to the schedule
submitted as part of the bid documents,
can only be cost adjusted if the delay was
not attributable to the contractor.
If the delay was attributed to the
contractor, only the portion of the work
that would have not been performed
according to the original schedule can be
adjusted.
The Bank of Mexico publishes on a
bi-weekly basis cost adjustments for
many items, including materials typically
used in construction processes. If a
material is not included in this price list,
the contractor shall calculate the price
adjustment based on the guidelines and
methods issued by Bank of Mexico. For
cost revision and adjustment purposes,
the original date of the prices shall be
Figure 1Mexican Peso-US Dollar Exchange Rates
Between August 2008 and August 2009
the date of presentation and opening of
proposals [9].
A hypothetical example will be used
to illustrate the effect of Mexicos Public
Works and Related Services Law. The
example will look at two opposing
situations. First, when the Mexican peso
is stronger than when the contract was
awarded during the construction phase
and secondly, when the Mexican peso is
weaker than when the contract was
awarded than during the construction
phase.
Hypothetical Illustrative Example
In order to illustrate the impact of
the dollar-peso parity fluctuations and
the Public Works and Related Services
Law cost adjustment clause, consider the
following hypothetical illustrative
example.
Case #1
The peso was stronger during the
construction period than when the
contract was awarded.
A construction company bids
and is awarded a
MX$100,000,000 highway
project in August 2008, the
construction period is two years
and the company is expecting
to make a 10 percent profit on
the project. It was assumed that
labor was 40 percent of
construction cost, 40 percent of
material cost and 20 percent
equipment cost.
Consider the following facts in
reference to this Case #1 example:
Construction equipment used in
Mexico is often rented in dollars;
therefore it is subject to dollar-peso
currency fluctuations.
In August 2008, the exchange rate
was MX$10 per dollar, therefore
MX$20,000,000 equaled
USD$2,000,000, which was what
was budgeted in the original
estimate.
In August 2009, which was the
midpoint of construction,
USD$2,000,000 equaled
MX$25,074,000 (using an exchange
rate of MX$12.87). This increased
the total construction cost from
MX$100,000,000 to
MX$105,074,000, which is a 5.5
percent cost growth.
In this case, the contractor had to
take a $5,074,000 loss.
Using the same example, lets add to
the contract wording establishing that
the cost will be adjusted following the
indices published by Bank of Mexico, as
allowed in article 56 of the of the Public
Works and Related Services Law.
Including this adjustment provision
would have the following impacts on the
Case #1 example:
During this time period, Bank of
Mexico adjusted the index of
equipment rental from 113.4 to
129.36, which is a 14.07 percent
increase.
In this case the public owner
adjusted the contractors bid from
MX$20,000,000 to MX$28,000,000.
Because of equipment rental cost
increases, the total budget
increased from MX$100,000,000 to
MX$108,000,000.
In this case, the public owner is
responsible for the MX$8,000,000
cost growth.
Now, lets use basically the same
example, but during a time period when
the Mexican peso was stronger during
the construction period than when the
project was awarded.
Case #2
The peso was stronger when the
contract was awarded than during the
construction period. Consider the
following facts in reference to this Case
#2 example:
In August 2009 the exchange rate
was MX$12.87 per dollar, therefore
MX$20,000,000 equaled
USD$1,554,002, which was what
was budgeted in the original
estimate.
In August 2010, which was the
midpoint of construction,
USD$1,554,002 equaled
MX$19,471,645 (using an exchange
rate of MX$12.53). This decreased
the total construction cost from
MX$100,000,000 to
MX$99,471,645, which is a -0.5
percent cost growth.
In this case the contractor had
$528,355 extra profit.
Using the same example, except
establishing in the contract that the cost
will be adjusted following the indices
published by Bank of Mexico, as allowed
in article 56 of the of the Public Works
and Related Services Law. Then the
impact would be as follows:
During this time period, Bank of
Mexico adjusted the index of
equipment rental from 129.36 to
126.78, which is a 2 percent
decrease. The public owner
adjusted the contractors bid from
MX$20,000,000 to MX$19,601,113.
In this case, the public owner saved
MX$398,887.
As stated earlier in this article, and
as shown in the example, Mexicos Public
Works and Related Services Law allows
contract amounts to be increased or
reduced according to the indexes
published by Bank of Mexico.
Government Pays LessWhen the
Mexican peso is stronger against the
dollar during the construction
period than when the contract was
awarded, the contract is reduced
and the government pays less than
what it originally agreed to pay in
the contract.
Government Pays MOREWhen
the Mexican peso is stronger against
the dollar when the contract was
awarded than during the
construction period, the
government pays more than what it
agreed to in the contract.
Having walked the reader through
these hypothetical examples, we now
present the highway Durango-Mazatlan
case study. This highway was being built
during the 2009 Mexican peso
devaluation; therefore the Mexican peso
was weaker during the construction
phase than when the contract was
awarded.
Case Study: Highway Durango-Mazatlan
The Highway Durango-Mazatlan
project was the largest construction
project let to date in Mexico. It was
designated by Mexicos president as the
project to commemorate the
bicentennial anniversary of Mexicos
independence.
This mega project was designed and
it is being built to highlight Mexicos
capability of designing and building
state-of-the-art transportation projects.
The planning and procurement phase for
Highway Durango-Mazatlan started in
2000 when the government decided to
make a national priority to modernize
Mexicos highway infrastructure,
generate employment, and encourage
development.
The only existing travel route
between the city of Durango and the
port of Mazatlan was a narrow highway
built in 1960. The old highway consisted
of 340 kilometers (211 miles) and it takes
approximately six hours to travel
between Durango and Mazatlan. The
new highway cuts through the mountain
range reducing the travel distance to 267
kilometers (166 miles) with a predicted
travel time of less than three hours [12].
During the early planning stages of
the project, the Mexican Ministry of
Communications and Transportation
(Secretaria de Comunicaciones y
Transportes in Spanish or SCT)
acknowledged the need of right-of-way
through ejidos.
Ejidos are communal farmland
which was expropriated in the 1920s by
the government from large property
owners and corporations and given to
community members to work the land.
This land could not be sold until 1992,
when a legislation change lifted this ban
[15].
Expropriation of ejidos for some
public projects has resulted in clashes
between the government and
community members causing significant
delays and sometimes even
cancellations of the projects. With these
in mind, SCT started buying right-of-ways
in 2002, six years before construction
started.
Highway Durango-Mazatlan
required complex technical solutions to
meet the transportation infrastructure
requirements of its physical location. The
highway will cross the Sierra Madre
Occidental mountain range. The highway
connecting Durango and Mazatlan in
Mexico consists of 143 miles of highway,
115 bridges, and 63 tunnels.
The project includes the
construction of the Bicentennial Bastion
Bridge across the Baluarte River canyon.
This is a cable stayed bridge, referred to
as the Puente Baluarte, which has a total
length of 1,124 m (3,688 ft) with a center
span of 520 m (1,706 ft) at a height of
390 m (1,280 ft). In addition to the
Bastion Bridge, the project includes
seven bridges with heights greater than
90 m (300 ft) [14].
Since Highway Durango-Mazatlan is
in a remote location, material and
equipment access is challenging. Rubio
Rodriguez, project director for Highway
Durango- Mazatlan, employed by SCT,
stated that in the state of Sinaloa the
contractor had to build 160 kilometers
(99 miles) of access roads to be able to
build 45 km (28 miles) of highway. [A.
Rubio Rodriguez, personal
communication, September 13, 2010].
SCT is also paying particular
attention to public outreach. Highway
Durango-Mazatlan is in the news often
and was branded as the project to
commemorate the bicentennial
anniversary of Mexicos independence
from Spain. The Bicentennial Bastion
Bridge receives particular attention
because of its large span and technical
complexity.
Contract Type and Cost Adjustments
Highway Durango Mazatlan was a
design-bid-build lump-sum contract.
However, as stated earlier in this article,
Table 1 Construction Contracts for Highway Durango-Mazatlan [14]
Mexicos Public Works and Related
Services Law allows adjustment of the
costs that make up the unit prices in the
contract, based on the index published
by the Bank of Mexico.
SCT decided to adopt this approach
to eliminate speculation about the cost
of the project because of inflation and
currency fluctuations. This contract type
makes SCT at risk for cost fluctuations.
The project was also funded by the
national fund for infrastructure (Fondo
Nacional de Infraestructura or Fonadin)
and the Trust Durango-Mazatlan
(Fideicomiso Durango-Mazatlan or
Fiduma) [14].
As shown in table 1, the
construction phase was divided into four
contracts to minimize the risk of a
company defaulting and to allow several
companies to participate in the
construction phase. The request for
proposals stipulated that no company
could be awarded more than one
project. SCT awarded each contract to
the lowest bidder who met the criteria
stated in the RFP.
Highway Durango- Mazatlan was
being built in 2008, when the Mexican
peso was devaluated. This change in the
peso-dollar parity caused the indices
published by Bank of Mexico to increase,
which resulted in a cost increase from
$15 billion pesos to $18 billion pesos [3].
Since the public owner was at risk for
cost fluctuations, it had to pay 20
percent more to the contractors.
Even though international construction
projects may be riskier than national and
local projects, often the rewards of doing
business in international markets make
these projects attractive to construction
companies.
International construction projects
allow companies to smooth business
cycles when the economy is slow in the
national market and grow their bottom
line.
In the case of the highway Durango-
Mazatlan, the public owner was at risk
for cost fluctuations which eliminated
speculation about the cost of
construction projects because of
inflation and currency fluctuations. This
allowed the contractors to bid the
project without escalating their costs or
adding a contingency for unpredictable
currency fluctuations.
As shown in this article, estimating
the cost of international construction
projects adds another layer of
complexity for cost estimators. In
addition to taking into account the
traditional factors, estimators must also
take into account other factors such as
currency fluctuations and increased risk
for material being damaged during
transportation. In order to reduce the
economic risk for construction
companies doing business in
international countries, cost estimators
may consider the following
recommendations:
Consider using cost reimbursable
contracts. This type of contract
minimizes the risk to contractors
resulting from inflation and
currency fluctuations. Typically, the
contractor fee is a percentage of the
construction cost.
Investigate whether the country
allows clauses similar to Mexicos
Public Works and Related Services
Law that allows contracts to be
increased or reduced, based on an
index.
Maintain contact with local
subcontractors and suppliers that
can provide current pricing
information. And,
Develop and maintain an
international project database that
includes information about the
project including, location, size, year
built, inflation rate, currency rate,
local market conditions, etc.
REFERENCES
1. Assiskumar, S., Historical
Construction Cost Database and Its
Application, AACE International
Transactions, AACE International,
Morgantown, WV, 2008.
2. Banco de Mxico, ndices de Precios
al Consumidor y UDIS: Actualizacin
de costos de las obras pblicas,
referenced on December 6, 2010,
from:
http://www.banxico.org.mx/polmo
neinflacion/estadisticas/indicesPrec
ios/CosObrasPub.html.
3. El Economista, Construccin de
autopista Durango-Mazatln se
encarece, 2010, referenced on
September 6, 2010, from:
http://eleconomista.com.mx/indust
ri as/2010/03/01/construcci on-
autopista-durango-mazatlan-se-
encarece.
4. Explorando Mexico (n.d.),
referenced on September 6, 2010,
f r o m :
www.explorandomexico.com/about
-mexico/6/264/
5. Gandel, S., A Currency Race to the
Bottom, Academic Search Premier,
January 17, 2001.
6. Hewitt, P.M., Development of an
International Cost Database, AACE
International Transactions, AACE
International, Morgantown, WV,
2001.
7. Hollmann, J.K., and L.R. Dysert,
Escalation Estimation: Working
With Economics Consultants, AACE
International Transactions, AACE
2007.
8. Nkuah, M.Y., Progress and
Performance Control of a Cost
Reimbursable Construction
Contract, Cost Engineering, AACE
pages 13-18, May 2006.
9. Public Works and Related Services
Law, 2009, referenced on
September 6, 2010 at:
http://www.diputados.gob.mx/Leye
sBiblio/pdf/56.pdf
10. Rahn, R.W., A Constant Unit of
Account, Cato Journal , pages 521-
533, Fall 2010.
11. Rajpatty, S.J., The Role of the
Estimator in Today's Construction
Industry, AACE International
Transactions, AACE International,
Morgantown, WV, 2008.
12. Revista Consultora, Puente
Baluarte: Un Gran Reto para la
Ingeniera Mexicana, 2010,
f r o m :
http://www.revistaconsultoria.com.
mx/articulos/puente-baluarte.html.
13. Rowse, B., Construction Material
Costs: Recent Years and Beyond,
Cost Engineering, AACE
January 2009.
14. Secretara de Comunicaciones y
Transportes, Autopista Durango-
Mazatln, 2008, referenced on
September 6, 2010, from:
http://www.sct.gob.mx/uploads/m
edia/080722_Conferencia_de_pren
sa_-_Durango-Mazatlan.pdf.
15. Secretara de la Reforma Agraria,
Reforma constitucional de 1992: La
cmara de diputados, 2009,
from:
http://www.sra.gob.mx/sraweb/con
oce-la-sra/historia/la-camara-de-
diputados/.
16. Seymour, R., Currency Wars, The
Middle East, pages 44-45, January
2011.
17. Thompson, D.M., Plan Local, Buy
Global, AACE Transactions, AACE
1996.
18. Waddle, T. W., The Contractor's Role
in Building Cost Reduction After
Design (Bringing a Project Into
Budget), Cost Engineering, AACE
pages 14-21, February 2008.
ABOUT THE AUTHOR
Dr. Carla Lopez del Puerto, CCC, is
with the Colorado State University. She
can be contacted by sending e-mail to:
carlalp@colostate.edu
Expertise. Technology. Results.
Energy and Sustainability
Management
Capital Budgeting and
Programming
Sustainable Planning and
Design
Program and Construction
Management
Capital Asset Management
www.mocasystems.com
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I
t is a generally accepted principle in
construction that only delays critical
to project completion can be
considered compensable, or liable, from
the owner. Non-critical delays simply
absorb project float, and do not allow
recovery of delay (time-related)
damages. As such, a subcontractor that is
extended on a project because of a non-
critical delay, may not be able to recover
for the costs of its superintendent, office
staff, trailers, and sometimes equipment.
Another concern for subcontractors
is that GCs often insist on contract
language that delay costs are only
reimbursable if liability exists and delay
costs are actually recovered from the
owner. The inclusion of such language
can shift the risks of delay on
construction projects to subcontractors
the party that may have the least
amount of control over the progress of
construction. But that doesnt mean the
subcontractor does not actually incur
delay-related costs, including when the
subcontractor incurs delays to its work
that is not on the projects critical path.
A common example of this type of
delay is when a drywall subcontractor
who is delayed on a particular floor
because of an owner change in the
rough-in electric, but the project
schedule shows the drywall activities
have sufficient float remaining to absorb
the delay. The overall project completion
date is not extended, but the drywall
contractor is forced to be on the project
longer than anticipated. In this situation,
the question becomes: Is the
subcontractor entitled to recover for the
extra costs it has incurred because of
these delays?
To address such questions and
facilitate the discussion, this article is
organized into the following sections:
Pass-through claims: The contractual
relationship between a
subcontractor and an owner.
Recovering delay damages through
the Miller Act.
Combating the no damage for delay
clause. And,
Overall strategies for proving a
subcontractors delay claim.
The recommendations in this article
are technical scheduling suggestions
based on the authors experience with
construction delay and disruption cases.
We recommend that parties that may be
involved with these issues seek guidance
related to any potential legal implications
from a knowledgeable construction
attorney.
Pass-Through Claims: The Contractual
Relationship Between a Subcontractor
and an Owner
In general, a subcontractor does not
have standing to bring a suit against the
owner for damages caused by the owner
because of a lack of privity of contract.
See Erickson Air Crane Co. of Wash. v.
United States, 731 F.2d 810, 813
(Fed.Cir.1984).
However, under certain
circumstances, subcontractors are able to
recover damages caused by the owner
through the use of pass-through claims.
A pass-through claim is a claim:
by a subcontractor who has incurred
damages resulting from the actions
of the owner/government with
whom it has no contract; and
submitted by the GC who has a
contractual relationship with both
the subcontractor and the
owner/government.
See: Interstate Contracting Corp. v.
City of Dallas, 135 S. W.3d 605, 610 (Tex.
2004).
As such, the claim from the
subcontractor passes-through the
prime contractor to the
owner/government.
In order to submit a pass-through
claim to the owner, the general
contractor must, sponsor and certify the
subcontractors claim and bring the
action in its own name [6]. This
certification, must be submitted with
the prime contractors belief that there is
good ground for the claim, which is
different from the prime contractors
belief that the claim is certain [6]. In
addition, a contractor is limited to passing
through only those suits for which it is
liable to the subcontractor. See Severin v.
United States, 99 Ct. Cl. 435 (1943).
The Severin Doctrine
With respect to contracts with the US
federal government, the Severin doctrine,
developed from the case of Severin v.
United States, 99 Ct. Cl. 435 (1943),
places limits on the governments
exposure to pass-through claims.
In the Severin case, the court held a
subcontractor could not recover against
the government in a representative
Can a Contractor Have a
Critical Path Delay When the
General Contractor Does Not?
Christopher W. Carson, PSP; Mark Boe, PE;
and Shannon L. Campbell, PSP
Abstract: To prove entitlement to delay damages, it has been reasonably estab-
lished (by best practices, as well as case law) that a contractor must show a critical
path delay to project completion. But, what happens when an owner-impact ex-
tends the time a subcontractor must remain on the job, but doesnt extend the
project completion date? Shouldnt the owner be liable for any damages to the
subcontractor? If not the owner, wouldnt the GC have some risk? What type of
analysis would be required to prove entitlement to these subcontractor delays?
Does current case law have any answers? This article will discuss the issues, ex-
amine existing case law, establish how experts analyze and prove subcontractor
delays, and provide an example of an analysis for this condition. This article was
first presented at the 2011 Annual Meeting as CDR-635.
Key Words: Claims, contracts, contractors, critical path delay, damages, and sub-
contractors
TECHNICAL ARTICLE
lawsuit if the prime contractor was not
also liable to the subcontractor on the
same claim. See Severin, 99 Ct.Cl. at 443.
Thus, under the Severin doctrine, a
prime contractor may sue the
government on behalf of its
subcontractor, in the nature of a pass-
through suit, for costs incurred by the
subcontractor [because of the
governments conduct] . . . [i]f the prime
contractor proves its liability to the
subcontractor for the damages sustained
by the latter . . . a showing [which]
overcomes the objection to the lack of
privity between the government and the
subcontractor. See Harper/Neilsen-
Dillingham, Builders, Inc. v. United
States, 81 Fed. Cl. 667, 674-6-75 (2008);
see also E.R. Mitchell Constr. Co. v.
Danzig, 175 F.3d 1369, 1370 (Fed. Cir.
1999).
The burden of proof under this
doctrine has shifted to the owner to
prove that the prime contractor is not
liable to the subcontractor for the
respective claims. See Erickson Air Crane
Co. of Wash. v. United States, 731 F.2d
810 (Fed.Cir.1984); Blount Bros. Constr.
Co. v. United States, 171 Ct.Cl. 478, 346
F.2d 962, 964-65 (1965).
Liquidating Agreements
Through the years, the Severin
doctrine has been refined to narrow the
severe consequences of its strict
application.
One example of this narrowing is
that the Severin doctrine requires a
complete release or contract provision
immunizing the prime contractor from
any liability to the subcontractor. See
E.R. Mitchell Constr. Co. v. Danzig, 175
F.3d at 1370 (Fed. Cir. 1999).
Thus, the Severin doctrine does not
bar a suit against the government if the
GC and the subcontractor enter into a
well crafted liquidating agreement.
The concept surrounding a
liquidating agreement is that the
subcontractor releases the GC from
liability, and in exchange, the GC agrees
to pursue the claims against the owner
on behalf of the subcontractor.
A liquidating agreement has two
seemingly opposite purposesfirst, to
satisfy the Severin doctrine requirement
that the GC is technically and legally
liable to the subcontractor for the claim
being passed through; second, to limit
the risk to the GC in the event that the
pass-through claim is not successful.
One New York Supreme Court
stipulated what was required in a
liquidating agreement:
the prime contractor acknowledges
liability to the subcontractor for
increased costs;
the prime and sub agree to
liquidate that liability to the
amount the prime is able to recover
from the project owner; and,
the prime agrees to pursue the subs
claim and pass through the
recovery, if any, to the sub.
See, e.g., Bovis Lend Lease LMB Inc.
v. GCT Venture, Inc., 285 A.D.2d 68, 728
N.Y.S.2d 25, 27 (N.Y.App.Div.2001).
In entering these agreements it is
important for a subcontractor to make
certain that it has some authority or
influence over the owner/GCs ability to
settle claims. Without this authority, the
owner/GC may settle claims without
regard to the interest of the
subcontractor.
The following are examples of how
pass-through claims are handled in the
US federal courts:
E.R. Mitchell Constr. Co. v. Danzig, 175
F.3d 1369, 1370 (Fed. Cir. 1999)
In this case, the US Federal Circuit
found the government liable for
unabsorbed home office overhead costs
of a subcontractor whose work was
delayed by the owner, even though the
prime contractor was not delayed in the
completion of the overall project.
The subcontractor, Clontz-Garrison
Mechanical Contractors, Inc., (CG), was
delayed 60 days by owner-caused poor
plans and specifications. CG submitted a
pass-through claim to E.R. Mitchell
Construction Co., (Mitchell), who
brought a suit against the government
on behalf of CG.
The court found that:
There was no dispute regarding the
governments liability for the faulty
plans and specifications or the
number of days that the
subcontractor was delayed.
The government had approved the
schedule which stipulated the
timeframe in which CG was
supposed to work.
The government was put on notice
that the delay was increasing the
costs of both Mitchell and CG.
The subcontractor satisfied all of the
requirements for entitlement to
Eichleay damages. And,
it should be clear that our
decision on the legal issue in this
case is dependent on the operative
facts of this case, which include the
awareness and approval by the
government of CGs duty to have
completed its work by a date
certain.
While this case clearly shows an
example of case law where the owner is
responsible for delay damages resulting
from owner issues that were not on the
critical path, the case has limited
application because the government
failed to raise the Severin doctrine as a
defense in the case. Thus, the appeals
court did not allow it to then raise this
defense on appeal. Had the government
raised this defense at trial, the
government may have been able to
prove that the contractor was not liable
to the subcontractor for these delay
costs. Assuming that the government
succeeded in this assertion, the outcome
of this case may very well have been
different.
J.L. Simmons v. United States, 304 F.2d
886 (Ct. Cl. 1962)
In J.L. Simmons v. United States, the
court defined the basic requirements of
a liquidating agreement. The court held
that where a prime contractor agreed to
reimburse its subcontractor for damages
suffered at the hands of the government,
but only as and when the prime received
payment for the subcontractor from the
government, the prime may maintain its
action against the US on behalf of the
subcontractor.
The court further held, under the
specific facts of that case, that a waiver
of lien and release did not negate an
action by the prime contractor on behalf
of its subcontractors where the
subcontracts did not expressly negate
the primes liability, even though the
waivers provided that if the prime was
unsuccessful in prosecuting the
subcontractor claims the prime's liability
would be extinguished.
In US state courts, the extent to
which a contractor must admit liability to
a subcontractor before sponsoring a
claim varies. As stated elsewhere in this
article, a subcontractors success is
wholly dependent on the circumstances
of the subcontractors case and the
jurisdiction in which the case will be
heard.
There are two basic arguments
which favor the sponsorship of
subcontractor pass-through claims.
First, it facilitates the settlement of
claims among the owner, prime and
subcontractors, by bringing all the
parties together in the same forum to
resolve disputes. Second, it allows the
contractor to avoid the two-step process
of litigating with the subcontractor and
then turning to the owner to reclaim
these damages [11].
Recovering Delay Damages Through the
Miller Act
Most people in the construction
business are familiar with the intent of
the Miller Act, 40 U.S.C. 3133. On non-
federal projects, first and second tier
subcontractors can typically add a lien to
a project to secure payment for labor
and materials which were provided for
that project.
Because mechanics liens are not
allowed on US federal projects, the
Miller Act was passed requiring a GC to
secure payment bonds as a means for a
subcontractor to receive payment for
labor and materials furnished [5]. A
discussion on payment bonds is relevant
to this article based on the success
subcontractors have had in recovering
delay damages through the use of the
payment bond.
The general trend with regard to
recovering delay damages on a Miller Act
payment bond is that they are
recoverable especially if they are
characterized as increased labor and
material costs [3]. The fact that the
delay may be the owners fault and not
the prime contractors is not relevant [3].
There are some general policy
considerations that have supported a
broader interpretation of the Miller Act
with regard to delay damages.
The following rationale would allow
for typical delay costs to be recovered by
the Miller Act:
The cost of labor and material
on a construction project
includes supervision, job site
office, and other overhead
costs, which are recoverable
against a Miller Act bond as part
of contract costs. Increased or
extended overhead costs are
typically recoverable on a Miller
Act bond and should still be
recoverable when increased by
delays [3].
In one case, a court awarded delay
damages because of active interference
of the prime contractor despite the
existence of a No Damage for Delay
clause [4] (discussed more fully below).
Another court determined that without
the ability to recover delay damages
through the payment bond, the
subcontractors options for recovery of
said damages would otherwise be
inadequate [4].
On non-federal cases, state courts
have had differing opinions with regard
to what extent, if any, a subcontractor
can recover delay damages on a
payment bond [3]. Some states have
enacted little Miller Act statutes,
which allow their state courts to
interpret the state statutes based on the
US federal act. As previously mentioned,
it is wholly dependent on the
circumstances of the subcontractors
claim.
There are certain issues which a
subcontractor must be aware of with
respect to payment bonds if it plans on
claiming against a GCs payment bond to
recover delay damages:
It is the subcontractors
responsibility to be aware of
whether or not a payment bond is
required for a project which it is
considering working on. For
instance, a payment bond is not
required under the Miller Act for
projects awarded under $100,000
[4].
If required by the contract, it is
equally important that a
subcontractor follow up and ensure
that the payment bond is attained
by the prime contractor despite the
fact that attainment of a bond may
be required by the contract.
In Greenville Independent
School District v. B&J Excavating,
Inc., the subcontractors and
suppliers were unable to recover
damages on a public job because of
a failure by the prime contractor to
obtain a payment bond.
Certain contract language may
be included to require a contractor
to furnish a copy of the bond to the
subcontractor (or other beneficiary)
such as the language included in
A201-207 Section 11.4.2 [13].
Filing suit for a Miller Act payment
bond must be initiated within 12
months of the subcontractor
providing the last work on the
project [3]. A subcontractor should
be aware of any contract language
attempting to require dispute
resolution which would preclude it
from initiating the Miller Act
payment bond in time.
The amount of liability that a surety
has under the payment bond is
limited to the penal sum set forth on
the bonds face. Consequently, in a
situation where there are multiple
claims such that the amount of
claim is higher than the penal
amount, then the total pool of
successful bond claimants will take a
pro rata share of the penal sum [4].
Combating the No Damage for Delay
Clause
The existence of the No Damage
for Delay (NDFD) clause is to protect the
owner or GC from paying monetary
damages when a project is delayed.
However, the existence of widely
accepted exceptions and lack of
enforceability in some states has
muddied the waters with respect to
the success, or lack of success, that an
owner/GC may have with using this
clause as a defense.
In any case, it is good business sense
for a subcontractor to plan that the
NDFD clause will be enforced. Possible
locations in a contract for the NDFD
clause are the following sections: Time
for Completion; Scheduling and
Delays; and Claims.
The typical clause may read as
follows:
No payment or compensation
of any kind shall be made to the
contractor for damages
because of hindrance or delay
from any cause in the progress
of the work, whether such
hindrances or delays be
avoidable or unavoidable [12].
Since subcontractors are typically at
a negotiating disadvantage and since
these clauses merely shift all delay risk to
the contractor/subcontractor, some
states have determined that these types
of clauses are void and unenforceable
(law varies from state to state regarding
validity of this clause on both public and
private contracts) [12].
Even in states where the clause is
enforceable, there are common
exceptions to its enforceability. The
following are the four most recognized
exceptionsthey involve situations
where the delay was:
not contemplated by the parties;
so unreasonable in length as to
amount to an abandonment of the
project by the owner;
caused by acts of bad faith or fraud
by the owner; or
caused by active interference by the
owner. And,
A fifth exception is also sometimes
cited-delays caused by gross
negligence [12].
Sometimes the NDFD clause is
incorporated by reference or as a flow-
down provision. As with most legal
disputes, there is differing case law as to
whether or not these flow-down
provisions or incorporations by
reference are enforceable [12].
Language providing disclaimer
clauses may occur in various places:
Instructions to Bidders, Terms and
Conditions, or elsewhere in the contract.
In addition, a subcontractor must be
aware of how a NDFD clause will affect a
contractors ability to submit a pass-
through claim to the owner. If the owner
can prove that the contractor is not
liable to pay damages to a subcontractor
because of a NDFD clause, a pass-
through claim may not be allowed [12].
A prime contractor in New York was
able to circumvent this situation by
entering into a liquidating agreement
with its subcontractor wherein it
accepted liability to the subcontractor
for delays caused by the owner. In this
case, the court ruled that the prime
contractor could sponsor a pass-through
claim by accepting liability in the
liquidating agreement despite the
existence of a NDFD clause in the
contract between the prime and the
subcontractor [10].
In conclusion, awareness of the
terms of the contract and rules by which
a subcontractors state is governed is
essential to ensuring that a
subcontractor has the ability to pursue
damages for delays in the future.
Overall Strategies for Proving a
Subcontractors Delay Claim
Implementation of strategies for
ensuring success in proving a delay claim
starts at the very beginning of the
project and continues through to the
end. There are important factors to
consider at every phase of the project.
Review and Negotiation of the Contract
At the beginning of the project, a
subcontractor should ensure that a
careful review of the contract is
conducted (assisted by a knowledgeable
construction attorney). Assume that a
No Damage for Delay clause will be
enforced. A subcontractor should
attempt to remove, or at least lessen,
the scope of the clause such that the
subcontractor only assumes risk for
specific causes of delay.
One representative clause prohibits
the recovery of delay damages unless
there is active owner interference as
defined by the following:
Another clause allows a grace
period before delay damages
are triggered. This would allow
the contractor/subcontractor
the ability to calculate a
contingency for the delay costs
during this aforementioned
grace period. The following is a
portion of the clause
referencing the existence of a
grace period:
The Contractor shall be
permitted an adjustment in the
Contract Sum if any Delays,
either individually or taken in
the aggregate, cause the
Contract Time to be increased
by more than ( ) days (the
Grace Period) [2].
While not specific to the situation in
question where a subcontractor is
delayed but the overall project is not
delayed, certain alternate contract
provisions may be worth considering in
order to overall increase the likelihood of
success in settling disputes after the fact.
These types of provisions include
the following, but are certainly not
limited to them:
include more specific definitions of
events that justify a time extension;
describe the proof required to
justify a time extension for
excusable and compensable delay;
or,
insert a provision on pricing of delay
claims [2].
An example of the provision for
pricing delay claims is as follows:
For each day of delay to the
critical path caused by [insert a
description of the relevant
delay events], Contractor shall
be entitled to (a) $ per day
for its general conditions or
jobsite overhead without any
additional markup for profit or
overhead; and (b) its increased
costs for Subcontractor Work
caused solely by the applicable
delay with a markup of % for
profit and overhead [2].
While the clauses are generally
meant for the owner/contractor
agreement, they could certainly be
changed to be applicable to the
subcontractor agreement.
A subcontractor should also review
the contract for conflicts. For example,
the contract may state one thing, but an
incorporation of a clause from the
owners contract to the GC may state
something different. In addition, if it is a
US federal project, be aware of whether
or not a payment bond will be required.
If it is, follow up to ensure that it is
obtained.
Another consideration is to be
aware of the jurisdiction where the
contract states that a dispute will be
settled. In one case, a project was in
Georgia, but the contract stated that any
disputes would be settled by Ohio law.
The subcontractor was awarded two
million dollars because an Ohio statute
did not enforce a No Damage for Delay
clause when it is the owner or
contractors act or failure to act which
caused the delay [9].
The authors have seen cases where
the GC put the owner on notice and
requested that the subcontractor
participate in preparing documentation
to secure its delay and disruption costs,
but the subcontractor didnt respond
until well after the project was complete.
Because the GC negotiated with the
owner, the subcontractor lost the ability
to pursue its pass-through claim, and
was forced to negotiate or litigate only
with the GC.
Timely Notice
During the project, there are also
many issues to consider. As with the No
Damage for Delay clause, a
subcontractor should assume that
Timely Notice clauses will be enforced.
In fact, there are multiple cases where
such clauses have been enforced.
It is especially important to keep a
prime informed: A lack of information
regarding a subcontractors delay claim
may compromise the prime contractors
ability to obtain a remedy from the
project owner [8]. If an owner is not put
on notice regarding the delays that have
occurred, the owner has no opportunity
to remedy the problem, take action to
mitigate the damages that delay causes,
or know that the contractor intends to
seek additional compensation or a time
extension [7].
Many of these suggestions are
important for any type of claim to be
pursued whether it is against the prime
contractor or intended to be passed
through to the owner. In particular, a
second look at Mitchell vs. Danzig serves
as a reminder that an owner must be
made aware of certain issues at the time
they are occurring. Part of the success
for the subcontractor in that case is
because of the fact that the government
was made aware of the delay
contemporaneously.
Waiver of Rights
During and after a project, a
subcontractor should be aware of a
possible waiver of its rights to pursue a
claim. This could be in the form of a
waiver as part of a payment application
or when executing a change order
request. A subcontractor should ensure
that there is some form of a reservation
included if it is contemplating submitting
a delay claim.
Good Documentation
Good documentation is another key
to ensuring that the subcontractor is
able to prove the damages it has
incurred as a result of an owner change
or decision. Accurate record keeping in
the form of bid documentation, daily
reports, pay requisitions, time and
materials invoice slips, correspondence,
input to schedule updates (preferably in
the form of written correspondence),
and weekly and/or monthly meeting
minutes are examples of the types of
documents that are needed to increase
the success in documenting damages. A
subcontractor should also track
expenses by base contract, change order
and/or disputed work.
Involvement in the Baseline Schedule
and Subsequent Updates
Finally, it is important for the
subcontractor to be involved in the
development of the baseline and
subsequent updates of the schedule to
be approved by the owner. In one case,
a subcontractor relied on one schedule
while the prime contractor relied on a
different schedule. In this case, the
boards decision was favorable to the
government. Fru-Con Constr. Corp.,
ASBCA 53544, 02-1 BCA 31729.
From the subcontractors point
of view, this case emphasizes
one reason why a sub should
participate in the creation of
the contractors CPM schedule.
The sub needs to be sure that
adequate time is available for
its work and, if early completion
is contemplated by the sub,
whether it will be prevented
from doing so by other
activities on the schedule [1].
The subcontractor should provide
detailed needs to the GC for any
scheduling efforts, carefully identifying
the subcontractors period of
performance, and the basis of that
period. This includes sizes of crews,
number and makeup of workers on the
crews, and sequencing needs such as the
number of crews planned to work
concurrently. The phasing and
sequencing of the subcontractors work
is essential; if the subcontractors work
requires stockpiling of materials, then
changes in the sequencing required by
the project will likely cost the
subcontractor additional labor and time
to re-stockpile materials. Shifting from
an orderly flow of work to an irregular
schedule will decrease the
subcontractors labor efficiency and
increase costs to the subcontractor.
Most subcontractors plan for regular
wage rates for their workers, but many
subcontracts include language that
permits the GC to force the
subcontractor to work as directed by the
GC. This includes requirements to work
weekends and holidays, absorbing any
overtime required, even if the delays are
not the fault of the subcontractor.
In addition, with the preparation
and publication of the periodic schedule
updates, it is not unusual for the GCs
scheduler, as directed by the project
manager, to reduce subcontractor
activity durations, or to overlap the
activities, changing the planned
sequential work to concurrent work.
This will rapidly increase labor
requirements, generally reduce labor
efficiency and increase costs. It is
imperative that the subcontractor
reviews each and every schedule update
or revision to ensure that no changes are
made that will decrease productivity or
increase risk to the subcontractor.
Another risk that may occur with the
schedule updates is movement of the
subcontractors start date or completion
date because of interference from other
trades, the GC, or the owner. If this
occurs, at the earliest recognition of the
problem, notify the GC if the changed
date will cause additional costs.
Other ways to minimize risks to the
subcontractor include insisting on
baseline and update printouts that show
total float values to determine if the
subcontract work is on the projects
critical path, and if not, how close the
work is to critical.
An important question that a
subcontractor may ask is how to portray
the delay it is experiencing in the
schedule updates. The first question is
whether or not the owner interference
has added scope to the subcontractors
work. In this situation, the answer may
be easier. A change order could be
negotiated for the extra work which
would include an appropriate markup for
overhead and profit.
However, this markup may not cover
the cost of mobilization/demobilization
which may be required dependant on
when the extra work occurs. In this case,
an insertion of a fragnet into the
schedule may be appropriate. This
fragnet might show previous completion
of base contract or non-disputed work
and a subsequent remobilization of a
work force to complete the new work.
A more difficult situation would
occur if there is no change to the scope
of work of the subcontractor. Perhaps
the subcontractors time of performance
is extended on the contract because of
issues beyond its scope of work.
In this case, the subcontractor
would need to show on the schedule
how the duration for its scope of work
has increased. The subcontractor would
also need to be able to explain and
document that the increased duration
was not merely because of its own
inability to complete the work on time.
A fragnet might be necessary to
show a stoppage of work and
subsequent restart because of the owner
change. In the example used in the
introduction regarding the delay of the
drywall subcontractor, the fragnet could
show the following: a start of work by
the drywall subcontractor; a stoppage of
work to fix the change in the rough-in
electrical; and a subsequent restart of
work on the drywall. The effect is the
drywall subcontractor is on the jobsite
longer than anticipated.
For that example, the ability to show
this sequence of events on the
contemporaneous schedule updates
would be very helpful in proving the
subcontractors delay. However, this
type of detail may not have been added
contemporaneously. It is then up to the
subcontractor to show the delay using
contemporaneous documentation (in
particular, meeting minutes,
correspondence, daily reports, etc.), and
might require some type of forensic
schedule analysis to determine the
actual effects of delay or disruption.
Loss of efficiency problems can most
easily be demonstrated through the use
of a measured mile type of disruption
analysis, which requires good
documentation of both the original plan
of resources, as well as the actual
consumption of resources, on the
project.
In sum, certain factors are key to a
subcontractors successful pursuit of a
delay claim:
Contractual negotiations prior to
the start of work.
Involvement in, and documented
feedback for, the baseline schedule
and subsequent updates.
Awareness of the rights and
obligations of the subject contract.
And,
Timely notice and good
contemporaneous documentation
which shows how the subcontractor
was affected by a specific change.
These are general recommendations
to ensure that a subcontractor has the
best chance at recouping its delay costs
because of owner changes on a project.
A
s has been demonstrated, there
is no clear-cut answer as to what
delay damages a subcontractor
may be able to recover because of
owner-caused issues. The specific set of
circumstances and the jurisdiction of the
individual case are the determining
factors of the outcome for each
situation.
However, a subcontractor should do
everything it can to increase its chances
of attaining a favorable outcome (for any
damages it is seeking). The following
recommendations should be followed:
Negotiate the Contract Try to
include language that is more
favorable to the subcontractor
especially in terms of a possible No
Damage for Delay clause.
Know the Contract Follow the
requirements of the contract
including giving timely notice of
present and future claims.
Be involved in the generation of the
baseline schedule and give input for
the schedule updates. Know how
your scope of work is included in the
schedule and understand how it is
incorporated with the work of other
subcontractors. And,
Maintain accurate documentation.
Finally, as noted earlier, it is
recommended that parties that may be
involved with this issue seek guidance
related to any potential legal
implications from a knowledgeable
construction attorney.
REFERENCES
1. Allen, Randall C. et al. (editor),
Failure to Incorporate Schedule Sinks
Lock and Dam Claim; Government
Gets 84 Days Credit in Reverse Delay
Case, Construction Claims Advisor,
April 2005.
2. Bartley, Keene W. et al., The
Construction Contracts Book, ABA
Publishing, Chicago, IL, pages 113-
115 and 123-124, 2008.
3. Bramble, Barry B. and Michael T.
Callahan, Construction Delay
Claims, 3rd Edition, Aspen
Publishers, New York, NY, pages 15-4
through 15-8, 2000.
4. Branca, Michael A. et al., Federal
Government Construction
Contracts, 2nd Edition, ABA
Publishing, Chicago, IL, pages 665,
667, and 706, 2010.
5. Darst, Brian A., Subcontract
Incorporation by Reference and
Flowdown Clauses Under Federal
Government Construction Projects,
Construction Briefings, page 21,
March 2005.
6. Feldman, Steven W., Subcontractors
in Federal Construction
Procurement: Roles, Rights &
Responsibilities, Construction
Briefings, page 17, August 2003.
7. Gatlin, Cheri Turnage, Enforceability
of Pre-Established Remedies for
Delay and Extended Performance,
Passing the Buck: Legal Limitations
on Transferring Construction Risks,
ABA Conference Winter Meeting,
Part D, page 21, 2002.
8. Jervis, Bruce (editor), Common
Impediments to Delay Damage
Recovery Part I, Construction Claims
Monthly, page 7, May 2003.
9. Jervis, Bruce (editor), Delinquent
Contractor Loses No-Damage-For-
Delay Argument, Subcontractor
Wins $2M, Construction Claims
Monthly, pages 4-5, July 2008.
10. Jervis, Bruce (editor), Prime
Sponsors Subs Delay Claims Despite
Disclaimers, Construction Claims
Monthly, page 8, October 2001.
11. Jervis, Bruce (editor), Public Works
Contractor Could Not Sponsor Pass-
Through Claim, Construction
Claims Monthly, pages 4-5, August
2010.
12. Kovars, Joseph C. and Michael E.
Peters, No Damage for Delay
Clauses/Edition II, Construction
Briefings, pages 1, 3, 5-11, March
2000.
13. Sweet, Jonathan J., Sweet on
Construction Industry Contracts:
Major AIA Documents, Volume 2,
Aspen Publishers, Austin, page
1099, 2009.
ABOUT THE AUTHORS
Christopher W Carson, PSP, is with
Alpha Corporation. He can be contacted
by sending e-mail to:
chris.carson@alphacorporation.com
Mark Boe, PE PSP, is
with Capital Project
Management, Inc. He
can be contacted by
sending e-mail to:
mboe@cpmiteam.com
Shannon L Campbell,
PSP, is with Capital
Project Management,
Inc. She can be
contacted by sending
e-mail to:
scampbell@cpmiteam.com.
C ONS T R UC T I ON
C ONS UL T I NG S E R V I C E S
www.mbpce.com | 800-898-9088
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L
The AACE Internatonal Board of Directors voted unani-
mously Oct. 16, to exercise its opton to terminate its existng
Memorandum of Understanding with the Royal Insttuton of
Chartered Surveyors (RICS). The terminaton comes in re-
sponse to RICS earlier decision, in January 2011, to no longer
honor the addendum to the MOU it had signed. That adden-
dum provided for a facilitated path to RICS membership/cert-
caton for AACE Internatonal members.
AACE Internatonal representatves had met with RICS rep-
resentatves in Montreal in April 2011 to discuss the issue. At
that point, AACE Internatonal believed that it had reached an
agreement in principle with RICS regarding a compromise, but
it appears that compromise agreed to by the RICS representa-
tve in Montreal was repudiated by the RICS commitee over-
seeing this area of responsibility within that organizaton.
In a leter to RICS on Aug. 22, AACE Internatonal Past
President Steve Revay, who had chaired a sub-commitee of
the board addressing this issue, expressed the positon: Afer
further reecton on what has transpired since the beginning
of 2011, the AACE Internatonal reluctantly has concluded that
the contnuaton of both the Nov. 8, 2007 addendum and the
Memorandum of Understanding entered into with RICS on July
17, 2008, no longer seems appropriate. The leter conveyed
to RICS that AACE Internatonal believed that unless the agree-
ments in principle that we had been led to believe had been
agreed to in Montreal were revisited, there was no reason to
contnue the MOU. Subsequently RICS wrote AACE Interna-
tonal indicatng they were not willing to accept the recom-
mendaton regarding that agreement in principle from their
representatves in Montreal.
As such, AACE Internatonal noted RICS that we have ter-
minated the MOU with RICS under the provisions of Secton
4.6 of the MOU. In conveying the decision to RICS, AACE In-
ternatonal stated, while we have concluded that terminatng
the MOU with RICS is the right step for AACE Internatonal at
this tme, we wish your organizaton the best in achieving its
mission and believe that there may be well-dened areas of
possible joint cooperaton that we might nd common ground
on in the future.
Under the provisions of the agreement, it will remain in
eect for six months, untl April 18, 2012, unless RICS mutually
agrees to terminate the MOU. In that case, the MOU dissolves
immediately.
AACE Board of Directors Notes RICS of Intenton to End MOU
PROFESSIONAL SERVICES DIRECTORY
INDEX TO ADVERTISERS
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YOUR
VISIBILITY
ARES Corporation, back cover

Bechtel Corporation, page 3
EcoSys, inside front cover
Infinitrac, this page
Journyx, Inc., page 26
Management Technologies, this page
McDonough Bolyard Peck, page 25
Moca Systems, page 16
Ron Winter Consulting, page 9
Sage Software, page 7
Skire, Inc., page 26
U.S. Cost, inside back cover
RECENTLY REVISED RECOMMENDED PRACTICES
Recommended Practce No. 17R-97
Cost Estmate Classicaton System
Cost Estmate Classicaton System: As Applied in Engineering,
Procurement, and Constructon for the Process Industries
Forensic Schedule Analysis
Risk Analysis and Contngency Determinaton Using Parametric
Estmatng
Risk Analysis and Contngency Determinaton Using Parametric
Estmatng - Example Models as Applied for the Process Indus-
tries
To access these and all other recommended practces,
visit: www.aacei.org/resources/rp
Alabama Secton
The Alabama Secton met Sept . 20
at the Southern Company oces in Birmingham.
This was the rst meetng of the year and was well
atended, as 25 members representng four companies in the
area were in atendance.
The speaker was Cheri Collins, general manager, Nuclear Li-
aison with Southern Company in Atlanta, Georgia. Ms. Collins has
been with Southern Company for 30 years and has held numer-
ous management positons within the company prior to joining
the Nuclear Development Group.
The presentaton given by Ms. Collins was a very informatve
overview of the constructon actvites of the new Vogtle 3 and 4
nuclear units under way near Augusta, Georgia. These will be the
rst nuclear units constructed in the US in over 30 years, and are
expected to come on line in 2016 and 2017 respectvely. The
presentaton went into considerable detail in the areas of the nu-
merous regulatory review steps that must be reviewed prior to
grantng a combined constructon and operatng license. The
members also learned a lot about the project schedule of actv-
ites, the economic benets to the region, constructon tech-
niques, and fabricaton logistcs challenges using multple foreign
vendors. The presentaton was followed by a queston and an-
swer session.
Arizona Secton
The Arizona Secton met on Sept. 15, at Kitchell Training
Room, located at the Camelback Arboleda, 1661 E Camelback
Rd, Suite 375, Phoenix, AZ.
The featured guest speaker was Jared Carlson from US Cost
and the topic of discussion was Web Technology: Centralized
and Collaboratve Estmatng.
Mr. Carlson gave an overview of enterprise wide estmatng
and discussed the unique capabilites web-based solutons pro-
vide, including having multple team members in the same est-
mate at the same tme. He also demonstrated how using
THE AACE
INTERNATIONAL BULLETIN
SECTIONNEWS
FROM AROUND
THE WORLD
Submitted photo
Jared Carlson, a US Cost employee, was guest speaker at the
September Arizona Secton meetng. The Sectons Director of
Programming, Daisy Culanag, presented a speakers certcate
and gif to Mr. Carlson.
Submitted photo
Arizona Secton members and guests (lef to right): James Os-
well; Ian Geitner; Hanna Look, and Mike McKee, were in aten-
dance for the Sectons September meetng.
centralized databases yields benets. These include cross proj-
ect reportng and data mining. This allows for detailed analysis
of cost estmates and provides dashboard views of the entre es-
tmatng enterprise. Additonally, the presentaton explained
how users can query similar projects to quickly compare unit
costs, resource use, etc., at the project, system, or component
level. This yields invaluable, targeted informaton to greatly en-
hance estmate validity.
Mr. Carlson, has worked for 11 years with US Cost in a sales,
marketng, and account manager positon. He has managed ac-
counts for Procter & Gamble, General Electric, the US Navy, the
FAA, Heineken, Goodyear Tire and Rubber and Natonal Grid.
Atlanta Secton
The Atlanta Area Secton was honored to receive, for its rst
tme ever, the Presidents Circle Award at the Annual Meetng
this summer in Anaheim. The secton was well-represented in
Anaheim, with a number of members in atendance, making
presentatons, and exhibitng.
At the Atlanta Area Secton September meetng, John
Thomas of BASF Wall Systems presented a program enttled,
Getng the Most from Stucco. He discussed the propertes
and materials included in various stucco systems, the advan-
tages of using stucco, and tradeos and drawbacks in using
stucco systems.
He introduced the three common stucco systems, in addi-
ton to making comparisons to Exterior Insulaton and Finish Sys-
tems (EIFS), and discussed in some detail the interfaces between
stucco nish systems and the materials and systems which sup-
port, drain, and enhance stucco systems, which was very bene-
cial from the standpoint of understanding the cost and sched-
ule ramicatons of the various systems.
If you have wondered what makes a quality stucco nish
system or want to understand the various systems, accessories,
and details, see Johns presentaton on the Atlanta Area Secton
website, htp://www. aaceiatlanta.com/meetngs.html and click
on the Getng the Most out of Stucco link at the botom of
the page.
Aurora Edmonton Secton
On Sept. 21, the Aurora Edmonton Secton had a dinner
meetng presentaton by guest speaker Paul Tsounis at the Uni-
versity of Alberta Faculty Club.
Paul Tsounis is the director of Strategic Business Analysis
and Forecastng for the government of Albertas Energy Ministry.
His informatve and interactve presentaton was enttled, Al-
bertas Energy Markets; Opportunites and Challenges. Paul
provided a governmental perspectve of the economic downturn
conditons globally. He presented insights on what the govern-
ment of Alberta is currently doing about the downturn to ensure
a prosperous future for Albertas energy industry and economy
for years to come.
The presentaton was well received and tmely in the con-
text of global economic uncertainty and environmental concerns
about pipelines constructon from Alberta into the US. There
was tremendous dialogue among the atendees, as many of
them are employed in the oil and gas energy sector.
Central Savannah River Secton
The September dinner meetng for the Central Savannah
River Area Secton, was at the North Augusta Community Center.
The guest speaker was Ken Chacey, site manager for Ameresco
Federal Solutons. Ameresco is under contract with the Depart-
Submitted photo
John Thomas of BASF Wall Systems presented a program ent-
tled, Getng the Most from Stucco. He discussed the proper-
tes and materials included in various stucco systems, the
advantages of using stucco, and tradeos and drawbacks in
using stucco systems. Shown below, atendees listen to the pres-
entaton.
Submitted photo
Aurora Edmonton Secton President, Dr. Don Mah, P.Eng., pre-
sented Paul Tsounis with a gif of appreciaton for his presenta-
ton.
ment of Energys Savannah River Site to design, build, and op-
erate two new biomass fueled boilers that will allow the sites
existng coal red power plant to be decommissioned. The boil-
ers are rated to produce steam at a rate of 120,000 lbs/hr per
boiler. they will be connected to a 20 mega-wat turbine that
will deliver the site both process steam and green electricity.
The plants will use approximately 325,000 tons of biomass
fuel a year, consistng primarily of forest residue supplied by
local suppliers. The design also allows for the use of bio-derived
fuel sources such as urban waste and/or tre derived fuels.
Ameresco has secured the necessary environmental permits to
be allowed to burn up to 30 percent (by weight) of alternate bio-
derived fuels to maximize potental fuel sources. Additonally,
Ameresco has broken ground on a separate tre shredding facil-
ity, not part of its contract with the department, to receive,
shred, and deliver tres from local suppliers.
The project was executed using an Energy Savings Perform-
ance Contract that allows the Department of Energy to repay
the contract value, through the savings generated by operaton
of the biomass plant over the 19 year performance period, com-
pared to baseline operatonal costs for operatng the existng
coal red power plan. Ameresco self-nanced the design and
constructon of the biomass plant and does not receive any pay-
ments tll the Savannah River Site begins paying for the steam
and electricity that it receives.
Some other key benets of this project include:
Greenhouse Gas (GHG) emissions will be reduced by
100,000 tons a year signicantly decreasing the carbon
footprint of the SR site.
Environmentally friendly opton through the reducton in
harmful air emissions:
Partculate Mater: about 400 tons a year,
NOx: about 2,500 tons a year, and
Sox: about 3,500 tons a year
Intake water from local river will decrease by over 2.8B gal
per year.
The CSRA Secton also partcipated in the September 2011
CSRA College Night at the Augusta-Richmond County Civic Cen-
ter, where more than 10,000 CSRA students, parents and guid-
ance counselors can visit more than 150 college and university
informaton booths, and university representatves about edu-
catonal opportunites. In additon to sponsoring the AACE
booth, the CSRA Secton contributed $150 toward the $17,000
event scholarship fund.
Chinook Calgary Secton
The 55th AACE Internatonal Annual Meetng was in Ana-
heim, Calif., at the Disneyland Hotel, June 19-22. On June 21,
AACE Past President Stephen Revay presented Arthur Kowalchuk
(a long term Chinook-Calgary Secton member) with the Charles
V. Keane Distnguished Service Award for consistently enhanc-
ing the professional image of cost engineering. Stephen also pre-
sented Chinook-Calgary Secton member Mahendra Bhathia
with the award of being named an AACE Fellow.
Atendance at the Annual Meetng was estmated at 800,
with representaton from many countries. There were about 100
atendees from Canada, with about 50 from the Calgary Secton.
There were many exhibitors showcasing their cost engineering
expertse.
Region 1 Director Ginete Basak had standing room only at-
tendance for the AACE Canada Inc. meetng on regulatons.
AACE Canada Inc. provides the method for charitable educaton
donatons to be provided to Canadian university students. At the
Sept. secton meetng, Secton President Donna Kainth intro-
duced Ms. Basak who gave a brief update about AACE Canada
Inc. and AACE Internatonal actvites.
Past President Deborah Clark introduced speaker Scot
Diehl, P.Eng. He presented the, Owner's Project Control Func-
ton. This technical paper was originally presented at the AACE
Annual Meetng in June.
Submitted photo
Myron Berry and Blake Waller at the 2011 Central Savannah
River Area Secton College Night at the Augusta-Richmond
County Civic Center, where more than 10,000 CSRA students,
parents and guidance counselors can visit more than 150 college
and university informaton booths, and university representa-
tves about educatonal opportunites.
Submitted photo
Partcipatng in the September Chinook-Calgary Secton meetng
were: Secton President Donna Kainth; Region 1 Director Ginete
Basack, guest speaker Scot Diehl, and past board member Peter
Ripley.
Scot spoke about the relatonship of the owners inital
project relatonship to contractor actvity. The contact between
contractor and owner is dierent for large projects versus
smaller projects.
The owner's representatve monitors contractor actvity in
the inital front end development. The owner wants to ensure
that the scope of front end actvites follows the owner's re-
quirements and that cost estmates and schedule conform to
what was required by owner specicatons. Trends need to be
idented so that contractor is focused on the project executon
and that material and labor costs are within the budget. A clear
scope helps maintain a minimum of change orders.
The owner needs a monthly reportng of schedule and cost
informaton. This is extremely important to the owner in being
able to use lessons learned for future projects. Also the infor-
maton provided by the contractor is required for management
reports and used in providing payment to contractor in a tmely
fashion.
The owner's organizaton provides design review, approvals,
ling to governments, environmental departments, provide for
plant operaton, maintenance, turnaround, planning startup, op-
erator training and safety. These items need to be integrated
with the contractor's progress and performance. The owner
oversees the contractor's actvites in shop fabricaton and the
eld constructon.
For project close-out, the owner needs actual cost and
schedule data. Final cost disbursements need to conform to
Liens Act and is required before project can be nally closed out.
Performance tests need to be carried out to ensure that project
meets specicatons.
The owner's organizaton needs to integrate with the con-
tractor's organizaton to avoid duplicaton and assure that the
contractor has the resources to handle the project require-
ments. This is an important item that needs to be done before
the owner awards work to the contractor. The owner's reportng
requirements need to be given to the contractor before work
starts and has to be agreed to by the contractor. Coding require-
ments need to be integrated with the contractor's systems. The
contractor's project control specicatons need to conform to
the owner's requirements. A queston/answer period followed
the presentaton.
East Tennessee Secton
The East Tennessee Secton in September hosted AACE In-
ternatonal President Michael R. Nosbisch, CCC PSP. He was
guest speaker at the meetng at the Chop House restaurant in
Knoxville. He covered two topics that included a State of the
Associaton and a technical presentaton ttled, Meetng Proj-
ect Schedule Compliance Standards.
Mike has been a member of AACE Internatonal since 1999,
and holds a bachelors degree in geology from the University of
Rochester (NY) and a Master of Engineering Management de-
gree from the George Washington University. Mike is also an ad-
junct professor at the University of Southern California teaching
graduate level courses in heavy constructon estmatng and
scheduling. Afer working for more than 23 years with a variety
of dierent rms, he recently joined Project Time & Cost as a
Managing Principal, Western Region, based in Long Beach, CA.
Mikes State of the Associaton address was very interest-
ing and included current metrics and future goals and objec-
tves. Here are just a few of the metrics that were shared with
the group. Membership is about 7,300, up 2,300 from 2005.
Certcatons are expected to be at 3,400 in 2011, up by 1,100
from 2009. Atendance at the Annual Meetng in June at Ana-
heim was 820. This Annual Meetng was the second highest in
atendance ever, and up from 715 in Atlanta the year before.
Goals and objectves have been developed and current sta-
tus can be reviewed on the AACE website. A few of the new and
interestng ideas being implemented include: Seminar in a Box,
a formal Mentoring Program, Enhanced Career Center, and
a complete make over for the Cost Engineering journal. To
top everything o, and I certainly couldnt include everything
here, AACE adopted a new service mark AACE Internatonal,
the authority for Total Cost Management.
Mikes second topic, Meetng Project Schedule Compliance
Standards, provided an in-depth look at scheduling compliance
Submitted photo
East Tennessee Secton Vice President Andrea Bach, AACE Pres-
ident Michael Nosbisch, and East Tennessee Secton President
Mark Plemmons, are shown above at the September East Ten-
nessee Secton meetng.
Submitted photo
Guest speaker, AACE President Michael Nosbisch, is shown
above resentng at the East Tennessee Sectons September
meetng.
criteria, as well as teaching tps, tools, and best practces, which
will help ensure your projects meet industry standards.
In summary, Project Time and Costs (PT&C) mission is to
help clients reduce program risk, and deliver independent pro-
gram cost, schedule, EVM, and risk consultng services. They
have extensive government agency experience, most notably
with the US Army Corps of Engineers (USACE), and Department
of Energy (DOE). Schedule compliance can be complicated with
a multtude of government agency requirements and non gov-
ernment requirements. Mike shared with us the sofware
Acumen Fuse which provides in-depth analysis of schedules
and other data in an integrated manner. FUSE has the ability to
integrate sof wares such as MSP, Primavera, Open Plan, Cobra,
Excel, and Pertmaster and provides a great analysis and visual-
izaton ability. More in-depth informaton on these worthwhile
topics can be found on PC&T (www.pctnc.com) and ACUMENs
(www.projectacumen.com) websites.
Northern West Virginia Secton
A joint meetng of the Northern West Virginia Secton of
AACE, the Natonal Society of Professional Estmators and the
American Society of Civil Engineers was conducted Oct. 19. This
meetng was an evening eld excursion to visit and see the fa-
cilites used by Mon Power for lineman training at Mon Powers
high tech complex at White Hall.
On Sept. 29, the three enttes opened the 2010-11 program
year with a joint meetng at the Engineering Sciences Building,
located on the Evansdale Campus of West Virginia University.
Casey Shrader, an expert on wetlands delineatons and
wildlife issues, presented the technical program. Casey works
for the US Department of Agriculture, Natural Resources Con-
servaton Service, Morgantown oce, and is the NRCS West Vir-
ginia state biologist. His presentaton was ttled, A Technical
Overview of Wetlands from Identcaton, Ecosystem Functon
and Regulatory Perspectves.
Casey has worked for USDA NRCS for the past 21 years on
wetland and wildlife issues and related regulatons concerning
the Clean Water Act and the Food Security Act. He has per-
formed and reviewed dozens of delineatons. He was the lead
instructor for the US Army Corps of Engineers Regulatory IV
Course Wetland Delineaton Course in West Virginia since 2001,
and most recently in 2009.
He has instructed many US federal and state agency per-
sonnel in wetland identcaton, restoraton and ecosystem
functon. Most recently he worked on the natonal regionaliza-
ton team for revisions to the wetland delineaton manual.
Casey currently serves as the biologist for the NRCS, working
throughout West Virginia primarily on wildlife and wetland con-
servaton issues on private agricultural lands. He has worked for
USDA in West Virginia eld oces in various capacites in Lewis-
burg, Huntngton and Hamlin.
Casey has bachelors degrees in both biology and agricul-
ture from Berea College. He was a US Marine from 1983 through
1988. He was born in San Jose, CA, raised in Beckley, and at-
tended Woodrow Wilson High School. He is married and the fa-
ther of two children. He and his family currently live in
Bridgeport.
Great Lakes Secton
Murray Woolf, President of the Internatonal Center for
Scheduling, was the featured speaker at the Great Lakes Sec-
tons September dinner meetng. Murrays presentaton,
Bringing Balance and Sanity Back to Constructon Project Man-
agement, was centered on his philosophy of Momentum Man-
agement developed through his many years of practce in the
eld of constructon project management.
At the October dinner, the speaker was Dr. Mohamed El-
Mehalawi , lead manager, project controls, Faithful & Gould, on
the topic of, Implementng Enterprise Project Controls Systems.
At the November dinner meetng, Kurt Winkel, of Marathon Oil,
discussed, Marathon DHOUP Project Controls.
HOW TO SUBMIT SECTION NEWS
TO THE COST ENGINEERING JOURNAL
All submissions should be e-mailed to editor@aacei.org.
Information may be included in the body of the e-mail or as
an attachment. Microsoft Word files are the preferred
format. All photos should be sent as PC tiff or jpg files at 300
dpi. If submitting at only 72 dpi, please send the photo as
large as possible as conversion will reduce its size. Include the
names and titles of each person shown in any photos.
Many times AACE International Sections have been
referred to as chapters. The correct reference should always
be to a Section. AACE International does not have chapters.
Please do not refer to Sections as chapters.
If an event is during the month of publication, it will be
listed as an upcoming event even if members will not receive
their journal in the mail until after the listed event. The
journal goes to press about one months in advance of the
issue date, which is always the first of each month, at which
time the electronic version should be posted.
AACE International reserves the right to edit all
submissions and to refuse to publish any submissions
determined by the editor or executive director to not meet
the standards of the journal.
Anyone with questions on submitting copy or photos
may contact:
Managing Editor - Marvin Gelhausen,
mgelhausen@aacei.org
ARTICLE REPRINTS AND PERMISSIONS
COSTENGINEERING
Vol. 53, No.12/December 2011
Members of AACE International have access to free downloads of selected articles
that are published with an AACE International reference number. These articles are
available at the online Virtual Library at www.aacei.org. Electronic files of each
months technical articles are posted and members can download an Adobe Acrobat
(PDF) version of any of the technical articles for free. You can search for articles
using the reference numbers listed in the Cost Engineering journal. Non-members
can subscribe to the AACE Virtual Library at an annual cost of US $100.00. AACE In-
ternational no longer offers reprints of individual articles.
TO ORDER
Contact: AACE International Publications Sales
at pubsales@aacei.org
Photocopying Prices:
For permission to photocopy individual articles
for personal use, or to request permission for
bulk photocopying, please contact the Copy-
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For Information Concerning
Other Reuse Requests
If you are seeking permission to quote or
translate into another language any material
from any issue of the Cost Engineering journal,
please contact our Managing Editor, Marvin
Gelhausen at mgelhausen@aacei.org
Pages 11-16
Currency Fluctuation and Inflation Impact on
International Mega Projects: A Mexican Case Study
This article examines the challenges of accurately estimating construction
costs for international projects. A case study is used to illustrate the challenges
that construction projects in Mexico faced with the 2009 devaluation of Mexican
currency. It presents a hypothetical example and a case study of the Durango-
Mazatlan highway; finds that the construction costs of highway Durango-Mazat-
lan in Mexico increased by 20 percent because of cost increases tied to the
peso-dollar parity; analyzes the impact to the project and discusses strategies
that cost engineers can use to minimize the risk of economic loss in international
construction projects resulting from political and economic instability. The study
concludes that using cost reimbursable contracts, transferring the risk of cost un-
certainty to the owner, maintaining contact with local subcontractors and sup-
pliers and maintaining international project databases minimize the risk resulting
from currency fluctuations on international mega-projects. This article was first
presented at the 2011 Annual Meeting as CSC-558.
Article Reference Number - 21966
Pages 19-25
Can a Contractor Have a Critical Path Delay
When the General Contractor Does Not?
Christopher W. Carson, PSP; Mark Boe, PE;
and Shannon L. Campbell, PSP
To prove entitlement to delay damages, it has been reasonably established
(by best practices, as well as case law) that a contractor must show a critical path
delay to project completion. But, what happens when an owner-impact extends
the time a subcontractor must remain on the job, but doesnt extend the project
completion date? Shouldnt the owner be liable for any damages to the subcon-
tractor? If not the owner, wouldnt the GC have some risk? What type of analysis
would be required to prove entitlement to these subcontractor delays? Does cur-
rent case law have any answers? This article will discuss the issues, examine ex-
isting case law, establish how experts analyze and prove subcontractor delays,
and provide an example of an analysis for this condition. This article was first pre-
sented at the 2011 Annual Meeting as CDR-635.
Article Reference Number - 21967
Skills and Knowledge of Cost
Engineering, 5th Edition, Revised
Scott J. Amos, Editor, 2007
This updated and expanded guide for
fundamentals is an excellent choice for anyone
interested in a concise reference to all aspects of
the profession. The new 5th edition includes
twenty-seven chapters on estimating,
manufacturing and operating costs, scheduling,
planning progress and cost control, and much
more. This is a very useful book for those studying
for the certification exam. 450 pages
1545-01 paper version - US$80.00
1595-02zip - Download - US$50.00 member/US$80 nonmember
CCC/CCE Certification Study Guide,
3rd Edition
Michael B. Pritchett, CCE, Editor, 2006
The AACE International CCC/CCE Certification
Study Guide provides an all-encompassing
reference text to prepare for the exam. The
CCC/CCE Certification Study Guide provides
background information on how to become
certified; gives those studying for the certification
exam a single reference text that includes theory,
worked problems with answers, references, and a
full discussion of key topics; allows students to
maximize their study time; and provides a concise overview of the
fundamentals of cost and project management.
1825-36zip - Download - US$50.00 member/US$80 nonmember
PSP Certification Study Guide, 1st Edition
Peter W. Griesmyer, Editor, 2008
This study guide is intended to assist you in your
study and review of the overall topics as one step
toward successful Planning and Scheduling Profes-
sional certification. The outline provides a listing of
the terms you should know & topics for which you
should have a good understanding of how to apply
the concepts to solve problems. Each chapter also
contains sample exercises, which test your knowl-
edge of that chapter's concepts. Additional sample
questions are provided in an appendix.
1820-38zip - Download - US$50.00 member/US$80.00 nonmember
EVP Certification Study Guide,
2nd Edition
Ken Cressman, CCC EVP and Gary C. Humphreys,
Editors, 2009
This study guide is intended to assist you in your
study and review of the overall topics as one step
toward successful Earned Value Professional certi-
fication. The outline provides a listing of the terms
you should know & topics for which you should
have a good understanding of how to apply the
concepts to solve problems. Each chapter also con-
tains sample exercises, which test your knowledge
of that chapter's concepts.
1820-40zip - Download - US$50.00 member/US$80.00 nonmember
Cost Engineering
The international journal
of cost estimation,
cost/schedule control,
project management,
and total cost
management.
Subscriptions are
accepted on an annual
basis. An automatic
benefit of AACE
International
membership, also
available to nonmembers.
5060-07 - US$72.00 (US)
- US$171.00 (other countries)
Please add US$80.00 for airmail
- US$61 electronic subscription
Cost Engineers Notebook
This CD-ROM is an important reference for any
project or cost professional. It includes data and
procedures related to basic skills and knowledge
that all cost engineers should possess, extensive
material on capital and operating cost estimation,
and papers in four subject areas: cost control,
planning and scheduling, project management, and
economic analysis and business planning.
4060-28zip - Download
- US$65.00 member/US$105.00 nonmember
AACE International Recommended Practices
Cost Engineering Terminology; Cost Estimate
Classification System; Estimate Preparation Costs in
the Process Industries; Project Code of Accounts;
Required Skills and Knowledge of a Cost Engineer;
Roles and Duties of a Planning and Scheduling
Engineer; Profitability Methods; plus many more.
The Total Cost Management Framework
John K. Hollmann, PE CCE, Editor, 2006
4060-21 - Paper version - US$80.00
2011 AACE
International
Transactions
5220-11 - CD-ROM
- US$90.00
member
- US$115
nonmember
5220-11 zip - Download
- US$75.00 member
- US$80.00 nonmember
AACE INTERNATIONAL ONLINE STORE
AACE INTERNATIONAL ONLINE STORE
more online at www.aacei.org
More AACE Publications at the Online Store - www.aacei.org
PPG#1: Contracts and Claims, 4th Ed.
James G. Zack Jr., Editor, 2008
Covers: Contract Administration; Management of
Construction Schedules; Schedule Control; Schedule
Float Ownership; Cost Control; Management of
Change; Cost Impacts; Productivity Impacts; Manage-
ment and Analysis of Delay; Concurrent Delay Issues;
Pricing of Delay; and more.
PPG#2: Risk, 2nd Ed.
Keith D. Brienzo, PE, Editor, 2007
Covers: Dictionary; Capital Investments; Cash Flow;
Competitive Bidding; Contingency Analysis; Contracts;
Cost Engineering; Currency Rates; Decision Trees; Eco-
nomic Analysis; Escalation; Human Factors; Manufac-
turing; Research & Development; Safety & Health;
Schedule; Technological Risk; and Value Engineering.
PPG#3: Cost Engineering in Aerospace and Avi-
ation
Sarwar A. Samad, Editor, 1998
Covers: Aerospace and Aviation.
PPG#4: Planning and Scheduling, 2nd Ed.
Trevor X. Crawford, CCC, Editor, 2006
Covers: Planning; Schedule Development; Schedule
Management/Control; and Classics.
PPG#5: Earned Value, 2nd Ed.
Robert A. Marshall, Editor, 2007
Covers: Why Use Earned Value?; Basics of Earned
Value; Cost/Schedule Control System Criteria; Actual
Physical Percent Complete; Productivity and Earned
Value; Earned Value Reporting; Applications of Earned
Value Project Management; and more.
PPG#6: Construction Cost Estimating, 2nd Ed.
Dr. Douglas D. Gransberg, PE CCE, And Carla Lopez
del Puerto, CCC, Editors, 2006
Covers: Recommended Practices; Estimating Theory;
Conceptual, Parametric, and Range Estimating; Esti-
mating Factors and Indices; Estimating Material Costs
and Quantity Surveying; Estimating Labor Costs; Esti-
mating Equipment Costs; Subcontracting Costs; Esti-
mating Overhead and Indirect Costs; Profit,
Contingencies, and Mark-Ups; Estimating Interna-
tional Construction Costs; and more.
PPG#7: Cost Engineering in the Utility
Industries, 2nd Ed.
Dennis M. Thompson, Editor, 2007
Covers: Auditing; Cost Estimating; Cost Modeling;
Cost/Schedule Control; Generation Power Plant; Nat-
ural Gas Industry; Nuclear Power Plant; Other Energy
Related Topics; Planning and Scheduling; Project
Management; Utility Rates; and Utility Property Valu-
ation.
PPG#8: Contingency, 2nd Ed.
Kul B. Uppal, PE, Editor, 2005
Covers: General Topics On Contingency; Cost Estimat-
ing and Contingency; Risk Analysis and Contingency;
and Other Related Topics.
PPG #10: Project Delivery Methods, 2nd Ed.
Dr. Douglas D. Gransberg, PE CCE, Tammy L. Mc-
Cuen, and Keith Molenaar, Editors, 2008
Covers: Design-Bid-Build (DBB) DBB Estimating, DBB
Scheduling, DBB Project Management; Construction
Management (CM) CM Estimating, CM Scheduling,
CM Project Management; Design-Build (DB) DB Es-
timating, DB Scheduling, DB Project Management; In-
ternational Project Delivery; Constructability; and
Partnering.
PPG #11: Environmental Remediation &
Decommissioning, 2nd Ed.
Richard A. Selg, CCE, Editor, 2009
Covers: Environmental Remediation Planning and
Scheduling Methodology; Cost Estimating, Project Con-
trols, Cost Modeling, and Reporting; Contingency Man-
agement, Risk Analysis, and Environmental Regulations;
Benchmarking and Lessons Learned; Economics of En-
vironmental and Waste Management; Cost-Effective
Waste Minimization and Pollution Prevention; Design,
Construction Practices, and Other Related Topics.
PPG #12: Construction Project Controls
Dr. Douglas D. Gransberg, PE CCE, and James E.
Koch, Editors, 2002
Covers: Introduction to Construction project Controls;
Cost Control; Schedule Control; Quality Control; Doc-
ument Control; Computer Applications; and Interna-
tional Project Controls
PPG #13: Parametric and Conceptual
Estimating, 2nd Ed.
Douglas W. Leo, CCC, Larry R. Dysert, CCC, and
Bruce Elliott, CCC, Editor, 2004
Covers: Parametric/Conceptual Estimating; Classifica-
tion; Methodology; Capacity Factoring; Process and
Non-Process Industries; and Systems
PPG #14: Portfolio and Program Management,
2nd Ed.
Randy R. Rapp, PE CCE, Editor, 2007
Covers: Enterprise Management: General Imperatives and
Concerns; Asset Requirements Elicitation and Analysis;
Asset Planning and Investment Decision-Making; Asset Per-
formance Assessment and Change Management; and Pro-
gram Management.
PPG #15: Life-Cycle Cost Analysis
Dr. Douglas D. Gransberg, PE CCE, and Carla Lopez
del Puerto, CCC, Editors, 2007
Covers: Life-Cycle Cost Theory; Life-Cycle Cost Methods,
Determining Discount Rate; Estimating Capital Cost of
Design and Construction; Estimating Operating Costs;
Estimating Salvage/Residual Value; Estimating Sustain-
ability; Life-Cycle Cost Risk Analysis; Life -Cycle Cost
Case Studies; Life-Cycle Cost Analysis in the Interna-
tional Context
PPG #16: Cost Engineering in the
Global Environment
Kul B. Uppal, PE, Editor, 2007
Covers: General Topics on International Projects; Appli-
cable AACE International Recommended Practices; Cost
Estimating Methodology; Risk and Contingency; and
Miscellaneous Topics
PPG #17: Public Sector Estimating
Joseph L. Macaluso, CCC, Editor, 2007
Covers: Basis of Estimates; Labor Costs; Overhead and
Profit; Soft Costs; Bid/Estimate Reconciliation; and
Change Orders
PPG #18: Green Building
Joseph L. Macaluso, CCC, Editor, 2008
Covers: Recognition of Affects and Economic Costs on
the Environment; Formulating Ways of Addressing
Green Building Strategies and Associated Economic
Costs; Specific Green Building Strategies and Project
Costs; Budgeting and Justifying the Cost of Sustainable
Practices; Evaluating Competing Sustainable Strategies:
Using Value Engineering; Evaluating Competing Sustain-
able Strategies: Other Techniques
PPG #19: Leadership and Management
of People
John J. Hannon, CEP, Editor, 2008
Covers: Leadership; Teams; Leadership Roles; Motiva-
tion; and Ethics.
PPG #20: Forensic Schedule Analysis
James G. Zack, Jr., CFCC, Editor, 2008
Covers: Recommended Practice No. 29R-03 Forensic
Schedule Analysis; Synopsis of Recommended Practice;
Basics of Schedule Delay Analysis; MIP-Observational
Static Gross; MIP-Observational Static Periodic; MIP-Ob-
servational Dynamic Contemporaneous As-Is; MIP-Ob-
servational Dynamic Contemporaneous Split;
MIP-Observational Dynamic Modified or Recreated; MIP-
Modeled Additive Single Base; MIP-Modeled Additive
Multiple Base; MIP-Modeled Subtractive Single Simula-
tion; Non-CPM Schedule Delay Analysis Techniques;
General Schedule Analysis Articles
PPG#21: Cost Engineering in the Process
Industries
Kul B. Uppal, PE CEP, Editor, 2009
Covers: General Topics on Process Industries; Cost Es-
timating Methodology; Project Management; Inter-
national Projects; Scheduling; Construction Activities;
Risk Management; Project Controls; and Applicable
AACE International Recommended Practices.
The AACE International Professional Practice Guides (PPGs)
The AACE International Professional Practice Guides (PPGs)
(PPGs) are a series of reference CDs
that consists of selected Cost Engin -
eering articles, AACE Inter national
Transaction papers, and other previ-
ously published documents to which
AACE has rights.
Price per PPG:
Download Member Price US$50.00
Download Non-Member Price US$70.00
Price for the PPG Package
includes all 21 PPGs:
Download Member Price US$874.00
Download Non-Member Price
US$1223.00
CALENDAR OF EVENTS
DECEMBER 2011
5-8 RSMeans Public Seminar
Schedule,
RSMeans,
Doubletree Hotel
San Diego, CA
Contact:
www.reedconstructiondata.com
8 CCM Application Workshop,
Construction Management
Association of America (CMAA),
Marriott Los Angeles Downtown
Los Angeles, CA
Contact: teo.sierra@swinerton.com
www.cmaanet.org/cmi
MARCH 2012
15-18 2012 Western Winter
Workshop,
San Francisco Bay Area Section of
AACE International
Harrahs & Harveys Casino Resort
Lake Tahoe, NV
Contact:
aacei.sf.www.2012@gmail.com
www.aaceisf.org
JULY 2012
5-8 AACE International
Education Seminars,
AACE International
Marriott Rivercenter Hotel
San Antonio, TX
Contact: phone 1-800-858-COST
fax (304) 291-5728
info@aacei.org
www.aacei.org
8-11 AACE Internationals
2012 Annual Meeting,
AACE International
San Antonio, TX
fax (304) 291-5728
info@aacei.org
www.aacei.org
12-13 AACE International
Education Seminars,
AACE International
San Antonio, TX
fax (304) 291-5728
info@aacei.org
www.aacei.org
NOVEMBER 2012
14-15 AACE Internationals
International Total Cost Manage
ment Conference,
AACE International
Hyatt Regency Dubai and Galleria
Dubai, United Arab Emirates
fax (304) 291-5728
info@aacei.org
www.aacei.org
AACE International,
1265 Suncrest Towne Centre Dr,
USA
phone: 304-296-8444
fax: 304-291-5728
e-mail: editor@aacei.org
website: www.aacei.org
Please submit items for future
calendar listings at least 60
days in advance of desired
publication.

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