AACE Cost Engineering Journal

THEJOURNALOFAACE INTERNATIONALTHEAUTHORITYFORTOTALCOSTMANAGEMENT
COST
TM
July 2011
ENGINEERING
www.aacei.org
PRACTICAL
PROBLEMS WITH
LESSONS LEARNED
SCHEDULE
DEVELOPMENT
PRICING DELAY
USING EICHLEAY
TM
USING PRIMAVERA P6
PRESIDENTS
MESSAGE
ON THE
SHOULDERS
OF GIANTS
AACE INTERNATIONAL
LAUNCHES COMPREHENSIVE
MENTORING
PROGRAM
SPECIAL FOCUS
Dr. McNeishs
LESSONS
FROM
GEESE
CONTENTS
COST ENGINEERING
TECHNICAL ARTICLES
13 Lessons Learned Schedule Development

Using Primavera P6
TM
Hannah E. Schumacher, PSP, and Charlie Jackson

Many contract documents are now requiring the use of the latest version of Primavera
software (P6) because of its enterprise capabilities and its use of latest technologies, including
the capabilities to interact other software applications; therefore it is important for the scheduler
to understand how to use this software most efficiently in their battle to complete their projects
in a timely manner. Primaveras latest release of P6 contains many features that can assist in
developing schedules quickly and efficiently. However, a new or in-experienced user would be
overwhelmed in the struggle to prepare the schedule using P6 and these advanced features
without proper training or basic training. This article will focus on the authors experiences
and their lessons learned regarding the effective use of P6 in the schedule development
process as they apply this to the TCM planning and scheduling development processes (TCM
7.2). This article was first presented as PS.11 at the 2010 AACE International Annual Meeting in
Atlanta.
24 Practical Problems With Pricing Delay

Using Eichleay
James G. Zack, CFCC and Dr. David W. Halligan, PE
Since 1960, the Eichleay Formula has been used to price extended and/or unabsorbed
home office overhead. Most in the construction industry treat the Eichleay Formula as an accounting mechanism seldom understanding that the US Armed Services Board of Contract Appeals created this formula as an estimating tool, not an accounting method. There are some
practical problems with the Eichleay Formula. From the accounting perspective, there are several
major flaws built into the formula. From the project owners perspective, there is a risk of overcompensation unless certain contractual defenses are employed. And, from the contractors
perspective, there are issues with the applicability and the use of the formula. This article examines the traditional Eichleay Formula from all three viewpoints, to identify the problems and
offer some recommendations on how to alleviate them.
COST ENGINEERING JULY 2011
CONTENTS
COST ENGINEERING
DEPARTMENTS
5
Presidents Message
Special Focus
On The Shoulders of Giants
Dr. McNeishs Lessons from Geese
11
In Memoriam
43
Article Reprints
and Permissions
Special Feature
Remembering Dolores Evan Neil, Fred G.

ODonnell, and John Davis Warren
Sharing our Articles and Experience
AACE International Launches

Comprehensive Mentoring Program
36
41
44
The AACE
International Bulletin
Calendar of Events
AACE International Events and More
Section News from Around the World
ALSO FEATURED
4
4
34
AACE International Board of Directors

Cost Engineering Journal Information
AACE News Flash
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of the CostEngineering journal has access to additional material on the AACE International website, www.aacei.org.
Anytime you see the symbol at center, there is additional
35
35
42
Professional Services Directory

Index to Advertisers
AACEs 56th Annual Meeting
content online associated with that article or feature. Direct

your browser to www.aacei.org and look for the online button to access additional resources. If you are already reading
the electronic version, just click the online button directly.
CONTENTS
AACE INTERNATIONAL
BOARD OF DIRECTORS
COST ENGINEERING
PRESIDENT
Established 1958
Michael R. Nosbisch, CCC PSP

562.733.2472 / president@aacei.org
Vol. 53, No.7/July 2011
Managing Editor
PRESIDENT-ELECT
Marlene Hyde, CCE EVP
303.940.3200 / preselect@aacei.org
Art Director
PAST PRESIDENT
Advertising Sales
Stephen O. Revay, CCC CFCC

403.777.4900 / pastpres@aacei.org
VICE PRESIDENT-ADMINISTRATION
Martin Darley, CCC
713.372.2426 / vpadmin@aacei.org
Marvin Gelhausen
mgelhausen@aacei.org
Noah Kinderknecht
nkinderknecht@aacei.org
Keith Price
Network Media Partners Inc.

410.584.1966 fax - 410.584.8359
kprice@networkmediapartners.com
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VICE PRESIDENT-FINANCE
John J. Ciccarelli, PE CCE PSP
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AACE International - The Authority for Total Cost Management

The Association for the Advancement of Cost Engineering
VICE PRESIDENT-TEC
George Whyte, CCC CEP EVP
301.957.7434 /vptec@aacei.org
TM
OUR VISION - To be the recognized technical authority in cost and schedule management
for programs, projects, products, assets, and services.
VICE PRESIDENT-REGIONS
OUR MISSION - The members of AACE enable organizations around the world to achieve
thier investment expectations by managing and controlling projects, programs, and portfolios; we create value by advancing technical knowledge and professional development.
Julie Owen, CCC PSP

213.922.7313 / vpregions@aacei.org
DIRECTOR-REGION 1
Cost Engineering (ISSN: 0274-9696/11) is published monthly by AACE International, Inc, 209 Prairie Ave., Suite 100,
Ginette Basak, P.Eng

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DIRECTOR-REGION 3
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James H. Carson, CCC CEP

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Engineering, its staff, or AACE International, Inc. Printed in York, PA, USA. Cost Engineering is a refereed journal. All technical
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DIRECTOR-REGION 8
Keith Webb
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EXECUTIVE DIRECTOR
Dennis G. Stork
304.296.8444 / dstork@aacei.org
Policy Concerning Published Columns, Features, and Articles

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 endorsing 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.
PRESIDENTS MESSAGE
ON THE SHOULDERS
OF
n this rst Presidents Message of my administration,

I thought I would take some time to reect on famous
leaders throughout history. As I have come into positions of increased authority and responsibility over the
past few years (both within and outside of AACE), I have
started to read a lot of historical non-ction, probably
in large part because of the amount of time I spend on airplanes. As a result, I have learned much about the leadership
and management style of former US presidents like George
Washington, Abraham Lincoln, John F. Kennedy, and even
George W. Bush.
Former President Bushs biography was especially interesting in that it featured another prominent leader that I have
been privileged to come to know over the past couple years,
our 2010 Annual Meeting keynote speaker General Peter Pace
(USMC, retired). While we have had a few very interesting conversations during that time, what Ive never discussed with General Pace is that when I was in the Marine Corps, I never felt I
had the time to read the books that were thought to be impor-
Michael R. Nosbisch, CCC PSP, President

tant to the professional development of Marine ocers.
Known as the Commandants Reading List, specic books
are listed that the current Marine Corps Commandant believes
are most closely aligned with the individual ranks that a Marine
ocer may achieve throughout their career, from lowly Second
Lieutenant through General.
I specically remember one book that was on the list for
Second Lieutenants when I was one more than 20 years ago
With the Old Breeda book that I actually owned back then
but sadly never bothered to read. When it hit book stores again
last year because of being one of the source stories for the HBO
miniseries, The Pacic, I bought a new copy and read it in a
week.
Long considered to one of the most realistic assessments
of World War II combat ever written by an enlisted man, I couldnt help but wonder if I would have been a better Marine ocer
if I had taken the time to read it back then (along with the other
books proscribed on the Commandants List). I hadnt really
thought of it before, but there may be an element of subconscious guilt behind the reason that I am so enthralled with
reading about historical leaders now.
The ability to learn from great leaders of the past is one of
the key reasons that I proposed last year to hold a Past Presidents Forum during each Annual Meeting, an idea that I admittedly copied from an association that we have a cooperative
agreement with, PMIs EVM Community of Practice (previously
the College of Performance Management).
Im denitely not ashamed to borrow a good idea from another group that has had a success with it, and Im denitely
not ashamed to look to the previous leaders of AACE to get

their input and thoughts as to the current state of the association and where we should be headed in the future.
Last years event was understandably low key, but it was
attended by several Past Presidents of the Association, and
many have been requesting specics on this years meeting in
Anaheim, which will be much more formal in nature than the
2010 version. Moving forward, I intend for it to be a cornerstone of the Annual Meeting, but the relationships that I hope
to build with the past leaders of AACE will extend throughout
my term and into my follow-on role as Past President.
EDITORS NOTE: To engage in other discussions, check out AACE

Internationals Online Forums at www.aacei.org/forums.
Drill-down from Dashboard to P6

Built-in Report & Editing Facility
Advanced Longest Path Analysis
Hundreds of Reports & Analyses
Interfaces Directly with Database
http://ScheduleAnalyzer.com
See more at
Everything
reviewing your P6 XER file?
reviewing your P6 schedule and
Primavera would have included it.

is the difference
between
Now:What
If schedules
needed analysis,
Now:What
If schedules
needed analysis,
is the difference
between
Primavera would have included it.
reviewing your P6 schedule and

reviewing your P6 XER file?
Everything
See more at
http://ScheduleAnalyzer.com
Interfaces Directly with Database

Hundreds of Reports & Analyses
Advanced Longest Path Analysis
Built-in Report & Editing Facility
Drill-down from Dashboard to P6
COSTENGINEERING JULY 2011
Enterprise Project Analysis

VALIDATE schedule
quality and build more

realistic plans
IDENTIFY logic flaws

in a single project or a
portfolio
COMPARE multiple
schedule iterations and

pinpoint variances
TRACK project
performance from
planning through
execution and close-out
Acumen Fuse
P
Project analysis and
visualization software
EVALUATE schedule,
cost, and earned value
trending
ALIGN schedule with
cost and risk information

Fuse is an enterprise project analysis software which uses libraries of metrics to offer not only an
advanced schedule quality analysis, but additionally assesses cost forecast accuracy, risk model
realism, earned value, project performance, logic integrity and project forensics.
Fuse is more than just a schedule critique, it is a comprehensive project analysis tool spanning the
numerous facets and phases that make up a complete project.
Download a trial version at: www.projectacumen.com/trial

Acumen Fuse integrates with Primavera, Microsoft Project, Deltek, Asta, and Microsoft Excel
SPECIAL FOCUS
Dr.
Dr.McNeishs
McNeishs
LESSONS FROM
GEESE
r. Robert McNeish, a science teacher who became a respected school administrator in Baltimore, MD, was a lifelong observer of the
migratory habits of the great ocks of geese
that passed through the Chesapeake wetlands each fall and spring. In 1972, he committed to paper his observations on geese and mankind when
he wrote, Lessons from the Geese, as part of a sermon for his
church. His clever prose became an oft repeated, but seldom
properly cited motivational story for groups ranging from Toastmasters to the Boy Scouts.
At the 2011 Annual Meeting awards luncheon in Anaheim,
CA, AACE International employed the powerful imagery from
Lessons from Geese, to provide a frame for our annual
Awards Program presentation. Dr. McNeishs ve lessons,
based upon his lifetime of observing both the behavior of geese
and human nature, was accompanied by inspiring photographs
of majestic ocks in ight, and this oered food for thought
for AACE International members participating in the event. We
wanted to share those insights with our readers.
Dennis G. Stork, Executive Director
Fact 1
As each goose aps its wings, it creates an uplift for the
birds that follow. By ying in a V formation, the whole ock
has a 71 percent greater ying range than if each bird ew
alone.
Lesson 1 for AACE International Members

People who share a common direction and sense of community can get where they are going quicker and easier, because they are traveling on the thrust of each other. That is the
very essence of why AACE International exists. The skills and
knowledge embodied in total cost management and project
controls techniques has grown exponentially because dedicated
men and women shared a common mission and vision.
In AACE Internationals case, that vision is to, to be the
recognized technical authority in cost and schedule management for programs, projects, products, assets, and services.
Each new technical paper at our Annual Meeting, each
new article in the Cost Engineering journal, each new thread
in a discussion group, creates uplift for the next generation
of total cost management practitioners who will benet from
our collective willingness to share ideas and techniques across
company and country boundaries. AACE International provides our members the opportunity to be part of a very special
learning community that focuses on constant improvement in
our professions.
Fact 2
When a goose falls out of formation, it suddenly feels the
drag and resistance of ying alone. It quickly moves back into
formation to take advantage of the lifting power of the bird
immediately in front of it.

If we have as much sense as a goose, we stay in formation
with those headed where we want to go. Some of the challenges of creating a sense of community in an international
association are the challenges of distance, clashing culture and
barriers of language. Despite these perceived diculties, the
reality is that the modest investment in annual membership
dues opens up a wide range of options to advance your career
by being part of a progressive international association. For
39 cents per day, the price of your membership dues, you can
avoid the drag and resistance of going alone through your career and have access to such resources as our Career Center,
Salary Study, AACE Presents! monthly program, Cost Engineering journal, Visual Total Cost Management Framework, and our
Virtual Library with more than 4,000 technical articles.
Fact 3
When the lead bird tires, it rotates back into the formation
to take advantage of the lifting power of the bird immediately
in front of it.

It pays to take turns doing the hard tasks and sharing leadership. As with geese, people are interdependent on each others skills, capabilities, and unique arrangement of gifts, talents,
or resources. For AACE International, we elect and appoint
leaders that take on the dicult head winds of leading a professional association during challenging times. On page 4 of
this issue of the Cost Engineering journal, we list the 2011-12
leaders who will serve on our Board of Directors. None of your
volunteer leaders receive compensation for their service. In
fact, seldom are direct expenses reimbursed. Yet, these dedicated men and women give of their time and their talents as a
labor of love for AACE International because they are driven by
a vision of a better world in the same way that compels geese
to obey their primal need to migrate seasonally. If you want
to be part of something special in your chosen eld of endeavor, shouldnt you be thinking about how you can serve at
the section, region or international level?
Fact 4
The geese ying in formation honk to encourage those up
front to keep up their speed.
Lesson 4 for AACE International

We need to make sure our honking is encouraging. In
groups where there is encouragement and acknowledgement
of achievement, the results are much greater. That is why our
Annual Meeting constitutes such a milestone event each year.
The Annual Meeting provides a place for AACE International
members to celebrate our collective achievements as an association and honor the leaders who have given so much to make
things happen in the past year. Among those achievements we
can celebrate were a 7.6 percent increase in membership in
2010, a 22 percent increase in certications and a signicant
expansion of the membership benets, including the introduction of AACE Presents, a more robust Career Center and Visual
TCM Framework.
In coming issues of the journal, we will honor various
award winners who have contributed to the advancement of
the art and science of total cost management, as well as those
recognized for signicant achievement in service to AACE International. Our annual Awards Program Luncheon provides
us the venue to honk our appreciation for their eorts toward making our vision a reality.
While honks of encouragement are essential, we dont
want to suggest that there is no place for honest dissent or disagreement on policies and practices; quite the contrary. The
dynamic tension among competing ideas makes AACE International a more vibrant and interesting professional community.
From that competition of ideas and opinions comes better professional practices and techniques and a sharpened focus as to
what is best for our members and stakeholders. But in a professional association, the price of having your ideas and criticism taken seriously by your peers will be in direct proportion
to willingness to be involved in forging a solution by active involvement, not merely identifying the problem and shortcomings from the sidelines.
Fact 5
When a goose gets sick, wounded, or shot down, two geese
drop out of formation and follow it down to help and protect
it. They stay with it until it dies or is able to y again. Then,
they launch out with another formation to catch up with the
ock.
Lesson 5 for AACE International

If we have as much sense as geese, we will stand by each
other in dicult times, as well as when were strong. There are
many challenges facing in our professional and private lives.
One of the hallmarks of a successful professional association is
the compassion that individual members show for one another
during dicult times. By being actively involved in AACE International, you form special bonds and connections with other
members. The signicance of these networks is dicult to
quantify but undeniably an important factor in creating our
sense of community. Almost all members know of someone
10
who lost their job only to be oered a better position because

of a relationship forged through association involvement. Almost all of us know of someone who was able to solve a problem by picking up a phone and calling another member to gain
insight and perspective.
There is something very special about the relationships that
are formed in a professional association such as AACE International. Your peers know rsthand the types of pressures and
frustrations that accompany the job in a way that friends and
family simply cannot appreciate. Having those connections with
your professional colleagues helps provide a safety net for those
moments in our careers when we need someone to share our
problems with.
Summary
Dr. McNeishs insight into the behavior of geese and
mankind has stood the test of almost 40 years since he wrote it
quite well. Despite the fact that there are hundreds of references to his work on the Internet, Dr. McNeish never received
a single dime for his work. Like those who have given so much
to create the skills and knowledge within AACE International,
his reward has been the satisfaction that he has touched the
lives and hearts of millions who have smiled at the recognition
of the simple truths embodied in his Lessons From Geese. On
the behalf of 7,500 AACE International members, Dr. McNeish,
a loud and appreciative honk.
SPECIAL FEATURE
AACE
AACE INTERNATIONAL
INTERNATIONAL LAUNCHES
LAUNCHES COMPREHENSIVE
COMPREHENSIVE
MENTORING
PROGRAM
ACE International formally launched its comprehensive Mentoring Program at its Annual
Meeting June 19-22, in Anaheim, CA. The
Mentoring Program evolved from a joint pilot
program conducted by the Diversity Task
Force, Women in Project Controls Committee
and the Young Professionals Task Force in 2010. Building upon
the initial success of the pilot, the AACE Mentoring Program employs a self-guided model that has gained wide acceptance
among professional associations sponsoring mentoring programs.
Earlier this year, the AACE President Steve Revay appointed Logan Anjaneyulu as chair of the Mentoring Advisory
Committee. Joining Anjaneyulu on the committee are Marina
Sominsky, Roy Wong, Jaimin Mehta, Rendy Tendean, Michael
Vargas, Josh Rowan , Julie Owen, Kristy Kastner and Tanner
Courrier. The Mentoring Advisory Committees major emphasis
for the coming year will be in actively recruiting qualied mentors and explaining the importance of mentoring to various constituencies and stakeholders.
Dennis G. Stork, Executive Director

After researching current trends within technically-oriented professional associations, AACE concluded that training
and ongoing support of the mentoring teams may be the most
important variable in determining the success of a mentoring
partnership, commented Anjaneyulu. We structured our
mentoring program based upon best practices within the association community, but we also customized selected resources
to be more accessible and relevant to our members and the
total cost management profession.
AACE International entered into a partnership with the
Center for Coaching & Mentoring, Inc. to provide the assessment and training resources such as the mentoring handbook
to support mentors and mentees/partners. AACE also engaged
Boxwood Technologies to adapt their matching and administrative system that facilitates the self-guided selection process.
Boxwood Technologies is the leading provider of career center
and e-mentoring software programs to the association community. Boxwood Technologies also manages the more robust
AACE Internationals Career Center introduced earlier this year.
11
While the formal opening of the Mentoring Program

launched at the Annual Meeting, the rst phase of the Mentoring Program to familiarize AACE members and stakeholders with
what mentoring means in a professional association environment began with the release of an online orientation program
in May. The web-based orientation presentation explains the
respective and complementary roles of the mentor and mentee.
The online orientation outlines the expectations as delineated
in the Mentoring Agreement that both parties must enter into
at the outset of the AACE mentoring program. The mentoring
orientation may be reviewed at
http://www.aacei.org/career/mentor/Mentoring_Presentation/player.html.
Once a potential mentor or
mentee/partner has reviewed the online orientation program and familiarized themselves with AACEs Mentoring Program
principles, an individual may self-nominate
to become a mentor or mentee/partner candidate. Individuals may complete the biographical and professional data forms online
at the AACE Career Center. The Boxwood
Technology software allow mentee/partners
to search for potential mentors using a
matching protocol congured for our purposes with criteria identied by the Mentoring Advisory Committee. The system allows individuals to
attach technical papers, a resume and other pertinent information to aid in the matching of the mentor and partner.
Prior to being approved to participate in the mentoring
program, the candidates information is reviewed by the AACE
sta to assure the applicants meet the minimum requirements
for mentors established by the Mentoring Advisory Committee.
These requirements include being a member in good standing
of AACE International, having at least ve years professional experience in cost engineering and/or total cost management, the
willingness to devote at least two hours per month to mentoring and agreeing to abide by all the provisions of the mentoring
agreement.
If approved, the mentor and mentee/partner will receive a welcoming email with a link to the Mentoring Partners
Handbook, a 64-page manual that provides step-by-step instructions on how to structure a successful mentoring relationship. The AACE Mentoring Partners Handbook represents
collaboration between AACE International and the Center for
Coaching & Mentoring, Inc. AACE has customized several resources developed by Dr. Matt Starcevich, Ph.D. to support
AACEs specic mentoring requirements and processes. Starcevich extensive experience organizing mentoring programs for
major corporations and organizations, especially among the engineering and scientic community, was a major factor in being
selected as our partner in this endeavor.
The Handbook includes diagnostic tools designed to
help the mentor and mentee/partner assess their individual
learning styles, communication preferences and other factors
that impact the success of a mentoring relationship. The handbook also provides tips on eective questioning, goal setting
and self-evaluations designed to assess how the mentoring re-
12
lationship is progressing. AACE will feature a series of articles

on mentoring by Dr. Starcevich in the Cost Engineering journal
as part of our campaign to raise awareness and encourage active participation in the mentoring process.
An approved mentee/partner may search the database of approved mentors for a possible match. A potential
mentor roster is displayed based upon professional interests,
education, experience and other search criteria that match the
needs of the mentee/partner conducting the search. The
searching mentee/partner may request a mentoring engagement with an approved mentor and arrange
for an initial discussion regarding suitability
for an engagement.
The decision to enter into a mentoring agreement must be mutual. To track the
process, the online system provides a dashboard view to show pending current mentoring relationships.
AACE will provide
periodic e-newsletters for those involved in
the mentoring program that will feature
ideas on how make the relationships even
more productive.
Once the two mutually agree to
form a mentoring partnership, they complete
the AACE Mentoring Program Agreement
dening their expectations of one another.
This agreement printed in the Mentoring Partners Handbook
is customized, based upon the conditions and expectations
agreed to by both parties. These variables include the anticipated duration, frequency of contact and anticipated outcomes
from the process.
Once executed, the mentor and
mentee/partner send the executed agreement to AACE headquarters. AACE sta updates the mentoring database to reect
that the two have formed a mentoring partnership. While a
mentor may accept more than one mentee at a time, a
mentee/partner may have only one mentor.
To encourage mentors and mentees/partners to participate in the program, AACE will grant approved mentors, who
have completed at least a six month mentoring engagement in
the previous 12 months, one continuing education credit toward recertication, plus a discount for the mentee/partner to
attend the AACE Annual Meeting, beginning in 2012. The Mentoring Advisory Committee plans on sponsoring a special recognition activity for mentors and mentees/partners will be hosted
at future Annual Meetings beginning in 2012.
Our structured, self-guided mentoring program promises to be a great opportunity for AACE International to accelerate the growth of the next generation of Association leaders
while increasing the diversity of our profession and membership, observed Anjaneyulu. We have partnered with two leading organizations, the Center for Coaching and Mentoring and
Boxwood Technologies, to create an exceptional support system
for our mentoring program participants. We encourage AACE
members to explore the mentoring orientation presentation
now available online. We need all interested and qualied
members to become actively involved to achieve this programs
full potential.
TECHNICAL ARTICLE
PEER REVIEWED
Lessons Learned
Schedule Development Using
Primavera P6
TM

Abstract: Many contract documents are now requiring the use of the latest version of Primavera software (P6) because of its enterprise capabilities and its use
of latest technologies, including the capabilities to interact other software applications; therefore it is important for the scheduler to understand how to use this
software most efficiently in their battle to complete their projects in a timely
manner. Primaveras latest release of P6 contains many features that can assist
in developing schedules quickly and efficiently. However, a new or in-experienced
user would be overwhelmed in the struggle to prepare the schedule using P6
and these advanced features without proper training or basic training. This article will focus on the authors experiences and their lessons learned regarding
the effective use of P6 in the schedule development process as they apply this
to the TCM planning and scheduling development processes (TCM 7.2). This article was first presented as PS.11 at the 2010 AACE International Annual Meeting
in Atlanta.
Key Words: Durations, estimates, schedule, software, lessons learned, planning
and scheduling
ACE Internationals Total Cost

Management Framework (TCM
section 7.2) outlines the 12 steps
for schedule planning and development
as follows:
contractual requirements) must be

evaluated. The user/scheduler must
understand the purpose of the schedule,
as well as the specific scheduling
requirements
contained
in
the
specifications and contract documents.
1. Plan for schedule planning and Requirements to consider include
development;
stakeholder needs, resource and/or cost
2. Identify activities;
loading, structure (Work Breakdown
3. Develop activity logic;
Structure and/or activity coding),
4. Estimate durations;
reporting,
updating,
weather
5. Establish schedule requirements;
considerations, calendars, activity detail
6. Allocate resources;
(durations, costs, resources), software,
7. Optimize schedule;
and application integration.
8. Establish schedule control basis;
9. Review and validate schedule;
Contractual and Internal Organizational
10. Document
and
communicate Considerations
schedule;
In the development of an
11. Submit schedule deliverables; and,
organizations management capabilities
12. Develop and maintain methods and of all projects across the enterprise,
tools. [1]
considerations must be taken which
govern integration with outside
This article will focus on the use of scheduling systems. These considerations
Primavera P6 to accomplish the first are essential when dealing with varying
seven steps of the process.
project environments and across multiple
industry sectors. Although scheduling
Plan for Schedule Planning and specifications
may
require
the
Development
organizations use of Primavera, multiple
Prior to developing the schedule, the outside participants with responsibilities
current documented scope basis and that relate directly or indirectly to the
technical
requirements
(including process of schedule development (i.e.,
design group, engineering group,

subcontractors, suppliers, etc.) may use
other scheduling applications to develop
timelines for their specific scope
development. These scheduling systems
will need to be considered, if not directly
interfaced with Primavera P6.
Contractual
obligations
might
require systems integration (conversion
to Primavera P3, SureTrak or Microsoft
Project) because of client/contractor or
third party schedule development and
review.
There are several items that must be
considered when integrating Primavera
P6 and other Primavera scheduling
applications, as well as Microsoft Project.
Even integration between differing
enterprise
structures
from
one
organizations
implementation
of
Primavera P6 can create technical and
data transfer issues.
When transferring data into
Primavera P6 an organization must
consider the integrity of its own system
based upon the implemented structures
and reporting requirements. If the goal
the company in the use of Primavera P6 is
to maintain these organizational
structures with consistent reporting and
management of projects across its
Enterprise Project Structure (EPS), then
the organization should consider an
alternative to a direct import into the
production database.
The initial implementation of
Primavera P6 should include the
consideration of multiple databases. A
live or production database contains
the active, most current data, and is used
by project schedulers to maintain and
analyze up-to-date information. This
database allows the organization to
maintain, manage, and report project
schedule information.
A second database to be considered
should be a sandbox or intermediary
database from outside sources and the
production database. The sandbox
database is used for the purpose of
cleaning or modifying outside schedules
to conform to the companys internal
requirements. The schedule is cleaned
global to project settings (calendars,
activity codes, etc.) or vice versa,
depending on the organizational
requirements
and
then
exported/imported into the live
13
database. Note: There should be a

process in place for notification to the
outside schedule source regarding any
modifications to the schedule. There
may be a request and resubmittal
process required to comply with
organizational requirements.
The
organizations structures must be clearly
defined upfront such that any outside
source knows the requirements for
schedule submission. This process or
requirement
should
be
clearly
understood from the beginning of any
contract with those developing timelines
outside the production database.
Original submissions of all outside
schedules should be kept as historical
records with their original format and
data.
A third database, a training
database, might also be created for the
purposes of training system users
outside of the production database.
The sample PMDB database provided by
Primavera with its sample data is one
example of a training database. A large
organization might consider duplicating
the production database to consist of
major programs and project examples
for use in a training environment. Some
might consider the sandbox database
as a source for training. However, this
database, over time, will have very little
structure that can be used to understand
the organizational use of Primavera.
Regardless of the varying databases
implemented by the organization, there
must be certain considerations when
importing data from outside sources.
The maintenance of the project schedule
and its structures is only one part of the
Primavera P6 function. The systems
capabilities of maintaining multiple
projects both from a project concentric
focus, as well as the project
management needs of the organization
make Primavera P6 a full project
management solution. The use of
Primaveras global attributes above the
project and within the EPS defines the
systems ability to manage project
requirements across the organizations
enterprise or program.
It is not
recommended to use these global
attributes with the focus of a specific
projects organization and schedule
controls.
14
Table 1The Advantage of Different Subcontracting Structures [6]

Using the import templates available in
P6 for both Microsoft Project and P3 can
help reduce data redundancy for both
existing projects and for project creation
from outside sources. Accessing these
templates is found within the file menu,
import option.
The Microsoft Project (MSP)
template initially defines the use of
summary tasks with the MSP schedule
and their possible conversion to P6 WBS
summary tasks (to be discussed in detail
later). Unlike MSP milestones, P6
milestones cannot have resource/cost
assignments. The template allows for
the reallocation of these milestone
resource costs to either task dependent
activities (to be discussed in detail) or
start milestones with expenses.
Resource structures within P6 are
hierarchical based on the organizational
requirements. The template defines how
resources transfer from MSP to the
organizations resource dictionary. The
use of activity IDs and their significance
differs between Primavera P6 and
Microsoft Project, therefore the
template defines how activity IDs will be
developed based on task structures from
MSP.
Additional
template
considerations are notes from MSP tasks
to P6 notebook topics and custom data
fields transfer. Project calendars or
working times imported from Microsoft
Project are imported as project specific
calendars.
Based on project group structures

within P3 and SureTrak (project group
type) the P3 import defines how these
structures will be imported into P6.
Similar to the MSP template, resources
must be imported into the existing
resource dictionary based on the
organizations
existing
resource
structures and activity logs or notes from
P3 must be assigned to notebook topics
within P6. The remaining portion of the
import contains the specific template
configurations for importing data and
how that data will conform to or modify
existing project data. An item of caution
when importing from P3 and SureTrak
(project group schedule types), project
calendars are imported as global
calendars.
Identify Activities
Define Work Breakdown Structure
(WBS)
The initial effort in the identification
of work items or activities is the
development of overall planning with
high-level planning structures including
work breakdown structures (WBS) and
activity codes and determining the role
of each. Most organizations use the
work breakdown structures (work
breakdown structure window) within P6
to define a projects phased or logistical
structures. However, because of the
rollup capabilities and earned value role
of the WBS, many contracts define the
projects work breakdown to cost
structures and measureable budgeted
first be translated into identifiable,

manageable activities and tasks [1].
Figure 2 Finish to Start Relationship
Figure 2 Finish to Finish Relationship
Figure 4 Start to Start Relationship
Figure 5 Start to Finish Relationship
quantities. This requirement can limit

the projects needs for structure and also
the organizations needs in its use of
internal enterprise wide management.
In this case, the activity codes can be
used to develop project phasing or
logistical layout of the project. Be aware
that when exporting to P3, the WBS will
export based on numerical outline, and
the activity codes will be exported in the
order created in P6.
If the contract does not define
usage of WBS, then this hierarchical
structure should be the overall
organizational breakdown of the project
either by scope breakout (i.e., phase,
area, location, etc.) or by budget of
quantities. The WBS by default is project
specific with the project at its highest
level. To create a project WBS, open the
work breakdown structure window in P6
and add the lower levels below the
project. Using the arrows in the
command bar, define the hierarchical
structure. This structure will define the
overall layout of the project.
Other than the usage of predefined
project start-up templates, there is no
direct correlation between varying
project structures in P6. There is,
however, an option of coding WBS levels
by using WBS categories (the
nomenclature can be modified). These
global phases are set by the system
administrator (admin menu, admin
categories, WBS categories) and
assigned in the WBS window (WBS
categories column). WBS categories can
then be used to group activities across
the enterprise based on the activitys
associated WBS regardless of the project
specific WBS nomenclature.
Define Activity Codes

Activity codes within Primavera P6
(enterprise menu, activity codes) are a
means of tagging activities with shared
or common attributes across the project,
the program (enterprise levels), and the
organization (globally).
To create activity codes (enterprise
menu, activity codes option) specify the
code type: global (enterprise-wide), EPS
(program wide), or project (project
specific). Click the modify button to add
the code. Once the code is added,
values for each code will need to be
created. Hierarchical structures can be
defined for each activity code value
listing (ex. CSI divisions and CSI codes)
using the arrows located to the right of
the activity code values list.
As the name implies, these activity
code values are then assigned to
individual activities (activity details,
codes tab). Once assigned, activity
codes can then be used for formatting
schedule information (i.e., grouping,
filtering, and sorting activity data) in
conjunction with or apart from the
projects WBS. The user should keep in
mind that although project level activity
codes are copied with the project and or
baseline schedule, formatting within
layouts will most likely need to be
recreated.
Define Activities
The next step in the process of
activity identification is to define the
details within the schedule. Activities or
individual deliverables will need to be
added within the WBS.
Defining
activities is the process of identifying the
specific actions to be performed to
produce the project deliverables [2]. To
prepare schedules, information from the
documents that define the scope must
Create Activities
To create activities in P6, open the
activities window and insert each
activity. If grouping by WBS, then
highlight the WBS level to which the
activity applies, then click the add
button in the command bar or click the
insert key on the keyboard. Note: To see
the entire WBS structure, make sure that
the hide if empty box is un-checked in
the group and sort window (view, group
and sort, group by options).
Activity ID
Each activity should have a unique
alphanumeric identifier. The activity IDs
should be capable of smart or
intelligent activity identification in
which unique activity identifiers are
systematically organized to relate to
various groupings for schedule activities
[3]. Examples of smart IDs would be
using the Construction Specifications
Institute (CSI) division as part of the
activity ID, or in the case of a logistically
defined project, such as multi-story
building, using an location or location
identifier, (i.e., floor level) as part of the
activity ID. It is important for the
scheduler to be aware of character
limitations for the activity ID; in P6 the
activity ID can have up to 20
alphanumeric characters. In P3 there is a
limit of 10 alphanumeric characters.
Therefore, if the contract requires that
the
schedule
be
downloadable/transferable to P3 or
SureTrak, the scheduler should limit the
activity ID to 10 characters. The
maximum ID length can be set by the
system administrator (admin menu,
admin preferences, ID lengths tab).
Keep in mind that all settings defined
under the admin menu are global,
meaning that they affect all projects
across the enterprise.
In P6 each project has a defined
default numbering convention set within
the projects window, project details,
defaults tab. The activity ID is defined by
a required prefix (consider a unique
project identifier used in advanced
tracking layouts) as well as a required
suffix. Activity IDs are then, by default,
incremented based on a numerical value
15
Figure 6 Lag and Lead

of 10. This incremental value may be
increased to allow for activity insertion
and maintaining sort/precedence
ordering to maintain organizational or
contractual requirements. P6 uses these
defined project settings when new
activities are added or the user can
specify to base a newly inserted activity
ID on an existing selected activity.
Activity ID definition can be altered
at any time by defining the structure of
existing IDs. By first highlighting multiple
activities, then selecting the edit menu,
renumber activity IDs option, the user is
prompted to redefine the activity ID
using three options: increment activity
ID based on selected activities, autonumber, replace beginning characters.
The first option, increment activity ID
based on selected activities, adds a user
defined value to each selected activity
suffix. The second option, auto-number
activity IDs option, restructures the
activity ID prefix, suffix, and allows for a
user defined value to increment
remaining selected activities. The third
option, replace beginning characters,
replaces the activity prefix, left to right,
based on the number of characters
specified by the user.
In previous versions of P6, using a
global change option was necessary to
alter large quantities of activities in
relation to both the activity name and ID.
This option can be found in the tools
menu, global change allows the user to
add to the existing activity ID and prefix
and/or remove/replace the existing
activity ID. This option is still available,
but may no longer be necessary with the
ability to renumber activity IDs in the
latest release of P6.
Figure 7 Viewing Relationship Ties

Activity Name
The activity name in P6 (activity
description) should be concise and
clearly defined such that all using the
schedule understand the scope of work
that the activity represents.
A
deliverable or quantifier in the activity
description, such as a dimension,
quantity or a physical demarcation, is
generally a good way to communicate
the activity scope. (Percentages are not
good quantifiers.) [3].
Keywords in the activity name (left
to right in order) should be used to
enable sorting and finding activities in
the P6 schedule easier. These keywords
will also be valuable in relationship
assignment by using the search fields in
both the predecessor and successor
windows.
The user should be aware that P6
has a limit of 120 characters for the
activity name, whereas P3 is limited to
48 characters. If the contract requires
that
the
schedule
be
downloadable/transferable to P3 or
SureTrak, the activity description should
be limited to 48 characters in P6.
Activity Type
Once the activity is added, its role
will need to be defined. In P6, there are
several different activity types including
task dependent, resource dependent,
WBS summary, level of effort and
Figure 8 Editing Relationship Ties
16
milestones. The activity type is set to

each activity in the activity details,
general tab, and governs the activitys
role within the schedule.
It is
important to understand what these
activity types mean and when you
should use them.
Each project will begin with a key
event that signals the beginning of work
or phase of work as well as a key event
signaling the completion of work or
phase of work. P6 uses both start and
finish milestones for such events.
Milestones, whether start or finish, have
no duration and can have no
resource/cost assignments. P3 flags are
not an option in P6.
Activities, by default, are scheduled
according the work period or calendar
associated to the activity. P6 gives two
options
that
determine
which
calendar(s) will be used in the
calculation of each activity. A task
dependent activity is scheduled
according the activitys main or base
calendar. A resource dependent activity
is scheduled according the calendar(s) of
its assigned resource(s).
The last two types of activities are
summary or high-level activities whose
durations are determined by their logical
predecessor(s) and successor(s) or by
the total duration of the level of the
work breakdown structure in which the
activity is added. A level of effort activity
Figure 9 Assign Predecessor and Successor Windows in P6

has a duration total based on its
predecessor(s) and its successor(s) ties.
Unlike P3 and a hammock with its
required start-to-start predecessor,
finish-to-finish successor, the level of
effort is not limited in the relationship
type available to its predecessor or
successor, including lag. LOE activities
can be used to measure resource total
durations across multiple activities (i.e.,
tower cranes, rental equipment). They
can also serve as resource/cost loaded
lump sum activities for overhead or
general costs. A WBS summary activity
has a duration based on the level of WBS
in which the activity exists. This type of
activity requires no relationships but
requires instead a defined work
breakdown structure. Both of these
types are useful in loading overall costs
or possible overhead costs by phase,
area, division, etc.
Develop Schedule Logic
Once the activities have been
defined, the next step is to sequence the
activities. Sequencing activities is the
process of identifying and documenting
relationships among the project
activities [2]. Logic addresses the
sequential dependencies between
activities, and similar issues such as
programmatic, procedural, and physical
requirements and constraints, and
preferential sequencing in consideration
of cost or resources [1]. Recommended
practice is that logic development is an
iterative planning process. This process
is further refined during the schedule
development and optimization [4].
Every activity and milestone in the
schedule (except the first and last) must
have at least one predecessor
relationship and one successor
relationship.
Relationship Types
There are four types of relationships
that can be assigned in P6, finish to start
(FS), start to start (SS), finish to finish (FF)
and start to finish (SF). Each of these
relationships can also be assigned a lead
or lag duration. In P6, the scheduler can
assign what calendar is used for defining
the relationship lag (schedule, options).
The following four relationship
types (listed by their default order in P6)
are used to schedule activity dates:
Finish to Start (FS) typically used

in planning the majority of work and
for maintaining time contingency in
the plan. Primavera uses this tie as
its default. This type of relationship
indicates that the successors start is
dependent on the predecessors
finish.
Finish to Finish (FF) typically used

when overlapping work. This type of
relationship indicates that the
successors finish is dependent on
the predecessors finish.
Start to Start (SS) typically used

when overlapping work. The type of
relationship indicates that the
successors start is dependent on
the predecessors start.
Start to Finish (SF) an

unconventional method for controlling a
successors finish date. This type of
relationship
indicates
that
the
successors finish is dependent on the
predecessors start.
Lag is time variance between the

start/finish dates of predecessors
and successors to the current
activity. Lag duration is, by default,
based on the predecessors
calendar, unless specified in the
scheduling options. (Lead is
negative lag.)
Finish-to-start logic will give you the

longest total project duration and is the
most common logic type. The start-tostart and finish-to-finish logic can be
used to compress (shorten) the
schedule. This compression is often
used in the execution phase of the
project to accelerate work.
Assigning Relationships
In P6, there are three methods for
assigning precedence relationships to an
activity. The first method can be
performed in either the Gantt Chart or
the Network views by dragging the
mouse from the predecessor to the
successor to create the relationship tie.
Check the yellow box to verify the type
of relationship being created. Always
begin from the predecessor and draw
to the successor to create the desired
relationship.
When viewing relationship ties,
editing can be performed by doubleclicking on the tie in question.
The second method uses the
relationships tab(s) or predecessor/
successor buttons (located in the
command bar) to assign the current
activitys predecessor(s), successor(s).
Use the Search field to locate
activities by either their IDs or by the
activity names. Click the display bar
(located at the top of each window) to
group activities by WBS (to locate
activities in other areas of the project) or
view a list of activities. Filter activities by
either those critical to the project or by
milestones.
Modify the columns
displayed by either status, dates (e.g.,
activity start/finish), or resource and
click the column headers to change the
sort. These settings are retained for the
user in working in the database. By
default, when creating relationships
using this option, a finish-to-start tie is
the default tie created to activities other
17
than milestones. The second tie is finishto-finish, third is start-to-start, and

fourth is start-to-finish.
The user should be careful when
assigning relationships using this
method since P6 allows for multiple
relationship assignments (i.e., finish-to
start with a finish-to-finish with a startto-start with a start-to-finish). Use the
undo to delete the last tie created
(individual tie only). Use the remove
button to delete the first tie created
(i.e., finish-to-start with a finish-tofinish. The remove button will remove
the finish-to-start whereas the undo will
remove the finish-to-finish.
The third method uses the link
activities feature to sequence two or
more activities in the order selected.
Highlight multiple activities in the order
of precedence and select the edit menu,
link activities option (or right-click in the
activity table, link activities). The
activities are linked finish-to-start by
default. Again, caution should be taken
when using the link activities feature to
avoid creating multiple relationship
assignments; using the undo option (edit
menu, undo) will remove the last tie
created.
Estimate Durations
The next step in the process is to
assign durations to each activity.
Estimating activity durations is the
process of approximating the number of
work periods needed to complete
individual activities with estimated
resources [2]. The duration of planned
activities is estimated to calculate the
estimated start and finish dates based
on the defined scope of work, estimates
of required resources and their
availability,
and
the
expected
performance (or consumption) rate of
those resources [1].
Work Periods and Calendars
When using P6, the user must be
aware that the software is always
scheduling/calculating in minutes. The
user may select how P6 displays activity
duration (edit menu, user preferences
option, time units tab).
Typically
duration is displayed in days. However,
based on the project plan a day might be
8 hours or 10 hours. In order to define
18
individual durations, work periods will

need to be established.
Every project plan revolves around a
standard work week or time-period per
month and per year. Activity detail must
be defined by hours, days, weeks, etc. as
work is broken down into measurable
units and scope.
Primavera uses
calendars to define standard periods of
work and nonwork (enterprise menu,
calendars option).
The standard
workweek is defined by establishing
calendars to measure work and to
calculate exceptions to the standard
workweek for the project and for
individual activities. Specific calendars
are then assigned to an activity as a base
calendar (activity details, general tab) or
to a resource (resource details, details
tab). Dependent on the activity type,
the activitys duration will be measured
based on its base calendar (a task
dependent activity type) or on its
assigned resources (resource dependent
activity type).
In P6 there are three types of
calendars: global, resource, and project.
P6 uses calendars to define standards
globally (available to all activities in
database), resource (used by resources
to schedule activities), and project
(specific to activities within the active
project). Global calendars set the
standards for creating other global
calendars as well as for creating resource
and project calendars. The default
global calendar is assigned to all new
projects. Global calendars can be
assigned to activities across all projects
within the database. The scheduler
using P6 must be aware of the
implications of using global calendars
instead of project calendars. Any change
to a global calendar, such as adding a
nonwork day, will affect all activities in
the database assigned to that calendar.
The project may begin on a standard
workweek (i.e., 5 work days and 2
nonwork days). Most likely not all work
days will have production due to
seasonal issues or holidays. These days
or dates will need to be modified to
nonwork to correctly define production
days. There may be reason to create a
seven-day workweek to measure or
account for 365 days of time in order to
measure total time durations. There
may also be reason to create additional
working calendars to measure optional

workweek standards (i.e., 6 work days
and 1 nonwork day because of needs
for accelerating production). Certain
contracts may require calendars to
define weather and/or environmental
conditions. Refer to the contract for
both calendar setup requirements and
specific periods of work and nonwork.
To create a new calendar, select the
type of calendar to be created (unless
managing a program of projects,
consider using a project type of
calendar). All calendars are created by
copying an existing global calendar.
Specify the global calendar to be created
and name the newly created calendar.
When creating a project specific type of
calendar consider naming the calendar
with a project identifier. This will assist
in reporting calendar information across
the enterprise. After the calendar is
created, it will inherit all holidays and
exceptions from its originating global
calendar. If the global calendar is
changed in future (i.e., workweek is
changed or nonwork periods modified),
the effect will carry over into all linked
calendars. To remove this link (i.e., the
calendar is stand-alone), use the pulldown in the lower left corner of the
calendar window (inherit holidays and
exceptions from the global calendar) and
specify <None>.
Because P6 calculates to the
minute; review the detailed work
hours/day to verify that the day
start/finish times are consistent for each
work period, as well as with other
calendars used in the project and
enterprise. Inconsistencies can cause
unusual start/finish times in the
schedule, as well as unwanted
overlapping of days between activities.
When modifying existing calendars (i.e.,
5 day to 6 day), verify detailed work
hours/day for each day of the workweek
to remove any inconsistencies. It is
recommended that the global calendars
be correctly defined initially to avoid
these inconsistencies from the start.
After calendars are established they
are then assigned to individual activities.
Each activity will have an assigned
calendar (activity details, general tab).
The user should be aware that the use of
multiple calendars within one project,
although common, can impact float
calculations for the project (i.e., 7 days in

a 7 day calendar or 7 days in a 5 day
calendar).
Workday Definition
After calendars are assigned to their
respective activities, durations for each
activity will reflect not only the
workweek per activity but any nonwork
time associated to the activitys
calendar. The user must be aware of the
work day definition (i.e., 8 hour workday
or 10 hour workday, etc.). In P6 (prior to
version 7) the work day was defined at
the admin or user level with only one
selection available, therefore causing
issues when multiple calendars were
used. In P6 version 7 (admin menu,
admin preferences, time periods), the
workday can be defined at the calendar
level. The system administrator can
define either global hours per time
period (day, month, etc.) or set the hours
per time period at the calendar level.
The user can modify how durations
(i.e., hours, days, etc.) are displayed
across the users projects under the edit
menu, user preferences option, time
units tab.
It is important for the scheduler to
understand the different duration types
in P6 and the relationship between the
duration of the activity and the cost
and/or resources assigned to the
activity. The scheduler must choose the
correct duration type for each activity in
the schedule for the schedule model to
accurately reflect the project plan.
Establish Schedule Requirements
The next step is to establish the
project or contract time limitation
requirements and the date constraints
within the plan [1]. These can be
contract milestones such as fixed dates
for substantial completion and phased
turnovers. P6 allows for several type of
constraints (both primary and secondary
constraints are available). The user must
understand the use of constraints, their
impact on date calculations, and
understand which constraint type to use.
Because
of
contractual
requirements and/or time limitations,
precedence relationships may not be the
driving consideration for specific
activities (i.e., contract or project
completion, phase startup and/or
completion). In these cases the use of

imposed time constraints might be
required to reflect the activitys
importance within the path of
precedence relationships.
When assigning these constraints
(whether contractual or internal)
(activity details, status tab) the user
should consider the level of priority of
the date (contract completion over a
material date), in other words, a level of
priority or process for change should a
change in date be required. If a date
change is not optional you might choose
one type of constraint versus another
type.
There are varying types of
constraints that can be applied to an
activitys start or finish date. Dependent
on the type of constraint, the imposed
date might affect the activitys early
dates or late dates.
A start on or after constraint
imposes a restriction on an activitys
early start date. This activity cannot
start earlier than its constrained start
date although precedence relationships
might cause the activity to start later. A
finish on or after constraint imposes a
restriction on an activitys early finish
date. This activity cannot finish earlier
than its constrained finish date although
precedence relationships might cause
the activity to finish later.
A start on or before constraint
imposes a restriction on an activitys late
start date. This activity cannot start later
than its constrained start date and will
override precedence relationships
possibly causing negative float. A finish
on or before constraint imposes a
restriction on an activitys late finish
date. This activity cannot finish later
than its constrained date and will
override precedence relationships
possibly causing negative float.
A start on constraint imposes a
restriction on an activitys early and late
start dates. This activity cannot start
earlier or later than its constrained start
date without impacting its criticality, but
this constraint will not override
precedence relationship. The finish on
constraint imposes a restriction on an
activitys early and late finish dates. This
activity cannot finish earlier or later than
its constrained finish date without
impacting its criticality, but this constrain
will
not
override
precedence
relationship.
Mandatory start and mandatory
finish impose restrictions on an activitys
early and late start dates and on an
activitys early and late finish dates
respectively. This activity cannot start or
finish later than its constrained date.
Unlike other constraints, these
mandatory constraints override any
precedence relationship.
The as late as possible constraint
removes all free float from the activity.
The activity moves to its latest possible
date without impacting is successors
early start date.
Allocate Resources
Estimating activity resources is the
process of estimating the type and
quantities of material, people,
equipment, or supplies to perform each
activity [2]. If the contract documents
require resource and/or cost loading, the
scheduler must assign resources to the
activities. Even if the contract does not
require resource/cost loading, it is good
practice; by assigning (i.e., loading)
resources for each activity, available
resources can be scheduled in
accordance with resource consumption
limitations (i.e., money, labor hours, etc.)
by resource leveling or balancing [1].
When considering activity resource
development and assignment the
determination must be made either
contractually or internally what types
of resources will be tracked and will
costs be associated to each resource or
tracked independently. Secondly will
resources be updated based on activity
work performance and will payment be
based on percentage complete. If this is
the case, the user and/or project team
must consider the amount of time that is
required to not only input resource/cost
data but the time involved to manage
and report resource updates.
Resources in Primavera P6 are
global in that a single resource dictionary
houses all projects resources. This
dictionary is hierarchical in its structure
which allows for controls to be in place
for overall resource management.
Resources are global in that a single
resource (dependent upon user access)
can be assigned to multiple activities
19
within across multiple projects within

the EPS.
In P6 cost loading is typically defined
at the resource level. Dependent upon
the requirements of both the
organization and the project contract,
cost loading is achieved as either a lump
sum nonlabor resource or a price per
unit labor/material resource.
Three areas or levels within P6
contain the settings which govern
resource allocation, costing, and
updating options. It is important that
the user be aware of these settings prior
to defining the resource and allocating
resource units/costs. Once a resource is
assigned to an activity, any changes to
the resource settings will apply to new
assignments only.
The first of the three areas which
contain settings governing resource
allocation is the resource itself. These
default global settings, specific to each
resource, affect the resource regardless
of the project and the activity to which it
is assigned. Secondly, the project also
contains default settings which affect all
resources within the specific project.
And finally the activity specific settings
affect the individual resources assigned
to that activity.
To control these settings within each
of the three levels, a basic understanding
of P6 and each option with its function
is required. The first setting is calculate
units from costs. By definition, costs are
recalculated whenever resource unit
quantities are modified. By default, this
setting, found at the resource level
(resource details, details tab) and at the
activity location (activity details,
resources tab, columns), applies to any
new resource assignment. This option is
not used for resources requiring lump
sum loading where units/time are not
considered.
A second setting that should be
understood is auto compute actuals. By
definition, resource actual and
remaining units, as well as start and
finish dates are updated automatically
based on the activitys planned dates,
budgeted units, and percent complete.
This option can only be modified at the
resource level (resource details, details
tab) and therefore applies to the
resource globally across its activity
assignments. The nomenclature for this
20
setting should not be confused with

what appears to be the same option at
the activity level. Although the naming
convention is identical, another setting
for updating activity information (found
in the columns in the activity window) is
used in conjunction with the apply
actuals option within Primavera P6.
A third setting that should be
understood is link actual and actual this
period units and cost. By definition,
resource costs/units are updated when
either actual or actual this period are
updated. This option must be selected
when using financial periods and store
period performance. Found at only the
project level (project details, calculations
tab) this option applies to all resource
assignments within the project.
Other considerations relating to
resource assignments include activity
types.
As discussed previously,
milestones cannot have assigned
resources and therefore cannot be cost
loaded.
Duration Types
Each activitys duration type defines
how resource modifications adjust the
activitys duration, its budgeted resource
quantities, and/or its resource
production by period.
When an
activitys duration type is fixed duration
and units, P6 will recalculate the units
per time for each of the activitys
resource assignments when either the
activitys duration or its budgeted units
are updated.
When an activitys
duration type is fixed duration and
units/time, P6 will recalculate the
budgeted units when either the activitys
duration or production rate (units/time)
is updated. When an activitys duration
type is units, P6 will recalculate either
the activitys duration or production rate
(units/time) when the budgeted units
are updated.
As mentioned previously, costs are
allocated to each activity as either a
lump sum resource cost or based on
price/unit resources. When cost loading
the P6 schedule, financial periods are
then used to store actual period
performance as opposed to spreading
actual work performance across the
timeline.
These financial periods are set at
the globally across the enterprise by the
Figure 10 Three Factors Determining

Duration Type
system administrator (under the admin
menu, financial periods option). They
are set at periodic intervals for
cost/production tracking.
Cost Accounts
Cost accounts can be established
within P6 (enterprise menu, cost
accounts) to identify organizational
accounting
codes
to
specific
resource/cost times within the schedule
and across the enterprise. They are
typically created by the cost engineer or
controls engineer. This hierarchical
structure is associated to each activity at
the resource level (activity detail,
resources tab, cost accounts column).
Resource Curves and Future Bucket
Planning
Resource curves (under the
enterprise menu, resource curves
option) define how resource units/costs
are distributed across an activitys
duration. They are associated to each
activitys resource (activity details,
resources tab, curves column).
Primavera P6 also offers future
bucket planning for resource units/cost
forecasting, where distributions are
manually entered in the resource usage
spreadsheet for future resource
projections. These manually spread
distributions are displayed in the activity
details, resource curves column as
manual.
Percent Complete Types
When determining the process of
updating resources and the contractual
and/or internal requirements for
resource/payment obligations, the user
must consider the means of updating
each resource at the activity level. When
payment is based on work performance,
the user must consider how each
activitys update will affect the resource
cost/quantities for that activity. Work
performance in P6 is updated
automatically (unless specified) in
Primavera using percent complete.
There are three percent complete types
at the activity level: duration percent
complete, physical percent complete,
and units percent complete.
Duration percent complete is
directly associated to the activitys
original duration and remaining
duration. This default setting within P6 is
used to update resource costs/units.
However, when payment is based on
work performance and stored materials,
duration percent complete might not
reflect actual costs to date.
Percent Complete = (Original Duration
Remaining Duration) / Original Duration
* 100.
(equation 1)
Physical percent complete is a
manually entered (or resource entered)
percentage of work. This percentage
type has no correlation with the
activitys duration or units complete. At
this time this option cannot be used to
update resource costs/units.
Units percent complete is directly
associated with the activitys labor and
nonlabor resources. This option can be
used to update resource costs/units.
Percent Complete = Actual Units / At
Completion Units * 100.
(equation 2)
In most instances where work
performance in the schedule is directly
tied to payment, the use of either
duration percent or units percent (when
associated with a lump sum activity)
cannot be used. The user should be
aware that actuals will need to be
manually entered at the resource level
within each activity.
Optimize Schedule (Simulation and
Optimization)
This process step is wherein the
scheduler, based on his or her cost
engineering judgment and team input
and feedback, iteratively modifies the
plan and schedule inputs until the most
satisfactory schedule is obtained [1].
The scheduler using P6 must have
an understanding of the software
Figure 11Schedule Options in P6

schedule options and the impact each
has on the calculation results.
Optimization of the schedule requires
consistent auditing of resource
definition and activity detail during the
course of schedule development.
Assessment and analysis of critical
events within the schedule define the
schedules ability to plan and manage
the life of the project. Understanding
the rules of schedule calculation which
determine these critical activities is
fundamental in the early stages of
schedule development as well as
maintenance of the mature schedule.
P6 provides multiple sources for
schedule optimization during the
schedule development phase of the
project. The schedule log (an option
found when updating and/or calculating
the schedule) analyzes schedule data
based on these predefined CPM rules.
As data is entered and the schedule is
calculated from the defined data date to
project completion and back, a log of
schedule analytics can be produced for
evaluation of schedule development and
overall critical path. The log displays the
calculation settings currently in place for
the particular project(s) (set within the
tools menu, schedule, options). These
options define whether the calculation
considers purely duration and sequence
of work or whether resource leveling
(based on resource allocations and
limitations) is used for calculation and at
what point. They also allow assignment

costs of resources to be automatically
recalculated each time the project is
scheduled updating activity costs to
reflect any new price/unit values
modifications.
In P6 the user has the ability, if
granted access, to sequence activities in
one project to activities in other projects
based on program requirements. The
scheduling options allow the user to
ignore these inter project ties to review
project specific critical events or to
consider these ties, analyzing an overall
critical path of the program (multiple
projects) where the latest finish date of
the latest open project is used as the
starting point for the backward pass.
Each schedule will have a start
activity (an activity with no predecessor)
and a finish activity (an activity with no
successor). Other than these two openended activities, all activities within the
schedule must have predecessor and
successor relationships with few
exceptions. P6 scheduling rules
determine how these exceptions are
handled in relationship to its criticality.
As activity precedence relationships
are added P6, through its scheduling
options, can set the schedule to
calculate latest data automatically as
changes are made. When developing
precedence between activities, the use
of lag, and the number of time periods
the lag represents is determined, by
21
default, based on the predecessors

calendar or work period. The user,
through the scheduling options, can
choose to use the successors calendar
for lag measurement as well as the
projects default calendar (project
details, defaults tab), or a 24 hour
calendar.
Other calculation rules are defined
by determining how P6 displays openended activities in relationship to the
critical path and whether total float
(based on a user defined number of
hours) will be used for measuring the
critical path or whether longest path will
be used.
Under the advanced options tab
within the schedule options, the user
can select whether P6 will calculate
multiple float paths based on either total
float or free float. When using total float
the application determines, based on
the
most
critical
precedence
relationships, each critical path. When
using free float, the application uses
longest path to identify the latest
calculated finish date tracing driving
relationships backward through the
schedule. Based on the specified
number of paths to calculate, P6 will
store each path within the Float Path
field (column).
In P6 there are three options
available when scheduling progressed
activities: retained logic, progress
override, and actual dates. Retained
logic maintains the as-built sequence of
activities regardless of actual work. The
predecessors
inherited
driving
relationships drive the successor. In
progress override the activity as-built
sequence can be overridden based on
actual work. The direct predecessor
activitys dates (remaining early) drive
those successor activities which have
not started. When the predecessor is
assigned an actual finish, the activitys
dates (remaining early) are driven by the
data date. When the activity has an
actual start, its remaining duration
drives the remaining early finish. The
option actual dates allows for future
actualized activity dates to calculate
sequence. If the actual dates option is
selected, then the predecessors late
finish is set to the time unit before the
actual start of the out-of-sequence
22
predecessor. This assignment has the

potential of creating negative float [5].
P6 also contains two options on how
to calculate start-to-start lag which
determines how a predecessors resume
date (when suspended) impacts its
successors start date when using a startto-start tie with lag. The options are
early start and actual start. Early start
drives the successors start date from
the predecessors remaining early start.
Actual start drives the successors start
date from the predecessors actual start.
Warnings on the schedule log report
include open-ended activities, out-ofsequence activities, activities with actual
dates on or after the data date, and
milestones with invalid relationships.
Primavera P6 will allow for milestones to
have finish-to-start relationships,
although not always recommended
because of start and finish times. A start
milestone should only have a start-tostart relationship with its predecessor
and a start-to-start and/or start-to-finish
with its successor. A finish milestone
should only have a finish-to-finish
relationship with its successor and a
finish-to-finish or start-to-finish with its
predecessor.
Unsatisfied
constraints
and
relationships are created when a
relationship overrides the assigned
activity constraint (i.e., start on or finish
on) or when a constraint overrides the
assigned relationship.
Claim Digger (issued as part of the
Primavera P6 software: tools, Claim
Digger) allows the user to compare two
schedules and evaluate the differences
between them, including but not limited
to: changes in durations, dates,
relationships, added / deleted activities,
added / deleted WBS, added / deleted
assignments.
P6 also contains many standard
tabular reports which can be helpful in
analyzing a schedule, such as logic
reports.
Many contract documents are now
requiring the use of the latest version of
Primavera software (P6) because of its
enterprise capabilities and its use of
latest technologies including the
capabilities to interact other software
applications. The scheduler should be
able to apply the implementation and
execution lessons learned outlined in
this article to develop schedules quickly

and efficiently using P6.
ACKNOWLEDGMENTS
The authors would like to thank Ron
Winter, PSP and F. Burak Evrenosoglu,
CCE PSP, for their invaluable help in
reviewing this article.
REFERENCES
1. AACE International. Chapter 7.2
Schedule
Planning
and
Development.
Total
Cost
Management Framework A
Process for Applying the Skills and
Knowledge of Cost Engineering,
First Edition. Pages(s) 129-138.
AACE International, Morgantown,
WV. 2006.
2. Project Management Institute.
Chapter
6:
Project
Time
Management. A Guide to the
Project Management Body of
Knowledge (PMBOK ), Fourth
Edition. Page(s) 129-164. Project
Management Institute, Newton
Square, PA. 2008.
3. AACE International, Recommended
Practice No 23R-02 Identification of
Activities, AACE International,
Morgantown, WV. 2007.
4. AACE International, Recommended
Practice No 24R-03 Developing
Activity Logic. AACE International,
Morgantown, WV. 2004.
5. Winter, Ronald M., PSP, and F. Burak
Evrenosoglu, CCE PSP. PS.15, Much
Ado About Dates Understanding P6
Date Information. 2009 AACE
International Transactions. AACE
International, Morgantown, WV.
2009.
ABOUT THE AUTHORS
Hannah E. Schumacher,
PSP, is with Kitchell
Contractors. She can be
contacted by sending email to:
hschumacher@kitchell.com
Charlie Jackson is with Hill

International. He can be
contacted by sending email to:
Expertise. Technology. Results.
Energy and Sustainability

Management
charliejackson@hillintl.com
Capital Budgeting and

Programming
Direct Downloads
available at the
AACE Online Store
Sustainable Planning and

Design
AACE International is now

oering direct digital downloads of
many of our publications at the
AACE Online Store. Downloading directly is a fast and easy way to get
the content you need at a discount
and without paying shipping and
handling charges. Why wait? Download immediately at the AACE Online Store.
Program and Construction

Management
Capital Asset Management
www.mocasystems.com
visit www.aacei.org
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23
TECHNICAL ARTICLE
PEER REVIEWED
Practical Problems With

Pricing Delay Using Eichleay
Abstract: Since 1960, the Eichleay Formula has been used to price extended
and/or unabsorbed home office overhead. Most in the construction industry
treat the Eichleay Formula as an accounting mechanism seldom understanding
that the US Armed Services Board of Contract Appeals created this formula as
an estimating tool, not an accounting method. There are some practical problems
with the Eichleay Formula. From the accounting perspective, there are several
major flaws built into the formula. From the project owners perspective, there
is a risk of overcompensation unless certain contractual defenses are employed.
And, from the contractors perspective, there are issues with the applicability and
the use of the formula. This article examines the traditional Eichleay Formula
from all three viewpoints, to identify the problems and offer some recommendations on how to alleviate them.
Key Words: Audits, delay, Eichleay Formula, estimating, home office overhead, and pricing
elay is a common occurrence on

construction projects. Delay
may be caused by action or
inaction of the owner, their designer or
construction manager; or by the
contractor,
their
subcontractors,
suppliers, or deliverymen; or by outside
forces such as weather, labor actions, war
or acts of terrorism, material shortages,
etc. The list of potential causes of delay is
extensive. What owners and contractors
focus on in the event of delay is how to
deal with the issue under the terms and
conditions of the contract.
Most standard form contracts, in
both the public and the private sector,
deal with at least three types of delay in
their terms and conditions, as follows.
Inexcusable Delay This is delay
caused by the contractor, or one his
subcontractors or suppliers at any tier.
Typically, most contracts deny any time or
cost recovery to the contractor in the
event of inexcusable delay and require
the contractor to recover the lost time, or
pay actual or liquidated damages for late
completion.
Excusable Delay This is delay
brought about by a third party (that is,
neither the owner nor the contractor) or
some outside force such as weather, acts
of God, acts of war or terrorism, labor
actions, etc. Private contracts frequently
deal with this situation in the Force
24
Majeure clause, while many public

contracts include this type of delay in the
Termination for Default clause [19]. Most
standard form contracts allow the
recovery of the delayed time but award
no time related costs for the period of the
excusable delay. Thus, the contractor
receives time but no time related costs,
while the owner grants the time and
cannot assess late completion damages
for the delayed time.
Compensable Delay This is delay
caused by the owner or someone for
whom the owner is responsible (such as
delayed return of drawings which impact
the project schedule) or by an event for
which the owner has assumed liability
(for example, differing site conditions).
Most standard form contracts allow the
contractor to recover both the lost time,
as well as time related damages from the
owner. Contractors are most often
allowed to recover extended field office,
storage, and equipment costs; idled labor
and equipment costs; impact costs; lost
productivity costs; and such other costs
that can be shown to have been incurred
as a result of the delay. Additionally,
contractors may be allowed to recover
extended or unabsorbed home office
overhead costs.
While there are several other types
of delay pacing delay, concurrent delay,
early completion delay and impact delay
which may be recoverable under
contracts, each will, depending upon the

terms and jurisdiction of the contract, be
dealt with as one of the above types of
delay.
Once the cause of the delay is
identified the argument turns more
technical. What is the extent of the
delay? Because of the complexity of
modern day scheduling and multiple
ways to perform forensic schedule
analysis, negotiations over the extent of a
delay are often difficult. Delay analyses
performed by two different parties,
concerning the same event, can and
often do yield results substantially at
odds with one another. However, if both
the owner and the contractor stay
focused on resolution, some agreement
can be reached on both the extent of
delay and the resulting recovery (i.e.,
non-excusable, excusable, compensable
or concurrent).
Then the argument turns to financial
impact. That is, what is the cost of a day
of compensable delay? Provided the
contractor maintained reasonably good
job cost records, determining daily field
office overhead (FOOH) costs is not
terribly difficult. Additionally, other costs
such as idled labor and equipment,
extended equipment and storage, etc.,
are not difficult to ascertain if good job
cost records have been maintained.
However, in owner-caused delay
situations, contractors frequently seek
recovery of extended or unabsorbed
home office overhead (HOOH). This is
where negotiations often deadlock.
Why? There is no standard method of
calculating HOOH. Most contractors
want to use formulas to calculate their
damage. Most owners want to see real
damage based on some sort of audit
Prove your overhead increased as a
result of my delay!
This article addresses the issue of the
recovery of HOOH. Specifically, the
article identifies practical problems with
the use of the Eichleay Formula as a
method
of
calculating
extended/unabsorbed HOOH. The article
discusses these problems from the
viewpoint of accountants/auditors,
owners and contractors. Finally, the
article offers some practical remedies to
be considered when addressing this issue
while preparing contracts for bid.
What is Home Office Overhead?

To begin, lets define the term,
home office overhead, and identify
what expenses are typically allocated to
this cost account by contractors.
Home office overhead is the
general and administrative
expense (G&A) an enterprise
expends to support its various
revenue generating activities.
Characteristically, the home
office overhead costs can not
be directly allocated to a
specific project. It is composed
of numerous items of indirect
cost, typically referred to as the
overhead pool. . . [28].
HOOH, generally, are those costs
incurred by a contractor for the benefit
of all projects in progress. This is an
actual cost, which is an essential part of
the cost of doing business [40]. These
are costs that cannot be directly
allocated to a project. This definition
excludes those costs incurred by the
contractor solely in support of a single
project or group of projects. Typical
examples of HOOH discussed in the
industry include the following:
executive
and
administrative
salaries;
legal and accounting expenses;
home office rent and expenses;
advertising;
company insurance;
recruiting costs;
utilities, telephone, fax and
computers;
human relations costs for the home
office;
interest on company borrowings;
travel for home office staff;
bad debt;
depreciation of company assets;
entertainment;
professional fees;
contributions;
bid costs;
automobiles;
licenses and fees;
property taxes;
data processing;
office supplies; and,
photocopying.
Total Contract Billings

Total Company Billings
For Performance Period
Total Company
=
Overhead for
Performance Period
HOOH Allocable to Contract

Actual Days of Contract Performance
HOOH Allocable
to Contract
Daily Contract HOOH Rate
Daily HOOH Rate x Days of Compensable Delay = HOOH Recoverable

Figure 1The Classic Eichleay Formula
Thus, for the contractors
enterprise to remain viable, a portion of
the contract revenues from each project
must be available to pay for or absorb
the home office overhead expense. By
comparison,
certain
items
of
administrative support provided in the
field usually are treated as direct costs of
the project, for example, site
administrative personnel, field office
trailers, utility services, and the like.
These are generally referred to as field
office overhead or general conditions
costs. . . . items of cost that can be
directly allocated to a specific contract
are not properly part of the [home
office] overhead pool.
There are, however, few regulations
concerning accounting for HOOH costs.
Contractors are reasonably free to
account for such costs in whatever
manner they choose. They must,
however, use the same system at all
times and on all contracts [14]. While
Federal Acquisition Regulations (FAR)
limit the recoverability of some types of
HOOH costs, these limitations apply only
to contracts directly with agencies of the
US federal government [1].
Compensation sought by the
contractor for unabsorbed home office
overhead can be one of the more
contentious issues faced on . . . projects
[43]. However, if the project owner is
an agency of the US government, or if a
contractor has a contract directly with
the US government and is seeking
recovery of HOOH, then they are
required to use the classic Eichleay
Formula to estimate the cost of the
unabsorbed HOOH [47].
What is the Eichleay Formula and How
Does it Work?
The Eichleay Formula, brought
about initially by decisions issued by the
US Court of Claims, is a method to
equitably determine the allocation of

unabsorbed overhead to allow fair
compensation to a contractor for a
government caused delay. It is used to
determine the compensation to a
contractor for unabsorbed overhead
costs because of government-caused
delay [41].
There is no exact method to
determine the amount of home
office expenses to be allocated
to any particular contract or
part of a contract. It is not
necessary to prove a specific
amount of home office
expenses,
but
only
to
determine a fair allocation for
the purpose of compensating a
contractor for delay by the
government. . . . The Eichleay
Formula calculates allocable
overhead costs as the ratio of
billings of the subject contract
to total firm billings during the
contract period, multiplied by
the total overhead incurred,
divided by the actual days of
performance,
times
the
number of days the contractor
was delayed. The basic formula
is outlined as an allocation of
the total recorded main office
expense to the contract in the
ratio of contract billings to total
billings for the period of
performance. The resulting
determination of a contract
allocation is divided into a daily
rate, which is multiplied by the
number of days of delay to
arrive at the amount of the
claim [33].
25
Stated more directly, the classic

Eichleay Formula described above is as
shown in figure 1.
Looked at this way and viewed in
the context of the citations above, it is
obvious that this is a method of
estimating
delay
damages
for
unabsorbed HOOH and is not an
accounting formula, contrary to popular
belief.
Genesis of the Eichleay Formula
Again, contrary to popular belief,
the Eichleay Formula was not created
out of whole cloth by the Armed
Services Board of Contract Appeals
(ASBCA) in 1960.
Rather, the
foundation of this delay allocation
formula was put in place by the US Court
of Claims nearly 20 years earlier. The
dispute arose from a 1933 Veterans
Administration construction contract in
Fresno, California, on which there were a
large number of changes and stop work
directives issued by the government,
resulting in a 58 day delay. Baruch
pursued a claim which included a claim
of $3,107 for general office overhead.
After trial, the Court of Claims awarded
general office overhead damages,
stating in part
During the delay occasioned
by the defendants stop order . .
. the contractor gave prompt
notice to the contracting officer
that such delay was occurring,
that damages therefor were
accumulating and that claim for
such damages against the
Government
would
be
demanded . . .
26
that the plaintiff company

engaged in other construction
work at the time the contract
work involved in this litigation
was being done. We have
therefore apportioned the
general office overhead and
allotted the proper part of
same to this particular
contract. In turn, we have
allotted the proper part of the
net result thus obtained to the
unforeseen delay. . .[21]
(Emphasis supplied.)
Four years later, in a case involving a
1935 contract to construct facilities at a
migratory waterfowl refuge in Bennett
County, South Dakota, the US Court of
Claims ruled
Where the contractor, by
negligence of the defendant
amounting to a breach of the
contract, is delayed in the
completion of the work; it is
held that plaintiff is entitled to
recover a proper proportion of
main office overhead for the
period of delay, without any
precise proof of the amount by
which plaintiffs overhead was
ultimately increased by the
delay. Brand Investment Co. v.
United States, 102 C. Cls. 40,
cited [20].
(Emphasis
supplied.)
Manifestly this delay was not in

the contemplation of the
parties at the time of the
making of the contract. . . . It
was not the fault of the
contractor . . . He should be
permitted to recover the actual
and
necessary
costs
proximately flowing from the
delay that was occasioned by
this action on the part of the
defendant. . . .
Neither of these decisions, however,

included the formula(s) they must have
devised and relied upon in order to
allocate the home office overhead due
the contractor as a result of the
government caused delay. These rulings
did not say how they arrived at the
damages awarded.
Finally, in 1960 the ASBCA heard the
appeal of the Eichleay Corporation from
a Corps of Engineers determination
concerning home office expense
allocable as a result of delays
encountered during the construction of
a Nike Missile Base in Pittsburgh,
Pennsylvania. The ASBCA decision
stated
As to the general office

overhead, the evidence shows
The problem out of which this

dispute arises is how to allocate
home office overhead expenses

incurred during a period of
suspension of work. These
expenses continue during
temporary
or
partial
suspensions, and it was in this
case not practical for the
contractor to undertake the
performance of other work
which might absorb them.
There is no exact method to
determine the amount of such
expenses to be allocated to any
particular contract or part of a
contract. It has been held a
number of times that it is not
necessary to prove a specific
amount, but only to determine
a fair allocation for the
purpose of compensating a
contractor for delay by the
Government [8]. (Emphasis
supplied.)
The ASBCA recognized that when a
contractor encounters government
caused delays of an unknown duration,
the contractors HOOH continues to
accrue but is no longer supported by
revenue from the delayed project. The
ASBCA acknowledged previous Court
findings that there is no exact way to
calculate unabsorbed HOOH in order to
determine the compensation owed the
contractor. It appears that the ASBCA
reached back to the Fred R. Comb case
discussion
of
proportioning
a
contractors HOOH and sought a way to
equitably compensate contractors in
such situations. The appellant in this
case, The Eichleay Corporation, offered a
formula to proportionately allocate their
HOOH from the corporate level to the
project level and then reduce it to a daily
cost. The ASBCA in their decision
adopted the appellants proposed
method of computing unabsorbed
HOOH delay costs and thus the
Eichleay Formula was born!
Lets now examine the practical
problems with the use of the Eichleay
Formula when pricing unabsorbed
HOOH. This examination looks at the
Eichleay Formula from three viewpoints
those being accountants or auditors,
owners and contractors.
Practical Problems Accountants and

Auditors Perspective
While the Eichleay Formula is
considered by the courts and the boards
of contract appeals to be a fair and
realistic estimating method to allocate
unabsorbed HOOH to determine the
compensation owed the contractor,
accountants and auditors recognize that
this is not an accounting formula.
Accountants and auditors who examine
the Eichleay Formula and who are
familiar with the construction industry
understand that The Eichleay formula is
based upon a number of presumptions,
the correctness of which determines the
formulas accuracy and usefulness [7].
There are six major accounting
assumptions embedded in the Eichleay
Formula which give accountants pause
and reason to question the accuracy
and usefulness of the formula as a way
of establishing compensation for
unabsorbed HOOH. The presumptions
referred to in Andersons thesis are the
following.
1.
2.
That a proportional relationship

exists between contract billings and
fixed indirect costs. This is a
questionable
presumption.
Anderson notes that contract
billings are rarely used as the base
for distribution of indirect costs
because contract billings is the
cost of sales plus profit. As the
amount of profit included in
contract billings varies by contract
they are not necessarily directly
proportionate between the contract
billings and the indirect cost pool as
is assumed in the Eichleay Formula.
That the indirect cost pool does not
include any variable costs. Again,
this is an assumption that may or
may not be correct. Even home
office costs, which are typically fixed
costs, sometimes contain variable
costs. To the extent that a claim
includes expenses that vary over
time, the Eichleay Formula does not
reliably measure the contractors
actual loss [22]. Home office costs
and indirect cost pools should be
carefully examined to identify and
remove such variable costs.
3.
4.
5.
6.
That the contractor during delay

period does not perform any
substituted work. This too should
be closely examined. The fact that
the contractor cannot take on
another project the same size as the
delayed or suspended contract does
not necessarily mean that the
contractors work force was idled
entirely and provided no benefit to
the contractor. Substituted work
mitigates the contractors damages
and is not accounted for in the
Eichleay Formula,
That the contractor was working at
full capacity during the entire period
of contract performance. This is an
assumption that may or may not be
true and which needs to be
examined carefully. If a contractor
has one large contract underway
when a second, government
contract is awarded and then,
during performance of the
government contract the larger
contract completes, the contractor
does not win another contract to
replace it and the government
contract is delayed or suspended,
then the contractors compensation
However, the
is increased.
increased
compensation
has
nothing to do with the government
caused delay.
That the effect of the delay on the
contractor is the same, regardless of
when the delay occurs. This may or
may not be true and needs to be
examined closely. If, in a northern
climate, the delay occurs during a
winter period when the contractor
is less productive and has fewer
personnel in the field may have less
impact on the contractor than a
delay which occurs during the
summer when larger and more
productive forces are in the field.
The Eichleay Formula, however,
compensates the contractor the
same in both cases.
That the period of contract
performance is an acceptable base
period for accumulating fixed
indirect costs. That is, this period is
representative of the contractors
fixed
indirect
costs.
This
presumption is more likely to be
accurate when a contractor is
operating under normal and
relatively
stable
business
conditions. However, in times of
economic turbulence the degree to
which costs may be fixed varies. The
Eichleay Formula does not deal with
this sort of accounting sensitivity.
Additionally, from the viewpoint of
accountants and auditors the Eichleay
Formula has the following additional
shortcomings which are not and cannot
be addressed when using the Eichleay
Formula.
1.
The Eichleay Formula cannot be

adjusted for the following:
a.
b.
c.
Seasonal work fluctuations;

Substituted work during delay
periods; or
To account for the capacity at
which contractor was working
before the delay period.
2.
HOOH recovered through mark-ups

on added or changed work is not
accounted for in the context of the
Eichleay Formula. Thus, if an owner
uses the Eichleay Formula to price
delay they should make an
adjustment to the resulting damage
calculations to reduce the damages
by that amount of HOOH paid
earlier in marks ups for changes. As
these markups are typically added
by application of a single percentage
number, the owner is, perforce,
required in enter into a second
negotiation that is, of the 10
percent markup on changes issued
during the delay period, how much
was HOOH? This is a difficult
negotiation indeed.
3.
Some also argue that the Eichleay

Formula fails to consider that a
delay simply defers recovery of
HOOH costs from one accounting
period to another. Thus, there is no
true economic loss to contractor.
Accountants and auditors are

frequently aware of these shortcomings
in the strict application of the Eichleay
27
Formula but as their work takes place

long after the contract is executed they
are powerless to change the formula or
its application. Some practical remedies
are offered in the last section of this
paper to help address some of these
objections.
Practical Problems Contractors

Perspective
Contractors too, have some
concerns and objections with the
application of the Eichleay Formula.
Among them are the following.
1.
Practical
Problems
Owners
Perspective
Owners, too, have a view
concerning strict application of the
Eichleay Formula. Among the owner
objections frequently voiced are the
following.
1.
The Eichleay Formula, strictly

applied, may cause overpayment
of the contractors damages as
noted above.
2.
The owner may end up paying for

the contractors Skybox at Angel
Stadium, their condominium in Sun
Valley, or their golf club
membership in Palm Springs, any or
all of which may be charged to
HOOH under the guise of employee
health, welfare and morale
expenses in accordance with
accounting and tax rules.
The contractor being compensated
via the Eichleay Formula may be
double dipping unless some
portion of the overhead markup
paid on previously issued change
orders is deducted from the Eichleay
Formula calculation.
3.
2.
Despite the fact that the Eichleay

Formula is now 50 years old and has
been employed in literally hundreds
of cases, the Eichleay Formula is not
recognized in all state courts
throughout the US.
In an
informative article published in
1996 [28], it was noted that only
Florida, Maryland, Massachusetts,
Ohio, Rhode Island and Washington
have state case law accepting the
Eichleay Formula and, even then,
had some restrictions on when the
formula could be employed. Some
states specifically disallow the use of
the Eichleay Formula [11]. Even
more interesting is the fact that 43
other states, as of 1996, had no
appellate level court cases
discussing the acceptability of
Eichleay[28]
US federal courts have proscribed
when
and
under
what
circumstances the Eichleay Formula
can be employed. Some state
courts have followed suit likewise.
The rules currently in effect as to
when the Eichleay Formula may be
employed are the following.
for estimating the impact of an

owner caused delay which resulted
in unabsorbed HOOH.
For a
contractor seeking to resolve delay
claims as they progress through the
project, the Eichleay Formula does
not offer any avenue for relief.
Some Potential Remedies
Practically speaking, the only
opportunity to make changes concerning
delay damages and the recovery of
extended/unabsorbed HOOH is to do so
when drafting the contract. Changes
after contract award either (a) have to
be negotiated with the contractor (who
has little incentive to enter into such
negotiations) or (b) will require an
expensive court case and, perhaps,
require the judge to make new law
(something most judges are loathe to
do). Therefore, some practical, potential
remedies offered for consideration are
the following.
Prohibit Recovery of
Extended/Unabsorbed HOOH
Some owners seek to avoid
payment of extended/unabsorbed
HOOH all together on the belief that
these are not real damages. For owners
who want to adopt this approach, the
following are two potential ways to
implement it by contract.
1.
No Damage For Delay Clause The

owner who seeks to prohibit
recovery of extended or unabsorbed
HOOH may include a no damage for
delay clause in the contract. Such
an exculpatory clause attempts to
eliminate or substantially reduce
the damages a contractor may seek
compensation for resulting from
owner caused delay. In some states,
such a clause is enforceable (i.e.,
New York [37]), while in other
states, the courts acknowledge
some or all of the six widely
recognized exceptions to the
enforceability of such contract
language [10, 25].
These
exceptions are, generally, the
following
a.
A delay not covered by the language

of the clause;
The contractor
4.
Finally, for those owners who truly

want to resolve delays during the
life of the project and not wait until
the end of the work to tackle such
thorny issues, the Eichleay Formula
cannot be applied. The Eichleay
Formula is an end of the project
formula as the costs and the period
of performance employed in the
formula all have to be calculated
when the project is complete.
Eichleay cannot be used during the
life of the project!
Some practical remedies are offered

in the last section of this article to help
address some of the concerns and
objections raised by project owners.
28
a.
b.
c.
d.
e.
f.
3.
Must experience government

caused (compensable) delay;
Of indefinite (unknown) duration;
Suspending most, if not all, of the
project work;
Resulting in a substantial disruption
or decrease in the income stream
from the project;
Remain ready to resume contract
work immediately; and,
Is unable to secure comparable
replacement work during the
impacted period in order to replace
the reduced cash flow from this
project [23, 24, 48].
Finally, as noted earlier, the Eichleay
Formula is an end of the job formula
b.
c.
d.
e.
f.
A delay not contemplated by the

parties when executing the
contract;
A delay of unreasonable duration;
A delay resulting from active
interference or other wrongful
conduct of the owner;
Waiver of the clause by actions of
the parties; or,
Fundamental breach of the contract
by
the
owner
justifying
nonenforcement of the clause [12].
this clause is more finely tuned in

that
it
limits
only
extended/unabsorbed
HOOH.
Again, though, owners thinking of
employing this approach need to
seek competent legal advice to
determine whether courts in their
jurisdiction have been enforcing the
AIA consequential damage clause.
3.
Finally, there are a number of states

where no damage for delay clauses
are unenforceable by statute. As of
the 2006 2007 timeframe, some
15 states had prohibited, in whole
or in part, including Arizona [9],
California [13], Colorado [16],
Kentucky [4], Massachusetts [27],
Minnesota [29], Missouri [30],
Nevada [31], North Carolina [32],
Ohio [34], Oregon [36], Rhode
Island [38], Texas [42], Virginia [45],
and Washington [46]. Therefore,
owners who decide to employ this
approach need to seek the advice of
competent legal counsel to
determine whether such a clause is
enforceable in the owners
jurisdiction.
2.
Include Unabsorbed HOOH in the

Consequential Damage Clause
The American Institute of Architects
(AIA) standard form construction
general conditions (AIA Document
A201-1997, 8.3.3) does not
preclude recovery of damages for
delay by either party [5].
However, in the Claims for
Consequential Damages article the
AIA document has the owner and
the contractor waiving claims
against one another for
consequential damages arising out
of or relating to this Contract. This
mutual waiver language includes
damages
incurred
by
the
Contractor for principal office
expenses
including
the
compensation
of
personnel
stationed there[6].
Unlike the broad brush of the no
damage for delay clause approach
Grace Period or Dead Band

Clause Under this approach the
owner may establish, by contract, a
grace period or dead band beyond
the original contract completion
date, during which period no claims
for extended/unabsorbed HOOH
are allowed. If owner caused delay
exceeds this period then the
contractor may seek compensation
for HOOH costs.
While this
approach does not eliminate claims
for extended/unabsorbed HOOH
entirely, it allocates the risk of such
costs should owner caused delay fall
within this period. That is, the
owner gambles that his delays will
not exceed this period and the
contractor is free to include some
potential owner caused delay costs
in his bid holding these costs in his
contingency should such delay arise.
If the owner caused delay does not
occur or occurs but does not
consume the entire grace period,
the remaining unused contingency
cost drops straight to the
contractors bottom line.
generally found support when

challenged in court and there is no
reason to believe this trend will not
continue.
2.
The Mortensen Rule Owners

seeking to limit recovery for owner
caused delay may incorporate the
Mortensen Rule [26] into the terms
and conditions of the contract.
Under this rule a contractor is given
the option of choosing either a
percentage markup rate for HOOH
costs on changes or a per diem rate.
Following the Mortensen Rule, the
contractor must use the same
method at all times subsequent to
selection of the method.
To
incorporate this approach, owners
should consult with legal counsel,
review the case law and craft a
clause
that
contractually
incorporates this approach into the
bidding documents.
3.
Absorption Rate Formulas

Stipulate the use of an absorption
rate formula in the contract for
recovery of owner caused delay
costs. Absorption rate formulas
calculate underabsorption by
comparing a potential or reasonable
overhead absorption rate against
the actual absorption rate for the
purpose of calculating the effect of
the delay on the contractors HOOH
absorption [43].
The two
absorption rate formulas are shown
in figure 2.
Change the Rules for Recovering

Extended/Unabsorbed HOOH
Other owners are willing to
compensate contractors for delay
damages arising from owner caused
delay but are loathe to adopt the
Eichleay Formula as they believe it over
compensates contractors. For owners
seeking to take this approach, the
following remedies may be employed.
1.
Audit Access to Records Clause

An Audit/Access to Records clause
should be included in all contracts
giving the owner the right to audit
the contractors job cost records and
any other records related to change
order cost proposals or claims [44].
Such clauses, properly worded, have
It should be noted that while a

number of accountants/auditors
have recommended this approach,
courts understand that these
formulas are more suitable for
manufacturing operations than
construction projects. Therefore,
owners seeking to take this
approach need to seek advice of
legal counsel to determine whether
courts in their jurisdiction are likely
to uphold such a clause.
4.
Fixed Mark Up Rates Include a

fixed markup rate in the contract
which
specifically
covers
unabsorbed or extended HOOH
costs.
The General Services
29
Administration, the Veterans

Administration and the US Postal
Service
have
all
adopted
contractually fixed overhead rates
which have withstood court
challenges [39].
To see the
Veterans Administration overhead
limitation clause see FAR 8-7.65021, Contract Changes [3]. The
General Services Administration
overhead limitation clause may be
found at FAR 552.243-71,
Equitable Adjustments [2].
5.
6.
Extended
vs.
Unabsorbed
Overhead Recovery Owners may
preclude recovery of unabsorbed
HOOH by contract using language
similar to AIA Document A201-1997,
8.3.3), but then allow recovery of
extended HOOH based on the
actual value of the additional
administrative
services
the
contractor had to employ because
of the delay, The approach would
be to determine the administrative
services the contractor had to
provide while the project was
proceeding as expected and
compare them to the administrative
costs incurred during the period of
delay [7].
Alleghany Method
The Allegheny Formula is set forth below.

Incurred Overhead Rate During - Actual Overhead Rate for =
Actual Period
Projected Performance
Overhead
Period
Excess Overhead Rate
b.
Contract Base Cost
Excess
Rate
= Unabsorbed HOOH
Carteret Method
The Carteret Formula is displayed below.

Incurred Overhead Rate During
Overhead
Delay Period
Rate
Excess Overhead Rate
Normal Overhead Rate =
Excess
Total Base Cost = Unabsorbed HOOH During

Delay Period
Figure 2Absorption Rate Formulas

contract, most legal forums are likely to
enforce use of the formula.
d.
Incorporate Federal Rules in the

Contract
e.
1.
f.
Alternative Formulas Owners may

include alternative formulas for
calculating extended/unabsorbed
HOOH in the contract. If clearly
worded in the contract it is likely
that such an approach would be
upheld by courts, boards and
arbitration panels. Some alternative
formulas for consideration are set
forth in figure 3.
The list of formulas in figure 3 is

certainly not all inclusive. There are,
undoubtedly, other formulas in use and
many more that can be crafted and
included in contracts. The point here is
that with thought and careful
wordsmithing owners can create their
own methods of calculating how
extended / unabsorbed HOOH will be
compensated in the event of owner
caused delay. It is believed that if the
formula is clearly stated and the
conditions under which it may be
employed are likewise clear in the
30
a.
a.
b.
c.
Adopt Federal Rules on Recovery of

Unabsorbed HOOH Some owners
are comfortable with the use of the
Eichleay Formula as a way of
estimating the compensation owed
a contractor because of owner
caused delay. However, they seek to
limit when such compensation is
owed or, rather, under what
circumstances may the contractor
employ the Eichleay Formula. In
this case, legal analysis of the
current Federal Court rules on the
subject can be written into the
contract. A contract clause can be
crafted that states clearly the
contractor
is
not
owed
extended/unabsorbed HOOH unless
all of the following conditions are
met.
The delay encountered must be
owner caused delay;
Of indefinite (unknown) duration;
Suspending most, if not all, of the
project work;
Resulting in a substantial disruption

or decrease in the income stream
from the project;
The contractor is required to remain
ready to resume contract work
immediately; and,
Is unable to secure comparable
replacement work during the
impacted period in order to replace
the reduced cash flow from this
project.
Certainly judges and arbitrators are
likely to recognize such rules as
being applicable to direct US federal
contracts and if they find the same
rules clearly incorporated into the
terms and conditions of the contract
in dispute, it is presumed they will
enforce what was clearly written
and agreed to.
2.
Incorporate FAR Unallowable Cost

Provisions Some owners do not
object to the Eichleay Formula but
want to insure that certain of the
contractors HOOH costs are
disallowed when calculating their
HOOH costs. Inclusion of language
in the contract to the effect that the
disallowed overhead costs from the
FAR [18] are disallowed under the
terms of this contract when
calculating extended/unabsorbed
HOOH. The Audit/Access to Records
clause mentioned earlier can be
employed to see that such a cost
limitation clause is strictly enforced.
Create Mid-Contract Unabsorbed HOOH
Rule in Contract
1.
2.
Limited Reservation of Rights

Many owners understand the value
of settling delay claims as such
situations arise. They understand
that this is one way to avoid a major
end of the project legal battle, as
well as a way to effectively eliminate
constructive acceleration claims on
their projects. Owners who have
studied this approach understand
that the Eichleay Formula cannot be
employed on a mid-project basis.
That is, they are cognizant of the
fact that the Eichleay Formula
cannot be employed until the end of
the project. This effectively cuts
against the owners intent to settle
delay claims during the course of
the project. However, inclusion of a
clause which provides for payment
of direct delay costs (such as,
extended equipment and storage
costs, extended FOOH costs, etc.)
but allows the contractor to reserve
their
rights
to
recover
extended/unabsorbed HOOH costs
until end of project may help resolve
this conundrum.
Create a Mid-Project Formula
Again, owners who want to resolve
delay claims as they arise may want
to consider choosing one of the
formulas above to employ as an
interim or mid-project mechanism
to use for calculating and paying
extended /unabsorbed HOOH but
with the owner reserving their
rights to apply the Eichleay Formula
at the end of the project to
determine if previous payments for
delay should be adjusted, upwards
or downwards, depending upon the
outcome of the final calculation.
Bid Daily Delay Cost

1.
Time Related Overhead Approach

The California Department of
a.
Andersons modified Eichleay Formula [7]
Delayed Contracts Value

Allocable
for Normal Period
Total Value of All Contracts
For Normal Period
b.
Total Fixed
x
Home Office
Expenditures
for Delay
Period
HOOH
Canadian Method [43]
% Markup from Bid x Original Contract Sum

Rate
Original Days in Contract
Daily Overhead
Daily Overhead Rate x Days of Compensable Delay = HOOH Owed

c.
Florida Method [43]
Average Overhead/Day
d.
Original Contract Amount x 8%

Original Contract Time
Ohio Method [43]
HOOH % [35]
Days of Delay x (Original Contract Value x 5.5%)

Original Contract Duration
Figure 3Alternative Formulas

Transportation (Caltrans) has
employed a unique mechanism on
some of their larger projects (the
San Francisco Oakland Bay Bridge
replacement project for example).
They use a Time Related Overhead
(TRO) bid item and specification
to implement the approach [15].
One of the line items in the bid form
requires the contractor to fill in their
daily time related cost and multiply
this daily rate times the number of
working days in the Time of
Performance clause. The cost is
stipulated to include FOOH as well
as HOOH. The contractor is paid
monthly as the project progresses
based upon the number of work
days consumed each month. If
delays arise during the performance
of the work, the TRO number is used
to price the delay once agreement is
reached on causation and liability.
The TRO number is only subject to
unit price adjustment if delay
exceeds 149 percent of the original
number of work days stipulated in
the contract.
This specification
generally avoids the need for audit
concerning delay costs and makes
settlement of delay claims easier.
Further, Caltrans has tied this

requirement to their Escrow Bid
Document requirement such that
the work sheets used to calculate
and bid the daily delay costs are
preserved in a neutral location for
examination in the event that one or
the other party has a need to review
the calculation in order to settle a
delay claim.
2.
Bid Your Delay A variant of the

above is for the owner to insert a
line item in the bid for x number
of days of owner caused delay. (The
owner stipulates the number of
days in the bid form.)
The
contractor is required to fill in the
cost per day and carry out the
multiplication for that line item. The
specification implementing this
approach states that the Owner
Caused Delay line item is an
allowance. Thus, the number of
days and payment therefor will be
subject to upward or downward
adjustment depending upon the
number of days of actual owner
caused delay at the end of the
project; provided that, the line item
cost is not subject to adjustment
31
[49]. The US General Services

Administration
(GSA)
has
successfully used the Bid Your Delay
approach to contractually define
delay damages, including HOOH
damages, to which a contractor is
entitled [17].
It is interesting to note that the
contract under consideration in these
motions also required the contractor to
bid the percentage markup it was top
received for added work. Thus, this
particular contract closed a potential
loophole under which a contractor might
claim that the contract did not allow for
the recovery of additional HOOH
incurred as a result of added work.
The Eichleay Formula is now a half
century old. It is, however, nearly as
controversial today as it was when it was
first created. Some US federal agencies
employ the Eichleay Formula because of
US federal court rulings, while others use
different approaches.
For those comfortable with the use
of the Eichleay Formula, use it
judiciously. For others, uncomfortable
with the formula, this article offers a
number of potential ways to deal with
the issue of compensating the contractor
for delay costs arising from owner
caused delays. The key to the successful
employment of any of these alternatives
is for owners to think through the
situation while the contract is being
drafted; decide how they want to
calculate compensation for delay
damages in the event they delay the
project; seek competent legal advice
concerning their decisions; and carefully
craft and clearly incorporate such
language into the contract documents.
Failure to do so may put the owner in the
unenviable position of having to close
out their project in an arbitration
hearing room or a courtroom.
Disclaimer
The opinions and information
provided herein are provided
with the understanding that the
opinions and information are
general in nature, do not relate
to any specific project or matter
and do not necessarily reflect
the official policy or position of
32
Navigant Consulting, Inc.

Because each project and
matter
is
unique
and
professionals can differ in their
opinions, the information
presented herein should not be
construed as being relevant or
true for any individual project
or matter. Navigant Consulting,
Inc. makes no representations
or warranties, expressed or
implied, and is not responsible
for the readers use of, or
reliance upon, this paper, nor
any decisions made based on
this paper.
REFERENCES
1. 48 C.F.R. 31.205-1 to 31.205-23
(1990).
2. 48 CFR 552.243-71.
3. 34 FR 15470, October 4, 1969, as
amended at 38 FR 5478, March 1,
1973; 39 FR 13263, April 12, 1974;
41 FR 48519, November 4, 1976; 45
FR 15930, March 12, 1980.
4. 371 Ky. Rev. St., 45 A-245, 371-160.
It is interesting to note that this
statute is applicable to some private
contracts in addition to public works
contracts entered into after June 26,
2007.
5. AIA Document A201-1997, 8.3.3.
6. AIA Document A201-1997, 4.3.10.
7. Anderson, David G. Recovery of
Indirect Costs in the Pricing of
Equitable
Adjustments
and
Terminations for Convenience, LL.M.
Thesis, The National Law Center,
George Washington University,
Washington, D.C., May, 1988.
8. Appeal of Eichleay Corporation,
ASBCA, 60-2 B.C.A. (CCH); 1960
ASBCA LEXIS 1207, July 29, 1960,
citing Fred R. Comb Co. v. United
States, (Ibid); B.W. Construction Co.
v. United States, 104 C. Cls. 608,
643-644 (1945), cert. den. 327 U.S.
785; Irwin & Leighton v. United
States, 101 C. Cls., 455, 481 (1944);
Brand Investment Co. v. United
States, 102 C. Cls. 40, 58 Fed. Supp.
749 (1944), cert. den. 324 U.S. 850.
9. Ariz. Rev. Stat. 41-2617.
10. Beattie, Carl S. Beattie. Apportioning
the Risk of Delay in Construction
Projects: A Proposed Alternative to
the Inadequate No Damages for
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
Delay Clause, William and Mary

Law Review, March, 2005.
Berley Industries, Inc. v. City of New
York, 398 N.Y.S.2d 353 (N.Y. App. Div.
1977), reversed, 45 N.Y.2d 683, 385
N.E.2d 281 (N.Y. 1978) and Manshul
Construction Corp. v. Dormitory
Authority, 436 N.Y.S.2d 724 (App.
Div. 1981).
Bramble, Barry B. and Michael T.
Callahan, Construction Delay
Claims, 3rd Edition, Aspen
Publishers, New York, N.Y., 2000.
Cal. Pub. Cont. Code 7102.
Callan, John L. and Hugh L. Rice,
Construction Accounting Deskbook
Financial, Tax, Accounting,
Management and Legal Answers,
5th Edition, Aspen Publishers, New
York, 2004.
Caltrans Program Procedure Bulletin
CPB 00-8, Contract Administration Time-Related Overhead (TRO),
December 15, 2000.
Colo. Rev. Stat. Ann. 24-91103.5(1)(a).
Cross MotionsThe Bid Your Delay
approach to defining delay damages
was recently upheld by the Civilian
Board of Contract Appeals (CBCA).
See Cross Motions for Partial
Summary Relief Granted in Part, July
29, 2010: CBCA 420, 450, 451, 1307,
1855;
Dick/Morganti, A Joint
Venture v. General Services
Administration.
FAR 31.205.
FAR 249-10(b) for a list of excusable
delay causes in typical US
government construction contracts.
Fred R. Comb Co. v. United States,
103 Ct. Cl. 174; 1945 U.S. Ct. Cl.
LEXIS 21, February 5, 1945.
Herbert M. Baruch Corporation,
Ltd., Herbert M. Baruch and Milton
Baruch v. United States, 93 Ct. Cl.
107; 1941 U.S. Ct. Cl. LEXIS 141,
March 3, 1941.
Home Office Overhead as Damage
for Construction Delays, 17 Georgia
Law Review 761, 7904 (1983). See
also, Salt Lake City Contractors,
VABCA 1362, 80-2 BCA 14713 at
72,559 (1980).
Jones, Reginald M. Recovering
Extended Home Office Overhead:
What is the State of Eichleay?,
24.
25.
26.
27.
28.
29.
30.
31.
32.
Procurement Lawyer, Vol. 40, No. 1,

Fall, 2004.
Howrey LLP, Unabsorbed Home
Office Overhead Making a Prima
Facie Case for Entitlement to
Recovery
Under
Eichleay,
Construction Weblinks, August 28,
2006.
Leavitt, Josh M. and Joseph C. Wylie,
Recent Trends in Exceptions to
Enforceability of No Damages for
Delay Clauses, Real Estate Law and
Practice
Course
Handbook,
Practising Law Institute, New York,
2005.
M.A. Mortenson Co., ASBCA No.
40750, 97-1 B.C.A. (CCH) 28,623
(1997), affd on recons. 9801 B.C.A.
(CCH) 29,658 (1998).
See also
Caldwell Construction Co., Inc.,
ASBCA No. 49333, 00-1 B.C.A.
30,702, affd on recons., 00-1 B.C.A.
(CCH) 30,859 (2000).
Mass. Gen. Laws Ann., Chapter 30,
390.
McGeehin, Patrick A. and Carleton
O. Strouss, Learning from Eichleay:
Unabsorbed Overhead Claims in
State and Local Jurisdictions, 25
Public Contract Law Journal 351,
Winter, 1996.
Minn. Stat. Ann. 15.411(2).
Mo. Ann. Stat. 34.058.
Nev. Rev. Stat. Ann. 108.2453(e),
624.622(2)(c).
N.C. Gen. Stat. Ann. 143-134.3.
33. Oak Environmental Consultants, Inc.

v. U.S., 77 Fed. Cl. 688; 2007 U.S.
Claims LEXIS 252, August 7, 2007.
34. Ohio Rev. Code Ann. 4113.62(
C)(2).
35. Ohio DOT has currently established
the HOOH percent they will pay
under their contracts at 5.5 percent.
36. OR. Rev. Stat. 279CV.315(1).
37. Phoenix Contracting Corp. v. New
York City Health and Hospital Corp.,
118 A.D.2d 477, 499 N.Y.S.2d 953
(1986).
38. R.I. Gen. Laws 37-2-42(a),(d).
39. Santa Fe Engineers v. United States,
801 F.2d 379 (C.A.F.C. 1986); West
Land Builders, VABCA 1664, 83-1
B.C.A. 16325.
40. Schwartzkopf, William, John J.
McNamara and Julian F. Hoffar,
Calculating Construction Damages.
New York, NY: John Wiley & Sons,
Inc., 1992.
41. Sunshine
Construction
&
Engineering, Inc. v. U.S., 64 Fed. Cl.
346; 2005 U.S. Claims LEXIS 55,
March 4, 2005.
42. Tex.
Govt.
Code
Ann.
2260.003(a)(3), ( c)(5).
43. Transportation Research Board,
Compensation for Contractors
Home Office Overhead: A Synthesis
of Highway Practice, Federal
Highway
Administration,
Transportation Research Board,
Washington, D.C., 2003.
44. US Governments Audit Clauses at

FAR 52.214-26 or 52.215-2.
45. Va. Code Ann. 2.2-4335(A).
46. Wash. Rev. Code Ann. 4-24.360.
47. Wickham Contracting Co. Inc... v.
Fischer, 12 F.3d 1574, 1580-81 (Fed.
Cir. 1994).
48. Zack, James G. Jr., Calculation and
Recovery of Home Office Overhead,
AACE International Transactions,
AACE International, Morgantown,
WV, 2001.
49. Zack, James G. Jr., Claimsmanship:
Current Perspective, American
Society of Civil Engineers Journal of
Construction Engineering and
Management, Vol. 119, No.3,
September, 1993.
ABOUT THE AUTHORS
James G. Zack, Jr., CFCC, is executive
director, Navigant Construction Disputes
Forum, the industrys resource for
thought leadership and best practices on
avoidance and resolution of construction
project disputes globally, based in Irvine,
CA.
Dr. David W. Halligan, PE, is the
Associate Director, Global Construction
Practice, with Navigant Consulting, Inc.,
located in San Francisco, CA.
AACE's New Recommended Practice

The Technical Board recently voted to approve AACE International Recommended Practice No. 58R-10 "Escalation
Estimating Principles and Methods Using Indices."
This recommended practice (RP) of AACE International denes basic principles and methodological building blocks
for estimating escalation costs using forecasted price or cost indices. There is a range of denitions of escalation and escalation estimating methodologies; this RP will help guide practitioners in developing or selecting appropriate methods
for their denitions and situation. Other RPs are expected to cover methods that do not involve indices, that cover specic
examples of fully elaborated methodologies for specic project situations, technologies, industries, and probabilistic applications. Also, while the RP discusses the relationships of escalation estimating to other risk cost accounts (namely contingency and currency exchange), dealing with those costs is not this RP's focus.
Escalation estimating is an element of both the cost estimating and risk management processes.
Like other risks escalation is amenable to mitigation, control, etc. However, this RP is focused on quantication, not on
escalation treatment (i.e., how it is addressed through contracting, bidding, schedule acceleration, hedging, etc.) or control. In terms of cost estimating, this RP covers practices applicable to all classication of estimates. The examples in the
RP emphasize capital cost estimating, but the principles apply equally to operating, maintenance and other cost.
For a list of all AACE Recommended Practices visit www.aacei.org/resources/rp
33
AACE
AACE
News
News
Flash
Flash
All AACE Books to Become
"Print-on-Demand" Products
Later this year, AACE will be reformatting each of its print products (i.e., the Skills
and Knowledge of Cost Engineering;
CCC/CCE Certication Study Guide; EVP
Study Guide; PSP Study Guide; and the TCM
Framework) to be produced by a subsidiary
of Amazon.com. Our goal is to begin 2012
with each of these AACE publications available online from Amazon.com. We will
maintain a link from the AACE website to
Amazon.com and recommend products as
well.
AACE Merchandise
Available Through Land's End
In addition to using Amazon.com as the
provider of AACE print products in a "printon-demand" service, all AACE hats, teeshirts, and member or speaker gift logo
products have already been outsourced to
Land's End, another recognized business
product provider. A link is already available
to these product oerings from the AACE
online store..
Similar to "print-on-demand," the merchandise and services available through Land's
End increases what is available to AACE
members, sections, and anyone wanting to
place an order. The AACE logo can be printed
on a wide variety of clothing products and
merchandise. Members have access to the
full range of sizes and colors that Lands End
carries and oers. Orders are placed with
and ship directly from Lands End.
34
PROFESSIONALSERVICESDIRECTORY
RECENTLY REVISED RECOMMENDED PRACTICES

Recommended Practice No. 17R-97
Cost Estimate Classication System
Cost Estimate Classication System: As Applied in Engineering,
Procurement, and Construction for the Process Industries
Forensic Schedule Analysis

Risk Analysis and Contingency Determination Using Parametric
Estimating
Risk Analysis and Contingency Determination Using Parametric
Estimating - Example Models as Applied for the Process Industries
To access these and all other recommended practices,
visit: www.aacei.org/resources/rp
INDEX TO ADVERTISERS
ADVERTISE
Acumen PM, page 7

ARES Corporation, back cover
Bechtel Corporation, page 3
Bluebeam Software, Inc., page 10
YOUR
VISIBILITY
EcoSys, inside front cover
PLACE your products/services in front of
over 50,000 users each month with a banner

ad at our website, www.aacei.org.
Management Technologies, this page
Moca Systems, page 23

Ron Winter Consulting, page 6
Skire, Inc., page 6
U.S. Cost, inside back cover
For additional information about the listed advertisers or about advertising with us, please phone Keith Price at Network Media Partners,
(410) 584-1966, or e-mail him at kprice@networkmediapartners.com
McDonough Bolyard Peck, page 23
REACH the entire AACE International membership every month by placing an ad in the
Cost Engineering journal.
Eos Group, Inc., page 34

Infinitrac, this page
IN THE
COST ENGINEERING
JOURNAL
EXHIBIT at the 2011 AACE International

Annual Meeting in Anaheim, CA, and meet
over 750 AACE International members face
to face.
CONTACT
Keith Price at Network Media Partners Inc.
phone 410-584-1966 fax 410-584-8359
e-mail kprice@networkmediapartners.com
OR GO ONLINE AT www.aacei.org
35
THE AACE INTERNATIONAL BULLETIN
SECTION NEWS
Arizona Section
On April 15, the last of the
three scheduled
presentations on project controls
was conducted
at the Del E. Webb School of
Construction, Arizona State University. Speakers included Chris Hudson, Cindy
King, Hannah Schumacher, Marina Sominsky and Max Shoura.
They discussed potential career paths, industry trends, specic
project experiences and growth opportunities through involvement in organizations and achieving certications. Throughout
the course of the presentation, the speakers answered various
student inquires and questions, making it a lively interactive session.
4D BIM for Delivery
The Arizona Section members and guests were pleased to
have Kirk Olson, executive vice president of Synchro Ltd, as its
guest speaker on April 21, at Kitchell's Training Center.
FROM AROUND
THE WORLD
During his presentation, Mr. Olson introduced a 4D technology solution, called Synchro that addresses, BIM for Delivery.
The essence of Synchro is to integrate BIM design models and
schedules to continue the data ow into the delivery process of
the project in a visual and synchronized mode. Synchro is a
highly functional 4D simulation and planning tool that allows
every construction team to deliver large, complex projects in a
totally new synchronized paradigm.
The presentation highlighted the use of Synchro in largescale complex construction projects and illustrated how sharing
this information in a collaborative environment for the construction team creates a very powerful visual dynamic. Mr.Olson also
demonstrated how dierent construction scenarios can be run
side-by-side using Synchro graphical simulation capabilities, as
well as how to incorporate project costs into what becomes Synchro 5D model. This highly informative and interactive presentation allowed participants to ask many questions about
Submitted photo
On April 15, the last of the three scheduled presentations on

project controls was conducted at the Del E. Webb School of Construction, Arizona State University. Shown above from left are
Dr. Leonard Kawecki of ASU with AACE presenters: Chris Hudson, CCC, CEP; Marina Sominsky, Hannah Schumacher, PSP;
Cindy King, and Max Shoura, PE PSP.
36
Submitted photo
Kirk Olson, executive vice president of Synchro Ltd., above left,

receives a gift from AACE Arizona Section Secretary Marina
Sominsky, PMP , at right. This followed Mr. Olsons presentation
at the Arizona Sections April meeting.
Submitted photo
William Ellie Daniel, a senior communications specialist from the

Alvin W. Vogtle Electric Generating Plant, presented the April
program for the Central Savannah River Area Section.
Submitted photo
Arizona Section Board Members Max Shoura, PE PSP, shown

above top along with Hannah Schumacher, PSP; Chris Hudson,
CCC, CEP; Cindy King, and Marina Sominsky, above photo, participate in an Arizona Section board meeting on May 19.
particular project situations and challenges.
Mr. Olson is the executive vice president of Synchro and is
based out of Sacramento, Ca. His previous positions include:
President of KMS Homes (regional builder in the Bay Area); CEO
of CustomerLink Systems (a market leader in the customer retention and data analytics of the automotive aftermarket industry); and EVP with International Business Systems (ERP software
company in the wholesale distribution market place). Mr. Olson
graduated from California State University Sacramento with a
degree in business management in 1992.
The Arizona Sections Board Meeting was conducted on
Thursday, May 19, at Kitchells Training Center, 1661 E Camelback
Rd, Suite 375, Phoenix, AZ. The subjects discussed included election results; section excellence award status, and the backup
documentation; and the upcoming calendar of events.
Central Savannah River Area Section

The April Meeting for the CSRA Section was held at the
North Augusta Community Center and featured William Ellie
Daniel Senior Communications Specialist from the Alvin W. Vogtle Electric Generating Plant as our guest speaker. The increased
demand for energy is driving the need for new baseload capacity
at Plant Vogtle. The population of the southeastern United
States continues to expand rapidly and according to the US Department of Energy, 40% of the US population will live in the
Southeast by 2030. The state of Georgia alone is expected to
grow by 4 million people by 2030. During the next 15 years, electrical demand on the Georgia Power system is projected to grow
30%.
Plant Vogtle is located approximately 34 miles southeast of Augusta Georgia, on the Savannah River. Southern Company is the
founding member of a consortium of utilities that has been
awarded funds from the US Department of Energy for the de-
Submitted photo
The Central Savannah River Area Sections April meeting featured William Ellie Daniel, senior communications specialist from
the Alvin W. Vogtle Electric Generating Plant, as the guest
speaker.
velopment, construction, and operation of 2 new nuclear plants
at Plant Vogtle. The recently signed contract with Westinghouse
& Shaw for construction, is the 1st EPC Contract Signed in the
U.S. in Almost 30 Years. The NRC approved an Early Site Permit
in August of 2009, making it the rst technology and site specic
ESP in 30 years. The project is on schedule to receive Construction & Operating License in late 2011, and expects both units to
be on line in 2016 and 2017
The CSRA Section Nomination Committee presented the roster
for the 2011-2012 AACEI-CSRA Board. Members of the CSRA
Section tendered their votes by May 1 and the results were announced.
Central Texas Section

The Central Texas Section conducted its third meeting of
2011 on April 14, at Spire Consulting Group's oce in Austin,
Texas. Jared Carlson, sales manager at US Cost in Atlanta, Georgia, presented on, Web Technology and Collaborative Estimat-
37
Submitted photo
Submitted photo
Jared Carlson, sales manager at US Cost in Atlanta, Georgia, was

the guest speaker at the April Central Texas Section meeting. He
presented on, Web Technology and Collaborative Estimating.
The Charles V. Keane Distinguished Service Award for 2011 was

awarded at the Annual Meeting to Arthur Kowalchuk. the
award was announced at the April Chinook-Calgary Section
meeting. Shown above from left are: Steve Revey, Arthur
Kowalchuk, Mahendra Bhatia, and Ginette Basak.
ing. During his presentation, he focused on the technology aspects and benets of companies moving toward web based applications, specically for cost estimating. Also, he highlighted
the perceived benets to companies that are using a central
platform for this work, allowing all estimators and project managers to access and collaborate.
Chinook-Calgary Section
President Deborah Clark welcomed 27 Chinook-Calgary Section members to the May 09, Annual General Meeting. She introduced the Board Directors for the 2011-12 sessions. A
number of items were discussed. Deborah Clark then introduced incoming President Donna Kainth who will be presiding
over the next sessions. The members thanked Deborah for handling the 2010-11 sessions. The AGM was then adjourned.
Some 57 members and guests attended the Chinook-Calgary Sections technical dinner meeting in the Riverview Room
of the International Hotel on Wednesday, April 20.
Donna Kainth introduced Stephen Revay who made a couple of announcements. He announced that the Awards Committee of AACE International has selected long-time
Chinook-Calgary member Arthur Kowalchuk as the 2011 recipient of the AACE Charles V. Keane Distinguished Service Award.
Arthur received a standing ovation from the session attendees.
Stephen Revay announced that a second Chinook-Calgary mem-
Submitted photo
Members of the 2011-2012 Chinook Calgary Board of Directors.
38
ber, Mahendra Bhatia, has been appointed a Fellow of AACE International. Mahendra also received an ovation from the attendees.
Mahendra Bhatia introduced the evening speaker, Dave
Weatherby, P.Eng., of SNC Lavalin Transport Vancouver division.
His presentation was on, Challenges in Design and Construction
for the West Calgary LRT Expansion Project. He began with a series of photographs showing various aspects of the facilities
which are still under construction. The project includes 8 kilometres (about 5 miles) of line, six LRT stations and two park and
ride sites. It was divided into elevated areas, cut and cover tunnels and open trench areas. The project was further complicated
with temporary rerouting of trac, minimizing impact on residential areas, shopping malls and schools.
There were signicant costs for re-routing utilities below
grade, constructing retaining walls, disposal of material from
open trench excavation, as well as providing grade separation at
major intersections. Year round construction required allowances for cold and snow during winter seasons. Traction
Power Stations for power distribution had to be provided at
strategic locations. Engineering also had to provide design for
pedestal towers carrying overhead tracks over 14th Street, CPR
Rail lines and along the Bow River. The trench and tunnel sections required solid support for embankments, track base and
several curved sections of rail lines. Prefabricated sections of
tunnels required heavy lift equipment for installation. Curved
support steel was provided for roof support at LRT Stations. The
Sarcee Trail Interchange involved complex grade requirements.
Safety was always considered and carried out at all construction
areas. A question/answer period followed the presentation.
Submitted photo
East Tennessee Section Vice President Je Morton, above left,

presents a presenters gift to Elizabeth Phillips following her
presentation at the sections April meeting.
East Tennessee Section

The East Tennessee Sections April meeting was a lunch
meeting at the University of Tennessee Out Reach Center in Oak
Ridge, TN. The guest speaker was Elizabeth Phillips of the DOE
Environmental Management Team for the DOE Oak Ridge Operations (ORO).
Elizabeths presentation topic was, How Do You Estimate a
Billion Dollar Remediation Project? with the subtitle of With
Multiple Risks and Uncertainties. The focus was on the Y-12
Mercury Remediation. As part of an industrial separation
process at Y-12, between 1955 and 1963, the inventory of Mercury was 24 million pounds and some of the mercury was lost
on site and remains on the Y-12 site today. The big problems
arise as mercury can turn into methyl mercury which is a human
neurotoxin and bioaccumulates in the food chain and can get
into humans from sh consumption. Mercury poisoning can
cause nervous disorders, loss of hair and teeth, loss of memory
and insanity.
Starting in the 1980s numerous remediation eorts and
projects were undertaken including investigations and studies.
Records of Decision were signed in 2002 and 2006.
In 2008, the Integrated Facility Disposition Project expanded
the scope of EM cleanup actions to include 97 more buildings
and 5 more remedial actions at Y12. Then in 2009 the Recovery
Act (ARRA) helped to direct funds to several additional clean up
projects.
The current remediation strategy that has been developed
Submitted photo
Shown above is an overview of East Tennessee Sections April

lunch time meeting at which Elizabeth Phillips presented the sections technical program.
through a variety of workshops, technical reviews and studies
include breaking projects into several WBS elements for separate funding and estimating. Besides the funding requirements,
the sequencing of projects is a key to success where buildings
are rst torn down and then the soils underneath them are remediated.
New mercury remediation strategies continue to evolve and
numerous preventative strategies have been implemented at Y12 to help keep the mercury contamination from getting worse.
But, there are continuous risks with the mercury that still exists
and there are still many unknowns about mercury contamination. Research continues through the Remediation of Mercury
and Industrial Contaminants (RoMIC) applied Field Research
Center to help develop solutions to the problems. From all the
risk and technical mysteries involved with mercury remediation
it is not hard to see how dicult it is to estimate remediation
projects and there are numerous methods and solutions that
can be used. Elizabeth outlined the current options for estimating remediation at Y-12 and the numerous pros and cons with
three proposed methods. The take away here is that there is no
COST ENGINEERING MARCH 2011
39
one, right way to remediate the mercury, and there is no one

right cost estimate when there are so many variables. It appears
that Elizabeth has many challenges ahead and we wish her success on this very important endeavor.
San Francisco Bay Area Section

The San Francisco Bay Area Section conducted its monthly
meeting on May 17, at Sinbads restaurant in San Francisco.
Members and friends gathered to hear Adam Rosss presentation on Green Energy Feasibility.
Northern West Virginia Section

The Northern West Virginia Section and the West Virginia
Society of Professional Engineers met Thursday, May 19, at the
Engineering Sciences Bldg, Room G84, Evansdale Campus, WVU.
The meeting included a tour of the new West Virginia University
basketball practice facility, currently under construction adjacent
to the WVU Coliseum above the Mountaineer Tennis Courts.
The $19 million facility will be used by the Mountaineer mens
and womens programs. The state-of-the-art facility will help
showcase Mountaineer Basketball and provide the necessary
practice, strength and conditioning, sports medicine, team
meeting, video, equipment, and locker room facilities all necessary to compete at the highest levels. This one-of-a-kind structure will provide Mountaineer teams with 24-hour facility access
and eliminate the time scheduling battle currently associated
with the WVU Coliseum.
The tour was led by Bill Linn, Capital Project Manager with
West Virginia University Facilities Management Construction
Services.
The meeting opened at 6:15 p.m. with social drinks and
snacks. At 7 p.m. was the technical program with a project
overview presentation at ESB. The overview was followed by
walking tour of the new Basketball Practice Facility. This was the
sections last meeting until September.
Pittsburgh Section
Submitted photo
Bernie Fedak, a member of the Pittsburgh Section and a project

executive with Aker Construction, above left, receives a Certicate of Recognition from Section Vice President Rich Easler. Mr.
Fedak presented the technical program at the sections May
meeting.
40
Submitted photo
San Francisco Section Ex-President Des Orsinelli is shown presenting a speakers certicate and bottle of wine to Adam Ross,
presenter of the sections May program.
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
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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.
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INMEMORIAM
DoloresEvanNeil(1930-2011)
Dolores Evon Neil, born August 14, 1930, lost her 11 year
battle with cancer on May 22, 2011. This stunning woman was
the daughter of William Patrick and Ella Sophie Conlon, born and
raised in Minot, North Dakota.
Dolores dedicated her life to enhancing the lives of others
though love, caring and working to bring opportunity in their
lives. As a young lady, Dolores obtained her Registered Nurse
degree and worked to help end pain and suering for those she
tended for. Her beautiful smile and loving encouragement gave
her patients hope and comfort.
In 1951, Dolores married the love of her life, Col. James M.
Neil, Ph.D. For the next 51 years, Dolores dedicated her life to
Jim's career, her loving family and service to the communities
where they lived.
As a military wife, Dolores volunteered her time to help enhance the lives of military families. At four dierent military installations, Dolores served as President of the Ocers Wives
Club. In this position she raised money for college scholarships,
developed welcome pantries for new military families needing
assistance and helping to fund the Army Emergency Relief fund.
After Jim's retirement from the military, Dolores continued
her community support with focus in the city in which they lived.
In 1974, Dolores served at the President of the Retired Ocers
Wives Club, in Bryan, Texas.
In 1981, Jim accepted a position with Morrison-Knudsen
Company in Boise, Idaho. There Dolores found a new joy in her
life that helped bring hope in the community, the Assistance
League of Boise. Both she and Jim dedicated hours to help the
less fortunate children in this community by helping to provide
new clothing, school supplies and hearing aids. From 19992000, Dolores served as President of this wonderful organization, where she continued to evolve the League's Mission to
AACEHeadquartersOce
MovestoNewLocation
AACE International Headquarters oce will be moving to
a new location in July. We will be posting more information about the upcoming move on our website in the
weeks to come
Our new mailing address will be:
AACE International Headquarters

1265 Suncrest Towne Centre Dr
U.S.A.
Our phone, fax, website, and email addresses will remain
the same.
bring a smile to the children of the Boise Community. After Dolores' term as president, she continued to provide her loving
support.
Dolores blessed this world with three wonderful children,
Terry Loofbourrow of Boise, Scott Neil of Boise, and David Neil
and his wife Tammy from Bryan, Texas. This loving family continued to grow with the blessing of six beautiful grandchildren,
Trina Loofbourrow Iovino, Jenny Loofbourrow, Brandon Neil, Ava
Neil, Ryan Neil and Brittany Neil Allen. Dolores extended her love
and family with the addition of Richard D'Agostino, Richard
Crimin, Dr. Robert and Magdie Teears, and their children, Laurel
and Matthew Teears. Dolores is also survived by her brother
and his wife, Bruce and Ginny Conlon and their two sons, Daniel
and Thomas.
Her husband preceded her in death in 2003. Dolores
wanted to thank the wonderful sta and her supportive friends
at the Plantation Place Assisted Living for making her nal years
so special.
A celebration of Dolores' life was conducted from 1-4 p.m.
on May 25, 2011, at her long time residence in The Plantation.
Dolores requested that a donation to the Assistance League of
Boise be made in honor of her, in lieu of owers. Please allow
her legacy to continue to bring joy to the children of this community.
Wordhasalsobeenreceivedofthefollowing
deaths:
FredG.ODonnell of Spire Consulting of Austin, Texas.
JohnDavisWarren on April 21, 2011, at Toronto, Ontario, Canada.
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41
ARTICLE REPRINTS AND PERMISSIONS
COST ENGINEERING
Vol. 53, No.7/July 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 International no longer offers reprints of individual articles.
Pages 13-23
Lessons Learned Schedule Development

Using Primavera P6
TM
TO ORDER
Contact: AACE International Publications Sales
at pubsales@aacei.org
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For permission to photocopy individual articles
for personal use, or to request permission for
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Contact Us
AACE International
209 Prairie Avenue, Suite 100
USA
Phone: 304.296.8444
Fax:
304.291.5728
Many contract documents are now requiring the use of the latest version
of Primavera software (P6) because of its enterprise capabilities and its use of
latest technologies, including the capabilities to interact other software applications; therefore it is important for the scheduler to understand how to use this
software most efficiently in their battle to complete their projects in a timely
manner. Primaveras latest release of P6 contains many features that can assist
in developing schedules quickly and efficiently. However, a new or in-experienced
user would be overwhelmed in the struggle to prepare the schedule using P6
and these advanced features without proper training or basic training. This article will focus on the authors experiences and their lessons learned regarding
the effective use of P6 in the schedule development process as they apply this
to the TCM planning and scheduling development processes (TCM 7.2). This article was first presented as PS.11 at the 2010 AACE International Annual Meeting
in Atlanta.
Article Reference Number - 21865

Pages 24-33
Practical Problems With Pricing Delay Using Eichleay

Since 1960, the Eichleay Formula has been used to price extended and/or
unabsorbed home office overhead. Most in the construction industry treat the
Eichleay Formula as an accounting mechanism seldom understanding that the
US Armed Services Board of Contract Appeals created this formula as an estimating tool, not an accounting method. There are some practical problems with
the Eichleay Formula. From the accounting perspective, there are several major
flaws built into the formula. From the project owners perspective, there is a risk
of overcompensation unless certain contractual defenses are employed. And,
from the contractors perspective, there are issues with the applicability and the
use of the formula. This article examines the traditional Eichleay Formula from
all three viewpoints, to identify the problems and offer some recommendations
on how to alleviate them.
Article Reference Number - 21866
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
43
CALENDAR OF EVENTS
OCTOBER 2011
8-11 AACE Internationals
16-20 ACI Fall 2011 Convention,
56th Annual Meeting,

AACE International
Mariott Rivercenter Hotel
San Antonio, TX
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
JULY 2012
5-8 AACE International
Education Seminars,
AACE International
San Antonio, TX
Contact: phone 1-800-858-COST
fax (304) 291-5728
info@aacei.org
www.aacei.org
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Dr. McNeishs Lessons from Geese

Remembering Dolores Evan Neil, Fred G.

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content online associated with that article or feature. Direct

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Policy Concerning Published Columns, Features, and Articles

COST ENGINEERING JULY 2011

n this rst Presidents Message of my administration,

Michael R. Nosbisch, CCC PSP, President

COST ENGINEERING JULY 2011

not ashamed to look to the previous leaders of AACE to get

EDITORS NOTE: To engage in other discussions, check out AACE

Drill-down from Dashboard to P6

Primavera would have included it.

reviewing your P6 schedule and

Interfaces Directly with Database

COSTENGINEERING JULY 2011

Enterprise Project Analysis

quality and build more

IDENTIFY logic flaws

schedule iterations and

ALIGN schedule with

cost and risk information

Download a trial version at: www.projectacumen.com/trial

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Lesson 2 for AACE International Members

Lesson 3 for AACE International Members

Lesson 4 for AACE International

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Lesson 5 for AACE International

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who lost their job only to be oered a better position because

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