Cost Engineering, Risk Management and Earned Value Management

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Upcoming Course

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Past Course

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        Aaron A. Zick, Ph.D. 
PST0287-201301  28 Oct 2013  01 Nov 2013  Bangkok, Thailand  SGD 5995  Richard Slingerland 
PST0287-201401  17 Mar 2014  21 Mar 2014  Kuala Lumpur, Malaysia  SGD 5995  Richard Slingerland 
PST0287-201501  20 Apr 2015  24 Apr 2015  Kuala Lumpur, Malaysia  SGD 5995  Richard Slingerland 

Cost Engineering and Risk Management (Day 1 - 3) program will cover the latest techniques and practical methodologies of project cost engineering and risk management to successfully manage project cost and risk, in order to maximize business ROI in the long run. You will gain the combination of unmatched risk analysis skills, cost engineering and thorough knowledge of your project parameters and uncertainties.

Earned Value Management (Day 4 - 5) program will cover the principles, methodologies and industry best practices in Earned Value Management. Using the knowledge to analyze project performance and to provide accurate cost and schedule forecasting, you will be able to contribute to your project’s increased performance and success.

Delegates will be guided through step by step exercises on real oil and gas project case studies

Day One

Estimating Definitions

  • Project Life Cycle
  • Purpose of Estimates
  • Accuracy and Probability
  • Allowances
  • Contingency and Escalation
  • Money of the Day / Real Term
  • Estimating Plan
  • Basis of Estimate

Factor Estimating

  • Definitions, advantages and disadvantages
  • Exponent method
  • Cost per capacity method
  • Lang, Hand and Chilton method
  • Peter-Timmerhaus method
  • Specific factor method

Case study: Factor estimating

Quantity Ratio Estimating

  • Definitions, advantages and disadvantages
  • Quantity ratios for piping
  • Quantity ratios for electrical & instrumentation
  • Quantity ratios for structural steel
  • Quantity ratios for civil, painting & insulation

Case study: Quantity ratio estimating


Parametric and Range Estimating

  • Nomenclature
  • Pareto’s Law
  • Critical elements and key questions
  • Range estimating input and simulation
  • Detailed Estimating
  • Discipline estimating
  • Unit rates & sources of pricing
  • Estimating of equipment
  • Piping estimate
  • Insulation estimate
  • Civil estimate

Case study: Detailed estimating


Day Two

Location Factors and Market Factors

  • How to set up a location factor
  • Location cost surveys
  • Steel and commodity prices
  • Benchmarks
  • Indices
  • Cost modeling

Case study: Analyzing differences between locations and markets


  • Setting up a project budget
  • Project baseline
  • Contingency allocation
  • Work breakdown structure
  • Cost breakdown structure
  • Code of accounts
  • Interaction with Contracting & Procurement

Case study: From estimate to budget

Project Control

  • Why Cost Control
  • Potential influences on costs
  • Pre-requisites for effective cost control
  • Cost control plan and procedures
  • Schedule control
  • Progress measurement
  • Earned value analysis / management
  • Project controls best practices
  • Integrated cost & schedule control
  • Project control tools

Case study: Earned value analysis

Advanced Project Control

  • Management of change
  • Re-baseline
  • Monthly reports
  • Forecasting
  • Cashflow analysis
  • Controlling cost of quality and safety
  • Project close-out & lessons learned
  • How to manage project control
  • Total Cost Management

Case study: Advanced project control


Day Three

Project Assurance

  • Estimate verification and assurance
  • Estimate assurance reviews
  • Client vs contractor estimate reconcilliation

Case Study: Project assurance

Risk Analysis Introduction and Definitions

  • Definitions and terminology
  • Risk register
  • Cost risk analysis
  • Schedule risk analysis
  • Deterministic methodology
  • Probabilistic methodology
  • Risk analysis tools
  • Risk management

Case study: Setting up a risk analysis model


Risk Management

  • Risk mitigation
  • Project risk management
  • Case study: Risk management
  • Schedule Risk Analysis
  • Uncertainties in duration
  • PERT
  • Critical path
  • Critical chain

Case study: Schedule risk analysis

Integrated Cost and Schedule Risk Analysis

  • Correlation between cost and schedule risks
  • Essentials of cost and schedule risk analysis
  • Methodology

Case study: Integrated cost / schedule risk analysis


Day Four

Definitions, Objectives, Methodologies and Analysis

  • Course objectives
  • Course program
  • Case studies


Definitions and Principles

  • Cost Engineering definitions
  • Estimates, budgets and value
  • Budget and Contingency allocation
  • Project baseline
  • Work Breakdown Structure
  • Cost Breakdown Structure
  • Work packages
  • Allocation of budget to WBS and work packages
  • Basic Earned Value terminology

Case Study: Budget allocation

Project Control

  • Project Control objectives
  • Project Control variables
  • Project Control methodologies
  • Project Control cycle
  • Project Control plan and procedures
  • Project Control best practices
  • Schedule Control
  • Integrated Cost & Schedule Control

Case Study: Project baseline and control sheet


Earned Value Analysis

  • Earned Value Analysis overview
  • Evaluate Earned Value techniques
  • Define and assess Earned Value
  • Cost Variance (CV) and Schedule Variance (SV)
  • Cost and Schedule Performance Indicators (CPI and SPI)
  • Forecasting on Cost and Schedule
  • Different forecasting methodologies and formulas
  • Accuracy of Cost and Schedule forecasts
  • Generate and Validate Estimate at Completion
  • Cost and Schedule performance curves
  • Trend analysis
  • Productivity analysis
  • Earned Schedule analysis

Case Study: Earned Value Analysis


Day Five


  • Elements of monitoring
  • Productivity
  • Progress measurement
  • Progress milestones
  • Monitoring plan
  • Cost and Schedule performance
  • Identify the steps used in updating the project status
  • Understand how predictive performance data is used
  • Controlling/managing engineering cost & schedule
  • Controlling/managing equipment cost & schedule
  • Controlling/managing bulk materials cost & schedule
  • Controlling/managing construction cost & schedule
  • Baseline Schedule date vs Forecast date

Case Study: Earned Value Monitoring



  • Reporting requirements
  • Reporting calendar
  • Reporting templates
  • Report on Program Performance Using EVMS
  • Best Practices
  • Project dashboards

Case Study: Project Controls Report and Dashboard


Advanced Earned Value Management

  • Management of Change
  • Problems and pitfalls
  • Pro’s and con’s of Earned Value Management
  • Alternatives to Earned Value Management
  • Earned Value vs Value of Work Done
  • Managing change and re-baseline
  • How to manage Project Control
  • Implementing Earned Value Management
  • Earned Value Management tools
  • Identify appropriate Work Authorization Levels
  • Use CPI and SPI in project management
  • EVM and related management responsibilities
  • Total Cost Management
  • Project close-out & lessons learned

Case Study: Advanced Earned Value Management

  • Develop a sound understanding of the principles, methodologies and industry best practices in Cost Engineering and Earned Value Management.
  • Understand the business context, the project life cycle and the purpose of Cost Engineering in Oil & Gas projects.
  • Learn to prepare cost estimates, from high level factor estimating to very detailed equipment and bulk material cost.
  • Learn to develop and work with work breakdown structures, work packages, project baselines and project forecasts.
  • Understand the impact of project location, market environment and project execution strategy on project cost.
  • Know how to apply Earned Value to analyse project performance and forecast cost and schedule at project completion.
  • Learn how to control, forecast and report the cost and progress during project execution.
  • Develop the skills and knowledge to review and reconcile cost estimates.
  • Understand the principles and methodologies of risk analysis and execute risk mitigation.

The course is designed for:

Cost Engineers, Cost Estimators, Cost Controllers, Project Managers, Project Engineers, Project Planners, Finance Managers & Executives.

Aaron A. Zick, Ph.D.

Founder and President


President, Zick Technologies (Since 10/93).

Petroleum engineering consulting and software development, specializing in the area of reservoir fluid phase behavior modeling. References available on request. Key achievements:

-Developed numerous equation-of-state and black-oil fluid characterizations for various major oil companies and as a sub-contractor for Pera A/S.

-Recommended phase behavior experimentation and modeling guidelines for several major oil companies.

-Wrote PhazeComp, a new, state-of-the-art program from Zick Technologies for equation-of-state phase behavior modeling, reservoir fluid characterization, and the robust, efficient calculation of minimum miscibility conditions.

-Wrote Streamz, unique Petrostreamz A/S software for translating, manipulating, and managing vast quantities of fluid stream information.

-Designed and helped write Pipe-It, unique Petrostreamz A/S software for managing and manipulating petroleum resources, processes, and projects.

-Taught numerous industry courses on phase behavior, equations of state, reservoir fluid characterization, and miscible gas injection processes.

-Designed and helped implement a new set of equation-of-state routines for the in-house reservoir simulator of a major oil company.

-Advised the architects of a major commercial reservoir simulator on ways to significantly improve their equation-of-state routines.


Director of Research, Reservoir Simulation Research Corporation (6/91–10/93).

Responsible for the research and development of more efficient, accurate, and reliable techniques for modeling reservoir fluid phase behavior within MORE® (a fully-compositional, equation-of-state reservoir simulator). Also responsible for improving three-dimensional visualization of reservoir simulator output, and for occasional consulting work. Key achievements:

-Designed and implemented new equation-of-state solution algorithms for MORE®, improving both efficiency and robustness while using less memory.

-Developed a powerful and flexible interface between MORE® and TECPLOT™ (three-dimensional surface contouring software from AMTEC Engineering).


Senior Principal Research Engineer, ARCO Oil and Gas Company (9/83–5/91).

Developed expertise in reservoir fluid phase behavior, phase behavior modeling, compositional reservoir simulation, and relative permeability modeling.  Designed and analyzed PVT experiments. Created equation-of-state reservoir fluid characterizations. Developed ARCO’s phase behavior modeling software and relative permeability modeling software. Helped develop several of ARCO’s compositional and limited compositional reservoir simulators. Key achievements:

-Discovered the true, condensing/vaporizing mechanism of oil displace­ment by enriched hydrocarbon gases.

-Represented ARCO on the Prudhoe Bay co-owners’ Enhanced Oil Recovery Task Force for the Prudhoe Bay Miscible Gas Project.

-Designed and analyzed most of the PVT and slim-tube experiments for the Prudhoe Bay Miscible Gas Project.

-Created the equation-of-state reservoir fluid characterization adopted by the operating companies for the Prudhoe Bay Miscible Gas Project.

-Developed the miscibility pressure correlations used by the facility operators for the Prudhoe Bay Miscible Gas Project.

-Developed EOSPHASE, a then state-of-the-art program for equation-of-state phase behavior modeling, reservoir fluid characterization, and the robust, efficient calculation of minimum miscibility conditions.

-Developed SLIMTUBE, a special-purpose, equation-of-state simulator for slim-tube displacements.

-Developed new, compositionally-consistent, three-phase relative perme­ability models for ARCO’s compositional simulators and wrote data-fitting software for those models.

-Developed the phase behavior and relative permeability routines for a new, limited compositional reservoir simulator and assisted on other aspects of it.

-Continually added improvements to various in-house reservoir simulators.

-Regularly taught in-house courses on the phase behavior of miscible gas displacement processes.



A. A. Zick, “A Combined Condensing/Vaporizing Mechanism in the Displacement of Oil by Enriched Gases,” presented at the 61st Annual Technical Conference and Exhibition of the Society of Petroleum Engineers, New Orleans, LA (October, 1986).

D. E. Tang and A. A. Zick, “A New Limited Compositional Reservoir Simulator,” presented at the 12th SPE Symposium on Reservoir Simulation, New Orleans, LA (March, 1993).