Cost and Schedule Risk Analysis

& Contingency Estimating

10 percent of large projects overrun their budget by >70%;  research has shown that traditional risk quantification methods are not working. This toolset includes two integrated cost and schedule risk analysis and contingency estimating Excel-based  tools. One tool is a tailored parametric model designed to  address systemic cost and schedule risks such as the level of  scope definition, process technology, complexity, and so on.  The parametric tool is designed for early estimates and  schedules (AACE Class 5 and 4). The project-specific risk tool  uses risk-register supported expected value methods in a  Monte-Carlo simulation model (typically using Palisade @Risk)  and is designed for more definitive estimates (AACE Class 3).  The tools integrate cost and schedule based on specific  consideration of assumed risk responses. The hybrid method  results in single distributions for cost and schedule outcomes  from which management can select contingency based on their risk appetite. The tools also feed information to the escalation toolset to produce the industry's first "universal" cost risk  analysis outcome. Validation Estimating customizes the tools to align with your company's processes; when complete, it is your tool! Example implementation for an EPC firm. Ref AACE RPs: 42R-08, 44R-08 & 65R-08 Ref Papers: see Library

Escalation Estimating &

Exchange Rate Analysis

Price and exchange rate volatility has increased project cost  uncertainty enormously (up and down!). Plus, published price  indices do not address costs in your EPC markets. VE has  developed a unique integrated suite of Excel-based tools for  escalation estimating, incurred escalation, cost normalization,  and exchange rate impact analysis. The tools use a database of historical and forecast price and FX indices obtained from IHS  Global Insight (not affiliated with VE). The tools use an  empirically tested method to adjust the economist’s indices for EPC capital demand in your markets and region. Further, the  escalation tool generates account cash flows for you. Finally, it uses Monte-Carlo simulation to generate probabilistic outputs, including outputs from the allied contingency toolset (i.e., it  produces the industry's first "universal" capital cost risk output; escalation being highly sensitive to schedule risk). Validation  Estimating customizes the tools to align with your company's  project types, locations, and cost coding. When complete, it is your tool! Example implementation for an owner firm (see pgs 31-35) Ref AACE RPs: 58R-10 & 68R-11 Ref Papers: see Library IHS Global Insight Cost Indices (test basis)

products

Validation Estimating LLC does not sell products; however, it has developed state-of-the-art, probabilistic integrated methods for risk  analysis, cost and schedule contingency estimating, escalation estimating, and currency exchange analysis for capital projects. These  are all covered in his new book “Project Risk Quantification”. The escalation method is designed to work with price, capex and  currency indices from IHS Global Insight (not affiliated with VE). All these methods are consistent with AACE International  Recommended Practices (some authored by the consultant). VE’s implements the methodologies in an Excel-based application  customized to the client’s needs (see the “Services” page for consulting services).
© Validation Estimating LLC
© Validation Estimating LLC

Cost and Schedule Risk Analysis

& Contingency Estimating

10 percent of large projects overrun their  budget by >70%; research has shown that  traditional risk quantification methods are  not working. This toolset includes two  integrated cost and schedule risk analysis  and contingency estimating Excel-based  tools. One tool is a tailored parametric  model designed to address systemic cost  and schedule risks such as the level of  scope definition, process technology,  complexity, and so on. The parametric  tool is designed for early estimates and  schedules (AACE Class 5 and 4). The  project-specific risk tool uses risk-register  supported expected value methods in a  Monte-Carlo simulation model (typically  using Palisade @Risk) and is designed for  more definitive estimates (AACE Class 3).  The tools integrate cost and schedule  based on specific consideration of  assumed risk responses. The hybrid  method results in single distributions for  cost and schedule outcomes from which  management can select contingency  based on their risk appetite. The tools  also feed information to the escalation  toolset to produce the industry's first  "universal" cost risk analysis outcome.  Validation Estimating customizes the tools  to align with your company's processes;  when complete, it is your tool!   Example implementation for an EPC firm.  Ref AACE RPs: 42R-08, 44R-08 & 65R-08 Ref Papers: see Library

Escalation Estimating &

Exchange Rate Analysis

Price and exchange rate volatility has  increased project cost uncertainty  enormously (up and down!). Plus,  published price indices do not address  costs in your EPC markets. VE has  developed a unique integrated suite of  Excel-based tools for escalation  estimating, incurred escalation, cost  normalization, and exchange rate impact  analysis. The tools use a database of  historical and forecast price and FX  indices obtained from IHS Global Insight  (not affiliated with VE). The tools use an  empirically tested method to adjust the  economist’s indices for EPC capital  demand in your markets and region.  Further, the escalation tool generates  account cash flows for you. Finally, it uses  Monte-Carlo simulation to generate  probabilistic outputs, including outputs  from the allied contingency toolset (i.e.,  it produces the industry's first "universal"  capital cost risk output; escalation being  highly sensitive to schedule risk).  Validation Estimating customizes the tools  to align with your company's project  types, locations, and cost coding. When  complete, it is your tool!  Example implementation for an owner  firm (see pgs 31-35)  Ref AACE RPs: 58R-10 & 68R-11 Ref Papers: see Library IHS Global Insight Cost Indices (test basis)

products

Validation Estimating LLC does not sell products; however, it has  developed state-of-the-art, probabilistic integrated methods for  risk analysis, cost and schedule contingency estimating, escalation  estimating, and currency exchange analysis for capital projects.  These are all covered in his new book “Project Risk  Quantification”. The escalation method is designed to work with  price, capex and currency indices from IHS Global Insight (not  affiliated with VE). All these methods are consistent with AACE  International Recommended Practices (some authored by the  consultant). VE’s implements the methodologies in an Excel-based  application customized to the client’s needs (see the “Services  page for consulting services).