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www.aacei.o

ENGINEERING

Sepember 20

THE JOURNAL OF AACE INTERNATIONAL -THE AUTHORITY FOR TOTAL COST MANAGEMENT

TM

COSTCOSTCOST

PRESIDENTS

MESSAGE

SPREADINGTHE WORD

CANONOF ETHICS

UPDATED

AND REVISED

SPECIAL FEATURE

GOVERNANCETASK FORCE

OUTLINES ITS WORK

AND SEEKS MEMBER INPUT

MistakesMade

NEGOTIATIONS

TOP10INProject

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3/40COST ENGINEERING SEPTEMBER 2011

CONTENTS

COST ENGINEERING

TECHNICAL ARTICLES

19 Top 10 Misakes Made inProjec Negoiaions

Joseph A. Lukas, PE CCE

Do you have cliens ha argue abou he addiional cos and/or ime or projecchanges? Do you have inernal disagreemens regarding esimaes and schedules? You needo be an eecive negoiaor o handle hese siuaions. Unorunaely, mos cos/schedule pro-essionals, esimaors, and projec managers, come up shor in inerpersonal skills, such as ne-goiaing. This aricle will discuss he op 10 misakes made in conducing projec negoiaions,along wih echniques ha can be used o avoid hese misakes. In addiion, a recommendedprocedure o ollow when preparing or a negoiaion will be described. The goal is o help youundersand when o hold your posiion in a negoiaion, when o compromise, and when o walkaway. This aricle should be o ineres o projec personnel looking or poiners on how o bemore eecive in negoiaion siuaions. I you hink youre a skilled negoiaor, read his aricleo see i you are making any o he 10 mos common negoiaion errors. You may be surprised!This aricle was irs presened a he 2010 AACE Inernaional Annual Meeing as manuscripPM.04.

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4/402 COST ENGINEERING SEPTEMBER 2011

5 Presidents MessageSpreading he Word

8 Special FeatureGovernance Task Force Oulines isWork and Seeks Member Inpu

10 Canon of EthicsUpdaed and Revised

14 Young Professionalsin Cost EngineeringSpoligh on F. Burak Evrenosoglu,

PE CCE PSP

16 Technical OverviewChange Managemen in he Trenches

4 AACE Inernaional Board o Direcors

4 Cos Engineering Journal Inormaion

27 Proessional Services Direcory

27 Index o Adverisers

32 AACE Inernaional Online Sore

34 AACEs 2012 Annual Meeing

CONTENTS

DEPARTMENTS

ALSO FEATURED

COST ENGINEERING

28 The AACEInternational BulletinSecion News rom Around he World

31 In MemoriamRemembering Casimir A. DeCwikiel

35 Article Reprintsand PermissionsSharing our Aricles and Experience

36 Calendar of EventsAACE Inernaional Evens and More

THE AACE INTERNATIONAL ONLINE BUTTON - This editon

o he Cos Engineeringjournal has access o additonal ma-

erial on he AACE Inernatonal websie, www.aacei.org.

Anytme you see he symbol a cener, here is additonal

conen online associaed wih ha artcle or eaure. Direc

your browser o www.aacei.organd look or he online bu-

on o access additonal resources. I you are already reading

he elecronic version, jus click he online buon direcly.

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COST ENGINEERING

4 COST ENGINEERING SEPTEMBER 2011

HEADQUARTERS1265 Suncres Towne Cenre Dr

Morganown, WV 26505-1876

800.858.COST ax - 304.291.5728

CONTENTSAACE INTERNATIONALBOARD OF DIRECTORS

PRESIDENTMichael R. Nosbisch, CCC PSP

562.733.2472 / [email protected]

PRESIDENT-ELECTMarlene Hyde, CCE EVP


PAST PRESIDENTSephen O. Revay, CCC CFCC


VICE PRESIDENT-ADMINISTRATIONMarin Darley, CCC FRICS


VICE PRESIDENT-FINANCEJohn J. Ciccarelli, PE CCE PSP


VICE PRESIDENT-TEC

George Whye, CCC CEP EVP301.957.7434 /[email protected]

VICE PRESIDENT-REGIONSJulie Owen, CCC PSP


DIRECTOR-REGION 1Ginee Basak, P.Eng. FAACE


DIRECTOR-REGION 2John C. Livengood, CFCC PSP


DIRECTOR-REGION 3James H. Carson, CCC CEP


DIRECTOR-REGION 4Duane R. Meyer, PE CCE

513.241.1230 x 620 / [email protected]

DIRECTOR-REGION 5Earl J. Seabrook, III, CCC


DIRECTOR-REGION 6Nicholas Keller, CCC EVP PSP

[email protected]

DIRECTOR-REGION 7Philips Tharakan Mulackal, CCE EVP

+971.50.631.4830 / [email protected]

DIRECTOR-REGION 8Keih Webb

+61.8.93485045 / [email protected]

EXECUTIVE DIRECTORDennis G. Sork


Viewpoins expressed in columns, eaures, and aricles published in Cos Engineering journal are solely hose

o he auhors and do no represen an oicial posiion o AACE Inernaional. AACE Inernaional is no en-

dorsing or sponsoring he auhors work. All conen is presened solely or inormaional purposes. Columns,

eaures, and aricles no designaed as Technical Aricles are no subjec o he peer-review process.

Cos Engineering (ISSN: 0274-9696/11) is published monhly by AACE Inernaional, Inc, 209 Prairie Ave., Suie 100,

Morganown, WV 26501 USA. Periodicals posage paid a Morganown, WV, and a addiional mailing oice. POSTMASTER:

Send address changes o AACE Inernaional; 209 Prairie Ave., Suie 100, Morganown, WV 26501 USA. Cusomer #7012359

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Beaver Creek, Richmond Hill, ON L4B 4R6. Single copies: US$9 members/ US$14 nonmembers (boh + shipping), excluding

special insers available o AACE members only. Subscripion raes: Unied Saes, US$72/year; all oher counries, US$91/year.

Overseas airmail delivery is available a US$99. Subscripions are acceped on an annual-year basis only. Copyrigh 2011 by

AACE Inernaional, Inc. All righs reserved. This publicaion or any par hereo may no be reproduced in any orm wihouwrien permission rom he publisher. AACE assumes no responsibiliy or saemens and opinions advanced by he

conribuors o is publicaions. Views expressed by hem or he edior do no necessarily represen he oicial posiion oCos

Engineering, is sa, or AACE Inernaional, Inc. Prined in York, PA, USA. Cos Engineering is a reereed journal. All echnical

aricles are subjec o review by a minimum o hree expers in he ield. To submi a manuscrip or peer review, see auhor

guidelines a www.aacei.org and submi a 200 word or less absrac o [email protected].. PHOTOCOPY PERMISSION:

Auhorizaion o phoocopy aricles herein or inernal or personal use, or he inernal or personal use o speciic cliens, is

graned by AACE Inernaional, Inc., provided ha he base ee o US$4.00 is paid direcly o Copyrigh Clearance Cener, 222

Rosewood Drive, Danvers, MA 01923 USA. Telephone: 978.750.8400. For hose organizaions ha have been graned a

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reporing service is ISSN-0274-9696/02 US$4.00. Paymen should be sen direcly o CCC. Copying or oher han personal or

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orders may be sen o [email protected]. ADVERTISING COPY: Conac Nework Media Parners., Execuive Plaza 1, 11350

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raes. Adverisers and adverising agencies assume liabiliy or all conen (including ex, represenaion, and illusraions) o

adverisemens prined and also assume responsibiliy or any claims arising hererom made agains he publisher. Thepublisher reserves he righ o rejec any adverising ha is no considered in keeping wih he publicaions mission and

sandards. The publisher reserves he righ o place he word adverisemen wih copy which, in he publishers opinion,

resembles ediorial maer. All adverising acceped or publicaion in Cos Engineering is limied o subjecs ha direcly relae

o he cos managemen proession. Curren rae card available on reques. COST ENGINEERING DEADLINES: Submissions or

Cos Engineering mus be received a leas 8 weeks in advance o he issue dae. Send o: Edior, 1265 Suncres Towne Cenre

Dr, Morganown, WV 26505-1876 USA. Deadlines do no apply o echnical papers.

Policy Concerning Published Columns, Features, and Articles

Esablished 1958

Managing Edior Marvin [email protected]

Ar Direcor Noah [email protected]

Adverising Sales Mark SouNework Media Parners Inc.410.584.1966 ax - [email protected]

Vol. 53, No.9/Sepember 2011

AACE Inernaional - The Auhoriy for Toal Cos ManagemenTM

OUR VISION - To be he recognized echnical auhoriy in cos and schedule managemen

or programs, projecs, producs, asses, and services.

OUR MISSION - The members o AACE enable organizaions around he world o achieve

hier invesmen expecaions by managing and conrolling projecs, programs, and por-

olios; we creae value by advancing echnical knowledge and proessional developmen.

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Anoher message being wrien as I fly back

home rom an inerestng week in Washingon,

DC. I sared his rip (sraigh rom he air-

por) wih a dinner meetng a my alma maer,

George Washingon Universiy, he proposed

sie or he governmen agency orum we are

planning o hold in he spring.

Proessor Renee Van Dorp and Adjunc Proessor David Gal-lay (an AACE member), joinly represened he Universiys En-

gineering Managemen and Sysems Engineering (EMSE)

program, which recenly added a concenraton in cos engi-

neering o is already impressive suie o ocus areas. Boh

Renee and David were very ineresed in he idea o GW hostng

he orum as a kind o neural sie or he US ederal agencies

o come ogeher o discuss bes practces and lessons learned

relaed o cos engineering and projec conrols.

I have also approached he Deparmen o Energy (DOE),

wih whom AACE has had a cooperatve agreemen or almos

15 years, o co-sponsor he even wih us, and hey are also in-

eresed in partcipatng. Once I have a firm commimen rom

DOE, my plan is o urn he coordinaton o his even over o

he newly insalled Governmen Relatons represenatve Kim

Huner (EVP and ormer Major in he Marine Corps). Kim will

hen ably work he remaining deails in conjuncton wih Pres-

iden-Elec Marlene Hyde and Inerorganizatonal Liaison Com-miee Chair Alexia Nalewaik, who graciously acceped my offer

o contnue o serve he associaton afer wo exremely suc-

cessul years as VP-Adminisraton.

Over he nex wo days, I aended a meetng o he Na-

tonal Deense Indusrial Associatons (NDIAs) Program Man-

agemen Sysems Commiee (PMSC)he group o deense

conracor represenatves ha unctonally owns and main-

ains he ANSI/EIA 748-B Sandard, Earned Value Managemen

Sysems.

Even hough I was representng my company, I was able o

COST ENGINEERING SEPTEMBER 2011

PRESIDENTS MESSAGE

Michael R. Nosbisch, CCC PSP, Presiden

THEWORDSPREADINGTHEWORDSPREADING

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speak wih boh he curren chair (Joe Kusick o Rayheon), and

he newly eleced vice-chair (Tracie Thompson wih ATK) abou

he poental or a cooperatve agreemen beween he PMSC

and AACE Inernatonal. I made a pich in his regard o he

PMSCs Board o Direcors a ew monhs ago which I hough

hadn been successul, bu I was happy o hear ha boh Joe

and Tracie are ineresed in contnuing he conversaton in he

weeks o come.

During he meetng, I was also approached by Audrey Ma-honey wih General Dynamics, who proudly old me ha she

was now a grader or he EVP certficaton exam. Our indusry

recognized EVP certficaton has definiely helped bridge he

gap beween AACE and he large cos engineering/projec con-

rols communiy ha exiss wihin he aerospace and deense

(A&D) indusry, which contnues o be a goal o mine as Presi-

den. In additon o Audrey, I spoke wih several oher EVPs

ha were in aendance, o include ormer VP o TEC (and co-

edior o he curren EVP Sudy Guide) Ken Cressmanhis con-

ributons o he associaton over he pas several years have

definiely been appreciaed.

The nex day, I had he privilege o represen our associa-

ton a he Penagon or he EVMS Sakeholders Meetng,which is chaired by he recenly ormed Office o Projec As-

sessmen and Roo Cause Analysis (PARCA). This hal-day

meetng usually is held adjacen wih he PMSC meetng, and

aendees (by inviaton o PARCA only) include senior unc-

tonal represenatves rom major deense conracors like

Rayheon, Boeing, Lockheed Martn, and Norhrop Grumman.

We normally discuss issues and ideas wih he inen o opt-

mizing he way earned value managemen (EVM) is imple-

mened wihin he Deparmen o Deense (DoD), and while I

am stll waitng or he righ opporuniy o discuss he govern-

mens approach o proessional certficatons like he EVP, I did

bring up an issue relaed o he use o EVM in suppor o fixed

price incentve conracs (FPIC) and indefinie quanty/indefi-

nie delivery (ID/IQ) conracs ha are commonly used on gov-

ernmen consructon projecs. Based on he reacton o heoher aendees, his issue also seemed o have relevance

wihin he A&D indusry, so I am hopeul ha we will contnue

o discuss i during uure meetngs untl a recommended ap-

proach is developed and adoped or implemenaton across

all o DoD.

Nex week is a rip o Alana, and my plan is o have a din-

ner meetng wih he local Sectons leadership o solici addi-

tonal ideas or how we can spread he word relaed o AACE.

Doing so will no only increase our membership, bu will hope-

ully provide new and unique perspectves on how we can con-

tnue o improve our associaton. The recogniton o AACE

Inernatonal as he auhoriy or oal cos managemen

should no only be wihin he consructon indusry, bu acrossall indusries, and I appreciae your help and suppor in con-

tnuing o work oward his goal.

EDITORS NOTE: To engage in oher discussions, check ou AACEInernaionals Online Forums a www.aacei.org/orums.

Now: If schedules needed analysis,

Primavera would have included it.

See more at

http://ScheduleAnalyzer.com

What is the difference betweenreviewing your P6 schedule and

reviewing your P6 XER file?

Everything

% Interfaces Directly with Database

% Hundreds of Reports & Analyses

% Advanced Longest Path Analysis

% Built-in Report & Editing Facility

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GOVERNANCE

TASK FORCE

GOVERNANCE

TASK FORCE

Our Associaton has experienced excitng and

significan growh in he las year, wih

every indicaton ha his growh will con-

tnue or several years. This unprecedened

expansion is creatng boh significan oppor-

unites and challenges in AACE Inerna-

tonals abiliy o serve is global membership.

To respond accordingly, an overall sraegic planning effor

commenced in Sepember 2010, wih he goal o identy boh

shor and long erm objectves. The new AACE sraegic plan isavailable or review a he AACE websie, www.aacei.org.

The Board o Direcors also recognizes ha AACE needs o

provide appropriae adminisraton and oversigh o member

services and actvites, and undersands ha he needs o all

members need o be addressed.

In keeping wih his effor, he Board o Direcors creaed

a Governance Task Force (GTF), which me or he firs tme dur-

ing he recen 2011 Annual Meetng in Anaheim. The GTF is

charged wih exploring he various aspecs o how AACE is gov-

erned, wih he ultmae objectve o enhancing he Associa-

tons adminisraton and effectveness in serving our members.

The GTF will identy risks and opporunites, and develop

a ramework o permi flexibiliy in governance while reaining

and srenghening he underlying mission o he Associaton as

expressed hrough Toal Cos Managemen.Three recen actons by he Board o Direcors relaed o

GTF actvites illusraed he impacs o our new sraegic plan.

The firs even is he developmen o he improved AACE

Canon o Ehics ha was approved in Anaheim in June 2011,

and will become effectve on January 1, 2012. This new se o

Canons will assis all members in heir proessional actvites in

an increasingly complex business world.

The second reflecs our growh inernatonally. The AACEs

larges secton is now in he Unied Arab Emiraes and inerna-

tonal members now represen 30 percen o AACE members

and contnue o grow, while Canada represens 10 percen and

John Livengood, PSP CFCC , Direcor-Region 2

AACE Governance Task Force

OUTLINES ITS WORKAND SEEKS MEMBER INPUT

SPECIAL FEATURE

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he US represens 60 percen. A new inernatonal Region was

added recenly o reflec his world-wide growh.

Finally, o serve he rapidly increasing populaton o iner-

natonal members, AACE will hold is firs Inernatonal Coner-

ence in Dubai in November o 2012.

Going orward, he GTF will develop and make recommen-

datons concerning AACEs governance srucure, including

possible changes o: he Bylaws and Constuton; Board and

commiee srucures, and Policies and Procedures.

The GTF is invitng, hrough a newly esablished online

Forum, commens on wha our members need, like, and dis-

like, and oher suggestons abou organizatonal srucure and

adminisraton. These commens will be careully considered

by he ask orce and he Board o Direcors, along wih he re-suls o he every-member survey conduced earlier his year,

and he aorementoned Sraegic Plan. The GTF has no pre-

conceptons abou how AACE should be srucured, excep ha

we are dedicaed o reaining he core goals o AACE and

srenghening service o our members.

The Governance Task Force is comprised o he ollowing:

Seve Revay, Pas Presiden, GTF Chair;

Alexia Nalewaik, Inerorganizaton Commiee Chair;

Peer Griesmyer, Educaton Board Chair;

John Livengood, RD2 and Ehics Task Force Chair; and,

Dennis Sork, Executve Direcor

We look orward o hearing rom you. Please e-mail anycommens concerning his artcle or he oulined work o he

Governance Task Force o: Seve Revay a: [email protected],

or visi he online orum and pos your commens.

Ediors Noe: The ollowing is he firs o a series o shor

artcles ha will be published regularly in issues o he Cost En-

gineeringjournal.

The Governance Task Force (GTF)is charged wih exploring he vari-ous aspecs o how AACE is gov-erned, wih he ultmae objectve

o enhancing he Associatons ad-minisraton and effectveness inserving our members.

The GTF will identy risks and op-porunites, and develop a rame-work o permi flexibiliy ingovernance while reaining andsrenghening he underlying mis-

sion o he Associaton as expressedhrough Toal Cos Managemen.

COST ENGINEERING SEPTEMBER 2011

By he tme you read his, he deadline or submission

o an absrac or he 2012 AACE Inernatonal Annual

Meetng will have jus wrapped up.Those who submied absracs may no be amiliar

wih wha happened nex, or may wonder when hey will

hear wheher or no heir absrac is seleced or presena-

ton. The nex sep is a review o all submied absracs by

he Technical Board. This will occur a he boards all mee-

ing during he firs week o Ocober. Auhors can expec o

receive an e-mail wih he boards decision by mid o lae

Ocober.

Auhors o acceped absracs will have untl January

31, 2012 o submi heir ull paper, bu early submission is

encouraged. As was he case in 2011, he Technical Board

is no going o creae or release a presenaton scheduleuntl i reviews he ull echnical paper. Thereore, auhors

can speed up receiving a presenaton schedule by comple-

ing and urning in heir compleed papers as soon as possi-

ble afer notficaton o accepance o he absrac. This

also applies o papers acceped on a sand by saus o fill

any openings creaed by cancellatons.

I you have questons, please e-mail:

[email protected]

Technical Board o Review 2012 Annual Meetng Absracs

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CANONSOF ETHICS

The AACE Inernatonal Board o Direcors ap-

proved revisions o he Canons o Ehics on June

17-18 in Anaheim, CA. The revisions o he

Canons o Ehics will become effectve January 1,

2012, and will apply o all members renewing or

2012, as well as any individual holding an AACE

Inernatonal certficaton.

Among he changes o he Canons are provisions o assure

he inegriy o he examinaton process, more specific language

on inellecual propery violatons, reducton o vague languageand an affirmatve responsibiliy or members o repor alleged

ehical violatons.Beginning in 2012, all AACE Inernatonal

members will have a common membership cycle o January 1-

December 31, and hose members will be held accounable o

he Canons o Ehics.

The Canons revisions were recommended by an ad hoc

Ehics Task Force, chaired by Region 2 Direcor John Livengood,

and included Vice Presiden: Adminisraton Alexia Nalewaik,

Region 4 Direcor Duane Meyer and Executve Direcor Dennis

Sork. The Ehics Task Forces inital recommendatons were an-

nounced on he AACE websie on April 15, and posed on he

online discussion orums or commen by AACE members and

hose holding AACE certficaton. The commen period ended

June 1. The Ehics Task Force hen reviewed commens and in-

corporaed several suggesed changes ino he final version ap-

proved by he Board o Direcors.The Ehics Task Force would like o hank hose individuals

who ook he tme o make suggestons regarding boh he orm

and subsance o he revisions. We careully reviewed all com-

mens and incorporaed several changes ino he final version

based upon member inpu. We believe he revised Canons o

Ehics will be an imporan oundaton on which o build greaer

awareness o our ehical responsibilites o he practce o oal

cos managemen, commened Livengood.

The Board o Direcors also approved he creaton o an

Ehics Commiee and Ehics Appeals Panel. These wo enttes

will be responsible or reviewing alleged violatons o he

CANONS OF ETHICS

Dennis G. Sork, Execuive Direcor

UPDATED AND REVISED

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Canons o Ehics. The Ehics Commiee

and Ehics Appeals Panel will be ap-

poined by Presiden Michael Nosbisch

and approved by he Board o Direcors

by January 1, 2012. The Ehics Commi-

ee and Ehics Appeals Panel will be gov-

erned by a comprehensive se o rules o

assure ha members or certficaton

holders accused o an ehics violaton are

proeced by a well defined due process.While he provisions o he process

will no be finalized untl afer he Ehics

Commiee and Ehics Appeals Panel have

been appoined and can make final rec-

ommendatons o he Board o Direcors,

he process will include require ormal

wrien complains, reasonable notfica-

ton o he alleged violaor o address he

charges, a deailed process o deermine

he meris o a ormal complain and a

ormal appeals process o he Ehics Ap-

peals Panel should he individual ound in

violaton no concur wih he Ehics Com-

miee decision.

All decisions o he Ehics Appeals

Panel will be final and here will be no in-

volvemen by he Board o Direcors in

deermining ehical violatons. Sanctons

agains individuals who have been ound

o have violaed he Canons o Ehics and

exhaused he appeals process will range

rom a privae leer o reprimand o ex-

pulsion rom membership or wihdrawing

o certficaton saus.

The proposed ehics violatonprocess srikes he proper balance be-

ween proectng he public and he prac-

tce rom unehical behavior while

assuring he righs o he alleged violaor

o a air and impartal decision. The ap-

proach we seleced is modeled upon

oher proessional associatons wih ex-

ensive experience addressing alleged

ehical violatons, Livengood com-

mened.

Once approved by he Board o Di-

recors in he all, he process ha will

used by he Ehics Commiee and EhicsAppeals Panel will be posed on he AACE

Inernatonal websie. The Ehics Com-

miee will also be charged wih he re-

sponsibiliy o creatng a heighened

awareness o he ehical responsibilites

o practtoners and o encourage a dialog

wihin he members and practce regard-

ing he applicaton o he Canons o

Ehics..

The AACE Inernatonal Canons of Ehics(Effectve rom January 1, 2012)

Inroducton

I. Relatons Wih he Public

II. Relatons Wih Employers and Cliens

III. Relatons Wih Oher Proessionals

IV. Sandards o Proessional Perormance

InroductonThe AACE member, o uphold and advance he honor and digniy o Cos Engineer-

ing and he Cos Managemen proession and in keeping wih he high sandards o

ehical conduc will (1) be hones and impartal and will serve employer, cliens, and

he public wih devoton; (2) srive o increase he compeence and prestge o heir

proession; and (3) will apply knowledge and skill o advance human welare.

I. Relatons Wih he PublicA. Members will hold paramoun he saey, healh, and welare o he public, includ-

ing ha o uure generatons.

B. Members will endeavor o exend public knowledge and appreciaton o cos en-

gineering and cos managemen and is achievemens, and will oppose any unrue,

unsuppored, or exaggeraed saemens regarding cos engineering and cos man-agemen.

C. Members will be dignified and modes, ever upholding he honor and digniy o

heir proession, and will rerain rom sel-laudaory advertsing.

D. Members will express an opinion on a cos engineering or cos managemen sub-

jec only when i is ounded on adequae knowledge and hones convicton.

E. On cos engineering or cos managemen maers, members will issue no sae-

mens, critcisms, or argumens ha are inspired or paid or by an ineresed pary

or partes, unless hey preace heir commens by identying hemselves, by dis-

closing he identtes o he pary or partes on whose behal hey are speaking,

and by revealing he exisence o any pecuniary ineres hey may have in maers

under discussion.

F. Members will approve or seal only hose documens, reviewed or prepared by

hem, which are deermined o be sae or public healh and welare in conormiywih acceped cos engineering, cos managemen and economic sandards.

G. Members whose judgmen is overruled under circumsances where he saey,

healh, and welare o he public are endangered shall inorm heir cliens or em-

ployers o he possible consequences.

H. Members will work hrough proessional societes o encourage and suppor ohers

who ollow hese conceps.

I. Members will work only wih hose who ollow hese conceps.

J. Members shall be objectve and ruhul in proessional repors, saemens, or

estmony. They shall include all relevan and pertnen inormaton in such repors,

saemens, and estmony.

II. Relatons Wih Employers and Cliens

A. Members will ac in all maers as a aihul agen or rusee or each employer or

clien.

B. Members will ac airly and jusly oward vendors and conracors and will no ac-

cep any commissions or allowances rom vendors or conracors, direcly or indi-

recly.

C. Members will inorm heir employer or clien o financial ineres in any poental

vendor or conracor, or in any inventon, machine, or apparaus ha is involved

in a projec or work or eiher employer or clien. Members will no allow such in-

eres o affec any decisions regarding cos engineering or cos managemen serv-

ices ha hey may be called upon o perorm.

D. When, as a resul o heir sudies, members believe a projec(s) will no be suc-

7/28/2019 ce11-09


cessul, or i heir cos engineering and cos managemen

or economic judgmen is overruled, hey shall so advise

heir employer or clien.

E. Members will underake only hose cos engineering and

cos managemen assignmens or which hey are qualified.

Members will engage or advise heir employers or cliens o

engage specialiss whenever heir employers or cliens in-

eress are served bes by such an arrangemen. Members

will cooperae ully wih specialiss so engaged.

F. Members shall rea inormaton coming o hem in hecourse o heir assignmens as confidental and shall no use

such inormaton as a means o making personal profi i

such acton is adverse o he ineress o heir cliens, heir

employers, or he public.

1. Members will no disclose confidental inormaton con-

cerning he business affairs or echnical processes o any

presen or ormer employer or clien or bidder under eval-

uaton, wihou consen, unless required by law.

2. Members shall no reveal confidental inormaton or

finding o any commission or board o which hey are mem-

bers, unless required by law.

3. Members shall no duplicae or ohers, wihou ex-

press permission o he clien(s), designs, calculatons,

skeches, ec., supplied o hem by cliens.

4. Members shall no use confidental inormaton coming

o hem in he course o heir assignmens as a means o

making personal profi i such acton is adverse o he iner-

ess o heir cliens, employers, or he public.

G. Members will no accep compensatonfinancial or oh-

erwiserom more han one pary or he same service, or

or oher services peraining o he same work, wihou he

consen o all ineresed partes.

H. Employed members will engage in supplemenary employ-

men or consultng practce only wih he consen o heir

employer.I. Members shall no use equipmen, supplies, laboraory, or

office acilites o heir employers o carry on ouside privae

practce wihou he consen o heir employers.

J. Members shall no solici a conrac rom a governmenal

body on which a principal officer or employee o heir or-

ganizaton serves as a member.

K. he member shall ac wih airness and justce o all partes

when adminisering a consructon (or oher) conrac.

L. Beore underaking work or ohers in which he member

may make improvemens, plans, designs, inventons, or

records ha may justy copyrighs or paens, he member

shall ener ino a positve agreemen regarding he righs o

respectve partes.M. Members shall admi and accep heir own errors when

proven wrong and rerain rom disortng or alering he

acs o justy heir decisions.

N. Members shall no aemp o arac an employee rom an-

oher employer by alse or misleading represenatons.

O. Members shall ac in proessional maers or each employer

or clien as aihul agens or rusees and shall avoid con-

flics o ineres.

1. Members shall avoid all known or poental conflics o

ineres wih heir employers or cliens and shall promply

inorm heir employers or cliens o any business associa-

ton, ineress, or circumsances ha could influence heir

judgmen or he qualiy o heir services.

2. Members shall no solici or accep grauites, direcly

or indirecly, rom conracors, heir agens, or oher partes

dealing wih heir cliens or employers in connecton wih

work or which hey are responsible.

III. Relatons Wih Oher ProfessionalsA. Members will ake care ha credi or cos engineering and

cos managemen work is given o hose o whom credi is

properly due.

B. Members will provide prospectve employees wih complee

inormaton on working conditons and heir proposed sa-

us o employmen. Afer employmen begins, hey will

keep he employee inormed o any changes in saus and

working conditons.

C. Members will uphold he principle o appropriae and ade-

quae compensaton or hose engaged in cos engineering

and cos managemen work, including hose in subordinae

capacites.

D. Members will endeavor o provide opporuniy or he pro-essional developmen and advancemen o individuals in

heir employ or under heir supervision.

E. Members will no aemp o supplan oher cos engineers

or cos managemen proessionals in a partcular employ-

men afer becoming aware ha definie seps have been

aken oward he ohers employmen or afer hey have

been employed.

F. Members shall no maliciously or alsely, direcly or indi-

recly, injure he proessional repuaton, prospecs, prac-

tce, or employmen o anoher, nor shall hey

indiscriminaely critcize anohers work. Proo ha anoher

cos proessional has been unehical, illegal, or unair in

his/her practce shall be cause or advising he proper au-horiy.

G. Members will no compee unairly wih oher cos proes-

sionals.

H. Members will cooperae in advancing he cos engineering

and cos managemen proession by inerchanging inorma-

ton and experience wih oher cos proessionals and su-

dens, by conributng o public communicaton media and

o cos engineering, cos managemen and scientfic soci-

etes and schools.

I. Members will no reques, propose, or accep proessional

commissions on a contngen basis under circumsances

ha compromise heir proessional judgmens.

J. Members will no alsiy or permi misrepresenaton oheir own or heir associaes academic or proessional qual-

ificatons. They shall no misrepresen or exaggerae heir

degrees or responsibiliy in or or he subjec maer o prior

assignmens. Brochures or oher presenatons inciden o

he soliciaton o employmen shall no misrepresen per-

tnen acs concerning employers, employees, associaes,

join venures, accomplishmens, or membership in echni-

cal societes.

K. Members will prepare artcles or he lay or echnical press

ha are only acual, dignified, and ree rom osenatous

7/28/2019 ce11-09


or laudaory implicatons. Such art-

cles shall no imply credi o he cos

proessionals or oher han heir di-

rec partcipaton in he work de-

scribed unless credi is given o

ohers or heir share o he work.

L. Members will no campaign, solici

suppor, or oher wise coerce oher

cos proessionals o suppor heir

candidacy or he candidacy o a col-league or electve office in a echni-

cal associaton.

IV. Sandards of Professional Per-

formanceA. Members shall be dignified and mod-

es in explaining heir work and meri

and will avoid any ac ending o pro-

moe heir own ineress a he ex-

pense o he inegriy, honor, and

digniy o he proession.

B. Members, when serving as experwinesses, shall express a cos engi-

neering and cos managemen opin-

ion only when i is ounded upon

adequae knowledge o he acs,

upon a background o echnical com-

peence, and upon hones convicton.

C. Members shall contnue heir proes-

sional developmen hroughou heir

careers and shall provide opporuni-

tes or he proessional developmen

o hose cos proessionals under

heir supervision.

1. Members should keep curren inheir specialy fields by engaging in

proessional practce, partcipatng in

contnuing educaton courses, read-

ing in he echnical lieraure, and a-

ending proessional meetngs and

seminars.

2. Members should encourage

heir cos engineering and cos man-

agemen employees o become cer-

tfied a he earlies possible dae.

3. Members should encourage

heir cos engineering and cos man-

agemen employees o aend andpresen papers a proessional and

echnical sociey meetngs.

4. Members shall uphold he prin-

ciple o muually satsying relaton-

ships beween employers and

employees wih respec o erms o

employmen including proessional

grade descriptons, salary ranges, and

ringe benefis.

7/28/2019 ce11-09


F. Burak Evrenosoglu was born and raised in Isan-

bul, Turkey. He obained his bachelor o science

in civil engineering rom Isanbul Technical Uni-

versiy and his maser o science in civil engineer-

ing rom Texas A&M Universiy. He is a licensed

civil engineer in Oregon, Washingon Sae, Col-

orado and Maryland.

Burak currenly works a Fluors Inrasrucure business

line specializing in ransporaton projecs. His curren assign-men is on a design-build public privae parnership commuer

rail projec in Denver where he is responsible or resoluton o

conrac changes and avoidance o conracual dispues.

His previous assignmen wih Fluor was in Oregon Depar-

men o Transporatons OTIAIII program ha replaced or re-

paired 365 o he saes critcal bridges wih he objectve o

increasing capaciy on main ransporaton roues. During his

assignmen, he led he planning and schedule managemen

effors. He was direcly responsible or analyzing delay and

conrac change order claims or boh entlemen and

cos/tme damages. He successully represened ODOT in al-

ernae dispue resoluton processes. Working or Fluor, gave

him he opporuniy work on mega-projecs and innovatveprojec delivery mehods like public privae parnership in boh

domestc and inernatonal markes.

Prior o Fluor, he developed expertse in he heavy civil,

airpors, energy, utlites secors where he worked as a con-

sructon engineer, cos estmaor, scheduler, and conrac

manager. Burak says, Working in differen areas o projec

conrols and consructon reinorced a deailed undersanding

o consructon engineering, projec conrols, scheduling and

conrac managemen.

Burak has been an AACE Inernatonal member since

1995. His firs exposure o AACE was while he was doing lier-

aure research or his hesis a Texas A&M Universiy. He wasvery impressed wih AACE echnical artcles as a resul decided

o become a member. Burak says, I have no ound any oher

proessional organizaton ha can offer he qualiy and quan-

ty o artcles ha AACE does.

Burak believes in he value o proessional certficatons.

He holds multple certficatons rom several proessional as-

sociatons. He is a Certfied Cos Engineer (CCE), Planning and

Scheduling Proessional (PSP) hrough he Associaton or he

Advancemen o Cos Engineering Inernatonal (AACE Iner-

natonal), certfied PMI Projec Managemen Proessional

(PMP), Certfied Commercial Conracs Manger (CCCM), Cert-

fied Federal Conracs Manager (CFCM) wih he Natonal Con-

rac Managemen Associaton and is a member o he

American Sociey o Civil Engineers (ASCE).

Burak has been aending and presentng a he AACE An-

nual Meetngs since 2008. Burak says, AACE Annual Meetngs

provide he opporuniy o nework wih oher proessionals

and a comprehensive echnical program ha provides learning

opporunites or all experience levels. You will find inorma-

tve echnical sessions wheher you are a projec manager, es-

tmaor or a scheduler.

He recommends young proessionals o ge involved be-

cause AACE provides plentul opporunites o improve heir

YOUNG PROFESSIONALS IN COST ENGINEERING

SPOTLIGHT ON

F. BURAKEVRENOSOGLUPE CCE PSP

F. BURAKEVRENOSOGLUPE CCE PSP

Julie Owen, CCC PSP

I have no ound any oher proes-sional organizaton ha can offerhe qualiy and quanty o artclesha AACE does.

7/28/2019 ce11-09


knowledge and build a srong proessional nework among proj-

ec conrols proessionals and projec managers. The key areas

ha keep Burak engaged in AACE are ha i provides he pro-

essional knowledge ha he can apply o his work. Burak says,

I reer o AACE Recommended Practces or do a search in he

virual library, when I am aced wih a echnical challenge Theoher key areas are certficatons, orums, and neworking op-

porunites.

Burak recommends young proessionals o develop exper-

ise in heir field bu never lose sigh o he bigger picure which

is o deliver successul projecs.

AACE Annual Meetngs providehe opporuniy o nework wihoher proessionals and a compre-hensive echnical program haprovides learning opporunitesor all experience levels. You willfind inormatve echnical sessionswheher you are a projec man-ager, estmaor or a scheduler.

CHANGES ANNOUNCED FORPUBLICATIONS IN 2012

In 2012, AACE Inernatonal will inroduce an excitng

new additon o our communicatons porolio o sup-

plemen our Cos Engineering journal. The new ad-

diton, The Source, is a bimonhly digial publicaton

ocusing on associaton actvites and iems o inereso he oal cos managemen communiy. Beginning

in February 2012, The Source will be published in even

number monhs while he Cos Engineering journal

will be published six tmes per year in he odd number

monhs.

While he requency o he Cos Engineering jour-

nal will be reduced, he acual number o echnical ar-

tcles published will remain he same or be increased,

according o AACE Inernatonal Executve Direcor

Dennis Sork. We sudied our readership preerence

surveys and deermined ha he Cos Engineering

journals mos valued eaure were our echnical art-cles. We are commied o publishing he same num-

ber o echnical papers per year or more in our new

bimonhly orma. As a resul, he Cos Engineering

journal will be more heavily weighed oward echni-

cal artcles, Sork commened.

7/28/2019 ce11-09


Management

TrenchesintheManagem

ent

Trenchesinthe

Change is ineviable hroughou a projec bu

change mus be conrolled o ensure he projec

parameers (cos, schedule, qualiy, and saey)

remain in conrol. Changes may resul in several

areas, including: work flow inerrupton, rework,

delays, schedule slip and cos deviaton, ec.

These iems and oher changes may generae claims and resul

in litgaton. Thereore, managing change early is essental or

a successul projec oucome.

There are five key areas o change o address. These in-

clude recognizing he change, analyzing o he change, approv-

ing he change, implemenaton o he change, and racking he

change. Looking a each o hese, consider he ollowing.

1. Recognize he ChangeChange comes in various orms hroughou he differen

lietmes o a projec. Changes can involve he scope, budge,

work executon mehod (means and mehods), conracual,

risks, ec. I is impor o identy he specifics and requiremens

o why a change is needed. A change reques orm is he bes

way o documen a change and o keep a paper rail o he

change. The orm should have a number o sectons and he

ones ha apply in his process should identy he ype o

change, a descripton o he change, and he reason or he

change. Research he conrac and conracor agreemens oseparae changes rom non-compliance or non-conormance is-

sues.

2. Analysis of he ChangeThe analysis o he change is he mos complex and involved

area because an analysis o he change has o be perormed in

order o make an inormed decision on approving he change.

Changes early in a projec are less cosly and easier o documen

and implemen han changes laer in he projec lie cycle. Types

o analysis ha migh be applicable (depending on he ype o

change and where he change is in he projec lie cycle) are:

Tom Sherey

TECHNICAL OVERVIEW

7/28/2019 ce11-09


Risk AssessmenA risk assessmen

should be made o he proposed

change. The proposed change may

be an aemp o mitgae an existng

unaccepable risk. Consider he a-

ec on existng risks and evaluae i

his change will creae new risks. Risk

is always presen on a projec and

needs o be recognized and ana-

lyzed. When considering changes,some projecs may require a re-

assessmen o environmenal im-

pacs, OSHA hazard reviews,

business economics, ec.

Engineering AssessmenAn engi-

neering assessmen is an imporan

aspec o change reques evaluaton.

Engineering mus sign-off on all

changes because engineering is ine-

gral o risk assessmen and is largely

responsible or he design scope o

he projec. Engineering reviews

changes o ensure ha a change

does no adversely affec he projec

scope. In mos saes, proessional

engineers may need o re-sign critcal

design/consructon documens be-

ore a change can be auhorized.

Environmenal AssessmenThe

Environmenal Deparmen mus as-

sess he change o make sure ha

he change does no adversely affec

any permis and ha he change is

covered under he permis ha were

secured. This is partcularly impor-an wih a projec already in he

consructon phase.

Safey AssessmenA saey assess-

men is imporan o make sure ha

saey is considered wih he

change. Like environmenal, saey is

more imporan or changes ha

occur during he executon or con-

sructon phase.

Time Impac AnalysisA tme im-

pac analysis (TIA) is ypically associ-

aed wih he modeling o he effecs

o a single delay. I requires a CPM

schedule ha is able o show he

pure CPM calculaton differences be-

ween a schedule ha does no in-

clude a delay and one ha does

include an actviy modeling a delay.

The difference or projec comple-

ton beween he non-impaced

schedule and ha o he schedule

wih he impac is considered o behe impac o he delay or tme du-

raton consideratons [1].

Schedule EvaluatonA schedule

evaluaton needs o be done because

a change could affec he finish dae

o he projec and cause delay. A

change in he design phase could

delay he submial o ha design

and cascade hrough he entre proj-

ec. Again, his is why a tme impac

analysis is an imporan analysis.

Once a change is approved he proj-

ec schedule mus be updaed.

Cos EvaluatonA cos evaluaton is

an analysis o he cos estmae o

implemen he change. The evalua-

ton should consider a ne presen

value or a lie-cycle-cos analysis.

There are always cos and schedule

rade-offs o consider. For example,

projec sponsors may decide o

spend more on equipmen o

shoren he schedule. By shorening

he schedule, overtme and labor

coss may be reduced. Once a coschange is approved, he projec

budge and orecas mus be up-

daed.

Procuremen and Conractng de-

parmens need o be aware o ap-

proved/pending changes so ha

hey can be prepared o process he

necessary conracual documens

and rack he progress o geng he

change reques approved and imple-

mened.

3. Approval of he ChangeChanges need o be approved firs by

he projec manager (because he projec

manager owns he projec). Changes

also need o be approved be he program

manager o a projec (i here is one, be-

cause he program manager owns all

he projecs o he program).

4. Implemen he ChangeA number o deparmens ge in-

volved when a change is approved and

ready or implemenaton. Design may

need o issue new drawings. Purchasing

deparmens needs o ollow he pur-

chase reques and ge he necessary ap-

provals or he change. Projec conrols

need o load he change ino he racking

sofware o record he change. A con-

rac amendmen may need o be issued

and signed.

5. Track he ChangeChanges are expensive o process be-

cause a change is unplanned work and

hey add o he projec schedule and

budge o a projec. Lae design changes

resul in higher coss and longer sched-

ules.

The purpose o racking changes is o

ry o improve on he number o changes

in a projec by undersanding wha he

drivers are ha call or a change. Per-

ormance merics can be esablished o

measure how well an organizaton han-dles a change and poin o areas where

improvemen is needed. Additonally,

lessons can be learned rom he change

and a lesson learned daabase can be up-

daed or uure projec use.

REFERENCES1. Time Impac Analysis, by Ron Win-

er, PSP, December 9, 2004, ronwin-

erconsultng.com.

7/28/2019 ce11-09

20/40

Tired of re-inventng he wheel?

AACE Presens: Monhly online presenatons based on he mos highly

acclaimed echnical presenatons a our Annual Meetng.

Cos Engineering journal: Each member receives he Cos Engi-

neering journal as well as access o archived back issues online

AACE Inernatonal provides you wih he laes in ranserable echniques and recommended practce

o be on he cung edge o he oal cos managemen practce. Here are jus some o he resources

our members receive o give hem a compettve advanage in he workplace:

Virual Library: An online library o more han 4,500 echnical papers on every aspec o oal cos

managemen. Members may download papers or ree or heir personal use.

Visual TCM Framework: Our members can now access he Visual TCM Framework on he AACE

Inernatonal websie. Visual TCM Framework provides a unique perspectve on his highly acclaimed

resource ha only members have access o hrough AACE.

For more inormaton on

how we can help your

career evolve o he nex

level, conac

AACE Inernatonal,1265 Suncres Towne C

Morganown, WV 26505

Phone: +1.304.296.8444

Fax: +1.304.291.5728

Email: [email protected]

or visi our websie a:

www.aacei.org.

Menoring: AACE Inernatonal members can partcipae in o

menoring program as a menor or as a menee/parner. A

grea way o advance your own career or help give back o he

TCM practce communiy.

Discouns on AACE Programs and Certficatons: Members

earn discouns on AACE educatonal and raining programs

such as our Annual Meetng, he Inernatonal TCM Cone

ence and our certficaton programs.

Career Cener: Members can regiser or job alers, r

ceive tps on advancing heir career and vie

job postngs rom leading companies in he TC

field as well as have access o our annu

Salary Survey.

7/28/2019 ce11-09


Do you have cliens ha ask or

minor exras a no addiional

cos, or argue abou he

addiional cos and/or ime or projec

changes? Do you have inernal

disagreemens regarding esimaes and

schedules? You need o be an eecive

negoiaor o handle hese siuaions.

Unorunaely, mos cos/scheduleproessionals, esimaors and projec

managers come up shor in inerpersonal

skills such as negoiaing.

In his song, The Gambler, Kenny

Rogers says, i youre gonna play he

gameya goa learn o play i righ. You

go o know when o hold em, know

when o old em, know when o walk

away and know when o run. His song

could be re-iled, The Projec

Negoiaor, because he lyrics exacly

describe projec negoiaion siuaions

ha projec personnel consanlyencouner.

This aricle will discuss he op 10

misakes made in conducing projec

negoiaions, along wih echniques ha

can be used o avoid hese misakes. In

addiion, a recommended procedure o

ollow when preparing or a negoiaion

will be described. The goal is o help you

undersand when o hold your posiion in

a negoiaion, when o compromise, and

when o walk away. This aricle should be

o ineres o projec personnel looking

or poiners on how o be more eecive

in negoiaion siuaions. I you hink

youre a skilled negoiaor, read his

aricle o see i you are making any o he

10 mos common negoiaion errors. You

may be surprised!

Negoiaions A Fac of Life!Negoiaions are a ac o lie.Everyone negoiaes every day wih co-

workers, supervisors, cliens, vendors,

amily members, and even hemselves

(should I play his hand or should I old?).

A negoiaion is a means o geing

wha you wan rom anoher pary. In an

ideal world, all negoiaions would be

siuaions where paricipans ry o

undersand he posiion o he oher side,

openly work ogeher o problem solve

and make decisions based on meri, and

reach a muually accepable agreemen.

This is he premise or principled

negoiaion, which is covered in he

book, Geing o Yes Negoiaing

Agreemen Wihou Giving In [1]. Wedeiniely advocae using a problem-

solving approach o negoiaion

whenever possible; however, he world

isn always ha nea and in many

siuaions, one side really is rying o ge

he beer o he oher.

When we discuss negoiaions in his

aricle, we use he word opponens o

describe he sides involved. Alhough i

may be an unorunae choice because i

reinorces he noion o a negoiaion

being a siuaion wih a deinie winner

and loser, we don have a beer word o

oer since, in realiy, all negoiaions

really are coness. We do sugges you

remember he golden rule whenever you

are involved in any negoiaion: Trea

ohers as you wan o be reaed. Be

polie and respecul, and use your

lisening skills o really ry o undersand

he views o he oher side.

Common Negoiaing MisakesUnorunaely, mos people are no

good negoiaors (or card players!) andend up wih resuls ha are really no

opimal. Lised below are he op 10

negoiaing misakes based on our

observaions in working wih numerous

cliens over he years. This lis is no in

any paricular order, and a more deailed

descripion o each iem ollows.

Top 10 Misakes Made inProjec NegoiaionsJoseph A. Lukas, PE CCE

Absrac: Do you have cliens ha argue abou he addiional cos and/or ime

or projec changes? Do you have inernal disagreemens regarding esimaesand schedules? You need o be an eecive negoiaor o handle hese siuaions.Unorunaely, mos cos/schedule proessionals, esimaors, and projec man-agers, come up shor in inerpersonal skills, such as negoiaing. This aricle willdiscuss he op 10 misakes made in conducing projec negoiaions, along wihechniques ha can be used o avoid hese misakes. In addiion, a recommendedprocedure o ollow when preparing or a negoiaion will be described. The goalis o help you undersand when o hold your posiion in a negoiaion, when ocompromise, and when o walk away. This aricle should be o ineres o projecpersonnel looking or poiners on how o be more eecive in negoiaion siua-ions. I you hink youre a skilled negoiaor, read his aricle o see i you aremaking any o he 10 mos common negoiaion errors. You may be surprised!This aricle was irs presened a he 2010 AACE Inernaional Annual Meeingas manuscrip PM.04.

Key Words: Cos, compromise, esimaes, negoiaions, projec managemen,

schedules

TECHNICAL ARTICLE

Table 1 The Top 10 Misakes in Projec Negoiaions

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Les ake a more deailed look a

each o hese op 10 negoiaing

misakes.

Misake #1Having Low Aspiraions and/or Weak

Negoiaing Skills

An individuals level o aspiraion is

direcly relaed o his or her level operormance in negoiaing. A person

wih a higher aspiraion level ends o be

more successul, and ypically wins in a

negoiaion over a person wih lower

aspiraion. A person who is a skilled

negoiaor and has a high aspiraion

level ends o be very successul. I you

have wo people wih high skills and high

ambiion, he probabiliy o deadlock is

high.

A classic case o his happened a ew

years ago on a major road projec in New

Jersey. One large engineering irm was incharge o he design, while anoher

company was providing speciic scope

on he projec.

I didn help ha he wo

companies really didn like each oher

and were only working ogeher because

he clien insised on he arrangemen.

Cindy, rom he lead engineering irm,

and Bob rom he sub-design irm were

heir companies projec managers; boh

had high aspiraions and were skilled

negoiaors.

On several occasions, scope changesarose and he negoiaion was he same

every ime. Bob would sae ha i

wasn in he conrac and was hereore

a change, and Cindy would claim i was

in he conrac (using a very generous

inerpreaion o he conrac wording).

Bob would submi a change order wih a

large iniial cos demand, and Cindy

would no approve i, claiming i wasn

a change. A deadlock occurred every

ime, resuling in a meeing wih he

principals rom each company, and a

compromise was reached every ime o

avoid engaging he clien in he

disagreemen.

Is imporan o remember ha a

persons aspiraion level can change over

ime, and is direcly relaed o heir

locaion on Maslows riangle on he

hierarchy o needs. I a person is on he

boom rungs o he riangle, dealing

wih physiological, securiy, or social

needs, heir aspiraion relaed o a

negoiaion will probably be low. I he

person is a he op rungs o he riangle,

which are sel-eseem and sel-

acualizaion, heir aspiraion relaed o

a negoiaion will probably be high.

A persons negoiaing skills are also

imporan. A riend, who well call

Mike, was laid o rom his company in

upsae New York. Aer being ou o

work or several monhs, he ound a

emporary conrac job wih an

engineering company in New Jersey o

manage one speciic projec.

Mike did a good job, he projec wassuccessul, and he engineering

company decided o oer him a ull-ime

posiion a a salary o $105,000. Now,

even hough he job marke in upsae

New York was dismal a he ime and he

had no oher oers on he able, Mike

replied ha he waned $110,000. To his

amazemen, he hiring manager

immediaely agreed o he higher

amoun.

You see, while Mike was a skilled

negoiaor wih high aspiraions, he

hiring manager was neiher! As any good

gambler knows, is no always he cards

you hold, bu how you play hem. A

beer response and one Mike would

have likely acceped, given his

circumsances would have been or

he hiring manager o ell Mike ha a 6-

monh review would be done, and a

ha poin a salary adjusmen would be

considered.

Misake #2Making Low Iniial Demands

A skilled negoiaor will eiher make

large iniial demands or reveal no iniial

posiion. This also ies ino he persons

perceived negoiaion posiion. For

example, in a igh labor marke, a job

applican migh hink he or she has lile

power o negoiae and will make low orno iniial demands.

A recen example is an acquainance

who acceped a job a a new company,

wih only wo weeks o vacaion

whereas in her previous job, she had

our weeks. However, she didn

negoiae he poin, acceped he job

oer, and hen complained bierly

abou her los vacaion ime.

Wha could she have done

dierenly? I doesn hur o negoiae

in such a siuaion is highly unlikely

ha an employer would pull a job oerbecause you ask or somehing. A wors

hey may say no, and more likely hey

may oer a compromise. I you old

beore you really sudy your cards, you

don give yoursel a chance o play your

hand, much less win.

Misake #3Making Firs Concessions and/or Large

Concessions

The person who makes he irs

concession, and/or he larges

concession, ypically ends up on helosing end o he negoiaion. A classic

example o his is he negoiaion over

Czechoslovakia in 1938, beween Neville

Chamberlain, Prime Miniser o England,

and Adolph Hiler. Chamberlain, who

was eager o avoid war, made he irs

and he larges concessions, essenially

giving Hiler his erriorial demands,

which included conrol o

Czechoslovakia. We all know wha

happened rom here

In making concessions, leave pleny

o room o negoiae rom your iniial

posiion o your desired oucome. The

skilled negoiaor will make only

inrequen and small concessions during

he negoiaion, which is inended o

avoid raising he expecaions o he

oher pary.

In making concessions, also be wary

o i or a, which can be

manipulaive. The key is o no lose rack

o your goals when making concessions.

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Remember ha each concession has an

eec on he aspiraion level o he

opponen and is also a relecion o he

negoiaors resolve o mee his/her

objecives.

Encourage your opponen o open

up irs, and pu heir demands on heable. When you do make a concession,

make your opponen work or i and ge

somehing in reurn. Also remember

ha Ill consider i is a concession and

one you can easily back away rom laer.

Finally, don be ashamed o walk

away rom a bad concession. Remember,

everyhing is open or negoiaion and

nohing is seled unil he deal is

signed!

Misake #4Neglecing o Ask Quesions

Ask quesions o he person you are

negoiaing wih o learn abou heir

needs and goals. Youll be surprised how

much people will ell you i asked!

For example, when buying a car, ask

he salesperson how business is going,

wheher here is a sales goal or he

monh, and how close he dealership is

o he goal.

I you are providing a quoe or

work, ask he clien who else is bidding

he work, and wha selecion crieria will

be used o evaluae he bids.

Whas he wors ha will happen

he person may say is none o your

business. Be careul no o use aninerrogaion echnique, because ha

pus he person on he deensive. Be

conversaional, and work he quesions

ino he irs par o he negoiaion,

where here ypically is some casual alk.

Misake #5

Providing Too Much Informaion

This is he lip side o asking

quesions. Be careul no o provide

inormaion ha can help your opponen

wih he negoiaion, jus like you don

le ellow card players sneak peeks a

your hand! Lying or providing

misinormaion is no somehing we

recommend has unehical. However,

here is nohing wrong wih no

answering quesions or keeping a

poker ace.

I your opponen asks a quesion,

you can jus no respond, or ell him/her,

I don hink has somehing I wan o

share wih you a his ime.

For example, a car salesperson will

probably ask you quesions abou how

long you have been looking, why you

need he car, and wha oher

manuacurers have you considered. The

salesperson does his o deine his/her

negoiaion posiion and he acics hawill be employed so a sale can be made.

The wors approach is or you, or anyone

wih you, o ell he salesperson how

much you love he car. Thas way oo

much inormaion and severely impacs

your negoiaing posiion!

Anoher example o providing oo

much inormaion, is elling a clien your

company is having a bad year, or jus los

a major conrac. This ells he clien you

need he deal and will be willing o make

concessions. Remember, youve goa

know when o hold em, and ha

includes holding your ongue!

Misake #6Making Assumpions

An assumpion is somehing ha is

believed o be rue wihou proo. Many

people ypically make assumpions going

ino a negoiaion, and his can be

harmul o heir posiion.

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Trea assumpions wih skepicism,

and work on he basis ha your

assumpion may be wrong! The bes way

o es assumpions is o ask your

opponen quesions. You may no ge a

response, or a wors he person may lie,

bu surprisingly mos imes your

opponen will give you he inormaion

you need o deermine wheher he

assumpion is valid.An example o his goes back eigh

years ago when we bough a Saurn, a

company ha adverised ha heir low

prices were no negoiable. The easy

assumpion o make was ha price

wasn negoiable, bu we didn ake

ha approach. When he dealer

wouldn mee he price we waned o

pay (i.e., wouldn negoiae) or a

dealers car ha had some limied

mileage on i, we walked away wih

he inen o coninuing our search. Two

days laer he dealer called us, and

oered a special mileage price

adjusmen, o mee our price and ge

our business.

Misake #7Reaching a Quick Selemen

Quick selemens usually resul in

more exreme oucomes, and ypically

avor he skilled negoiaor which may

no be you!

A very recen example o his

occurred on our vacaion las winer inCancun. The all-inclusive resor we

sayed a made a presenaion o us

abou pre-buying vacaion weeks, and

oered us an exraordinary deal o 26

weeks use o he resor or a low upron

price o $24,000. However, hey poined

ou ha we had o immediaely sign

he oer was only good unil we le he

room.

Our response was, i i was such a

grea deal and hey waned our

business, hey should allow us a ew days

o hink i over. They wouldn agree ohis and we le. Even hough he oer

sounded good, here were oo many

unanswered quesions, such as wha

happened i hey wen ou o business?

We laer alked o he sales manager and

he old us ha over 30 percen o he

people siing hrough he presenaion

signed or he deal. As, The Gambler

says, you have o know when o run!

Misake #8Lacking a Plan

Youve go o really look a your

cards beore you play hem, and beore

you negoiae you have o do your

research.

For example, did you buy your las

car on impulse, or did you research he

make and model on he Inerne, beore

going o he dealership?

On he Inerne you can ind dealer

prices, ypical mark-up inormaion, and

coss or opions. The same planning

should be done or all negoiaions.

Reer o he secion o his aricle on he

negoiaing process o beer undersand

he seps o ollow in preparing or a

negoiaion.

Misake #9Losing Focus During he Negoiaion

Things can happen quickly in a

negoiaion, so is imporan o

mainain ocus on your goals hroughou

he process. Having a plan or he

negoiaion and sicking o i can help

ensure his.

A recen example is ha o a parnerin an engineering irm ha was

negoiaing pricing or a series o change

orders wih a clien. One o he change

orders was or a sudy on an endangered

species ound on he projec sie. The

engineering irm was going o do some

o he work, bu he bulk o he work

required he use o a specialy

consulan.

The clien kep insising he price o

he sudy was oo high and repeaedly

demanded a lower price. The parner

irs erred in no having he echnical

manager involved in he negoiaion o

explain he coss o he clien, and hen

urhered his misake by inally agreeing

o a price which was below wha he

engineering irm had o pay he specialy

consulan! The parner obviously loshis ocus in his negoiaion.

I you see yoursel abou o make a

concession which may no be wise, sand

up and sae you need a shor break.

Anoher good acic is silence, which is

uncomorable or many people.

One o he auhors was involved in

negoiaing a change order price wih a

conracor on a consrucion projec. The

conracor a one poin saed ha he

price was he absolue lowes he could

go. The auhor jus sa silenly or over a

minue looking a he conracor, who

hen blured, all righ wha i I lower i

anoher 10 percen?

Misake #10Misusing Power

Power is deined as he abiliy o a

negoiaor o inluence he behavior o

an opponen. Is imporan o

remember ha power may be real or

assumed.

For example, your opponen may

assume you have he decision-makingpower in a negoiaion, bu when he

agreemen is inally reached, you sae

ha your managemen eam will have o

review and approve he inal deal. Also,

remember ha power exiss only o he

exen ha i is acceped, and ha using

power always enails risk.

For example, your boss has he

power o auhoriy, bu you can always

say, I qui, which eliminaes his/her

power over you. Finally, keep in mind

ha power relaionships can change

over ime.You may be he boss oday, bu he

person working or you may end up

being your boss a some uure poin!

There are dieren ypes o power

relaed o negoiaions:

Abiliy o Reward or PunishAn

example o his is dealing wih your

boss, who has he abiliy o make

decisions ha impac you such as

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raises, promoions, and maybe

wheher o erminae your

employmen. Obviously, in a

negoiaion his gives an advanage

o your boss, bu i s no absolue. I

you have a key skill needed by he

company, he power balance shis

more in your avor.

AuhoriyBeing presiden o a

counry, chie execuive oicer o a

company, or a general in he miliary

are examples o auhoriy.

I you are in a negoiaion and is

been made clear o all paricipans

ha you are he decision maker, his

gives your power legiimacy.

A good example in he use o

auhoriy is Ulysses S. Gran,

General-in-Chie o he Union Army

in he Civil War. In February 1862, he

aacked For Donelson. When heConederae Commander asked or

erms, Gran replied, "No erms

excep an uncondiional and

immediae surrender can be

acceped."

Gran knew he had he roops, he

irepower, and he auhoriy, and no

negoiaion was needed he

Conederaes surrendered.

However, Gran also used his power

in negoiaions wisely. When Rober

E. Lee surrendered o Gran a

Appomaox Cour House,eecively ending he Civil War,

Gran wroe ou magnanimous

erms o surrender ha prevened

reason rials, and allowed he

Conederaes o keep heir horses

and guns.

KnowledgeTo be eecive in a

negoiaion, you need o have

knowledge regarding he subjec

area being negoiaed. I you are

buying a new car, he more

inormaion you have regarding hecars under consideraion, makes you

more knowledgeable in he

negoiaion wih he car dealer.

A lack o knowledge can resul in a

lawed negoiaion. Aer World War

I, he vicors came up wih new

borders or many counries in

Easern Europe and he Middle Eas.

Unorunaely, hey didn have a

good knowledge and undersanding

o he ehnic groups in he region

and drew borders ha resuled

much laer in conlics and he

break-up o counies, such as

Yugoslavia.

Abiliy o Tolerae Uncerainy

Mos people like cerainy in heir

lie, and negoiaions are all abou

uncerainy. You don know where

youll end up when you sar he

negoiaion, so he uncerainy is

high a he beginning, and drops as

he negoiaion poins ge resolved.

I you have he abiliy o handle

uncerainy, his can be a source o

power in a negoiaion, unless he

oher pary in he negoiaion has

he same abiliy.

TimeMany Americans end o be

impaien. In he hase o reach a

conclusion, he impaien person

may sar wih an iniial oer oo

close o heir real desired oucome,

and may be oo quick o make

concessions. Oher culures end o

be more paien in a negoiaion,and his is a source o power.

Negoiaion SkillsA person who

has he raining and experience as a

negoiaor, has a source o power

over he opponen. A good example

o his is car salespeople. One o he

auhors has acually prepared

raining maerials in how o

negoiae and close he deal or a

well-known European car company.

The key poin is o be judicious in

your use o power in a negoiaion. You

can orce a decision in your avor, bu i

may lead o uninended consequences

down he road. A good example is he

peace reay imposed on he Germans a

he end o World War I. The onerous

erms and harsh condiions planed he

seeds or he rise o Adolph Hiler, and

he adven o World War II.

The Negoiaion Process

The negoiaion process consiss o

hree phases: pre-meeing, he acual

negoiaion, and he pos-meeing.

Beore conducing a negoiaion, is

imporan o have a plan.

This is no dieren han rying o

underake a projec wihou a plan! Youneed o develop your posiion based on

ac-inding and analysis, and he

logisics o he negoiaion need o be

planned. Aer he negoiaion here are

ypically ollow-up aciviies. In his

secion o he aricle, we discuss each

phase o he negoiaion process in more

deail.

Pre-Meeing

Prior o any negoiaion, here are

imporan sraegic, adminisraive, and

acical planning consideraions haneed o be addressed.

Sraegic planning addresses he

goals or he negoiaion. Par o

sraegic planning is learning abou your

opponens needs and goals. This can be

accomplished by sudying heir business

inancial saemens and public records,

visiing heir aciliy and asking

quesions, or checking wih people who

have deal wih hem.

Sraegic planning also involves ac

inding, inancial analysis, and esing all

assumpions. Is imporan o noe hai you are conducing a negoiaion or

your company, sraegic planning oen

includes sakeholder bargaining, since

is no unusual or inernal sakeholders

o have dieren opinions on criical

issues and wha deines an accepable

oucome or he negoiaion.

The key pre-meeing deliverables o

agree upon are your:

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Iniial OfferThis is he irs oer

you will make a he appropriae

poin during he negoiaion. Is

imporan o have some daa and

jusiicaion o back his up or you

risk losing credibiliy;

Goal for SelemenThis is your

desired oucome or he

negoiaion; and

Walk-Away (No Deal) PoinThis is

he oucome where you won make

a deal. For example, les say you are

buying a car, and you decide ha,

based on your inancial siuaion,

he mos you can pay or a car is

$30,000. When negoiaing wih a

car dealership, i heir bes and

inal oer is $31,000, you should

walk rom he deal.

Tacical planning reers o

deermining he approach andechniques o use during he negoiaion

o obain he bes possible resul. This

includes deciding wheher he

negoiaion is a cooperaive problem-

solving siuaion, or an adversarial

siuaion where compromise will be he

oucome.

The negoiaor and he organizaion

mus know wha is waned and why

(sraegic planning) beore negoiaing

acics can be seleced. Tacical planning

is very imporan, since a good sraegy

can be weakened by poor acics duringhe negoiaion.

Conversely, good acics can

compensae or a poor sraegy. Tacics

are he echniques used during he

negoiaion o creae a siuaion in which

he goals can be reached and bargaining

posiions deended. Negoiaion acics

can include use o deadlines, good guy-

bad guy, daa jumble, escalaing

approval, rial balloons, and leaks.

However, a discussion o hese acics is

beyond he scope o his aricle.

Adminisraive planning deals wihmanaging he pre-meeing aciviies,

ensuring ha all necessary inormaion is

gahered and all negoiaion logisics are

resolved.

This includes deining he ollowing:

Who will be involved in he

negoiaion?

Wha will be covered in he

negoiaion (wha can be discussed

and wha won be discussed)

including he agenda?

Where he negoiaion will be

conduced, including logisical iems

such as he shape and size o he

able (recall he Paris Peace Talks

ha ended he Vienam War!)?

When he negoiaions will be

conduced (dae, ime)?

Whywhich ges ino wha is he

desired oucomes rom he

negoiaion?

Meeing

The negoiaion meeing ypicallyconsiss o hree phases: he opening,

hard bargaining, and he closure, which

hopeully resuls in an agreemen, bu

can be a deadlock.

During he Opening Phase, he rules

and agenda or he negoiaion should

be covered, along wih he iems o be

negoiaed. The opening phase may

include verbal ireworks i he

negoiaion is beween wo anagoniss.

For example, in negoiaions over

labor conracs, i is common or boh

sides o sar wih verbal ireworks as ameans o presening heir posiion. The

managemen eam may complain abou

heir lack o prois over he las ew

years because o high labor coss, and

he union may complain abou he poor

beneis, compared o similar

companies. The oucome o he opening

phase should be a clear undersanding o

he problems and issues ha need o be

addressed.

In he Hard Bargaining Phase, boh

sides ane up. They employ various

acics while hey discuss he problems

and issues, explore possible resoluions,

and make decisions. I his is a problem-

solving (i.e., principled) negoiaion,

hen boh paries will ry o resolve he

problems and issues o he oher side,

and will openly work ogeher o reach a

muually accepable agreemen.

By he Closure Phase, agreemens

have been reached and he negoiaion

is coming o a conclusion. Typically, he

agreemens are reviewed and a inal

documen signed o veriy wha has

been agreed upon. For example, he

closure phase or a new car purchase

includes signing he conrac (and any

loan papers).

Pos-Meeing

Is imporan o noe hanegoiaions are no really over jus

because he negoiaion meeing ends.

The negoiaor may need o go back and

inorm he sakeholders o he oucome

and obain heir agreemen and

accepance. Agreemen elaboraion may

be needed aer he negoiaion, which

migh enail he acual wriing o a

negoiaion agreemen documen.

A recen example o his is a

redevelopmen projec in a own along

he New Jersey coas. The developer

presened his plan or heredevelopmen o ive blocks in he

cener o own. Aer he presenaion

and over wo hours o discussion, he

Town Board inally approved he plan

wih some required modiicaions.

However, i ook anoher hree monhs

or he lawyers o prepare he zoning

agreemen documen or signaure

because o dispues over wha was

agreed o a he meeing.

Beore you ener ino a

negoiaion o any ype, reviewhe recommended procedure

presened in his aricle and be aware o

he 10 common misakes made in

negoiaions. Doing his will help make

you a more eecive negoiaor, as will

remembering he lyrics rom, The

Gambler: I youre gonna play he

game ya goa learn o play i righ. You

go o know when o hold em, know

7/28/2019 ce11-09


when o old em, know when o walk

away and know when o run.

REFERENCES1. Fisher, R. and W. Ury. Geing o Yes

Negoiaing Agreemen Wihou

Giving In, Penguin Books, New York,

1991.

2. Karrass, C. The Negoiaing Game

How o Ge Wha You Wan, Harper

Business, New York, 1992.

3. Rogers, Kenny, The Gambler, (CD)

Cenury Ciy, CA: Unied Ariss

ABOUT THE AUTHOR

Joseph A. Lukas, PE

CCE, currenly wih

PMCenersUSA, may

be conaced bysending e-mail o:

[email protected]

C O N S T R U C T I O N

C O N S U L T I N G S E R V I C E S

www.mbpce.com | 800-898-9088

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Cos Estmae Classificaton Sysem

Recommended Practce No. 18R-97

Cos Estmae Classificaton Sysem: As Applied in Engineering,

Procuremen, and Consructon or he Process Indusries


Forensic Schedule Analysis


Risk Analysis and Contngency Deerminaton Using Parameric

Estmatng


Risk Analysis and Contngency Deerminaton Using ParamericEstmatng - Example Models as Applied or he Process Indus-

ries

To access hese and all oher recommended practces,

visi: www.aacei.org/resources/rp

7/28/2019 ce11-09


Chinook Calgary SectonSome 57 members and guess a-

ended he Chinook-Calgary echnical

dinner meetng in he Riverview Room o he In-

ernatonal Hoel on Wednesday, April 20.

Donna Kainh inroduced Sephen Revay who made a cou-

ple o announcemens. He announced ha he Awards Commi-

ee o AACE Inernatonal has seleced long-tme

Chinook-Calgary member Arhur Kowalchuk, P.Eng., as he 2011

recipien o he AACE Charles V. Keane Distnguished Service

Award. Arhur received a sanding ovaton rom he session a-

endees. Sephen Revay announced ha a second Chinook-Cal-

gary member Mahendra Bhata has been appoined a Fellow o

AACE Inernatonal. Mahendra also received an ovaton rom he

aendees.

Mahendra Bhata inroduced he evening speaker Dave

Weaherby,P.Eng. o SNC Lavalin Transpor Vancouver division.

He commenced his presenaton on Challenges in Design and

Consructon or he Wes Calgary LRT Expansion Projec wih a

series o phoographs showing various aspecs o he acilites

which are stll under consructon. The projec includes 8 kilo-

meres (abou 5 miles) o line, 6 LRT Satons and 2 Park&Ride

Sies. I was divided ino elevaed areas, cu and cover unnelsand open rench areas. The projec was urher complicaed

wih emporary reroutng o raffic, minimizing impac on resi-

dental areas, shopping malls and schools. There were signifi-

can coss or re-routng utlites below grade, consructng

reaining walls, disposal o maerial rom open rench excava-

ton, as well as providing grade separaton a major inersec-

tons. Year round consructon required allowances or cold and

snow during winer seasons. Tracton Power Satons or power

disributon had o be provided a sraegic locatons. Engineer-

ing also had o provide design or pedesal owers carrying over-

THE AACE INTERNATIONAL BULLETIN

SECTION NEWS FROM AROUNDTHE WORLD

Submied phoo

The Chinook Calgary Sectons April meetng eaured David

Weaherby as he gues speaker. Shown above are: Seve Revey,

CCC CFCC; Mahendra Bhata, David Weaherby and Donna

Kainh.

Submied phoo

Long-tme Chinook-Calgary member Arhur Kowalchuk, P.Eng.,

is he 2011 recipien o he Charles V. Keane Distnguished Serv-

ice Award. Shown above a a Chinook Calgary Secton meetng

are Seve Revey, CCC CFCC; Arhur Kowalchuk, P.Eng.; Mahendra

Bhata, and Ginee Basak, P.Eng.

7/28/2019 ce11-09


head racks over 14h Sree, CPR Rail lines and along he Bow

River. The Trench&Tunnel sectons required solid suppor or em-

bankmens, rack base and several curved sectons o rail lines.

Preabricaed sectons o unnels required heavy lif equipmen

or insallaton. Curved suppor seel was provided or roo sup-

por a LRT Satons. The Sarcee Trail Inerchange involved com-

plex grade requiremens. Saey was always considered and

carried ou a all consructon areas.

A queston/answer period ollowed he presenaton.

Cascade SectonOn July 28, he board members o he Cascade Secton me

a he Bridgepor Brewery o discuss ways o enhance he sec-

tons monhly meetngs. The members were honored o have

Nick Kellar, CCC EVP PSP, Region 6 Direcor, in aendance.

Also presen were TJ Baxer, Direcor, Seve Kunishige, VP, Bas-

sam Khalieh, Presiden, and Dennis Van Kirk, Pas Presiden.

Much was discussed on he challenges o geng more reg-

isered AACE members o aend he monhly meetngs. Nick

partcipaed in he discussion and passed along grea ideas

abou geng back o he basics o cos engineering, cos est-

matng, planning and scheduling and projec conrols. The sec-ton board hanks Nick or aending he board meetng during

his busy schedule.

Monreal SectonThe Monreal Secton sponsored a special even i

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