AACE® International Professional Guidance Document No. 01
GUIDE TO COST ESTIMATE CLASSIFICATION SYSTEMS
TCM Framework: 7.3 - Cost Estimating and Budgeting

Rev. August 29, 2022

 

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Table of Contents

 

Table of Contents
Purpose
Introduction
Classification Concepts and Principles
More on Uncertainty and Accuracy
Addressing Projects of Mixed Scope
Classification for Long-Term Planning and Asset Life Cycle Cost Estimates
Guide to Industry Specific Estimate Classification RPs (in numerical order)

17R-97: Generic
18R-97: Process Industries
47R-11: Mining and Mineral Processing Industries
56R-08: Building and General Construction Industries
69R-12: Hydropower Industries
87R-14: Petroleum Exploration and Production Industries
96R-18: Power Transmission Line Infrastructure Industries
97R-18: Pipeline Transportation Infrastructure Industries
98R-18: Road and Rail Transportation Infrastructure Industries
102R-19: Pharmaceutical and Related Industries
107R-19: Environmental Remediation Industries
112R-20: Maintenance Turnarounds for the Process Industries
115R-21: Nuclear Power Industries

References
Contributors

 

Purpose

The Guide to Cost Estimate Classification Systems provides a roadmap and annotated table of contents for finding AACE International ® (AACE) recommended practices (RPs) relating to cost estimate classification (classification) and estimate accuracy.

The various AACE classification RPs were developed as a series. The series starts with 17R-97 which covers the principles of classification including a generic Cost Estimate Classification Matrix; a table of estimate characteristics by class (of which there are five; Class 5 to 1 from least to most defined). 104R-19 titled Communicating Estimate Accuracy supplements 17R by providing further information about accuracy which is a key characteristic of estimate class. 17R is followed by a series of “As Applied In…” RPs that add specific, detailed Estimate Input Checklist and Maturity Matrix tables for various industries. The purpose of this guide is to address the difficulty in locating the appropriate RP(s) for one’s project situation or concern. This document is not intended to provide a guideline for any specific practice; only to guide one to other RPs with that purpose. 

Introduction

The first AACE guideline of any kind was developed by the Estimating Methods Committee in 1958 [1]. It was titled Estimate Types and proposed 4 types; Order of Magnitude, Preliminary, Definitive, and Detailed. For each type, it described four typical estimate characteristics; purpose, accuracy, information available for estimating, and methods. A central principle was that as the level of scope definition (information available for estimating) improved, so too did the accuracy when expressed as a high to low range. While the details have changed, the general idea of classification or phased estimates is the same today.

In the 1990s, formal project phase or stage-gate scope development processes and procedures became ubiquitous in the process industries where the term front-end loading (FEL) was commonly used to represent such processes [2]. In 1997, the AACE Cost Estimating Committee developed the generic RP 17R-97 to align with these processes. The same year, the first “As Applied In” RP was developed for the process industries (RP 18R-97). In these RPs, the four types were replaced by five classes to align with the most common FEL processes that had five scope development phases and associated investment decision or funding approval gates or milestones.

The changes from the 1958 guidelines started with replacing the type narrative names (which improperly implied estimate use, accuracy or method) with class numbers. A significant improvement was adding industry-specific detail to the information available (deliverables) for estimating. Also, the fixed +/- accuracy ranges were replaced by indicative range-of-ranges recognizing that the accuracy range is not wholly determined by the level of scope definition. For example, an estimate for a project with new technology will have much less accuracy than an estimate for a clone project. Unfortunately, inappropriate statements of fixed accuracy ranges continues, so the RP Understanding Estimate Accuracy was prepared [3].

Speaking of accuracy, state or phase-gate systems, which estimate classification supports, are a risk management approach. Funds are released in proportion to the decision maker’s understanding of and willingness to accept risk. For example, at Class 5 (the least defined phase), understanding of scope definition is minimal, so only minimal funding is approved to advance the definition to the next phase. Just as stage-gate is a risk management process, classification is tied to quantitative risk analysis (QRA) which provides the accuracy ranges. While QRA RPs are not included in this series, it is recommended that they be understood by estimators and RP users. In particular, RP 42R-08 covers systemic risks and parametric modeling which is a method that directly quantifies the uncertainty related to the level of scope definition based on empirical research [4].

Finally, it should be noted that schedules can also be classified as to the level of scope definition that they are based on [5]. While schedules and cost estimates should be integrated and of the same class, AACE developed an RP to better define the meanings in respect to schedule development.  

In summary, to understand the concept of estimate classification, the sequence of RPs to study are:

 

1.  17R-97: Cost Estimate Classification System
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2.  27R-03: Schedule Classification System
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3.  104R-19: Communicating Estimate Accuracy
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4.  Industry-specific “As Applied In” estimating RPs (see list in this guide)
 
5.  42R-08: Risk Analysis and Contingency Determination Using Parametric Estimating
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Classification Concepts and Principles

 

RP 17R-97 provides a summary of the general principles of classification. However, a key principle is:

 

The maturity level of definition is the sole determining (i.e., primary) characteristic of class.

 

All other estimate characteristics including the end use, methodology, effort and accuracy are secondary. Note that class does not speak to the requirements for or quality of an estimating process; i.e., class alone is not a valid contract specification for estimating services (e.g., “Contractor will provide a Class 3 estimate” only requires what deliverables that must be used as the estimate basis.) To obtain quality, one must define, and assure, estimating requirements, processes, methods, and plans in detail.

 

Another principle for all RPs in this series is that for each industry there is a level of scope definition at which the cost uncertainty (typically expressed as an accuracy range) is reduced to a point that most reasonably prudent decision makers can make a full-funds (sanction) project investment decision, at least in respect to the capital expenditure (capex) element. For each industry, this full-funding uncertainty level is expressed by Class 3. That is not to say that Class 3 is a standard; for example, in upstream oil, full funds may be committed early (Class 4) due to the need to sign development agreements. On the other hand, for government funded infrastructure, policy often dictates that commitment of funds be held off until tenders are received (Class 2).

 

The principle above leads to certain commonalities among the industry-specific RPs. For example, the “Project Master Schedule” and “Work Breakdown” are to be “Defined” at Class 3 for all industries. Most of the industry differences are in the engineering and other deliverables (e.g., P&IDs for process plants versus room layout plans for buildings).

 

For some industries, the deliverables and their status to define each class and the resultant typical accuracy range-of-ranges are backed by extensive empirical risk research; particularly for the process industries. For less well researched industries, the deliverables and their status are based more on general consensus of the RP reviewers. Some industries have standards related to class; for example, in mining the Canadian Securities Administrators, National Instrument 43-101 defines requirements for “Feasibility” studies. Where applicable, the industry RPs discuss these; they may not be aligned as the objectives of these other categorizations may vary.

 

A characteristic of class is that it is intended as a threshold (not continuous) metric. i.e., a class level is not achieved until all key deliverables reach the desired class level of definition or status (there is not a Class 3.5). If the deliverables for a specific estimate substantially meet the maturity expectations for a given class, but a few non-critical deliverables are lagging in maturity or approvals, the rating may be described as Class X with exceptions with the specific laggard deliverables identified for stakeholder consideration (generally in the Basis of Estimate document).  This is not an exhaustive list of principles and concepts. Users should refer to the appropriate RPs.

 

 

More on Uncertainty and Accuracy

 

It is worth repeating that accuracy range does not determine the class, nor does class determine the accuracy. Accuracy can only be determined through QRA; each scope and estimate will have its own unique range driven by its unique uncertainties and risk profile. It was also mentioned that the accuracy characteristic provided in Table 1 of each RP is a range-of-ranges for each class. These ranges are indicative of the relative improvement in the range from Class 5 though Class 1; they are not to be used in as absolute metrics or targets. Research shows that it is not uncommon for the high (+) range for projects of high complexity and/or supported by weak project systems may be more than two times the values shown.

 

Each RP includes Figure 1 below that illustrates the concept of improving accuracy with increased scope definition (as a percent of full definition). Note the absence of axis values; this reflects the fact that absolute range values cannot be quoted in the absence of QRA. Also note the overlap in the class bars; this expresses the concept that percent of definition, like accuracy, is not a given for each class. For example, Class 3 for a clone project wherein P&IDs are just red-lined, may be achieved very quickly (a small percent of total engineering effort) versus a new technology process requiring significant effort (a large percent of total engineering effort) in front-end process engineering. For more information, refer to RP 104R-19 Communicating Estimate Accuracy.

 

 

Figure 1 – Estimate Accuracy Improves as the Level of Project Definition Improves

 

 

Addressing Projects of Mixed Scope

It is common for project scope to include assets of multiple types. For example, a process project may include not only the process plant, but infrastructure to support that plant such as pipelines and rail as well as administration and other buildings. In developing separate classification RPs, typical physical or asset types were assumed. It is also common for design and engineering and/or construction contractors to specialize in projects of different types. In those cases, common practice is to develop a high-level work breakdown structure (WBS) that segregates the asset types, and for each element of the WBS an estimate will be prepared for which the class is rated using the most appropriate industry-specific RP.  

The dependence of the WBS elements should be considered when deciding if a phase-gate threshold has been achieved for an overall program or project. For example, if the process plant estimate is Class 3, but the plant utilities estimate is Class 4, sanctioning just the plant scope may not be justified because the lagging utility definition adds risk of major changes to the process plant to the degree that the plant and utilities are interconnected.  

 

 

CLASSIFICATION FOR LONG-TERM PLANNING AND ASSET LIFE CYCLE COST ESTIMATES

 

Classification maps the phases and stages of project cost estimating. Typically, in a phase-gate project system, scope definition and capital cost estimating activities flow from framing a business opportunity through to a capital investment decision and eventual project completion in a more-or-less steady, short-term (e.g., several years) project life-cycle process.
 

Cost estimates are also prepared to support long-range (e.g., perhaps several decades) capital budgeting and/or asset life cycle planning (re: 111R-20: Estimating for Long-Range Planning - As Applied for the Public Sector). Asset life cycle estimates are also prepared to support net present value (e.g., estimates for initial capital project, sustaining capital, and decommissioning projects), value engineering and other cost or economic studies. These estimates are necessary to address sustainability as well. Typically, these long-range estimates are based on minimal scope definition as defined for Class 5. However, these asset life cycle “conceptual” estimates are prepared so far in advance that it is virtually assured that the scope will change from even the minimal level of definition assumed at the time of the estimate. Therefore, the expected estimate accuracy values (percent that actual cost will be over or under the estimate including contingency) are not meaningful because the accuracy values explicitly exclude scope change. For long-term estimates, one of the following two classification approaches is recommended:

In all cases, a Basis of Estimate should be documented so that the estimate is clearly understood by those reviewing and/or relying on them later. Also, the estimating methods and other characteristics of Class 5 estimates generally apply. In other words, an Unclassified or Class 10 designation must not be used as an excuse for unprofessional estimating practice.

 

 

Guide to Industry Specific Estimate Classification RPs (in numerical order)

 

17R-97: Cost Estimate Classification System
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Generic
Scope: Covers basic concepts and principles of classification.

 

 

18R-97: Cost Estimate Classification System – As Applied in Engineering, Procurement, and Construction for the Process Industries
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Process Industries

Scope: Facilities for the manufacture and production of chemicals, petrochemicals, and hydrocarbon processing, but also pharmaceutical, utility, metallurgical, converting, and similar. These rely on process flow diagrams (PFDs, piping and instrument diagrams (P&IDs) and electrical one-lines as primary scope defining documents. Estimates typically center on mechanical and chemical process equipment, and they have significant amounts of process piping, electrical, instrumentation, and process controls involved as well as civil/structural work associated with the plant. Substations, a common element of process plant facilities, are covered as well. Also includes pumping and compression stations, and terminal tank facilities for pipelines projects.

 

 

47R-11: Cost Estimate Classification System – As Applied in Engineering, Procurement, and Construction for the Mining and Mineral Processing Industries
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Mining and Mineral Processing Industries

Scope: Definitions depends on data from/for project permitting; drilling and exploration; underground and surface mining; ore handling, milling and metallurgical processing; tailings and water management; and other onsite and offsite infrastructure facilities that may be similar to any process plant or uniquely mining. Intended to cover entire mining projects from the mine (surface or underground) through the initial processing including all associated process and infrastructure facilities within the scope. However, if the project is for a processing plant with no other mining aspect, it is assumed covered by 18R-97. Similarly, if the project is only for infrastructure elements alone (pipeline, power lines, road and rail) or buildings, those are covered by their respective RPs. Standalone exploration programs based on drilling or remote means are not included in this RP; however, exploration such as sinking shafts, driving drifts from an operation or drilling funded as part of mine development may be covered. In addition, projects for mine reclamation and closure may be included. Other than these exclusions, this addendum is specifically intended to cover the full mining project scope and should not be combined with other addendums.

 

 

56R-08: Cost Estimate Classification System – As Applied in Engineering, Procurement, and Construction for the Building and General Construction Industries
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Building and General Construction Industries

Scope: Covers new or renovated building (vertical) construction, as well as site/civil projects of repetitive and repeatable nature. Examples for buildings include: residential construction, commercial buildings, hotels, resorts, offices, retail, etc. Examples for site/civil projects include: site development, utility infrastructure, telecom, water and sanitary sewer pipelines, storm water and water resources projects. Estimates center on: functional space requirements, structural requirements, site requirements, architectural elements, sustainability, and supporting mechanical, electrical, plumbing, and life‐safety systems. This addendum specifically does not address process industries, environmental remediation, road and rail transportation, hydropower, reservoirs, and tunnels. This RP also does not fully cover one‐of‐a‐kind projects with special scope like concert halls, sports stadium, research building, health facilities, pharmaceutical, science laboratories and hi‐tech manufacturing. 

 

 

69R-12: Cost Estimate Classification System – As Applied in Engineering, Procurement, and Construction for the Hydropower Industries
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Hydropower Industries

Scope: Involves the production of electrical power, exclusive of transmission and distribution, using natural gravitational force of falling or flowing water, excluding tidal forces, to drive a turbine that powers a generator. Hydropower facilities are typically composed of key features such as reservoir area preparation (e.g., clearing, removal of structures and earthmoving), river management (e.g., cofferdams, diversion channels or tunnels, sediment management plans, environmental monitoring programs), principal structures (e.g., dams, dykes, intakes, penstocks, powerhouses, low level outlets, power tunnels, de-silting basins, and spillway structures), permanent local infrastructure (e.g., access roads, railroads, bridges, offices, warehouse and housing), Temporary infrastructure (e.g., construction camp, site access roads, airport, workshops, construction power, etc.) and environmental mitigation features (e.g. fish ladders, water bypass and creation of new fish or wildlife habitat). Typical hydropower facilities may include: turbines, generators, exciters, governors, transformers, gates for intake, spillway and draft tubes, and supporting electrical, mechanical, telecom, protection, and control systems. The water storage reservoir is typically required to support the operations of the hydropower facility. This RP does not specifically address commercial buildings, environmental remediation, regional transportation infrastructure, transmission and distribution of electricity, thermal, wind, solar, tidal and geothermal generation.

 

 

87R-14: Cost Estimate Classification System - As Applied in Engineering, Procurement, and Construction for the Petroleum Exploration and Production Industries
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Petroleum Exploration and Production Industries

Scope: Petroleum exploration and production (E&P) projects covering drilling, completion, gathering systems, and processing to a marketable product, including all associated process and infrastructure facilities within the scope of the project (but not including major infrastructure such as major pipelines, power transmission, and road and rail). Offshore facilities, such as subsea systems, fixed platforms, and floating facilities, are covered. As with mining, early seismic and exploration studies may be expensed and excluded. All facilities downstream of the production facilities are also excluded. E&P projects must pay special attention to the political and regulatory environment.

 

 

96R-18: Cost Estimate Classification System – As Applied in Engineering, Procurement, and Construction for the Power Transmission Line Infrastructure Industries
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Power Transmission Line Infrastructure Industries

Scope: Facilities for overhead, buried and submarine transmission of electrical power in the infrastructure industries. High voltage is typically >100kV but may be less (e.g., 33 or 66kv) if long distance with light loads. This excludes power supply and distribution scope within a process plant or building. It also excludes power generation facilities and substations. Like pipeline, a distinguishing feature is that they often traverse wide areas, cross country or subsea, which puts an emphasis on the definition of routing, land ownership and conditions, and establishing right-of-way (ROW). Associated scope definition challenges include defining stakeholder, permitting and regulatory requirements (power transmission is usually a regulated industry if not government owned). Submarine installations increase the focus on cable selection including armoring and joint considerations. While many distinguish power transmission (higher voltage, long distances) from power distribution (short distance, lower voltage connections to retail customers), the principles of estimating these elements are similar; i.e., the RP applies to both. The main physical power transmission line scope elements are conductors and their support structures if installed overhead. Main installation elements include land clearing if over land (including forestry if applicable), foundation and structure erection and conductor stringing if overhead, or trenching, laying and horizontal boring if subsurface or subsea. Special scope elements are involved with crossings of water, road, rail and so on and at terminations. The main scope definition deliverables are associated with defining the power requirements (i.e., kV), the conductors and structure, and the routing. The route’s land (or subsea) characteristics and the nature of developments drive the need for special design features and execution strategies.

 

  

97R-18: Cost Estimate Classification System – As Applied in in Engineering, Procurement, and Construction for the Pipeline Transportation Infrastructure Industries
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Pipeline Transportation Infrastructure Industries

Scope: Facilities for onshore and offshore pipelines for transportation of gas and liquids in the infrastructure industries. Including but not limited to hydrocarbons, chemicals and water. This primarily covers pipelines under pressure (e.g., steel, composite, etc.) and not gravity drainage (e.g., concrete; see general construction). Excludes piping within a process plant. It also excludes pumping and compression stations and storage and shipping terminals (see process). However, incidental valve, monitoring or pigging stations may be included. A key element of defining scope is to study system hydraulics. A distinguishing feature of these projects is that they often traverse wide areas, cross country or subsea, which puts an emphasis on the definition of routing, land ownership and conditions, and establishing right-of-way (ROW). Associated scope definition challenges include defining stakeholder, permitting and regulatory requirements (pipeline transportation is usually a regulated industry if not government owned). Special scope elements are involved with crossings of water, road, rail and so on (including borings) and at the pipeline terminations. Environmental, safety and health concerns are paramount with pipelines under pressure, and may carry hazardous materials, therefore, monitoring and control systems are key scope elements as well as inspection and maintenance considerations (e.g., pigging).

 

 

98R-18: Cost Estimate Classification – As Applied in Engineering, Procurement, and Construction for the Road and Rail Transportation Infrastructure Industries
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Road and Rail Transportation Infrastructure Industries

Scope: Facilities for major roads, highways, railroads, transit rail and similar facilities for transporting people and goods. Rail may be primarily for freight, people (transit) or both including specialized systems such as metros, light rail, high speed, monorails and people movers. This includes the right-of-way and access site preparation and civil work (excavation, drainage, causeway, etc.), structures (e.g., over and underpasses, bridged crossings, monorail structure, walkways, etc.), electrical for lighting and for power (if electric driven), road surfaces, guides, rail components and rolling stock, safety, signaling and signage, telecommunications, and other ancillary facilities. This excludes specialized elements (major projects in their own right) including major long-span bridges and viaducts (e.g., major river or canyon crossings, etc.) and major tunnels; however elevated structure for urban monorail or people movers is included. Also excludes major buildings such as toll stations, rail stations, rail maintenance, fueling and remote operations and control facilities. Also excluded are specialized systems such as hyperloop and traction/cable funiculars and cable car. Major system power generation, transmission and substations are also excluded but distributed traction substations and power lines/rail for electric trains are included. The main elements are the roadway itself including embankments, cuts, and pavement layers, drainage and culverts, retaining/shoring structures, noise barriers, safety structures, support structures (under/overpasses, minor bridges and walkways), signage, signals and lighting. Typical installation elements include earthworks (land clearing, top soil removal, embankment and cut sections), paving (with specialized equipment), underground and surface drainage, utility relocation and modification, road and structure foundations including retaining/shoring features, structural steel and/or concrete, lighting electrical, signal electrical and controls and various specialty items (sound barriers, guardrail, fence, speed control systems, smart systems, etc.). Environmental concerns are paramount. The main rail elements are track components (rails, fastenings, sleepers, switches and crossings, ballast or slab track (if not ballast), and the railroad base (sub ballast, sub base) including earthworks (land clearing, top soil removal, embankment and cut sections), underground and surface drainage, utility relocation and modification. Elevated structures for monorail or other transitways may be included. It also adds grade crossings and safety barriers. If electric propulsion is used, overhead lines and structure are required, as well as power distribution such as traction substations. Finally, the engines and rolling stock, trainsets and other vehicles are included.

 

 

102R-19: Cost Estimate Classification System – As Applied in Engineering, Procurement, Construction, and Qualification for the Pharmaceutical and Related Industries
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Pharmaceutical and Related Industries

Scope: Includes facilities in the pharmaceutical and biopharmaceutical industries, but also nutraceuticals which approach pharmaceutical grade quality. These facilities support the manufacturing and packaging of products regulated as drugs or medicines (or of near quality such as nutraceuticals). These facilities typically combine specialized process plant, packaging, utilities and waste handling scope, with specialized building scope. Their scope is similar to that of other indoor process facilities except for the level of quality and process and environmental control. In terms of stage-gate processes, these projects also include a more extensive, rigorous and regulated start-up and commissioning phase than typical process plants termed qualification and validation. Qualification typically has sub-phases of installation and operational qualification (IQ/OQ) that verify that the facility was installed correctly and operates as intended respectively. Additional defining deliverables are required which can be of extensive duration (and added uncertainty). For non-medicine nutraceuticals, there are food safety qualification practices of a similar nature but less regulated. The scope elements are similar to process plants and buildings covered in RPs 18R-97 and 56R-08 respectively. It includes the site and building (site development and; architectural, civil and structural works, mechanical systems [e.g., HVAC], power and lighting, and so on); major plant installations; production areas; production equipment and the process facilities (equipment, piping, electrical, controls and so on).; support production systems; protection and associated control and automation system; qualification and validation. However, some of the building and process elements are of a highly specialized nature such as the hygienic piping, valves and fittings, impervious and aseptic building finishes, and clean room HVAC to name a few. If a project consists of a site and building or process element that is of a more standard nature (e.g., an office building adjacent to the plant) and lacks the specialized features and qualification requirements, RPs 18R-97 and 56R-08 can be applied.

 

 

107R-19: Cost Estimate Classification System – As Applied in Engineering, Procurement, Construction, and Qualification for the Environmental Remediation Industries
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Environmental Remediation Industries

Scope: This RP focuses on Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) remedial projects and United States Resource Conservation and Recovery Act (RCRA) corrective action projects, as well as decontamination and demolition (D&D), ordnance and explosives cleanups, and other environmental remediation work. However, it can be applied towards other legal frameworks and regulations that follow similar processes. This RP focuses on environmental remediation in response to the result of the release of toxic and hazardous substance. It includes estimates for work encompassing the entire environmental remediation life cycle from initial investigations (excluding R&D) through site closure, including long term surveillance and long-term maintenance. Therefore, it could be applied to cost estimates for closure/post-closure of regulated facilities (e.g., hazardous waste facilities under RCRA) such as mine reclamation or asbestos abatement prior to demolition of a building. It excludes projects to construct waste processing facilities such as wastewater treatment, or decommissioning projects not involving environmental remediation. This RP is unique in its integration of classification with the six phases usually associated with environmental remediation project life cycles.

 

 

112R-20: Cost Estimate Classification System – As Applied in Maintenance Turnarounds for the Process Industries
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Maintenance Turnarounds for the Process Industries

Scope: This RP applies to the process industries where a common attribute is the continuous operation (as opposed to batch operation) of the process plant, thus necessitating regular maintenance turnarounds. Maintenance turnarounds refers to maintenance, inspection and minor upgrade/modification work carried out by the turnaround maintenance and inspection team during a planned, periodic (total or partial) shutdown of a process unit or plant. These often have traditional capital project tie-in scope which needs to be executed in the turnaround event window. The cost estimates covered by this RP are for the inspection and maintenance work only. RP 18R-97 covers estimates for the traditional project scope. To explain further, this RP applies to corrective maintenance, preventive maintenance, inspection work (statutory, risk-based, company mandated, etc.) and minor management of change projects, if carried out by the maintenance team. It does not apply to capital investment project work, executed by a project team, even if that project work requires a shutdown of the plant for installation of tie-ins. Nor does it apply to shutdowns for routine catalyst changes. Examples of typical turnaround work include, but are not limited to, valve refurbishment, pipe clamp removal and pipe repair, repair of corrosion under insulation, overhaul of compressors to meet original equipment manufacturer warranty requirements, cleaning of shell and tube heat exchanger tubes, replacement of heat refractory bricks in a reactor, repair/replacement of damaged trays in a distillation column, and so on. This RP also discusses unique risk funding in turnarounds that may have separate accounts in addition to traditional contingency including emergent work that arises after scope freeze and before the start of shutdown, and discovery work that is discovered during the turnaround execution when equipment is opened and inspected.

 

 

 

115R-21: Cost Estimate Classification System – As Applied in Engineering, Procurement, and Construction for the Nuclear Power Industries
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Nuclear Power Industries

Scope: The nuclear power industry includes private and public utilities using nuclear fission reactors in the production of electrical power, exclusive of transmission and distribution (see RP 96R-18 for transmission). Projects include both modification and new build projects. Nuclear power facilities typically include, but are not limited to, the nuclear reactor structures, systems, equipment, and components; nuclear steam supply system; turbogenerator and auxiliary systems and the balance of plant structures, systems, equipment, and components. Cost estimates for nuclear power projects include unique concerns and definition requirements related to licensing, worker radiation protection, nuclear safety systems procurement requirements, and security concerns that can add uncertainty. Requirements for nuclear systems redundancy for licensing and safety considerations add scope, deliverables and uncertainty beyond traditional process or thermal power generation projects. This RP excludes nuclear decommissioning, waste and disposal, fuel enrichment or reprocessing, pilot facilities, or research and fusion nuclear reactors. The plant scope typically includes significant building construction directly associated with nuclear power plants; however, major buildings not directly associated with the processes (e.g., office buildings) should use RP 56R-08 for general construction.

 

 

 

 

 

 

References

 

[1]

Gorey, J.M., “Estimate Types: A Proposal by the Estimating Methods Committee”, AACE Bulletin Vol 1, No. 1, 1958.
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[2]

Lukas, Joseph and R Nemes, “Reengineering Kodak’s Capital Process”, AACE International Transactions, 1996.

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[3]

AACE International, Recommended Practice 104R-19, "Communicating Estimate Accuracy", AACE International, Morgantown, WV, (latest revision).

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[4] AACE International, Recommended Practice 42R-08, "Risk Analysis and Contingency Determination Using Parametric Estimating", AACE International, Morgantown, WV, (latest revision).
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[5] AACE International, Recommended Practice 27R-03, “Schedule Classification System”, AACE International, Morgantown, WV, (latest revision).
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Contributors

Disclaimer: The content provided by the contributors to this professional guidance document is their own and does not necessarily reflect that of their employers, unless otherwise stated. 

John K. Hollmann, PE CCP CEP DRMP FAACE Hon. Life (Primary Contributor) 

This document is copyrighted by AACE International and may not be reproduced without permission.