Perfil de Competencias

INFRASTRUCTURE PROJECTS

Blischke and Murthy (2011) defined estimation as a symbolic formation of a system, and the content of it is defined using the factors affecting the construction cost and duration of projects such as risk and uncertainty. Since the 1950s, efforts have been made to identify the relation between the level of available information and construction cost and time to develop models to estimate construction cost and duration accurately. WSDOT stated that estimating is a maturation process that follows project development.

Generally, the theories of cost and time estimation are classified into two main groups: deterministic and probabilistic.

3.2.1 Deterministic theory

Deterministic theory focuses on the values and durations which are qualified with all variables that exactly known or can be estimated accurately (Benjamin and Cornell, 2014). Deterministic theory, also known as base estimation, provides a single cost and duration and neglects to consider the risk and uncertainty in the estimate of cost and time.

The base estimation process is the most common estimation technique in the construction industry developed based on deterministic theory. The base estimation considers the project construct at the point of the idea and calculates the cost and time of activity based on the normal (mode) value and duration (Khamooshi et al., 2012). The base estimation employs several methods to estimate the cost and time of projects, such as global estimation, composite estimating, unit rate estimating, first principles estimating, and unit rates/first principles estimation Base estimation is an estimation process developed from deterministic theory.

The base cost estimate is the sum of two key components: the client (public) costs and construction (indirect, direct, margin) costs, while the base time estimate is obtained by the construction (indirect, direct) time as at the applicable base date and which should cover all phases of the project (Development, 2017). The base estimate is prepared based on the estimator’s best assessment of the quantities, market rates and production rates that will be required for a given scope of work at the time the estimate is prepared. Allowance, contingency or escalation do not form part of the base estimate which means the project must be constructed in ideal conditions. Total project cost

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attained by the simple summation of all activities’ cost and the total project time is obtained by the simple summation of all critical activities’ time.

The nature of the deterministic estimation of cost and time is independent of the method employed for obtaining the initial values (Kumar and Varaiya, 2015) Thus, deterministic cost and time estimations are derived from an analysis of historical data of past projects or expert opinions. Considering the project to be constructed in ideal conditions is the main weakness of the deterministic (base estimation) theory, which systematically disregards the occurrence of any uncertainty and unforeseen conditions during the construction of the project.

Therefore, deterministic estimation methods such as base estimation yield higher cost and time differentials (underestimation) and do not allow planners to incorporate the risk and uncertainty that define the characteristics and uniqueness of each construction project. The estimation models, which used deterministic theory, such as the single value estimation model and base cost estimation, are considered unreliable and lead in underestimation of construction cost and duration of projects (Odoh and Ihedigbo, 2014).

3.2.3 Probabilistic theory

Probabilistic theory, also known as risk-based estimation is based on the ideology of the random nature of the construction cost and time of activities, and initial values of a specific statistic distributions (Benjamin and Cornell, 2014). Probabilistic theory incorporates the risk and the uncertainty that surrounds each construction project and, consequently, it provides a method representative of the project characteristics and uniqueness.

Probabilistic theory accepts that although the values of some variables are not absolutely certain, they can be calculated. The main advantage of probabilistic theory compared to deterministic theory its ability to provide insight into the accuracy of the estimate and the impact of risk and uncertainty (AASHTO, 2013). The concept of probabilistic theory shown in Figure 3.1.

Several estimating methods have been developed based on probabilistic theory such as: expected value, variance, central limit theorem, PERT, and Monte Carlo. These probabilistic methods represent the construction project cost and time as full probability distributions, and incorporate new information as the construction progresses. The main difficulty of models using probabilistic theory lies in the necessity of reliable expert estimation data, and the effort of obtaining and incorporating reliable data into estimation models have been identified as the main problems of this approach (Ross, 2013). Even when reliable data is available, some other challenges, such as selection of the appropriate probability distributions to describe the cost and time elements, and the determination and quantification of correlation among cost and time variables involved in the construction project, are difficult to address (Kumar and Varaiya, 2015).

The models based on probabilistic theory have not been widely employed in the construction industry, because there is not a real demand for quantitative modelling of uncertainty among projects planners and decision makers, and existing probabilistic models do not provide a realistic

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and accurate estimate due to not properly assessing the impact of risk and uncertainty (Eastman, 2018).

Figure 3.1: Probabilistic theory concept