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ENGINEERING
September 2011
THE JOURNAL OF AACE INTERNATIONAL -
THE AUTHORITY FOR TOTAL COST MANAGEMENT
TM
COST COST COST
PRESIDENTS
MESSAGE
SPREADING
THE WORD
CANON
OF ETHICS
UPDATED
AND REVISED
SPECIAL FEATURE
GOVERNANCE
TASK FORCE
OUTLINES ITS WORK
AND SEEKS MEMBER INPUT
Mistakes
Made
NEGOTIATIONS
TOP10
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1 COST ENGINEERING SEPTEMBER 2011
CONTENTS
COST ENGINEERING
TECHNICAL ARTICLES
19 Top 10 Mistakes Made in
Project Negotiations
Joseph A. Lukas, PE CCE
Do you have clients that argue about the additional cost and/or time for project
changes? Do you have internal disagreements regarding estimates and schedules? You need
to be an effective negotiator to handle these situations. Unfortunately, most cost/schedule pro-
fessionals, estimators, and project managers, come up short in interpersonal skills, such as ne-
gotiating. This article will discuss the top 10 mistakes made in conducting project negotiations,
along with techniques that can be used to avoid these mistakes. In addition, a recommended
procedure to follow when preparing for a negotiation will be described. The goal is to help you
understand when to hold your position in a negotiation, when to compromise, and when to walk
away. This article should be of interest to project personnel looking for pointers on how to be
more effective in negotiation situations. If you think youre a skilled negotiator, read this article
to see if you are making any of the 10 most common negotiation errors. You may be surprised!
This article was first presented at the 2010 AACE International Annual Meeting as manuscript
PM.04.
2 COST ENGINEERING SEPTEMBER 2011
5 Presidents Message
Spreading the Word
8 Special Feature
Governance Task Force Outlines its
Work and Seeks Member Input
10 Canon of Ethics
Updated and Revised
14 Young Professionals
in Cost Engineering
Spotlight on F. Burak Evrenosoglu,
PE CCE PSP
16 Technical Overview
Change Management in the Trenches
4 AACE International Board of Directors
4 Cost Engineering Journal Information
27 Professional Services Directory

27 Index to Advertisers
32 AACE International Online Store
34 AACEs 2012 Annual Meeting
CONTENTS
DEPARTMENTS
ALSO FEATURED
COST ENGINEERING
28 The AACE
International Bulletin
Section News from Around the World
31 In Memoriam
Remembering Casimir A. DeCwikiel
35 Article Reprints
and Permissions
Sharing our Articles and Experience
36 Calendar of Events
AACE International Events and More
THE AACE INTERNATIONAL ONLINE BUTTON - This editon
of the Cost Engineering journal has access to additonal ma-
terial on the AACE Internatonal website, www.aacei.org.
Anytme you see the symbol at center, there is additonal
content online associated with that artcle or feature. Direct
your browser to www.aacei.org and look for the online but-
ton to access additonal resources. If you are already reading
the electronic version, just click the online buton directly.
COSTENGINEERING
4 COST ENGINEERING SEPTEMBER 2011
HEADQUARTERS
1265 Suncrest Towne Centre Dr
Morgantown, WV 26505-1876
800.858.COST fax - 304.291.5728
CONTENTS
AACE INTERNATIONAL
BOARD OF DIRECTORS
PRESIDENT
Michael R. Nosbisch, CCC PSP
562.733.2472 / president@aacei.org
PRESIDENT-ELECT
Marlene Hyde, CCE EVP
303.940.3200 / preselect@aacei.org
PAST PRESIDENT
Stephen O. Revay, CCC CFCC
403.777.4900 / pastpres@aacei.org
VICE PRESIDENT-ADMINISTRATION
Martin Darley, CCC FRICS
713.372.2426 / vpadmin@aacei.org
VICE PRESIDENT-FINANCE
John J. Ciccarelli, PE CCE PSP
609.497.2285 / vpfinance@aacei.org
VICE PRESIDENT-TEC
George Whyte, CCC CEP EVP
301.957.7434 /vptec@aacei.org
VICE PRESIDENT-REGIONS
Julie Owen, CCC PSP
213.922.7313 / vpregions@aacei.org
DIRECTOR-REGION 1
Ginette Basak, P.Eng. FAACE
403.708.7674 / dirregion1@aacei.org
DIRECTOR-REGION 2
John C. Livengood, CFCC PSP
202.669.1360 / dirregion2@aacei.org
DIRECTOR-REGION 3
James H. Carson, CCC CEP
770.444.9799 / dirregion3@aacei.org
DIRECTOR-REGION 4
Duane R. Meyer, PE CCE
513.241.1230 x 620 / dirregion4@aacei.org
DIRECTOR-REGION 5
Earl J. Seabrook, III, CCC
713.372.0521 / dirregion5@aacei.org
DIRECTOR-REGION 6
Nicholas Keller, CCC EVP PSP
dirregion6@aacei.org
DIRECTOR-REGION 7
Philips Tharakan Mulackal, CCE EVP
+971.50.631.4830 / dirregion7@aacei.org
DIRECTOR-REGION 8
Keith Webb
+61.8.93485045 / dirregion8@aacei.org
EXECUTIVE DIRECTOR
Dennis G. Stork
304.296.8444 / dstork@aacei.org
Viewpoints expressed in columns, features, and articles published in Cost Engineering journal are solely those
of the authors and do not represent an official position of AACE International. AACE International is not en-
dorsing or sponsoring the authors work. All content is presented solely for informational purposes. Columns,
features, and articles not designated as Technical Articles are not subject to the peer-review process.
Cost Engineering (ISSN: 0274-9696/11) is published monthly by AACE International, Inc, 209 Prairie Ave., Suite 100,
Morgantown, WV 26501 USA. Periodicals postage paid at Morgantown, WV, and at additional mailing office. POSTMASTER:
Send address changes to AACE International; 209 Prairie Ave., Suite 100, Morgantown, WV 26501 USA. Customer #7012359
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Overseas airmail delivery is available at US$99. Subscriptions are accepted on an annual-year basis only. Copyright 2011 by
AACE International, Inc. All rights reserved. This publication or any part thereof may not be reproduced in any form without
written permission from the publisher. AACE assumes no responsibility for statements and opinions advanced by the
contributors to its publications. Views expressed by them or the editor do not necessarily represent the official position of Cost
Engineering, its staff, or AACE International, Inc. Printed in York, PA, USA. Cost Engineering is a refereed journal. All technical
articles are subject to review by a minimum of three experts in the field. To submit a manuscript for peer review, see author
guidelines at www.aacei.org and submit a 200 word or less abstract to editor@aacei.org.. PHOTOCOPY PERMISSION:
Authorization to photocopy articles herein for internal or personal use, or the internal or personal use of specific clients, is
granted by AACE International, Inc., provided that the base fee of US$4.00 is paid directly to Copyright Clearance Center, 222
Rosewood Drive, Danvers, MA 01923 USA. Telephone: 978.750.8400. For those organizations that have been granted a
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reporting service is ISSN-0274-9696/02 US$4.00. Payment should be sent directly to CCC. Copying for other than personal or
internal reference use without the express permission of AACE is prohibited. E-mail requests for photocopy permission on bulk
orders may be sent to editor@aacei.org. ADVERTISING COPY: Contact Network Media Partners., Executive Plaza 1, 11350
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rates. Advertisers and advertising agencies assume liability for all content (including text, representation, and illustrations) of
advertisements printed and also assume responsibility for any claims arising therefrom made against the publisher. The
publisher reserves the right to reject any advertising that is not considered in keeping with the publications mission and
standards. The publisher reserves the right to place the word advertisement with copy which, in the publishers opinion,
resembles editorial matter. All advertising accepted for publication in Cost Engineering is limited to subjects that directly relate
to the cost management profession. Current rate card available on request. COST ENGINEERING DEADLINES: Submissions for
Cost Engineering must be received at least 8 weeks in advance of the issue date. Send to: Editor, 1265 Suncrest Towne Centre
Dr, Morgantown, WV 26505-1876 USA. Deadlines do not apply to technical papers.
Policy Concerning Published Columns, Features, and Articles
Established 1958
Managing Editor Marvin Gelhausen
mgelhausen@aacei.org
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Vol. 53, No.9/September 2011
AACE International - The Authority for Total Cost Management
TM
OUR VISION - To be the recognized technical authority in cost and schedule management
for programs, projects, products, assets, and services.
OUR MISSION - The members of AACE

enable organizations around the world to achieve


thier investment expectations by managing and controlling projects, programs, and port-
folios; we create value by advancing technical knowledge and professional development.
A
nother message being writen as I y back
home from an interestng week in Washington,
DC. I started this trip (straight from the air-
port) with a dinner meetng at my alma mater,
George Washington University, the proposed
site for the government agency forum we are
planning to hold in the spring.
Professor Renee Van Dorp and Adjunct Professor David Gal-
lay (an AACE member), jointly represented the Universitys En-
gineering Management and Systems Engineering (EMSE)
program, which recently added a concentraton in cost engi-
neering to its already impressive suite of focus areas. Both
Renee and David were very interested in the idea of GW hostng
the forum as a kind of neutral site for the US federal agencies
to come together to discuss best practces and lessons learned
related to cost engineering and project controls.
I have also approached the Department of Energy (DOE),
with whom AACE has had a cooperatve agreement for almost
15 years, to co-sponsor the event with us, and they are also in-
terested in partcipatng. Once I have a rm commitment from
DOE, my plan is to turn the coordinaton of this event over to
the newly installed Government Relatons representatve Kim
Hunter (EVP and former Major in the Marine Corps). Kim will
then ably work the remaining details in conjuncton with Pres-
ident-Elect Marlene Hyde and Interorganizatonal Liaison Com-
mitee Chair Alexia Nalewaik, who graciously accepted my oer
to contnue to serve the associaton afer two extremely suc-
cessful years as VP-Administraton.
Over the next two days, I atended a meetng of the Na-
tonal Defense Industrial Associatons (NDIAs) Program Man-
agement Systems Commitee (PMSC)the group of defense
contractor representatves that functonally owns and main-
tains the ANSI/EIA 748-B Standard, Earned Value Management
Systems.
Even though I was representng my company, I was able to
5 COST ENGINEERING SEPTEMBER 2011
PRESIDENTS MESSAGE
Michael R. Nosbisch, CCC PSP, President
THE
WORD
SPREADING
THE
WORD
SPREADING
6 COST ENGINEERING SEPTEMBER 2011
speak with both the current chair (Joe Kusick of Raytheon), and
the newly elected vice-chair (Tracie Thompson with ATK) about
the potental for a cooperatve agreement between the PMSC
and AACE Internatonal. I made a pitch in this regard to the
PMSCs Board of Directors a few months ago which I thought
hadnt been successful, but I was happy to hear that both Joe
and Tracie are interested in contnuing the conversaton in the
weeks to come.
During the meetng, I was also approached by Audrey Ma-
honey with General Dynamics, who proudly told me that she
was now a grader for the EVP certcaton exam. Our industry
recognized EVP certcaton has denitely helped bridge the
gap between AACE and the large cost engineering/project con-
trols community that exists within the aerospace and defense
(A&D) industry, which contnues to be a goal of mine as Presi-
dent. In additon to Audrey, I spoke with several other EVPs
that were in atendance, to include former VP of TEC (and co-
editor of the current EVP Study Guide) Ken Cressmanhis con-
tributons to the associaton over the past several years have
denitely been appreciated.
The next day, I had the privilege to represent our associa-
ton at the Pentagon for the EVMS Stakeholders Meetng,
which is chaired by the recently formed Oce of Project As-
sessment and Root Cause Analysis (PARCA). This half-day
meetng usually is held adjacent with the PMSC meetng, and
atendees (by invitaton of PARCA only) include senior func-
tonal representatves from major defense contractors like
Raytheon, Boeing, Lockheed Martn, and Northrop Grumman.
We normally discuss issues and ideas with the intent of opt-
mizing the way earned value management (EVM) is imple-
mented within the Department of Defense (DoD), and while I
am stll waitng for the right opportunity to discuss the govern-
ments approach to professional certcatons like the EVP, I did
bring up an issue related to the use of EVM in support of xed
price incentve contracts (FPIC) and indenite quantty/inde-
nite delivery (ID/IQ) contracts that are commonly used on gov-
ernment constructon projects. Based on the reacton of the
other atendees, this issue also seemed to have relevance
within the A&D industry, so I am hopeful that we will contnue
to discuss it during future meetngs untl a recommended ap-
proach is developed and adopted for implementaton across
all of DoD.
Next week is a trip to Atlanta, and my plan is to have a din-
ner meetng with the local Sectons leadership to solicit addi-
tonal ideas for how we can spread the word related to AACE.
Doing so will not only increase our membership, but will hope-
fully provide new and unique perspectves on how we can con-
tnue to improve our associaton. The recogniton of AACE
Internatonal as the authority for total cost management
should not only be within the constructon industry, but across
all industries, and I appreciate your help and support in con-
tnuing to work toward this goal.
EDITORS NOTE: To engage in other discussions, check out AACE
Internationals Online Forums at www.aacei.org/forums.


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8 COST ENGINEERING SEPTEMBER 2011
GOVERNANCE
TASK FORCE
GOVERNANCE
TASK FORCE
O
ur Associaton has experienced excitng and
signicant growth in the last year, with
every indicaton that this growth will con-
tnue for several years. This unprecedented
expansion is creatng both signicant oppor-
tunites and challenges in AACE Interna-
tonals ability to serve its global membership.
To respond accordingly, an overall strategic planning eort
commenced in September 2010, with the goal to identfy both
short and long term objectves. The new AACE strategic plan is
available for review at the AACE website, www.aacei.org.
The Board of Directors also recognizes that AACE needs to
provide appropriate administraton and oversight of member
services and actvites, and understands that the needs of all
members need to be addressed.
In keeping with this eort, the Board of Directors created
a Governance Task Force (GTF), which met for the rst tme dur-
ing the recent 2011 Annual Meetng in Anaheim. The GTF is
charged with exploring the various aspects of how AACE is gov-
erned, with the ultmate objectve of enhancing the Associa-
tons administraton and eectveness in serving our members.
The GTF will identfy risks and opportunites, and develop
a framework to permit exibility in governance while retaining
and strengthening the underlying mission of the Associaton as
expressed through Total Cost Management.
Three recent actons by the Board of Directors related to
GTF actvites illustrated the impacts of our new strategic plan.
The rst event is the development of the improved AACE
Canon of Ethics that was approved in Anaheim in June 2011,
and will become eectve on January 1, 2012. This new set of
Canons will assist all members in their professional actvites in
an increasingly complex business world.
The second reects our growth internatonally. The AACEs
largest secton is now in the United Arab Emirates and interna-
tonal members now represent 30 percent of AACE members
and contnue to grow, while Canada represents 10 percent and
John Livengood, PSP CFCC , Director-Region 2
AACE Governance Task Force
OUTLINES ITS WORK
AND SEEKS MEMBER INPUT
SPECIAL FEATURE
the US represents 60 percent. A new internatonal Region was
added recently to reect this world-wide growth.
Finally, to serve the rapidly increasing populaton of inter-
natonal members, AACE will hold its rst Internatonal Confer-
ence in Dubai in November of 2012.
Going forward, the GTF will develop and make recommen-
datons concerning AACEs governance structure, including
possible changes to: the Bylaws and Consttuton; Board and
commitee structures, and Policies and Procedures.
The GTF is invitng, through a newly established online
Forum, comments on what our members need, like, and dis-
like, and other suggestons about organizatonal structure and
administraton. These comments will be carefully considered
by the task force and the Board of Directors, along with the re-
sults of the every-member survey conducted earlier this year,
and the aforementoned Strategic Plan. The GTF has no pre-
conceptons about how AACE should be structured, except that
we are dedicated to retaining the core goals of AACE and
strengthening service to our members.
The Governance Task Force is comprised of the following:
Steve Revay, Past President, GTF Chair;
Alexia Nalewaik, Interorganizaton Commitee Chair;
Peter Griesmyer, Educaton Board Chair;
John Livengood, RD2 and Ethics Task Force Chair; and,
Dennis Stork, Executve Director
We look forward to hearing from you. Please e-mail any
comments concerning this artcle or the outlined work of the
Governance Task Force to: Steve Revay at: pastpres@aacei.org,
or visit the online forum and post your comments.
Editors Note: The following is the rst of a series of short
artcles that will be published regularly in issues of the Cost En
gineering journal.
The Governance Task Force (GTF)
is charged with exploring the vari-
ous aspects of how AACE is gov-
erned, with the ultmate objectve
of enhancing the Associatons ad-
ministraton and eectveness in
serving our members.
The GTF will identfy risks and op-
portunites, and develop a frame-
work to permit exibility in
governance while retaining and
strengthening the underlying mis-
sion of the Associaton as expressed
through Total Cost Management.
9 COST ENGINEERING SEPTEMBER 2011
By the tme you read this, the deadline for submission
of an abstract for the 2012 AACE Internatonal Annual
Meetng will have just wrapped up.
Those who submited abstracts may not be familiar
with what happened next, or may wonder when they will
hear whether or not their abstract is selected for presenta-
ton. The next step is a review of all submited abstracts by
the Technical Board. This will occur at the boards fall meet-
ing during the rst week of October. Authors can expect to
receive an e-mail with the boards decision by mid to late
October.
Authors of accepted abstracts will have untl January
31, 2012 to submit their full paper, but early submission is
encouraged. As was the case in 2011, the Technical Board
is not going to create or release a presentaton schedule
untl it reviews the full technical paper. Therefore, authors
can speed up receiving a presentaton schedule by complet-
ing and turning in their completed papers as soon as possi-
ble afer notcaton of acceptance of the abstract. This
also applies to papers accepted on a stand by status to ll
any openings created by cancellatons.
If you have questons, please e-mail:
trans@aacei.org
Technical Board to Review 2012 Annual Meetng Abstracts
10 COST ENGINEERING SEPTEMBER 2011
CANONS
OF ETHICS
T
he AACE Internatonal Board of Directors ap-
proved revisions to the Canons of Ethics on June
17-18 in Anaheim, CA. The revisions to the
Canons of Ethics will become eectve January 1,
2012, and will apply to all members renewing for
2012, as well as any individual holding an AACE
Internatonal certcaton.
Among the changes to the Canons are provisions to assure
the integrity of the examinaton process, more specic language
on intellectual property violatons, reducton of vague language
and an armatve responsibility for members to report alleged
ethical violatons. Beginning in 2012, all AACE Internatonal
members will have a common membership cycle of January 1-
December 31, and those members will be held accountable to
the Canons of Ethics.
The Canons revisions were recommended by an ad hoc
Ethics Task Force, chaired by Region 2 Director John Livengood,
and included Vice President: Administraton Alexia Nalewaik,
Region 4 Director Duane Meyer and Executve Director Dennis
Stork. The Ethics Task Forces inital recommendatons were an-
nounced on the AACE website on April 15, and posted on the
online discussion forums for comment by AACE members and
those holding AACE certcaton. The comment period ended
June 1. The Ethics Task Force then reviewed comments and in-
corporated several suggested changes into the nal version ap-
proved by the Board of Directors.
The Ethics Task Force would like to thank those individuals
who took the tme to make suggestons regarding both the form
and substance of the revisions. We carefully reviewed all com-
ments and incorporated several changes into the nal version
based upon member input. We believe the revised Canons of
Ethics will be an important foundaton on which to build greater
awareness of our ethical responsibilites to the practce of total
cost management, commented Livengood.
The Board of Directors also approved the creaton of an
Ethics Commitee and Ethics Appeals Panel. These two enttes
will be responsible for reviewing alleged violatons of the
CANONS OF ETHICS
Dennis G. Stork, Executive Director
UPDATED AND REVISED
11 COST ENGINEERING SEPTEMBER 2011
Canons of Ethics. The Ethics Commitee
and Ethics Appeals Panel will be ap-
pointed by President Michael Nosbisch
and approved by the Board of Directors
by January 1, 2012. The Ethics Commit-
tee and Ethics Appeals Panel will be gov-
erned by a comprehensive set of rules to
assure that members or certcaton
holders accused of an ethics violaton are
protected by a well dened due process.
While the provisions of the process
will not be nalized untl afer the Ethics
Commitee and Ethics Appeals Panel have
been appointed and can make nal rec-
ommendatons to the Board of Directors,
the process will include require formal
writen complaints, reasonable notca-
ton to the alleged violator to address the
charges, a detailed process to determine
the merits of a formal complaint and a
formal appeals process to the Ethics Ap-
peals Panel should the individual found in
violaton not concur with the Ethics Com-
mitee decision.
All decisions of the Ethics Appeals
Panel will be nal and there will be no in-
volvement by the Board of Directors in
determining ethical violatons. Sanctons
against individuals who have been found
to have violated the Canons of Ethics and
exhausted the appeals process will range
from a private leter of reprimand to ex-
pulsion from membership or withdrawing
of certcaton status.
The proposed ethics violaton
process strikes the proper balance be-
tween protectng the public and the prac-
tce from unethical behavior while
assuring the rights of the alleged violator
to a fair and impartal decision. The ap-
proach we selected is modeled upon
other professional associatons with ex-
tensive experience addressing alleged
ethical violatons, Livengood com-
mented.
Once approved by the Board of Di-
rectors in the fall, the process that will
used by the Ethics Commitee and Ethics
Appeals Panel will be posted on the AACE
Internatonal website. The Ethics Com-
mitee will also be charged with the re-
sponsibility of creatng a heightened
awareness of the ethical responsibilites
of practtoners and to encourage a dialog
within the members and practce regard-
ing the applicaton of the Canons of
Ethics..
The AACE Internatonal Canons of Ethics
(Eectve from January 1, 2012)
Introducton
I. Relatons With the Public
II. Relatons With Employers and Clients
III. Relatons With Other Professionals
IV. Standards of Professional Performance
Introducton
The AACE member, to uphold and advance the honor and dignity of Cost Engineer-
ing and the Cost Management profession and in keeping with the high standards of
ethical conduct will (1) be honest and impartal and will serve employer, clients, and
the public with devoton; (2) strive to increase the competence and prestge of their
profession; and (3) will apply knowledge and skill to advance human welfare.
I. Relatons With the Public
A. Members will hold paramount the safety, health, and welfare of the public, includ-
ing that of future generatons.
B. Members will endeavor to extend public knowledge and appreciaton of cost en-
gineering and cost management and its achievements, and will oppose any untrue,
unsupported, or exaggerated statements regarding cost engineering and cost man-
agement.
C. Members will be dignied and modest, ever upholding the honor and dignity of
their profession, and will refrain from self-laudatory advertsing.
D. Members will express an opinion on a cost engineering or cost management sub-
ject only when it is founded on adequate knowledge and honest convicton.
E. On cost engineering or cost management maters, members will issue no state-
ments, critcisms, or arguments that are inspired or paid for by an interested party
or partes, unless they preface their comments by identfying themselves, by dis-
closing the identtes of the party or partes on whose behalf they are speaking,
and by revealing the existence of any pecuniary interest they may have in maters
under discussion.
F. Members will approve or seal only those documents, reviewed or prepared by
them, which are determined to be safe for public health and welfare in conformity
with accepted cost engineering, cost management and economic standards.
G. Members whose judgment is overruled under circumstances where the safety,
health, and welfare of the public are endangered shall inform their clients or em-
ployers of the possible consequences.
H. Members will work through professional societes to encourage and support others
who follow these concepts.
I. Members will work only with those who follow these concepts.
J. Members shall be objectve and truthful in professional reports, statements, or
testmony. They shall include all relevant and pertnent informaton in such reports,
statements, and testmony.
II. Relatons With Employers and Clients
A. Members will act in all maters as a faithful agent or trustee for each employer or
client.
B. Members will act fairly and justly toward vendors and contractors and will not ac-
cept any commissions or allowances from vendors or contractors, directly or indi-
rectly.
C. Members will inform their employer or client of nancial interest in any potental
vendor or contractor, or in any inventon, machine, or apparatus that is involved
in a project or work for either employer or client. Members will not allow such in-
terest to aect any decisions regarding cost engineering or cost management serv-
ices that they may be called upon to perform.
D. When, as a result of their studies, members believe a project(s) will not be suc-
12 COST ENGINEERING SEPTEMBER 2011
cessful, or if their cost engineering and cost management
or economic judgment is overruled, they shall so advise
their employer or client.
E. Members will undertake only those cost engineering and
cost management assignments for which they are qualied.
Members will engage or advise their employers or clients to
engage specialists whenever their employers or clients in-
terests are served best by such an arrangement. Members
will cooperate fully with specialists so engaged.
F. Members shall treat informaton coming to them in the
course of their assignments as condental and shall not use
such informaton as a means of making personal prot if
such acton is adverse to the interests of their clients, their
employers, or the public.
1. Members will not disclose condental informaton con-
cerning the business aairs or technical processes of any
present or former employer or client or bidder under eval-
uaton, without consent, unless required by law.
2. Members shall not reveal condental informaton or
nding of any commission or board of which they are mem-
bers, unless required by law.
3. Members shall not duplicate for others, without ex-
press permission of the client(s), designs, calculatons,
sketches, etc., supplied to them by clients.
4. Members shall not use condental informaton coming
to them in the course of their assignments as a means of
making personal prot if such acton is adverse to the inter-
ests of their clients, employers, or the public.
G. Members will not accept compensatonnancial or oth-
erwisefrom more than one party for the same service, or
for other services pertaining to the same work, without the
consent of all interested partes.
H. Employed members will engage in supplementary employ-
ment or consultng practce only with the consent of their
employer.
I. Members shall not use equipment, supplies, laboratory, or
oce facilites of their employers to carry on outside private
practce without the consent of their employers.
J. Members shall not solicit a contract from a governmental
body on which a principal ocer or employee of their or-
ganizaton serves as a member.
K. he member shall act with fairness and justce to all partes
when administering a constructon (or other) contract.
L. Before undertaking work for others in which the member
may make improvements, plans, designs, inventons, or
records that may justfy copyrights or patents, the member
shall enter into a positve agreement regarding the rights of
respectve partes.
M. Members shall admit and accept their own errors when
proven wrong and refrain from distortng or altering the
facts to justfy their decisions.
N. Members shall not atempt to atract an employee from an-
other employer by false or misleading representatons.
O. Members shall act in professional maters for each employer
or client as faithful agents or trustees and shall avoid con-
icts of interest.
1. Members shall avoid all known or potental conicts of
interest with their employers or clients and shall promptly
inform their employers or clients of any business associa-
ton, interests, or circumstances that could inuence their
judgment or the quality of their services.
2. Members shall not solicit or accept gratuites, directly
or indirectly, from contractors, their agents, or other partes
dealing with their clients or employers in connecton with
work for which they are responsible.
III. Relatons With Other Professionals
A. Members will take care that credit for cost engineering and
cost management work is given to those to whom credit is
properly due.
B. Members will provide prospectve employees with complete
informaton on working conditons and their proposed sta-
tus of employment. Afer employment begins, they will
keep the employee informed of any changes in status and
working conditons.
C. Members will uphold the principle of appropriate and ade-
quate compensaton for those engaged in cost engineering
and cost management work, including those in subordinate
capacites.
D. Members will endeavor to provide opportunity for the pro-
fessional development and advancement of individuals in
their employ or under their supervision.
E. Members will not atempt to supplant other cost engineers
or cost management professionals in a partcular employ-
ment afer becoming aware that denite steps have been
taken toward the others employment or afer they have
been employed.
F. Members shall not maliciously or falsely, directly or indi-
rectly, injure the professional reputaton, prospects, prac-
tce, or employment of another, nor shall they
indiscriminately critcize anothers work. Proof that another
cost professional has been unethical, illegal, or unfair in
his/her practce shall be cause for advising the proper au-
thority.
G. Members will not compete unfairly with other cost profes-
sionals.
H. Members will cooperate in advancing the cost engineering
and cost management profession by interchanging informa-
ton and experience with other cost professionals and stu-
dents, by contributng to public communicaton media and
to cost engineering, cost management and scientc soci-
etes and schools.
I. Members will not request, propose, or accept professional
commissions on a contngent basis under circumstances
that compromise their professional judgments.
J. Members will not falsify or permit misrepresentaton of
their own or their associates academic or professional qual-
icatons. They shall not misrepresent or exaggerate their
degrees or responsibility in or for the subject mater of prior
assignments. Brochures or other presentatons incident to
the solicitaton of employment shall not misrepresent per-
tnent facts concerning employers, employees, associates,
joint ventures, accomplishments, or membership in techni-
cal societes.
K. Members will prepare artcles for the lay or technical press
that are only factual, dignied, and free from ostentatous
13 COST ENGINEERING SEPTEMBER 2011
or laudatory implicatons. Such art-
cles shall not imply credit to the cost
professionals for other than their di-
rect partcipaton in the work de-
scribed unless credit is given to
others for their share of the work.
L. Members will not campaign, solicit
support, or other wise coerce other
cost professionals to support their
candidacy or the candidacy of a col-
league for electve oce in a techni-
cal associaton.
IV. Standards of Professional Per-
formance
A. Members shall be dignied and mod-
est in explaining their work and merit
and will avoid any act tending to pro-
mote their own interests at the ex-
pense of the integrity, honor, and
dignity of the profession.
B. Members, when serving as expert
witnesses, shall express a cost engi-
neering and cost management opin-
ion only when it is founded upon
adequate knowledge of the facts,
upon a background of technical com-
petence, and upon honest convicton.
C. Members shall contnue their profes-
sional development throughout their
careers and shall provide opportuni-
tes for the professional development
of those cost professionals under
their supervision.
1. Members should keep current in
their specialty elds by engaging in
professional practce, partcipatng in
contnuing educaton courses, read-
ing in the technical literature, and at-
tending professional meetngs and
seminars.
2. Members should encourage
their cost engineering and cost man-
agement employees to become cer-
ted at the earliest possible date.
3. Members should encourage
their cost engineering and cost man-
agement employees to atend and
present papers at professional and
technical society meetngs.
4. Members shall uphold the prin-
ciple of mutually satsfying relaton-
ships between employers and
employees with respect to terms of
employment including professional
grade descriptons, salary ranges, and
fringe benets.
14 COST ENGINEERING SEPTEMBER 2011
F
. Burak Evrenosoglu was born and raised in Istan-
bul, Turkey. He obtained his bachelor of science
in civil engineering from Istanbul Technical Uni-
versity and his master of science in civil engineer-
ing from Texas A&M University. He is a licensed
civil engineer in Oregon, Washington State, Col-
orado and Maryland.
Burak currently works at Fluors Infrastructure business
line specializing in transportaton projects. His current assign-
ment is on a design-build public private partnership commuter
rail project in Denver where he is responsible for resoluton of
contract changes and avoidance of contractual disputes.
His previous assignment with Fluor was in Oregon Depart-
ment of Transportatons OTIAIII program that replaced or re-
paired 365 of the states critcal bridges with the objectve of
increasing capacity on main transportaton routes. During his
assignment, he led the planning and schedule management
eorts. He was directly responsible for analyzing delay and
contract change order claims for both enttlement and
cost/tme damages. He successfully represented ODOT in al-
ternate dispute resoluton processes. Working for Fluor, gave
him the opportunity work on mega-projects and innovatve
project delivery methods like public private partnership in both
domestc and internatonal markets.
Prior to Fluor, he developed expertse in the heavy civil,
airports, energy, utlites sectors where he worked as a con-
structon engineer, cost estmator, scheduler, and contract
manager. Burak says, Working in dierent areas of project
controls and constructon reinforced a detailed understanding
of constructon engineering, project controls, scheduling and
contract management.
Burak has been an AACE Internatonal member since
1995. His rst exposure to AACE was while he was doing liter-
ature research for his thesis at Texas A&M University. He was
very impressed with AACE technical artcles as a result decided
to become a member. Burak says, I have not found any other
professional organizaton that can oer the quality and quan-
tty of artcles that AACE does.
Burak believes in the value of professional certcatons.
He holds multple certcatons from several professional as-
sociatons. He is a Certed Cost Engineer (CCE), Planning and
Scheduling Professional (PSP) through the Associaton for the
Advancement of Cost Engineering Internatonal (AACE Inter-
natonal), certed PMI Project Management Professional
(PMP), Certed Commercial Contracts Manger (CCCM), Cert-
ed Federal Contracts Manager (CFCM) with the Natonal Con-
tract Management Associaton and is a member of the
American Society of Civil Engineers (ASCE).
Burak has been atending and presentng at the AACE An-
nual Meetngs since 2008. Burak says, AACE Annual Meetngs
provide the opportunity to network with other professionals
and a comprehensive technical program that provides learning
opportunites for all experience levels. You will nd informa-
tve technical sessions whether you are a project manager, es-
tmator or a scheduler.
He recommends young professionals to get involved be-
cause AACE provides plentful opportunites to improve their
YOUNG PROFESSIONALS IN COST ENGINEERING
SPOTLIGHT ON
F. BURAK
EVRENOSOGLU
PE CCE PSP
F. BURAK
EVRENOSOGLU
PE CCE PSP
Julie Owen, CCC PSP
I have not found any other profes-
sional organizaton that can oer
the quality and quantty of artcles
that AACE does.
15 COST ENGINEERING SEPTEMBER 2011 15
knowledge and build a strong professional network among proj-
ect controls professionals and project managers. The key areas
that keep Burak engaged in AACE are that it provides the pro-
fessional knowledge that he can apply to his work. Burak says,
I refer to AACE Recommended Practces or do a search in the
virtual library, when I am faced with a technical challenge The
other key areas are certcatons, forums, and networking op-
portunites.
Burak recommends young professionals to develop expert-
ise in their eld but never lose sight of the bigger picture which
is to deliver successful projects.
AACE Annual Meetngs provide
the opportunity to network with
other professionals and a compre-
hensive technical program that
provides learning opportunites
for all experience levels. You will
nd informatve technical sessions
whether you are a project man-
ager, estmator or a scheduler.
CHANGES ANNOUNCED FOR
PUBLICATIONS IN 2012
In 2012, AACE Internatonal will introduce an excitng
new additon to our communicatons portolio to sup-
plement our Cost Engineering journal. The new ad-
diton, The Source, is a bimonthly digital publicaton
focusing on associaton actvites and items of interest
to the total cost management community. Beginning
in February 2012, The Source will be published in even
number months while the Cost Engineering journal
will be published six tmes per year in the odd number
months.
While the frequency of the Cost Engineering jour-
nal will be reduced, the actual number of technical ar-
tcles published will remain the same or be increased,
according to AACE Internatonal Executve Director
Dennis Stork. We studied our readership preference
surveys and determined that the Cost Engineering
journals most valued feature were our technical art-
cles. We are commited to publishing the same num-
ber of technical papers per year or more in our new
bimonthly format. As a result, the Cost Engineering
journal will be more heavily weighted toward techni-
cal artcles, Stork commented.
16 COST ENGINEERING SEPTEMBER 2011
M
a
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e
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e
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e
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e
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n

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a
g
e
m
e
n
t
T
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e
n
c
h
e
s i
n

t
h
e
C
hange is inevitable throughout a project but
change must be controlled to ensure the project
parameters (cost, schedule, quality, and safety)
remain in control. Changes may result in several
areas, including: work ow interrupton, rework,
delays, schedule slip and cost deviaton, etc.
These items and other changes may generate claims and result
in litgaton. Therefore, managing change early is essental for
a successful project outcome.
There are ve key areas of change to address. These in-
clude recognizing the change, analyzing of the change, approv-
ing the change, implementaton of the change, and tracking the
change. Looking at each of these, consider the following.
1. Recognize the Change
Change comes in various forms throughout the dierent
lifetmes of a project. Changes can involve the scope, budget,
work executon method (means and methods), contractual,
risks, etc. It is import to identfy the specics and requirements
of why a change is needed. A change request form is the best
way to document a change and to keep a paper trail of the
change. The form should have a number of sectons and the
ones that apply in this process should identfy the type of
change, a descripton of the change, and the reason for the
change. Research the contract and contractor agreements to
separate changes from non-compliance or non-conformance is-
sues.
2. Analysis of the Change
The analysis of the change is the most complex and involved
area because an analysis of the change has to be performed in
order to make an informed decision on approving the change.
Changes early in a project are less costly and easier to document
and implement than changes later in the project life cycle. Types
of analysis that might be applicable (depending on the type of
change and where the change is in the project life cycle) are:
Tom Sheffrey
TECHNICAL OVERVIEW
17 COST ENGINEERING SEPTEMBER 2011
Risk AssessmentA risk assessment
should be made of the proposed
change. The proposed change may
be an atempt to mitgate an existng
unacceptable risk. Consider the af-
fect on existng risks and evaluate if
this change will create new risks. Risk
is always present on a project and
needs to be recognized and ana-
lyzed. When considering changes,
some projects may require a re-
assessment of environmental im-
pacts, OSHA hazard reviews,
business economics, etc.
Engineering AssessmentAn engi-
neering assessment is an important
aspect to change request evaluaton.
Engineering must sign-o on all
changes because engineering is inte-
gral to risk assessment and is largely
responsible for the design scope of
the project. Engineering reviews
changes to ensure that a change
does not adversely aect the project
scope. In most states, professional
engineers may need to re-sign critcal
design/constructon documents be-
fore a change can be authorized.
Environmental AssessmentThe
Environmental Department must as-
sess the change to make sure that
the change does not adversely aect
any permits and that the change is
covered under the permits that were
secured. This is partcularly impor-
tant with a project already in the
constructon phase.
Safety AssessmentA safety assess-
ment is important to make sure that
safety is considered with the
change. Like environmental, safety is
more important for changes that
occur during the executon or con-
structon phase.
Time Impact AnalysisA tme im-
pact analysis (TIA) is typically associ-
ated with the modeling of the eects
of a single delay. It requires a CPM
schedule that is able to show the
pure CPM calculaton dierences be-
tween a schedule that does not in-
clude a delay and one that does
include an actvity modeling a delay.
The dierence for project comple-
ton between the non-impacted
schedule and that of the schedule
with the impact is considered to be
the impact of the delay for tme du-
raton consideratons [1].
Schedule EvaluatonA schedule
evaluaton needs to be done because
a change could aect the nish date
of the project and cause delay. A
change in the design phase could
delay the submital of that design
and cascade through the entre proj-
ect. Again, this is why a tme impact
analysis is an important analysis.
Once a change is approved the proj-
ect schedule must be updated.
Cost EvaluatonA cost evaluaton is
an analysis of the cost estmate to
implement the change. The evalua-
ton should consider a net present
value or a life-cycle-cost analysis.
There are always cost and schedule
trade-os to consider. For example,
project sponsors may decide to
spend more on equipment to
shorten the schedule. By shortening
the schedule, overtme and labor
costs may be reduced. Once a cost
change is approved, the project
budget and forecast must be up-
dated.
Procurement and Contractng de-
partments need to be aware of ap-
proved/pending changes so that
they can be prepared to process the
necessary contractual documents
and track the progress of getng the
change request approved and imple-
mented.
3. Approval of the Change
Changes need to be approved rst by
the project manager (because the project
manager owns the project). Changes
also need to be approved be the program
manager of a project (if there is one, be-
cause the program manager owns all
the projects of the program).
4. Implement the Change
A number of departments get in-
volved when a change is approved and
ready for implementaton. Design may
need to issue new drawings. Purchasing
departments needs to follow the pur-
chase request and get the necessary ap-
provals for the change. Project controls
need to load the change into the tracking
sofware to record the change. A con-
tract amendment may need to be issued
and signed.
5. Track the Change
Changes are expensive to process be-
cause a change is unplanned work and
they add to the project schedule and
budget of a project. Late design changes
result in higher costs and longer sched-
ules.
The purpose of tracking changes is to
try to improve on the number of changes
in a project by understanding what the
drivers are that call for a change. Per-
formance metrics can be established to
measure how well an organizaton han-
dles a change and point to areas where
improvement is needed. Additonally,
lessons can be learned from the change
and a lesson learned database can be up-
dated for future project use.
REFERENCES
1. Time Impact Analysis, by Ron Win-
ter, PSP, December 9, 2004, ronwin-
terconsultng.com.
Tired of re-inventng the wheel?
AACE Presents: Monthly online presentatons based on the most highly
acclaimed technical presentatons at our Annual Meetng.
Cost Engineering journal: Each member receives the Cost Engi-
neering journal as well as access to archived back issues online.
AACE Internatonal provides you with the latest in transferable techniques and recommended practces
to be on the cutng edge of the total cost management practce. Here are just some of the resources
our members receive to give them a compettve advantage in the workplace:
Virtual Library: An online library of more than 4,500 technical papers on every aspect of total cost
management. Members may download papers for free for their personal use.
Visual TCM Framework: Our members can now access the Visual TCM Framework on the AACE
Internatonal website. Visual TCM Framework provides a unique perspectve on this highly acclaimed
resource that only members have access to through AACE.
For more informaton on
how we can help your
career evolve to the next
level, contact
AACE Internatonal,
1265 Suncrest Towne Ctr,
Morgantown, WV 26505
Phone: +1.304.296.8444
Fax: +1.304.291.5728
Email: info@aacei.org
or visit our website at:
www.aacei.org.
Mentoring: AACE Internatonal members can partcipate in our
mentoring program as a mentor or as a mentee/partner. A
great way to advance your own career or help give back to the
TCM practce community.
Discounts on AACE Programs and Certcatons: Members
earn discounts on AACE educatonal and training programs
such as our Annual Meetng, the Internatonal TCM Confer-
ence and our certcaton programs.
Career Center: Members can register for job alerts, re-
ceive tps on advancing their career and view
job postngs from leading companies in the TCM
eld as well as have access to our annual
Salary Survey.
19 COST ENGINEERING SEPTEMBER 2011
D
o you have clients that ask for
minor extras at no additional
cost, or argue about the
additional cost and/or time for project
changes? Do you have internal
disagreements regarding estimates and
schedules? You need to be an effective
negotiator to handle these situations.
Unfortunately, most cost/schedule
professionals, estimators and project
managers come up short in interpersonal
skills such as negotiating.
In his song, The Gambler, Kenny
Rogers says, if youre gonna play the
gameya gotta learn to play it right. You
got to know when to hold em, know
when to fold em, know when to walk
away and know when to run. His song
could be re-titled, The Project
Negotiator, because the lyrics exactly
describe project negotiation situations
that project personnel constantly
encounter.
This article will discuss the top 10
mistakes made in conducting project
negotiations, along with techniques that
can be used to avoid these mistakes. In
addition, a recommended procedure to
follow when preparing for a negotiation
will be described. The goal is to help you
understand when to hold your position in
a negotiation, when to compromise, and
when to walk away. This article should be
of interest to project personnel looking
for pointers on how to be more effective
in negotiation situations. If you think
youre a skilled negotiator, read this
article to see if you are making any of the
10 most common negotiation errors. You
may be surprised!
Negotiations A Fact of Life!
Negotiations are a fact of life.
Everyone negotiates every day with co-
workers, supervisors, clients, vendors,
family members, and even themselves
(should I play this hand or should I fold?).
A negotiation is a means of getting
what you want from another party. In an
ideal world, all negotiations would be
situations where participants try to
understand the position of the other side,
openly work together to problem solve
and make decisions based on merit, and
reach a mutually acceptable agreement.
This is the premise for principled
negotiation, which is covered in the
book, Getting to Yes Negotiating
Agreement Without Giving In [1]. We
definitely advocate using a problem-
solving approach to negotiation
whenever possible; however, the world
isnt always that neat and in many
situations, one side really is trying to get
the better of the other.
When we discuss negotiations in this
article, we use the word opponents to
describe the sides involved. Although it
may be an unfortunate choice because it
reinforces the notion of a negotiation
being a situation with a definite winner
and loser, we dont have a better word to
offer since, in reality, all negotiations
really are contests. We do suggest you
remember the golden rule whenever you
are involved in any negotiation: Treat
others as you want to be treated. Be
polite and respectful, and use your
listening skills to really try to understand
the views of the other side.
Common Negotiating Mistakes
Unfortunately, most people are not
good negotiators (or card players!) and
end up with results that are really not
optimal. Listed below are the top 10
negotiating mistakes based on our
observations in working with numerous
clients over the years. This list is not in
any particular order, and a more detailed
description of each item follows.
Top 10 Mistakes Made in
Project Negotiations
Joseph A. Lukas, PE CCE
Abstract: Do you have clients that argue about the additional cost and/or time
for project changes? Do you have internal disagreements regarding estimates
and schedules? You need to be an effective negotiator to handle these situations.
Unfortunately, most cost/schedule professionals, estimators, and project man-
agers, come up short in interpersonal skills, such as negotiating. This article will
discuss the top 10 mistakes made in conducting project negotiations, along with
techniques that can be used to avoid these mistakes. In addition, a recommended
procedure to follow when preparing for a negotiation will be described. The goal
is to help you understand when to hold your position in a negotiation, when to
compromise, and when to walk away. This article should be of interest to project
personnel looking for pointers on how to be more effective in negotiation situa-
tions. If you think youre a skilled negotiator, read this article to see if you are
making any of the 10 most common negotiation errors. You may be surprised!
This article was first presented at the 2010 AACE International Annual Meeting
as manuscript PM.04.
Key Words: Cost, compromise, estimates, negotiations, project management,
schedules
TECHNICAL ARTICLE
Table 1 The Top 10 Mistakes in Project Negotiations
20 COST ENGINEERING SEPTEMBER 2011
Lets take a more detailed look at
each of these top 10 negotiating
mistakes.
Mistake #1
Having Low Aspirations and/or Weak
Negotiating Skills
An individuals level of aspiration is
directly related to his or her level of
performance in negotiating. A person
with a higher aspiration level tends to be
more successful, and typically wins in a
negotiation over a person with lower
aspiration. A person who is a skilled
negotiator and has a high aspiration
level tends to be very successful. If you
have two people with high skills and high
ambition, the probability of deadlock is
high.
A classic case of this happened a few
years ago on a major road project in New
Jersey. One large engineering firm was in
charge of the design, while another
company was providing specific scope
on the project.
It didnt help that the two
companies really didnt like each other
and were only working together because
the client insisted on the arrangement.
Cindy, from the lead engineering firm,
and Bob from the sub-design firm were
their companies project managers; both
had high aspirations and were skilled
negotiators.
On several occasions, scope changes
arose and the negotiation was the same
every time. Bob would state that it
wasnt in the contract and was therefore
a change, and Cindy would claim it was
in the contract (using a very generous
interpretation of the contract wording).
Bob would submit a change order with a
large initial cost demand, and Cindy
would not approve it, claiming it wasnt
a change. A deadlock occurred every
time, resulting in a meeting with the
principals from each company, and a
compromise was reached every time to
avoid engaging the client in the
disagreement.
Its important to remember that a
persons aspiration level can change over
time, and is directly related to their
location on Maslows triangle on the
hierarchy of needs. If a person is on the
bottom rungs of the triangle, dealing
with physiological, security, or social
needs, their aspiration related to a
negotiation will probably be low. If the
person is at the top rungs of the triangle,
which are self-esteem and self-
actualization, their aspiration related to
a negotiation will probably be high.
A persons negotiating skills are also
important. A friend, who well call
Mike, was laid off from his company in
upstate New York. After being out of
work for several months, he found a
temporary contract job with an
engineering company in New Jersey to
manage one specific project.
Mike did a good job, the project was
successful, and the engineering
company decided to offer him a full-time
position at a salary of $105,000. Now,
even though the job market in upstate
New York was dismal at the time and he
had no other offers on the table, Mike
replied that he wanted $110,000. To his
amazement, the hiring manager
immediately agreed to the higher
amount.
You see, while Mike was a skilled
negotiator with high aspirations, the
hiring manager was neither! As any good
gambler knows, its not always the cards
you hold, but how you play them. A
better response and one Mike would
have likely accepted, given his
circumstances would have been for
the hiring manager to tell Mike that a 6-
month review would be done, and at
that point a salary adjustment would be
considered.
Mistake #2
Making Low Initial Demands
A skilled negotiator will either make
large initial demands or reveal no initial
position. This also ties into the persons
perceived negotiation position. For
example, in a tight labor market, a job
applicant might think he or she has little
power to negotiate and will make low or
no initial demands.
A recent example is an acquaintance
who accepted a job at a new company,
with only two weeks of vacation
whereas in her previous job, she had
four weeks. However, she didnt
negotiate the point, accepted the job
offer, and then complained bitterly
about her lost vacation time.
What could she have done
differently? It doesnt hurt to negotiate
in such a situation its highly unlikely
that an employer would pull a job offer
because you ask for something. At worst
they may say no, and more likely they
may offer a compromise. If you fold
before you really study your cards, you
dont give yourself a chance to play your
hand, much less win.
Mistake #3
Making First Concessions and/or Large
Concessions
The person who makes the first
concession, and/or the largest
concession, typically ends up on the
losing end of the negotiation. A classic
example of this is the negotiation over
Czechoslovakia in 1938, between Neville
Chamberlain, Prime Minister of England,
and Adolph Hitler. Chamberlain, who
was eager to avoid war, made the first
and the largest concessions, essentially
giving Hitler his territorial demands,
which included control of
Czechoslovakia. We all know what
happened from there
In making concessions, leave plenty
of room to negotiate from your initial
position to your desired outcome. The
skilled negotiator will make only
infrequent and small concessions during
the negotiation, which is intended to
avoid raising the expectations of the
other party.
In making concessions, also be wary
of tit for tat, which can be
manipulative. The key is to not lose track
of your goals when making concessions.
21 COST ENGINEERING SEPTEMBER 2011
Remember that each concession has an
effect on the aspiration level of the
opponent and is also a reflection of the
negotiators resolve to meet his/her
objectives.
Encourage your opponent to open
up first, and put their demands on the
table. When you do make a concession,
make your opponent work for it and get
something in return. Also remember
that Ill consider it is a concession and
one you can easily back away from later.
Finally, dont be ashamed to walk
away from a bad concession. Remember,
everything is open for negotiation and
nothing is settled until the deal is
signed!
Mistake #4
Neglecting to Ask Questions
Ask questions of the person you are
negotiating with to learn about their
needs and goals. Youll be surprised how
much people will tell you if asked!
For example, when buying a car, ask
the salesperson how business is going,
whether there is a sales goal for the
month, and how close the dealership is
to the goal.
If you are providing a quote for
work, ask the client who else is bidding
the work, and what selection criteria will
be used to evaluate the bids.
Whats the worst that will happen
the person may say its none of your
business. Be careful not to use an
interrogation technique, because that
puts the person on the defensive. Be
conversational, and work the questions
into the first part of the negotiation,
where there typically is some casual talk.
Mistake #5
Providing Too Much Information
This is the flip side of asking
questions. Be careful not to provide
information that can help your opponent
with the negotiation, just like you dont
let fellow card players sneak peeks at
your hand! Lying or providing
misinformation is not something we
recommend thats unethical. However,
there is nothing wrong with not
answering questions or keeping a
poker face.
If your opponent asks a question,
you can just not respond, or tell him/her,
I dont think thats something I want to
share with you at this time.
For example, a car salesperson will
probably ask you questions about how
long you have been looking, why you
need the car, and what other
manufacturers have you considered. The
salesperson does this to define his/her
negotiation position and the tactics that
will be employed so a sale can be made.
The worst approach is for you, or anyone
with you, to tell the salesperson how
much you love the car. Thats way too
much information and severely impacts
your negotiating position!
Another example of providing too
much information, is telling a client your
company is having a bad year, or just lost
a major contract. This tells the client you
need the deal and will be willing to make
concessions. Remember, youve gotta
know when to hold em, and that
includes holding your tongue!
Mistake #6
Making Assumptions
An assumption is something that is
believed to be true without proof. Many
people typically make assumptions going
into a negotiation, and this can be
harmful to their position.
22 COST ENGINEERING SEPTEMBER 2011
Treat assumptions with skepticism,
and work on the basis that your
assumption may be wrong! The best way
to test assumptions is to ask your
opponent questions. You may not get a
response, or at worst the person may lie,
but surprisingly most times your
opponent will give you the information
you need to determine whether the
assumption is valid.
An example of this goes back eight
years ago when we bought a Saturn, a
company that advertised that their low
prices were not negotiable. The easy
assumption to make was that price
wasnt negotiable, but we didnt take
that approach. When the dealer
wouldnt meet the price we wanted to
pay (i.e., wouldnt negotiate) for a
dealers car that had some limited
mileage on it, we walked away with
the intent of continuing our search. Two
days later the dealer called us, and
offered a special mileage price
adjustment, to meet our price and get
our business.
Mistake #7
Reaching a Quick Settlement
Quick settlements usually result in
more extreme outcomes, and typically
favor the skilled negotiator which may
not be you!
A very recent example of this
occurred on our vacation last winter in
Cancun. The all-inclusive resort we
stayed at made a presentation to us
about pre-buying vacation weeks, and
offered us an extraordinary deal of 26
weeks use of the resort for a low upfront
price of $24,000. However, they pointed
out that we had to immediately sign
the offer was only good until we left the
room.
Our response was, if it was such a
great deal and they wanted our
business, they should allow us a few days
to think it over. They wouldnt agree to
this and we left. Even though the offer
sounded good, there were too many
unanswered questions, such as what
happened if they went out of business?
We later talked to the sales manager and
he told us that over 30 percent of the
people sitting through the presentation
signed for the deal. As, The Gambler
says, you have to know when to run!
Mistake #8
Lacking a Plan
Youve got to really look at your
cards before you play them, and before
you negotiate you have to do your
research.
For example, did you buy your last
car on impulse, or did you research the
make and model on the Internet, before
going to the dealership?
On the Internet you can find dealer
prices, typical mark-up information, and
costs for options. The same planning
should be done for all negotiations.
Refer to the section of this article on the
negotiating process to better understand
the steps to follow in preparing for a
negotiation.
Mistake #9
Losing Focus During the Negotiation
Things can happen quickly in a
negotiation, so its important to
maintain focus on your goals throughout
the process. Having a plan for the
negotiation and sticking to it can help
ensure this.
A recent example is that of a partner
in an engineering firm that was
negotiating pricing for a series of change
orders with a client. One of the change
orders was for a study on an endangered
species found on the project site. The
engineering firm was going to do some
of the work, but the bulk of the work
required the use of a specialty
consultant.
The client kept insisting the price of
the study was too high and repeatedly
demanded a lower price. The partner
first erred in not having the technical
manager involved in the negotiation to
explain the costs to the client, and then
furthered his mistake by finally agreeing
to a price which was below what the
engineering firm had to pay the specialty
consultant! The partner obviously lost
his focus in this negotiation.
If you see yourself about to make a
concession which may not be wise, stand
up and state you need a short break.
Another good tactic is silence, which is
uncomfortable for many people.
One of the authors was involved in
negotiating a change order price with a
contractor on a construction project. The
contractor at one point stated that the
price was the absolute lowest he could
go. The author just sat silently for over a
minute looking at the contractor, who
then blurted, all right what if I lower it
another 10 percent?
Mistake #10
Misusing Power
Power is defined as the ability of a
negotiator to influence the behavior of
an opponent. Its important to
remember that power may be real or
assumed.
For example, your opponent may
assume you have the decision-making
power in a negotiation, but when the
agreement is finally reached, you state
that your management team will have to
review and approve the final deal. Also,
remember that power exists only to the
extent that it is accepted, and that using
power always entails risk.
For example, your boss has the
power of authority, but you can always
say, I quit, which eliminates his/her
power over you. Finally, keep in mind
that power relationships can change
over time.
You may be the boss today, but the
person working for you may end up
being your boss at some future point!
There are different types of power
related to negotiations:
Ability to Reward or PunishAn
example of this is dealing with your
boss, who has the ability to make
decisions that impact you such as
23 COST ENGINEERING SEPTEMBER 2011
raises, promotions, and maybe
whether to terminate your
employment. Obviously, in a
negotiation this gives an advantage
to your boss, but its not absolute. If
you have a key skill needed by the
company, the power balance shifts
more in your favor.
AuthorityBeing president of a
country, chief executive officer of a
company, or a general in the military
are examples of authority.
If you are in a negotiation and its
been made clear to all participants
that you are the decision maker, this
gives your power legitimacy.
A good example in the use of
authority is Ulysses S. Grant,
General-in-Chief of the Union Army
in the Civil War. In February 1862, he
attacked Fort Donelson. When the
Confederate Commander asked for
terms, Grant replied, "No terms
except an unconditional and
immediate surrender can be
accepted."
Grant knew he had the troops, the
firepower, and the authority, and no
negotiation was needed the
Confederates surrendered.
However, Grant also used his power
in negotiations wisely. When Robert
E. Lee surrendered to Grant at
Appomattox Court House,
effectively ending the Civil War,
Grant wrote out magnanimous
terms of surrender that prevented
treason trials, and allowed the
Confederates to keep their horses
and guns.
KnowledgeTo be effective in a
negotiation, you need to have
knowledge regarding the subject
area being negotiated. If you are
buying a new car, the more
information you have regarding the
cars under consideration, makes you
more knowledgeable in the
negotiation with the car dealer.
A lack of knowledge can result in a
flawed negotiation. After World War
I, the victors came up with new
borders for many countries in
Eastern Europe and the Middle East.
Unfortunately, they didnt have a
good knowledge and understanding
of the ethnic groups in the region
and drew borders that resulted
much later in conflicts and the
break-up of counties, such as
Yugoslavia.
Ability to Tolerate Uncertainty
Most people like certainty in their
life, and negotiations are all about
uncertainty. You dont know where
youll end up when you start the
negotiation, so the uncertainty is
high at the beginning, and drops as
the negotiation points get resolved.
If you have the ability to handle
uncertainty, this can be a source of
power in a negotiation, unless the
other party in the negotiation has
the same ability.
TimeMany Americans tend to be
impatient. In the haste to reach a
conclusion, the impatient person
may start with an initial offer too
close to their real desired outcome,
and may be too quick to make
concessions. Other cultures tend to
be more patient in a negotiation,
and this is a source of power.
Negotiation SkillsA person who
has the training and experience as a
negotiator, has a source of power
over the opponent. A good example
of this is car salespeople. One of the
authors has actually prepared
training materials in how to
negotiate and close the deal for a
well-known European car company.
The key point is to be judicious in
your use of power in a negotiation. You
can force a decision in your favor, but it
may lead to unintended consequences
down the road. A good example is the
peace treaty imposed on the Germans at
the end of World War I. The onerous
terms and harsh conditions planted the
seeds for the rise of Adolph Hitler, and
the advent of World War II.
The Negotiation Process
The negotiation process consists of
three phases: pre-meeting, the actual
negotiation, and the post-meeting.
Before conducting a negotiation, its
important to have a plan.
This is no different than trying to
undertake a project without a plan! You
need to develop your position based on
fact-finding and analysis, and the
logistics of the negotiation need to be
planned. After the negotiation there are
typically follow-up activities. In this
section of the article, we discuss each
phase of the negotiation process in more
detail.
Pre-Meeting
Prior to any negotiation, there are
important strategic, administrative, and
tactical planning considerations that
need to be addressed.
Strategic planning addresses the
goals for the negotiation. Part of
strategic planning is learning about your
opponents needs and goals. This can be
accomplished by studying their business
financial statements and public records,
visiting their facility and asking
questions, or checking with people who
have dealt with them.
Strategic planning also involves fact
finding, financial analysis, and testing all
assumptions. Its important to note that
if you are conducting a negotiation for
your company, strategic planning often
includes stakeholder bargaining, since
its not unusual for internal stakeholders
to have different opinions on critical
issues and what defines an acceptable
outcome for the negotiation.
The key pre-meeting deliverables to
agree upon are your:
24 COST ENGINEERING SEPTEMBER 2011
Initial OfferThis is the first offer
you will make at the appropriate
point during the negotiation. Its
important to have some data and
justification to back this up or you
risk losing credibility;
Goal for SettlementThis is your
desired outcome for the
negotiation; and
Walk-Away (No Deal) PointThis is
the outcome where you wont make
a deal. For example, lets say you are
buying a car, and you decide that,
based on your financial situation,
the most you can pay for a car is
$30,000. When negotiating with a
car dealership, if their best and
final offer is $31,000, you should
walk from the deal.
Tactical planning refers to
determining the approach and
techniques to use during the negotiation
to obtain the best possible result. This
includes deciding whether the
negotiation is a cooperative problem-
solving situation, or an adversarial
situation where compromise will be the
outcome.
The negotiator and the organization
must know what is wanted and why
(strategic planning) before negotiating
tactics can be selected. Tactical planning
is very important, since a good strategy
can be weakened by poor tactics during
the negotiation.
Conversely, good tactics can
compensate for a poor strategy. Tactics
are the techniques used during the
negotiation to create a situation in which
the goals can be reached and bargaining
positions defended. Negotiation tactics
can include use of deadlines, good guy-
bad guy, data jumble, escalating
approval, trial balloons, and leaks.
However, a discussion of these tactics is
beyond the scope of this article.
Administrative planning deals with
managing the pre-meeting activities,
ensuring that all necessary information is
gathered and all negotiation logistics are
resolved.
This includes defining the following:
Who will be involved in the
negotiation?
What will be covered in the
negotiation (what can be discussed
and what wont be discussed)
including the agenda?
Where the negotiation will be
conducted, including logistical items
such as the shape and size of the
table (recall the Paris Peace Talks
that ended the Vietnam War!)?
When the negotiations will be
conducted (date, time)?
Whywhich gets into what is the
desired outcomes from the
negotiation?
Meeting
The negotiation meeting typically
consists of three phases: the opening,
hard bargaining, and the closure, which
hopefully results in an agreement, but
can be a deadlock.
During the Opening Phase, the rules
and agenda for the negotiation should
be covered, along with the items to be
negotiated. The opening phase may
include verbal fireworks if the
negotiation is between two antagonists.
For example, in negotiations over
labor contracts, it is common for both
sides to start with verbal fireworks as a
means of presenting their position. The
management team may complain about
their lack of profits over the last few
years because of high labor costs, and
the union may complain about the poor
benefits, compared to similar
companies. The outcome of the opening
phase should be a clear understanding of
the problems and issues that need to be
addressed.
In the Hard Bargaining Phase, both
sides ante up. They employ various
tactics while they discuss the problems
and issues, explore possible resolutions,
and make decisions. If this is a problem-
solving (i.e., principled) negotiation,
then both parties will try to resolve the
problems and issues of the other side,
and will openly work together to reach a
mutually acceptable agreement.
By the Closure Phase, agreements
have been reached and the negotiation
is coming to a conclusion. Typically, the
agreements are reviewed and a final
document signed to verify what has
been agreed upon. For example, the
closure phase for a new car purchase
includes signing the contract (and any
loan papers).
Post-Meeting
Its important to note that
negotiations are not really over just
because the negotiation meeting ends.
The negotiator may need to go back and
inform the stakeholders of the outcome
and obtain their agreement and
acceptance. Agreement elaboration may
be needed after the negotiation, which
might entail the actual writing of a
negotiation agreement document.
A recent example of this is a
redevelopment project in a town along
the New Jersey coast. The developer
presented his plan for the
redevelopment of five blocks in the
center of town. After the presentation
and over two hours of discussion, the
Town Board finally approved the plan
with some required modifications.
However, it took another three months
for the lawyers to prepare the zoning
agreement document for signature
because of disputes over what was
agreed to at the meeting.
B
efore you enter into a
negotiation of any type, review
the recommended procedure
presented in this article and be aware of
the 10 common mistakes made in
negotiations. Doing this will help make
you a more effective negotiator, as will
remembering the lyrics from, The
Gambler: If youre gonna play the
game ya gotta learn to play it right. You
got to know when to hold em, know
25 COST ENGINEERING SEPTEMBER 2011
when to fold em, know when to walk
away and know when to run.
REFERENCES
1. Fisher, R. and W. Ury. Getting to Yes
Negotiating Agreement Without
Giving In, Penguin Books, New York,
1991.
2. Karrass, C. The Negotiating Game
How to Get What You Want, Harper
Business, New York, 1992.
3. Rogers, Kenny, The Gambler, (CD)
Century City, CA: United Artists
ABOUT THE AUTHOR
Joseph A. Lukas, PE
CCE, currently with
PMCentersUSA, may
be contacted by
sending e-mail to:
joe.lukas@pmcentersusa.com
C ONS T R UC T I ON
C ONS UL T I NG S E R V I C E S
www.mbpce.com | 800-898-9088
&

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Project Closeout
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27 COST ENGINEERING SEPTEMBER 2011
PROFESSIONAL SERVICES DIRECTORY
INDEX TO ADVERTISERS
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tising with us, please phone Mark Stout at Network Media Partners,
(410) 584-1966, or e-mail him at mstout@networkmediapartners.com
ADVERTISE
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bership every month by placing an ad in the
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YOUR
VISIBILITY

Acumen PM, page 7


ARES Corporation, back cover
Bechtel Corporation, page 3
EcoSys, inside front cover
Faithful+Gould, page 26
Infinitrac, this page
Management Technologies, this page
McDonough Bolyard Peck, page 25
Moca Systems, page 25
Ron Winter Consulting, page 6
Skire, Inc., page 6
U.S. Cost, inside back cover
RECENTLY REVISED RECOMMENDED PRACTICES
Recommended Practce No. 17R-97
Cost Estmate Classicaton System
Recommended Practce No. 18R-97
Cost Estmate Classicaton System: As Applied in Engineering,
Procurement, and Constructon for the Process Industries
Recommended Practce No. 29R-03
Forensic Schedule Analysis
Recommended Practce No. 42R-08
Risk Analysis and Contngency Determinaton Using Parametric
Estmatng
Recommended Practce No. 43R-08
Risk Analysis and Contngency Determinaton Using Parametric
Estmatng - Example Models as Applied for the Process Indus-
tries
To access these and all other recommended practces,
visit: www.aacei.org/resources/rp
28 COST ENGINEERING SEPTEMBER 2011
Chinook Calgary Secton
Some 57 members and guests at-
tended the Chinook-Calgary technical
dinner meetng in the Riverview Room of the In-
ternatonal Hotel on Wednesday, April 20.
Donna Kainth introduced Stephen Revay who made a cou-
ple of announcements. He announced that the Awards Commit-
tee of AACE Internatonal has selected long-tme
Chinook-Calgary member Arthur Kowalchuk, P.Eng., as the 2011
recipient of the AACE Charles V. Keane Distnguished Service
Award. Arthur received a standing ovaton from the session at-
tendees. Stephen Revay announced that a second Chinook-Cal-
gary member Mahendra Bhata has been appointed a Fellow of
AACE Internatonal. Mahendra also received an ovaton from the
atendees.
Mahendra Bhata introduced the evening speaker Dave
Weatherby,P.Eng. of SNC Lavalin Transport Vancouver division.
He commenced his presentaton on Challenges in Design and
Constructon for the West Calgary LRT Expansion Project with a
series of photographs showing various aspects of the facilites
which are stll under constructon. The project includes 8 kilo-
metres (about 5 miles) of line, 6 LRT Statons and 2 Park&Ride
Sites. It was divided into elevated areas, cut and cover tunnels
and open trench areas. The project was further complicated
with temporary reroutng of trac, minimizing impact on resi-
dental areas, shopping malls and schools. There were signi-
cant costs for re-routng utlites below grade, constructng
retaining walls, disposal of material from open trench excava-
ton, as well as providing grade separaton at major intersec-
tons. Year round constructon required allowances for cold and
snow during winter seasons. Tracton Power Statons for power
distributon had to be provided at strategic locatons. Engineer-
ing also had to provide design for pedestal towers carrying over-
THE AACE

INTERNATIONAL BULLETIN
SECTIONNEWS
FROM AROUND
THE WORLD
Submitted photo
The Chinook Calgary Sectons April meetng featured David
Weatherby as the guest speaker. Shown above are: Steve Revey,
CCC CFCC; Mahendra Bhata, David Weatherby and Donna
Kainth.
Submitted photo
Long-tme Chinook-Calgary member Arthur Kowalchuk, P.Eng.,
is the 2011 recipient of the Charles V. Keane Distnguished Serv-
ice Award. Shown above at a Chinook Calgary Secton meetng
are Steve Revey, CCC CFCC; Arthur Kowalchuk, P.Eng.; Mahendra
Bhata, and Ginete Basak, P.Eng.
29 COST ENGINEERING SEPTEMBER 2011
head tracks over 14th Street, CPR Rail lines and along the Bow
River. The Trench&Tunnel sectons required solid support for em-
bankments, track base and several curved sectons of rail lines.
Prefabricated sectons of tunnels required heavy lif equipment
for installaton. Curved support steel was provided for roof sup-
port at LRT Statons. The Sarcee Trail Interchange involved com-
plex grade requirements. Safety was always considered and
carried out at all constructon areas.
A queston/answer period followed the presentaton.
Cascade Secton
On July 28, the board members of the Cascade Secton met
at the Bridgeport Brewery to discuss ways to enhance the sec-
tons monthly meetngs. The members were honored to have
Nick Kellar, CCC EVP PSP, Region 6 Director, in atendance.
Also present were TJ Baxter, Director, Steve Kunishige, VP, Bas-
sam Khalifeh, President, and Dennis Van Kirk, Past President.
Much was discussed on the challenges of getng more reg-
istered AACE members to atend the monthly meetngs. Nick
partcipated in the discussion and passed along great ideas
about getng back to the basics of cost engineering, cost est-
matng, planning and scheduling and project controls. The sec-
ton board thanks Nick for atending the board meetng during
his busy schedule.
Montreal Secton
The Montreal Secton sponsored a special event in April
2011 to celebrate the 50th anniversary of the Montreal Secton,
the rst Canadian secton founded in 1961, and whose member-
ship originally included Mr. Arthur Millar, one of the founding
members of AACE.
As the AACE Internatonal Board of Directors was holding a
two day meetng in Montreal in April, Steve Revay, CCC CFCC and
President of AACE Internatonal and Ginete Basek, P.Eng., Direc-
tor-Region 1, were invited as guest speakers at the event which
was at the Omni Mount Royal Hotel in downtown Montreal.
Submitted photo
Atendees at the 50th anniversary celebraton of the Montreal
Secton presented AACE President Steve Revay, CCC CFCC, with
a gif. Shown above from lef are: Rino Gosselin,Michael Primi-
ani, Serge Pressoir, Ginete Basek, P.Eng.; Steve Revay, CCC CFCC;
John J. Ciccarelli,PE CCE PSP; Martn Darley, CCC; and Khaled
Elfekhfakh.
Submitted photo
Montreal Secton Board of Directors member, Celina Ma, talks
to an atendee at the sectons 50th anniversary celebraton.
Submitted photo
Among the atentve audience for the Montreal Sectons 50th
anniversary celebraton were: shown lef to right at the front
table, Hagire Emrani Rino Gosselin, Steve Mancini,Marlene
Raa, Dave Barken, PE; and Dawn Kenny.
Submitted photo
Representng the ACE Internatonal Board of Directors at the
Montreal Sectons 50th anniversary celebraton in April were,
shown lef to right, Martn Darley, CCC; AACE VP-Administraton;
Les McMullan, Montreal Secton President; Ginete Basek,
P.Eng., Region 1 Director; Steve Revay, CCC CFCC, AACE Presi-
dent; and John J. Ciccarelli, PE CCE PSP, AACE VP Finance.
30 COST ENGINEERING SEPTEMBER 2011
A number of the past presidents of the Montreal Secton at-
tended the event including Serge Pressoir, David Barken, PE;
Michael Primiani and Dr. Osama Moselhi, P.Eng., of Concordia
University. Other members of the Internatonal Board also joined
in the festvites including John. J. Ciccarelli, Pe CCE PSP; and
Martn Darley, CCC.
Montreal Secton Board members atended including Les
McMullan (President), Marie-Helene Bi, P.Eng. (Secretary)
John Prizio (Treasurer), Sophie Metras, Susan Klucinskas, Khaled
Elfekhfakh, Celina Ma and Tushith Islam (President Concordia
Student Secton).
The evening started with a bilingual welcome to the AACE
board, Montreal Secton board and members and an introduc-
ton by Les McMullan, current President of the Secton, with a
health and safety video on automobile safety and speed fol-
lowed by a slideshow and photo gallery on various technical
meetngs and seminars such as the School of Project Controls
two day skills and knowledge workshops, the Montreal scholar-
ship program, as well as actvites by Montreal members at the
AACE Annual Meetng in 2010. A panoramic and scenic two
minute video on Montreal provided by the Montreal Tourist Of-
ce was screened to the appreciaton of the audience.
There were 80 persons in atendance to enjoy an enthusi-
astc presentaton by Steve, enttled, Why Good Projects Go
Bad that discussed project warning signs from the viewpoint of
owner, consultant and contractor and provided both causes and
solutons based on project experience and lessons learned.
Ginete provided an interestng presentaton on the status of
AACE and some statstcs, highlightng membership growth of
14 percent, increase in certcaton and the success of various
initatves within the organizaton.
The enjoyment of the evening was enhanced by the excel-
lent service and venue at the Omni Hotel for this special 50th
anniversary event. It was an excellent opportunity to socialize
with our peers in a relaxed setng, enjoy top speakers and cel-
ebrate with the cost engineering community this milestone in
the history of the Montreal Secton of AACE Internatonal and
its ongoing contributon to project management, project con-
trols and cost engineering.
The evening was enjoyed by all, with many members sug-
gestng that a special dinner presentaton could become an an-
nual event..
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info@aacei.org
HOW TO SUBMIT SECTION NEWS
TO THE COST ENGINEERING JOURNAL
All submissions should be e-mailed to editor@aacei.org.
Information may be included in the body of the e-mail or as
an attachment. Microsoft Word files are the preferred
format. All photos should be sent as PC tiff or jpg files at 300
dpi. If submitting at only 72 dpi, please send the photo as
large as possible as conversion will reduce its size. Include the
names and titles of each person shown in any photos.
Many times AACE International Sections have been
referred to as chapters. The correct reference should always
be to a Section. AACE International does not have chapters.
Please do not refer to Sections as chapters.
If an event is during the month of publication, it will be
listed as an upcoming event even if members will not receive
their journal in the mail until after the listed event. The
journal goes to press about one months in advance of the
issue date, which is always the first of each month, at which
time the electronic version should be posted.
AACE International reserves the right to edit all
submissions and to refuse to publish any submissions
determined by the editor or executive director to not meet
the standards of the journal.
Anyone with questions on submitting copy or photos
may contact:
Managing Editor - Marvin Gelhausen,
mgelhausen@aacei.org
Submitted photo
Ginete Basek, P.Eng., Director-Region 1, was one of the
speakers at the Montreal Sectons 50th anniversary celebraton
in April. She updated atendees on the status of AACE and some
statstcs, highlightng membership growth of 14 percent, in-
crease in certcaton and the success of various initatves
within the organizaton.
31 COST ENGINEERING SEPTEMBER 2011
IN MEMORIAM
Bernard Ira Liss (1914-2009)
Bernard Ira Liss, 95, died Friday, May 22, 2009, at the Over-
look Hospital in Summit, NJ. Born in Providence, RI, he resided
in New York City, Sheeld, AL, Jersey City and Middlesex before
moving to Warren.
He received his bachelor of science degree from City College
of New York. He was a licensed engineer in New York and New
Jersey. He worked for the Atomic Energy Commission during
World War II. He was a chemical engineer for AIRCO, Inc., in
Murray Hill, NJ, and retred from Lummus in Bloomeld, NJ.
He was preceded in death by both his rst wife, Marjorie
Burger Liss, and by his second wife, Adele Morse Liss. Surviving
are a son, Dr. Richard Liss and his wife, Eleanor, of Warren, NJ; a
daughter, Susan Rivera and her husband, Aniceto, of Boonton,
NJ; ve grandchildren and four great-grandchildren.
A graveside service was conducted at 1 p.m. on Sunday, May
24, 2009, at the Beth Israel Memorial Park Cemetery in Wood-
bridge, NJ. Arrangements were by the Higgins Home for Funerals
of Watchung, NJ.
A
ACE Internatonal is now oering a limited
window of opportunity, for individuals who al-
lowed their certcaton to lapse, to reinstate
those certcatons without taking the exam-
inaton. To take advantage of this one-tme,
limited amnesty program, individuals must
submit a special recertcaton applicaton with payment by De-
cember 31, 2011, along with proof that they have met or ex-
ceeded the recertcaton required by AACE Internatonal to
maintain the certcaton status.
1. Visit the AACE website, www.aacei.org.
2. Select either the online applicaton or the print and mail
applicaton opton listed at the botom of the web page.
3. Complete the applicaton and provide payment informa-
ton.
4. Collect all supportng documents to support the credits
claimed on the applicaton, such as:
Leters from current/previous employers to verify your
actve employment in the industry during the past three
years.
Copies of certcates, atendance rosters, etc. of any
educatonal or professional development actvites during
the past three years.
Copies of lists of professional papers published in the
professional journals or magazines or presented at techni-
cal meetngs, etc., during the past three years.
Documentaton for all voluntary service to AACE or
other cost or management related organizatons, during
the past three years.
Copies of any additonal technical certcatons or li-
cense obtained, during the past three years.
Copy of the last AACE Internatonal certcaton cer-
tcate (if possible).
5. Submit all supportng documents to:
certcaton@aacei.org or mail to:
AACE Internatonal
1265 Suncrest Towne Centre Dr
Morgantown, WV 26505-1876 USA
As of January 1, 2012, any individual who has lapsed the
recertcaton will be required to retake the examinaton to re-
instate the certcaton. AACE Internatonal has announced that
it will be more assertve in assuring that individuals with lapsed
AACE certcatons are not claiming the status on their business
cards, leterhead and professional resumes.
For more informaton on how to reinstate your certca-
ton, contact Valerie Smith or Amanda E. Hildebran at AACE In-
ternatonal Headquarters.
WE CANT FIX YOUR
PARKING TICKET,
BUT WE CAN HELP IF
YOUR CERTIFICATION HAS LAPSED!
Skills and Knowledge of Cost Engineering,
5th Edition, Revised
Scott J. Amos, Editor, 2007
This updated and expanded guide for fundamentals is an
excellent choice for anyone interested in a concise
reference to all aspects of the profession. The new 5th
edition includes twenty-seven chapters on estimating,
manufacturing and operating costs, scheduling, planning
progress and cost control, and much more. This is a very
useful book for those studying for the certification exam. 450 pages
1545-01 paper version - US$65.00 member/US$95.00 nonmember
1545-02 CD-ROM - US$65.00 member/US$95.00 nonmember
1595-02zip - Download - US$50.00 member/US$80 nonmember
CCC/CCE Certification Study Guide, 3rd Edition
Michael B. Pritchett, CCE, Editor, 2006
The AACE International CCC/CCE Certification Study
Guide provides an all-encompassing reference text to
prepare for the exam. The CCC/CCE Certification Study
Guide provides background information on how to
become certified; gives those studying for the
certification exam a single reference text that includes
theory, worked problems with answers, references, and
a full discussion of key topics; allows students to
maximize their study time; and provides a concise overview of the
fundamentals of cost and project management.
1820-35 paper version - US$65.00 member/US$95.00 nonmember
1820-36 CD-ROM - US$65.00 member/US$95.00 nonmember
1825-36zip - Download - US$50.00 member/US$80 nonmember
SPECIAL OFFER - BUY BOTH AND SAVE!
Skills and Knowledge of Cost Engineering, 5th Edition, Revised
& CCC/CCE Certification Study Guide, 3rd Edition Combo
1820-98 - US$115.00 member/US$170.00 nonmember
PSP Certification Study Guide, 1st Edition
Peter W. Griesmyer, Editor, 2008
This study guide is intended to assist you in your study
and review of the overall topics as one step toward suc-
cessful Planning and Scheduling Professional certification.
The outline provides a listing of the terms you should
know & topics for which you should have a good under-
standing of how to apply the concepts to solve problems.
Each chapter also contains sample exercises, which test
your knowledge of that chapter's concepts. Additional
sample questions are provided in an appendix.
1820-37 paper version - US$65.00 member/US$95.00 nonmember
1820-38 CD-ROM - US$65.00 member/US$95.00 nonmember
1820-38zip - Download - US$50.00 member/US$80.00 nonmember
EVP Certification Study Guide, 2nd Edition
Ken Cressman, CCC EVP and Gary C. Humphreys, Editors, 2009
This study guide is intended to assist you in your study and
review of the overall topics as one step toward successful
Earned Value Professional certification. The outline pro-
vides a listing of the terms you should know & topics for
which you should have a good understanding of how to
apply the concepts to solve problems. Each chapter also
contains sample exercises, which test your knowledge of
that chapter's concepts.
1820-39 paper version - US$65.00 member/US$95.00 nonmember
1820-40 CD-ROM - US$65.00 member/US$95.00 nonmember
1820-40zip - Download - US$50.00 member/US$80.00 nonmember
Cost Engineering
The international journal of
cost estimation, cost/schedule
control, project management,
and total cost management.
Subscriptions are accepted on
an annual basis. An automatic
benefit of AACE International
membership, also available to
nonmembers.
5060-07 - US$72.00 (US)
- US$171.00 (other countries)
Please add US$80.00 for airmail
- US$61 electronic subscription
Cost Engineers Notebook
This CD-ROM is an important reference for any
project or cost professional. It includes data and
procedures related to basic skills and knowledge
that all cost engineers should possess, extensive
material on capital and operating cost estimation,
and papers in four subject areas: cost control,
planning and scheduling, project management, and
economic analysis and business planning.
4060-01 - CD-ROM
- US$80.00 member/US$120.00 nonmember
4060-28zip - Download
- US$65.00 member/US$105.00 nonmember
AACE International Recommended Practices
Cost Engineering Terminology; Cost Estimate
Classification System; Estimate Preparation Costs in
the Process Industries; Project Code of Accounts;
Required Skills and Knowledge of a Cost Engineer;
Roles and Duties of a Planning and Scheduling
Engineer; Profitability Methods; plus many more.
4060-05 - CD-ROM
- US$85.00 member/US$125.00 nonmember
4060-05zip - Download
- US$70.00 member/US$110.00 nonmember
The Total Cost Management Framework
John K. Hollmann, PE CCE, Editor, 2006
4060-21 - Paper version
- US$65.00 member/US$95.00 nonmember
4060-20 - CD-ROM
- US$65.00 member/US$95.00 nonmember
4060-20zip - Download
- US$50.00 member/US$70.00 nonmember
2011 AACE International Transactions
5220-11 - CD-ROM
- US$90.00 member
- US$115 nonmember
5220-11 zip - Download
- US$75.00 member
- US$80.00 nonmember
AACE INTERNATIONAL ONLINE STORE
AACE INTERNATIONAL ONLINE STORE
more online at www.aacei.org
More AACE Publications at the Online Store - www.aacei.org
PPG#1: Contracts and Claims, 4th Ed.
James G. Zack Jr., Editor, 2008
Covers: Contract Administration; Management of
Construction Schedules; Schedule Control; Schedule
Float Ownership; Cost Control; Management of
Change; Cost Impacts; Productivity Impacts; Manage-
ment and Analysis of Delay; Concurrent Delay Issues;
Pricing of Delay; and more.
PPG#2: Risk, 2nd Ed.
Keith D. Brienzo, PE, Editor, 2007
Covers: Dictionary; Capital Investments; Cash Flow;
Competitive Bidding; Contingency Analysis; Contracts;
Cost Engineering; Currency Rates; Decision Trees; Eco-
nomic Analysis; Escalation; Human Factors; Manufac-
turing; Research & Development; Safety & Health;
Schedule; Technological Risk; and Value Engineering.
PPG#3: Cost Engineering in Aerospace and Avi-
ation
Sarwar A. Samad, Editor, 1998
Covers: Aerospace and Aviation.
PPG#4: Planning and Scheduling, 2nd Ed.
Trevor X. Crawford, CCC, Editor, 2006
Covers: Planning; Schedule Development; Schedule
Management/Control; and Classics.
PPG#5: Earned Value, 2nd Ed.
Robert A. Marshall, Editor, 2007
Covers: Why Use Earned Value?; Basics of Earned
Value; Cost/Schedule Control System Criteria; Actual
Physical Percent Complete; Productivity and Earned
Value; Earned Value Reporting; Applications of Earned
Value Project Management; and more.
PPG#6: Construction Cost Estimating, 2nd Ed.
Dr. Douglas D. Gransberg, PE CCE, And Carla Lopez
del Puerto, CCC, Editors, 2006
Covers: Recommended Practices; Estimating Theory;
Conceptual, Parametric, and Range Estimating; Esti-
mating Factors and Indices; Estimating Material Costs
and Quantity Surveying; Estimating Labor Costs; Esti-
mating Equipment Costs; Subcontracting Costs; Esti-
mating Overhead and Indirect Costs; Profit,
Contingencies, and Mark-Ups; Estimating Interna-
tional Construction Costs; and more.
PPG#7: Cost Engineering in the Utility
Industries, 2nd Ed.
Dennis M. Thompson, Editor, 2007
Covers: Auditing; Cost Estimating; Cost Modeling;
Cost/Schedule Control; Generation Power Plant; Nat-
ural Gas Industry; Nuclear Power Plant; Other Energy
Related Topics; Planning and Scheduling; Project
Management; Utility Rates; and Utility Property Valu-
ation.
PPG#8: Contingency, 2nd Ed.
Kul B. Uppal, PE, Editor, 2005
Covers: General Topics On Contingency; Cost Estimat-
ing and Contingency; Risk Analysis and Contingency;
and Other Related Topics.
PPG #10: Project Delivery Methods, 2nd Ed.
Dr. Douglas D. Gransberg, PE CCE, Tammy L. Mc-
Cuen, and Keith Molenaar, Editors, 2008
Covers: Design-Bid-Build (DBB) DBB Estimating, DBB
Scheduling, DBB Project Management; Construction
Management (CM) CM Estimating, CM Scheduling,
CM Project Management; Design-Build (DB) DB Es-
timating, DB Scheduling, DB Project Management; In-
ternational Project Delivery; Constructability; and
Partnering.
PPG #11: Environmental Remediation &
Decommissioning, 2nd Ed.
Richard A. Selg, CCE, Editor, 2009
Covers: Environmental Remediation Planning and
Scheduling Methodology; Cost Estimating, Project Con-
trols, Cost Modeling, and Reporting; Contingency Man-
agement, Risk Analysis, and Environmental Regulations;
Benchmarking and Lessons Learned; Economics of En-
vironmental and Waste Management; Cost-Effective
Waste Minimization and Pollution Prevention; Design,
Construction Practices, and Other Related Topics.
PPG #12: Construction Project Controls
Dr. Douglas D. Gransberg, PE CCE, and James E.
Koch, Editors, 2002
Covers: Introduction to Construction project Controls;
Cost Control; Schedule Control; Quality Control; Doc-
ument Control; Computer Applications; and Interna-
tional Project Controls
PPG #13: Parametric and Conceptual
Estimating, 2nd Ed.
Douglas W. Leo, CCC, Larry R. Dysert, CCC, and
Bruce Elliott, CCC, Editor, 2004
Covers: Parametric/Conceptual Estimating; Classifica-
tion; Methodology; Capacity Factoring; Process and
Non-Process Industries; and Systems
PPG #14: Portfolio and Program Management,
2nd Ed.
Randy R. Rapp, PE CCE, Editor, 2007
Covers: Enterprise Management: General Imperatives and
Concerns; Asset Requirements Elicitation and Analysis;
Asset Planning and Investment Decision-Making; Asset Per-
formance Assessment and Change Management; and Pro-
gram Management.
PPG #15: Life-Cycle Cost Analysis
Dr. Douglas D. Gransberg, PE CCE, and Carla Lopez
del Puerto, CCC, Editors, 2007
Covers: Life-Cycle Cost Theory; Life-Cycle Cost Methods,
Determining Discount Rate; Estimating Capital Cost of
Design and Construction; Estimating Operating Costs;
Estimating Salvage/Residual Value; Estimating Sustain-
ability; Life-Cycle Cost Risk Analysis; Life -Cycle Cost
Case Studies; Life-Cycle Cost Analysis in the Interna-
tional Context
PPG #16: Cost Engineering in the
Global Environment
Kul B. Uppal, PE, Editor, 2007
Covers: General Topics on International Projects; Appli-
cable AACE International Recommended Practices; Cost
Estimating Methodology; Risk and Contingency; and
Miscellaneous Topics
PPG #17: Public Sector Estimating
Joseph L. Macaluso, CCC, Editor, 2007
Covers: Basis of Estimates; Labor Costs; Overhead and
Profit; Soft Costs; Bid/Estimate Reconciliation; and
Change Orders
PPG #18: Green Building
Joseph L. Macaluso, CCC, Editor, 2008
Covers: Recognition of Affects and Economic Costs on
the Environment; Formulating Ways of Addressing
Green Building Strategies and Associated Economic
Costs; Specific Green Building Strategies and Project
Costs; Budgeting and Justifying the Cost of Sustainable
Practices; Evaluating Competing Sustainable Strategies:
Using Value Engineering; Evaluating Competing Sustain-
able Strategies: Other Techniques
PPG #19: Leadership and Management
of People
John J. Hannon, CEP, Editor, 2008
Covers: Leadership; Teams; Leadership Roles; Motiva-
tion; and Ethics.
PPG #20: Forensic Schedule Analysis
James G. Zack, Jr., CFCC, Editor, 2008
Covers: Recommended Practice No. 29R-03 Forensic
Schedule Analysis; Synopsis of Recommended Practice;
Basics of Schedule Delay Analysis; MIP-Observational
Static Gross; MIP-Observational Static Periodic; MIP-Ob-
servational Dynamic Contemporaneous As-Is; MIP-Ob-
servational Dynamic Contemporaneous Split;
MIP-Observational Dynamic Modified or Recreated; MIP-
Modeled Additive Single Base; MIP-Modeled Additive
Multiple Base; MIP-Modeled Subtractive Single Simula-
tion; Non-CPM Schedule Delay Analysis Techniques;
General Schedule Analysis Articles
PPG#21: Cost Engineering in the Process
Industries
Kul B. Uppal, PE CEP, Editor, 2009
Covers: General Topics on Process Industries; Cost Es-
timating Methodology; Project Management; Inter-
national Projects; Scheduling; Construction Activities;
Risk Management; Project Controls; and Applicable
AACE International Recommended Practices.
The AACE International Professional Practice Guides (PPGs)
The AACE International Professional Practice Guides (PPGs)
(PPGs) are a series of refer-
ence CDs that consists of
selected Cost Engin eering
articles, AACE Inter national
Transaction papers, and
other previously published documents to
which AACE has rights.
Price per PPG:
CD Member Price US$65.00
CD Non-Member Price US$85.00
Download Member Price US$50.00
Download Non-Member Price US$70.00
Price for the PPG Package
includes all 21 PPGs:
CD Member Price US$1005.00
CD Non-Member Price US$1305.00
Download Member Price US$874.00
Download Non-Member Price
US$1223.00
35 COST ENGINEERING SEPTEMBER 2011
ARTICLE REPRINTS AND PERMISSIONS
COSTENGINEERING
Vol. 53, No.9/September 2011
Members of AACE International have access to free downloads of selected articles
that are published with an AACE International reference number. These articles are
available at the online Virtual Library at www.aacei.org. Electronic files of each
months technical articles are posted and members can download an Adobe Acrobat
(PDF) version of any of the technical articles for free. You can search for articles
using the reference numbers listed in the Cost Engineering journal. Non-members
can subscribe to the AACE Virtual Library at an annual cost of US $100.00. AACE In-
ternational no longer offers reprints of individual articles.
TO ORDER
Contact: AACE International Publications Sales
at pubsales@aacei.org
Photocopying Prices:
For permission to photocopy individual articles
for personal use, or to request permission for
bulk photocopying, please contact the Copy-
right Clearance Center at 978.750.8400, and
pay the required photocopying fees. For any
other use or reprint requests, please e-mail:
editor@aacei.org.
Contact Us
AACE International
1265 Suncrest Towne Centre Dr
Morgantown, WV 26505-1876
USA
Phone: 304.296.8444
Fax: 304.291.5728
For Information Concerning
Other Reuse Requests
If you are seeking permission to quote or
translate into another language any material
from any issue of the Cost Engineering journal,
please contact our Managing Editor, Marvin
Gelhausen at mgelhausen@aacei.org
Pages 19-25
Top 10 Mistakes Made in Project Negotiations
Joseph A. Lukas, PE CCE
Do you have clients that argue about the additional cost and/or time for
project changes? Do you have internal disagreements regarding estimates and
schedules? You need to be an effective negotiator to handle these situations. Un-
fortunately, most cost/schedule professionals, estimators, and project managers,
come up short in interpersonal skills, such as negotiating. This article will discuss
the top 10 mistakes made in conducting project negotiations, along with tech-
niques that can be used to avoid these mistakes. In addition, a recommended
procedure to follow when preparing for a negotiation will be described. The goal
is to help you understand when to hold your position in a negotiation, when to
compromise, and when to walk away. This article should be of interest to project
personnel looking for pointers on how to be more effective in negotiation situa-
tions. If you think youre a skilled negotiator, read this article to see if you are
making any of the 10 most common negotiation errors. You may be surprised!
This article was first presented at the 2010 AACE International Annual Meeting
as manuscript PM.04.
Article Reference Number - 21962
36 COST ENGINEERING SEPTEMBER 2011
CALENDAR OF EVENTS
SEPTEMBER 2011
6 2011 Mobility 21 Southern
California Transportation Summit,
Mobility 21,
900 West Olympic Boulevard
Los Angeles, CA
Contact: 11summit.eventbrite.com
12-15 RSMeans Seminars
RSMeans,
Crystal City Courtyard
by Marriott Hotel
Arlington, VA
Contact: (415) 441-4000
www.reedconstructionsdata.com
OCTOBER 2011
16-20 ACI Fall 2011 Convention,
The American Concrete Institute (ACI),
Millennium Hotel and
Duke Energy Center
Cincinnati, OH
Contact: www.concrete.org
NOVEMBER 2011
11-17 2011 ASME Mechanical
Engineering Congress and Exposition,
The American Society of Mechanical
Engineers (ASME),
Hyatt Regency Denver and Colorado
Convention Center
Denver, CO
Contact: www.asmeconferences.org
12 AACE International
Leadership Conference,
AACE International
Magnolia Hotel
Houston, TX
Contact:
www.aacei.org/mtgs/ldrconf/
MARCH 2012
15-18 2012 Western Winter
Workshop,
San Francisco Bay Area Section of
AACE International
Harrahs & Harveys Casino Resort
Lake Tahoe, NV
Contact:
aacei.sf.www.2012@gmail.com
www.aaceisf.org
JULY 2012
5-8 AACE International
Education Seminars,
AACE International
Marriott Rivercenter Hotel
San Antonio, TX
Contact: phone 1-800-858-COST
fax (304) 291-5728
info@aacei.org
www.aacei.org
8-11 AACE Internationals
56th Annual Meeting,
AACE International
Marriott Rivercenter Hotel
San Antonio, TX
Contact: phone 1-800-858-COST
fax (304) 291-5728
info@aacei.org
www.aacei.org
12-13 AACE International
Education Seminars,
AACE International
Marriott Rivercenter Hotel
San Antonio, TX
Contact: phone 1-800-858-COST
fax (304) 291-5728
info@aacei.org
www.aacei.org
AACE International,
1265 Suncrest Towne Centre Dr,
Morgantown, WV 26505-1876
USA
phone: 304-296-8444
fax: 304-291-5728
e-mail: editor@aacei.org
website: www.aacei.org
Please submit items for future
calendar listings at least 60
days in advance of desired
publication.
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