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Recommended Practice

Total CostManagement®

Framework:

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Recommended Practice Recommended Practice

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DiscussionForums:

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Conferences:

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Periodicals

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Copyright © AACE® International AACE

® International Recommended Practices

AACE International Recommended Practice No. 39R-06

PROJECT PLANNING – AS APPLIED IN ENGINEERING AND

CONSTRUCTION FOR CAPITAL PROJECTSTCM Framework: 3.1 – Requirements Elicitation and Analysis

3.2 – Asset Planning

4.1 – Project Implementation

7.1 – Project Scope and Execution Strategy Development

7.2 – Schedule Planning and Development

7.3 – Cost Estimating and Budgeting

7.4 – Resource Planning

7.5 –Value Analysis and Engineering

7.6 – Risk Management

7.7 – Procurement Planning8.1 – Project Control Plan Implementation

Rev. December 8, 2011Note: As AACE International Recommended Practices evolve over time, please refer to www.aacei.org for the latest revisions.

Contributors:

Edward E. Douglas III, CCC PSP (Author)Peter W. Griesmyer (Author)

Christopher W. Carson, PSP

John O. Evans III, PSP

Earl T. Glenwright Jr., PE

John Hollmann, PE CCE CEP

Donald F. McDonald Jr., PE CCE PSP

Jose Noe

Glen R. Palmer, CFCC PSP

Donald E. Parker, PE CCEPerry Petersen

Wesley R. Querns, CCE

Hannah E. Schumacher, PSP

Carmelita Thorndike, PSP

Ronald M. Winter, PSP

David C. Wolfson

James G. Zack Jr., CFCC

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AACE® International Recommended Practice No. 39R-06

PROJECT PLANNING – AS APPLIED IN ENGINEERING

AND CONSTRUCTION FOR CAPITAL PROJECTS TCM Framework: 3.1 – Requirements Elicitation and Analysis

3.2 – Asset Planning

4.1 – Project Implementation

7.1 – Project Scope and Execution Strategy Development

7.2 – Schedule Planning and Development7.3 – Cost Estimating and Budgeting

7.4 – Resource Planning

7.5 –Value Analysis and Engineering

7.6 – Risk Management

7.7 – Procurement Planning

8.1 – Project Control Plan Implementation

December 8, 2011



PURPOSE

This recommended practice (RP) to project planning provides guidelines developed primarily for engineering and

capital construction projects.

AACE International Recommended Practices are intended to provide guidelines, not to establish standards. This

recommended practice is intended to be a guide for the many project team members involved in the planning and

scheduling of their work process and can be adapted for any type of project or program where planning is

required.

This recommended practice is intended to focus on the elements of project planning: who, what, where, when, and

how. It also focuses on the actions required by members of the project team in order to translate that planning

effort into a useful project plan that will serve as a management navigation tool to guide the project team to

successful project completion. This RP will focus on the actions required by the engineering and construction

project team AFTER the development of the clients’ business requirements, business case, alternatives and

assumptions.

APPLICABILITY

This recommended practice is intended to provide guidance for the planning process as it pertains primarily to

capital project planning. Project planning is a critical and important step in commencing a project and the

subsequent preparation of the project execution schedule.

TCM Framework Correlation

This recommended practice includes references to many of the planning elements detailed in AACE International’s

TCM Framework included in the following chapters:

• Chapter 3 – Strategic Asset Planning

• Chapter 4 – Project Implementation

• Chapter 7 – Project Control Planning

• Chapter 8 – Project Control Plan Implementation

Project planning as outlined in TCM is a process comprised of a series of integrated steps which begin with

conceptual planning, continues with project scope development and execution planning, schedule planning and

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39R-06: Project Planning – As Applied in Engineering and Construction for Capital Projects 2 of 17

December 8, 2011



schedule development, resource and procurement planning, cost estimating and budgeting, risk management,

value management and after approval ultimately concludes with project controls implementation. Other key

components of the planning process for construction that need to be understood are logistics planning and

planning documentation.

OVERVIEW

Project planning, as defined by AACE is “the determination of a project’s objectives with identification of the

activities to be performed, methods and resources to be used for accomplishing the tasks, assignment of

responsibility and accountability, and establishment of an integrated plan to achieve completion as required.”[1, 2]

Project planning consists of:

• Identifying project stakeholders and their roles, responsibilities and their affect on the scheduling

planning process.

• Identifying contract requirements including project delivery methods under the terms of the contract. The

contract delivery method will determine the extent of the planning effort by the project team.

• Identifying the constraints, and variables that will allow the project team to begin the planning process.

• Establishing a planning process to determine the scope of work, client requirements, schedule hierarchy,

division of responsibility, project plan review and approval requirements and distribution.

• Identifying major work activities (phases) and deliverables (goals) and the preferred sequence in which

they are to be accomplished.

• Establishing an integrated time phased plan to achieve project completion as required.

•

Identifying project management coordination necessary to establish cost/schedule areas for the furtherdefinition of the scope of work.

• Development of non-schedule related planning methodologies such as logistics planning including but not

limited to: site access plan, heavy lift plans, placement of cranes, long lead material/equipment

procurement plans, owner provided material/equipment planning, and other such specific purpose plans.

These planning methodologies are not discussed in detail in this RP however an effort will be made to

identify the major non-schedule planning methods that are required on most engineering and capital

construction projects.

RECOMMENDED PRACTICE

Schedule Planning and Schedule Development

Planning and scheduling are distinctively different but related processes for capital construction projects. Schedule

planning and schedule development usually require a different set of skills and knowledge.

Planning consists of planning the work, the resources, and the estimated cost over time to complete the scope of

work defined in the early phases of project. Schedule planning includes the identification of many elements that

are associated with the scope of work which is developed into work packages, sequenced into phases and then

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December 8, 2011



Planning Process

The objective of planning by a project management team is to:

• Identify the stakeholders, contract requirements, and project delivery method.

•

Identify the scope of work and the constraints/variables that may impact the project.• Establish an acceptable course of action ("plan") to perform a project (scope of work) in an organized and

coordinated manner through the review of project requirements; roles and responsibilities.

• Respond to events during project execution to keep the project on schedule.

Project planning begins as soon as the project is identified and continues as the project progresses through the

various phases of the project life cycle from project conception to project completion and closeout. Rather than a

definitive sequential process, it is best thought of as an evolving planning cyclical process. Scheduling is the process

of creating discrete activities, durations and relationships between activities that represent the plan chronologically

and that can be communicated effectively.

Project planning essentially consists of planning development (input) and planning product (output).

Project management professionals generally agree that there is a basic five-step process involved in developing a

project plan. Essential questions that are answered during project planning:

• Who? Stakeholders, resource commitments and organization breakdown structure (OBS).

• What? The physical features and technical objectives (scope of work).

• Where? The location where the project work will be performed: engineering, procurement and

construction.

• How? Work breakdown structure (WBS) decomposition of the scope into deliverables.

• When? Initial timeline, phases and sequence for the subsequent schedule planning process.

• How Much? Rough order of magnitude (ROM) cost estimate to the budget.

Generally the recommended sequence to develop the project plan includes:

1. Identify stakeholders.

2. Identify the contract requirements, project objectives and project delivery method.

3. Define the project scope of work (SOW).

4. Establish the work breakdown structure (WBS) of deliverables.

5. Identify resources availability (people and capital assets).

6. Identify the constraints and variables and their potential impact on the project.

7. Establish the preliminary timeline and sequence of deliverables (phases).

8. Determine the rough order of magnitude (ROM) cost estimate for each component phase, work package,

or group of tasks. Include estimated quantities, planned production rates and pricing.

Project planning includes:

1. Identifying project stakeholders, division of responsibility, constraints, variables and contract

requirements to begin the planning process and to mediate any differences the stakeholders may have

during the planning process.

2. Identifying the contract requirements and project delivery method. Both the contract requirements and

the project delivery method will influence the efforts of the planning process. The project delivery

method will determine the time and planning effort required by the project team due to the different

aspects of the delivery method utilized.

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December 8, 2011



3. Determining the client requirements, scope of work (SOW), technical documents and specifications, and

other project requirements.

4. Establishing the work breakdown structure (WBS) and organization breakdown structure (OBS).

5.

Identifying major activities (phases) to be performed and the preferred sequence in which they are to beaccomplished.

6. Developing the planning elements such as logistics planning, heavy lift planning, etc. Include all key non-

schedule planning that is integral to project success or failure.

7. Identifying the different planning methodologies versus scheduling.

8. Establishing the initial project sequencing and phasing including the initial development of the foundation

for the project baseline.

9. Establishing, communicating, and transferring the integrated plan to achieve project execution and

completion, project plan review and approval and appropriate distribution.

10. Developing the planning basis document with all the assumptions and exclusions identified and

reconciled. Developing the basis for potential project risks and mitigation plans.

Planning Development (Input)

Project planning essentially consists of planning development (input) and planning product (output).

A conceptual project plan will be developed when an owner or developer; (whether a public entity, or a private

individual or commercial organization) first perceives a need for an industrial process or a capital project. From this

initial conceptual effort planning for the proposed project commences.

The planning process identifies and considers among other elements the constraints of resources and project

variables. With the owner’s scope identified, consideration of engineering or technical variables is reviewed to

identify the choices of the various stakeholders. This process is interactive so that appropriate choices are

identified that satisfy the interests of the parties and the goals of the project.

One of the important concepts and responsibilities for planners is recognition of the cyclical and iterative nature of

the planning process. Additionally, maintaining open-mindedness and communication throughout the planning

process leads to the identification of the most appropriate concepts for the success of the project.

Planning Product (Output)

The project plan is a result of the overall planning development process. It is required for all projects. The project

plan provides data source input for the subsequent CPM schedule development process. Smaller or less complex

projects may abbreviate the outputs and deliverables from the planning process to only provide the minimal

information needed to define the requirements and approaches for accomplishing the relevant scope of work.

These products might be identified as the site execution plan or a task execution plan.

Development of the project execution plan (PEP) or project implementation plan (PIP) provides the project team

with a format for clearly organizing and defining tasks, interfaces, responsibilities and accountability for

accomplishing the project scope. The project execution plan is known in some professional groups as the project

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December 8, 2011



management plan (PMP) and the construction management plan (CMP) and as the project implementation plan.

Regardless of the title, the plan is a key product from the project planning process. The topic formats, sections and

titles vary among organizations and are also project dependent.

Suggested components of the project execution plan are listed below:

1. Executive summary

2. Scope of work

3. Project objectives, goals & strategy

4. Contract requirements

5. Safety, health, environmental & security

6. Quality assurance / quality control

7. Execution approach, work plan

8. Change control

9. Risk management

10. Internal (project) requirements

11. Public & community relations

12. Organization, roles & responsibilities

13.

Communications & reporting

14. Documentation requirements

Identification of Stakeholders

Any party that has an interest (stake) in the endeavor or project is a stakeholder. Stakeholders may directly or

indirectly affect or become involved in the day-to-day management and execution of work.

There are many different stakeholders on a project and each has different goals and objectives. These stakeholder

goals and objectives influence the development of the plan and the interaction between the team implementing

the plan and the various stakeholders.

Stakeholder interests may be positive or negative as related to the planning process therefore obtaining consensus

among the stakeholders during the planning process is important to project success.

Stakeholder Considerations

Stakeholder considerations and constraints must be identified, evaluated and reconciled as part of the planning

process. Stakeholders large and small will have a significant impact on the success or failure of a project.

It is important for the planner and the project team to communicate the project plan, goals and objectives to all

stakeholders and ensure the stakeholders fully understand the plan, goals and objectives of the project as various

stakeholders will have different views that are not always in agreement with other project stakeholders. It will

then be the planner and the project team responsibility to mediate any differences that may exist between

stakeholders to ensure the plan is implemented as developed and agreed upon. Failure to resolve any differences

may result in failure or cancellation of the project.

Stakeholders include but are not limited to the following:

• Owners / users / operators

• Designers / architects / engineers

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• Contractors / subcontractors / direct hire craft

• Suppliers / vendors

• Government or public agencies

• Local utilities

• Community and special interest groups

Contract Requirements

The primary focus of the project team during the planning phase is to understand the total scope of the contract

documents. It is important for all project team members to know and understand contract terms, conditions,

project delivery method, technical requirements, and their relationship to the work.

Identification of the baseline scope of work is critical to the planning effort. This is the basis for the initial planning

process. This scope of work should be defined by the project owner and communicated to the project team for the

planning effort.

Contract Documents / Technical Specifications

The requirements for a project normally come from the governing contract documents. The requirements define

the scope of work and type of processes and procedures to be used. They explicitly or implicitly define the

minimum planning and scheduling requirements.

Note that the term “contract documents” applies equally as well to projects that have evolved to the draft contract

stage or to an endeavor that has yet to evolve to a contract, if a contract should result. In the latter case, a

planning and scheduling specification, an organization’s policies/ practices, procedures or experience will guide the

planning process.

Requirements in the contract documents cannot be disregarded, even if the planners feel that there are better

options. Any contract specifics that do not fit with the proposed plan must be identified and wavered by thestakeholders in order to exclude that task.

Contract types: There are project risk allocation advantages and disadvantages of these various types of contracts

from both the owner and contractor viewpoints:

Stipulated Sum (value) Contracts

• Fixed price

• Unit price

Cost Reimbursable Contracts

• Cost-plus (with fixed, incentive, or award fees)

• Time and materials (T&M)

Project Delivery Methods: These project delivery methods influence the roles and responsibilities of the project

participants:

• Design-bid-build

• At risk construction management

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• Multi-prime contracting

• Design-build

• EPC (engineering-procurement-construction)

• Design-build-operate

• Integrated project delivery (IPD)

•

Variations of the above

The contract delivery method will influence the extent to which the planning occurs. Each delivery method will

have its own process as described in the two examples:

• In a traditional owner designed – owner contracted construction method the early aspects of planning are

undertaken between the owner/architect/engineer-designer. Only when the construction contract is

awarded does the “builder” generally acquire a planning responsibility.

• In an EPC project the designer/builder is given a much broader responsibility for planning because of their

earlier entry into the project.

Planning Input and Data

Key to successful project planning is the input of relevant and accurate data concerning the project. This

information can be historical data, benchmark data and/or new data pertaining to the current project. The input

and data collection phase represents the initial process of identifying these requirements.

The input and data collection process includes identification of project stakeholders, the contract/ technical

requirements and performance of the initial planning (constructability) assessment.

Historical and Physical Project Data

The use of relevant historical and site specific project data can be beneficial in developing the project plan, andproject cost and schedule.

A project plan library includes project historical reference documents such as conceptual plans, pertinent project

correspondence, project variations and constraints, and other impacts related to the project. This data will be

useful for planning similar or like projects.

There are several factors when initiating a new project that influence the development of the project plan.

Examples of relevant historical data include:

• Type of project

• Throughput/capacity

•

Technology• Global market conditions

• Labor resources

• Project team organization

• Lessons learned

• Actual cost and schedule data

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Examples of relevant physical data include:

• Geographic and other location factors

• Geological

• Terrain

•

Utilities• Transportation

• Environmental

• Cultural

• Climate factors

Variables and Constraints

Each project has variables and constraints beyond the availability of resources. These variables include but are not

limited to such factors as site conditions and restrictions, financial and economic factors, cultural and religious

factors, and local laws and regulations. These variables and their relative impacts must be identified, evaluated,

documented, and resolved or mitigated in the best interest of the stakeholders and the project. As the planningprocess evolves, these uncertainties may change, be resolved, magnified or disappear. Therefore, when the

variable changes, planning dynamics change and the plan must be re-evaluated.

A project variable is an event, element, or feature that will have an impact on project performance. The key in

planning is the identification and resolution of these as required for the success of a project. Significant project

variables and constraints include:

• Physical location and space

• Geological limitations

• Efficient sequencing

• Productivity assumptions

• Identification of resources available

•

Project labor agreements

• Funding methods and phases

• Contracting & project delivery method

• Closeout and commissioning requirements

Resource Planning

Resources planning is critical to the planning process and if not considered can adversely impact the project.

Planners must identify the key resources in relation to the overall objectives of the project. Resources include the

various assets used to accomplish the specified work during the life of a project. Resources include but are not

limited to the following:

• People

• Equipment

• Materials

• Technology

• Capital funding

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Planning Assessments

Value engineering and constructability assessments are important elements of the planning process.

While constructability reviews focus on the optimal execution of the current plan, value engineering is concerned

with the re-design of the project to meet stated performance criteria in a less costly manner than previouslyenvisioned.

Value Engineering

Value engineering (VE) often begins during design and focuses on maximizing value, which can be formulated as

the sum of design item functionality and quality, per unit cost.

Value engineering during project design planning is intended to optimize product and production system design in

consideration of the effective performance of manufacturing and related activities. Alternate materials, or

technologies and standardization (e.g., use common parts for different products) are some of the considerations.

In its relationship to the planning process value engineering must consider stakeholders’ requirements, prioritize

required functions, and evaluate their cost and schedule impact.

Constructability

Constructability is the application of construction knowledge and experience during project planning, design,

procurement and field execution to consider methods that achieve the most effective performance of construction

activities. Alternate materials, installation construction sequencing, safety, and construction technologies are all

considerations. Constructability analysis during the planning process examines the methods and cost of installed

equipment and materials, technology, site conditions, resources, and related infrastructure.

Constructability assessments should begin during the initial planning phase and continue throughout the entire

planning cycle and into the implementation phase of the project. The constructability assessment can reduce bothtime and cost impact to a program or project. Constructability analysis is often continued throughout the life of a

project to optimize the cost and schedule planning while mitigating risk. It has the most significant positive impact

when implemented during the earliest planning stages of the project.

(Refer to AACE Recommended Practices No. 30R-03, Implementing Project Constructability and 48R-06, Schedule

Constructability Review for additional details.)

Risk and Response Planning

Risk management planning includes development of risk response plans to propose potential solutions to impacts

caused by risk or change. Changes may either have a positive or negative impact on the current project plan.

Developing procedures to identify impacts and response planning is necessary. During the planning process, it is

appropriate to identify areas of potential risk and methods to apply to mitigate risks. Planning for change should

be part of the planning process. The project team should develop response plans as part of the planning process.

As the plan is developed, the project team should be aware of the potential risks and implement a risk

management plan. This alerts management to monitor for risks. The risk management plan may be used to

mitigate risk.

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• Risk & mitigation plans

• Project team implementation approval

• Stakeholders reviews and acceptance

• Periodic forecasts & planning

Define the Project Scope of Work

At the conceptual stage of a project, the scope of work is a narrative description. The client/owner is responsible

for defining the conceptual scope of work.

As the project evolves the scope of work is refined and expanded during the planning process into an assortment

of deliverables to reflect the current project goals and requirements. In later stages of planning the level of detail

continues to be enhanced.

The scope of work is identified and expressed as an achievable product. As the planning process progresses the

scope of work becomes better clarified and is more specifically defined.

Development of the work packages is a product of the planning phase of the project. The scope of work provides

the relationship between the execution strategy, and the considerations and constraints that serve and support

the contractual requirement.

The scope of work provides a basis from which the baseline plan for performance measurement is developed

during the scheduling phase of the project.

Define Project Goals

Every program or project must establish achievable goals in order to be successful. The client and owner establish

the initial conceptual goals and the team is responsible for identifying, reviewing and recommending incremental

goals for stakeholders’ action.

A project goal is a concept that is identified and expressed as an achievable end product. The goals may be either

contractual or non-contractual, depending on the nature of the program and/or project. The contract should only

represent definable (or measurable) and achievable goals.

Each stakeholder may have different perceptions of established goals that require reconciliation to ensure goal

alignment. Subsequently, some stakeholders may have differing opinions of the degree of project success.

Define Project Plan

The project plan is the output of the planning process for a project. The project team planning actions eventually

develop through reviews and revisions into the project baseline plan. The baseline plan provides the framework

and benchmark for all project measurement evaluations.

The initial scope of work identified during the planning process determines the basic methods and means

necessary to develop the project plan that will enable the process to move forward.

An organization’s policies and procedures, along with the project’s policies and procedures, may influence the

development, review and approval of a baseline plan.

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The project plan is a baseline document, which is fixed unless modifications or changes to the scope of work (SOW)

cause significant changes to the project. Significant scope changes may require modification of the current plan or

creation of a new plan. Any revised project plan should be agreed to by appropriate stakeholders to the extent

that those stakeholders have a contractual basis to provide such input. However, input from non-contractual

stakeholders should also be carefully and appropriately considered.

Once the project plan is identified, an initial schedule risk assessment/analysis should be completed to determine

the feasibility and risk(s) associated in meeting the timeframe identified in the project plan.

Phase Definition

A phase is a significant period or grouping of work within a project. A phase may encompass several stages of

planning and work. Phase definition involves the initial identification and outlining of major relationships and

sequence planning, as defined by the scope of work. As the scope of work is refined, planning includes the

identification or breakdown of the project scope into various tasks that may likewise be expanded to encompass

the entire project.

Phase definition will lead to the initial development of the cost estimate, control level schedules and the

identification of risk to achieving success in those defined phases.

Phases are based on and derived from the scope of work, sequence of work, phase relationships and the work

breakdown structure (WBS). Phases might be defined/ modeled by a fragnet and can have distinct start and finish

milestones.

Sequence and Phase Relationships

Phase relationships are the basis for development of a framework for monitoring, analyzing, controlling and

reporting. Work phases eventually become broad groupings within the schedule and ultimately result in a nesting

of specific work packages and activities.

Sequencing is a part of the planning process that brings together the interrelated phases of a project using simple

relationships. Phases may overlap within the project.

Sequencing and phase relationships are an output. They result from the project team’s definition of the various

phases of the project. Sequencing and identification of phase relationships comprise the beginning of the process

that results in the translation of the plan into the project schedule.

Establish Work Breakdown Structure (WBS)

The work breakdown structure (WBS) is a hierarchical division of the work elements to be performed on a project.

The function of the WBS is to divide the scope of work into manageable parts that correspond to key deliverables,

phases and/or milestones with the intent to avoid the omission of key elements and assist in the communication

of cost, schedule and resource performance data to stakeholders.

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The WBS must balance between complexity required for control and simplicity for accurate progress reporting.

Rules of thumb for defining activity complexity and number are:

• Any activity should require at least a day in duration; and

•

No activity duration should exceed a project routine reporting period, for example, one month.

Establish Organization Breakdown Structure (OBS)

The organization breakdown structure (OBS) is a hierarchical division of the producers of the work to be performed

by a particular organization. The function of the OBS is to allocate the resources required to execute the scope of

work as identified in the work breakdown structure. The OBS must balance between complexity required for

control and simplicity for accurate progress reporting.

The work breakdown structure and organization breakdown structure must also relate to code/chart of accounts.

• A work package is the lowest level WBS and OBS where resources/cost can be budgeted or estimated.

• The cost account is the intersection of WBS and OBS components where actual costs can be forecasted

and collected.

Establish Cost Breakdown Structure (CBS)

A cost breakdown structure (CBS) is a hierarchical definition of the key elements of a project. At the highest level

these are: labor, materials, direct and indirect costs. For a complex project there will be many sub-levels of these

major elements.

The cost breakdown structure is a key element of control for a project and a planning requirement which allows all

levels of management to track the cost for the project to meet their particular control and reporting needs. The

CBS allows management to evaluate the effectiveness of the estimate versus the work in place, remaining work,and overall costs.

Every project requires a cost breakdown structure in order to define the full range of elements of cost associated

with implementation. The development of the cost breakdown structure allows tracking and forecasting of

estimated costs versus actual costs. A CBS also makes it possible to perform additional, unplanned work on a cost

for labor and material (T&M) basis, when required.

As construction is underway proper assignment of costs and roll-up cost summaries must be maintained for

effective control of labor and materials both on-hand and installed. Accurate accountability for direct and indirect

cost elements associated with the project is essential.

Cost Estimate Development

During the planning process, goals, objectives and overall scope of work are developed. The budget planning

process and development incorporates stakeholder expectations for the project.

Budget projections are continually refined based on identified constraints and considerations. Budget projections

are often revised to be in agreement with project goals, objectives and timeline.

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Impacts associated with resource constraints and considerations influence the timeline and budgeting process.

Contract documents may dictate how and when the cost estimate is developed. They may outline the type and

timing of various detailed estimates for the entire project or for specific phases or deliverables.

The work breakdown structure (WBS) and organizational breakdown structure (OBS) are integrated into the

preliminary cost estimate and this integration should form the basis for the schedule WBS/OBS model.

Cost estimates plus contingencies and other risk factors should lead to budget estimates. Budget development and

evolution drives development of the project schedule. The budgetary process provides the underlying basis of cost

and schedule baselines used for monitoring, controlling and reporting.

During the planning process, alternatives for resource options are developed and evaluated based on timelines

and the projected budget considerations. These “time versus cost” considerations include value engineering and

constructability assessments in addition to revisions to the project scope.

The planning timeline and associated budget are developed concurrently. At the point major elements of the work

scope are known in sufficient detail to graphically depict on a timeline allowing an analysis of cash flow, overall

resource utilization and further optimization of the plan. If necessary, revisions are developed and evaluated to

reflect meeting the overall program/project goals.

Baseline Plan

The baseline plan is the final output of the initial planning process for a project. The baseline provides the

framework for all progress and measurement evaluation as the plan is implemented.

Unless significant modifications to the scope of work occur, the baseline plan is a ‘fixed’ or unchanging document.

Significant changes to the scope of work can cause the previous baseline to be an inadequate representation of the

work and of little value for work progress reporting. When that occurs, a planning effort to re-baseline is

recommended. Budget, schedule, and percent complete status are all typically affected. This revised baseline

should be agreed to by the appropriate stakeholders (contracting parties).

The planning timeline evolves during the planning process. At this final stage in the planning process goals,

objectives and overall scope of work are defined in sufficient detail.

Sequencing and phasing of major tasks allow planning to evolve into conceptual schedule model development. Key

milestones can be identified and established. The project schedule model begins with a planning timeline and

conceptual budget. These high level presentations allow stakeholders to evaluate the project planning status and

likelihood of meeting desired goals.

The baseline planning timeline and cost estimate/budget for completion are evaluated to determine feasibility of

meeting stakeholder requirements. If necessary revisions are developed and evaluated to reflect meeting overall

project goals.

Each organization manages to its own baseline plan and schedule requirements. That is, an owner/ client may not

need or want to manage the project execution plan to the same level of detail as a contractor. Likewise, a

subcontractor focuses primarily on only the breadth of its scope of work and interfaces with related trade work

and/or phasing and may not need any further level of detail.

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Periodic Forecasts and Planning

A forecast is a prediction, (or an estimate) of future conditions and events based on factual information and

observable trends, professional judgment, and documented assumptions available at the time of the evaluation. A

periodic forecast update is typically produced on a regular basis for a given future period. Periodic forecasts are

usually limited in scope. Forecasts fall into categories of periodic or special.

Conditions may dictate that a special purpose forecast be produced. The special purpose forecast may be defined

as a periodic forecast in the contract documents or created by one of the stakeholders to provide a proposed

solution to a specific problem. A special purpose forecast might be used by managers to assess the risk associated

with a contingent event.

Assessment of the planned work scope and goals from the project plan are essential tools to monitor periodic

forecasts. These forecasts are important for controlling and reporting progress toward project deliverables and

milestones.

Stakeholder Review

Stakeholders influence the entire planning process. It is important to the project team to manage all stakeholder

interests and concerns. This does not mean that all stakeholder concerns should be acted upon. However all

concerns should be actively listened to and documented. Stakeholder input and review throughout the planning

process is critical.

The key stakeholders’ detailed review and decision making must be documented. Their concerns may result in

positive or negative actions requiring re-planning or stoppage.

Minor stakeholders’ review and input is also important to project success. Failure to embrace these stakeholders in

the planning process may cause social or political issues that should not be over looked. Otherwise, additional

planning and potentially significant cost and schedule impacts may be the result.

Not all stakeholders contribute resources. Some may only have opinions or may be activists. Their involvement

costs them little or nothing in resources. Commitments and obligations to stakeholders are critical to the planning

process.

Project Planning Approval

It is essential that all of the project participants have an opportunity to review the completed initial plan and

comment on it. Adequate time for management and appropriate stakeholder approval of the final project plan is

important to success of the project.

CONTRIBUTORS

Edward E. Douglas III, CCC PSP (Author)

Peter W. Griesmyer (Author)

Christopher W. Carson, PSP

John O. Evans III, PSP

Earl T. Glenwright Jr., PE

John Hollmann, PE CCE CEP

Donald F. McDonald Jr., PE CCE PSP

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® ®

Jose Noe

Glen R. Palmer, CFCC PSP

Donald E. Parker, PE CCE

Perry Petersen

Wesley R. Querns, CCE

Hannah E. Schumacher, PSPCarmelita Thorndike, PSP

Ronald M. Winter, PSP

David C. Wolfson

James G. Zack Jr., CFCC

REFERENCES

1. Hollmann, John K., PE CCE, Editor, Total Cost Management Framework: An Integrated Approach to Portfolio,

Program and Project Management , AACE International, Morgantown, WV, 2006.

2. AACE International Recommended Practice No. 10S-90, Cost Engineering Terminology , AACE International,

Morgantown, WV, (latest revision)

3.

AACE International Recommended Practice No. 14R-90, Responsibility and Required Skills for a Project

Planning and Scheduling Professional , AACE International, Morgantown, WV, (latest revision)

4. Greismyer, Peter W., Editor, PSP Certification Study Guide, 1st Edition Revised , AACE International, Morgantown,

WV, 2008.

5. Baker, Sunny, and Ken Baker, On Time/ On Budget: A Step-By-Step Guide for Managing Any Project, Prentice

Hall, New Jersey, 1992.

6. Bechtel Group, White Paper: EN-3 Project Execution Planning, http://bsii.bechtel.com/BNI, World Wide

Web, December 2, 1997.

7. Dinsmore, Paul C., Editor, Human Factors in Project Management, Revised Edition, AMACOM, New York,

1990.

8. Douglas, Edward E. III, CCC, Project Planning – Then Scheduling, 2004 AACE International Transactions,

PS.07, AACE International, Morgantown, WV, 2004.

9.

Knutson, Joan, and Ira Blitz, Project Management , AMACOM, New York, 1991.10. Lewis, James P., Fundamentals of Project Management, Second Edition, AMACOM, New York, 2002.

11. Silvestrini, Remo J., The Planning Engineer – A Human Element of Planning and Scheduling, 1983 AACE

Transactions, E.3, AACE International, Morgantown, WV, 1983.

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