AACE CEP Certified Estimating Professional flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Estimate Accuracy

The degree to which an estimate's predicted cost matches actual cost. Accuracy ranges narrow as project definition improves, from wide conceptual ranges to narrow definitive ranges.

Estimate Precision

The level of detail and rounding in an estimate. High precision does not guarantee accuracy; a very detailed estimate can still be far from actual cost.

AACE Estimate Class 5

The least mature estimate class, typically 0-2% project definition, using order-of-magnitude methods with the widest accuracy range for concept screening.

AACE Estimate Class 1

The most mature estimate class, typically 65-100% project definition, using detailed deterministic methods with the narrowest accuracy range for final control.

Basis of Estimate

Document recording scope, methodology, assumptions, exclusions, pricing basis, accuracy range, and risks. It makes the estimate auditable and interpretable by reviewers.

Direct versus Indirect Cost

Direct costs attach to specific work items (e.g., pipe, steel); indirect costs are shared across the project (e.g., supervision, temporary facilities, home office support).

Six-Tenths Rule

Capacity scaling formula C2 = C1 × (Q2/Q1)^n with exponent n near 0.6. It estimates cost of a new capacity from a known similar facility.

Lang Factor

A multiplier applied to delivered equipment cost to estimate total plant cost. Factors differ by plant type (solids, fluids, mixed) and include installation and indirects.

Parametric Estimating

Method using statistical relationships between cost and measurable drivers such as cost per kW or per square meter. Reliability depends on calibrated historical data.

Bottom-Up Estimating

Deterministic method building total cost from detailed quantity takeoff times unit rates, rolled up through the WBS. Requires mature scope definition.

Factored Estimating

Technique applying multipliers to a known base cost, such as piping as a ratio of equipment cost. Accuracy is intermediate between conceptual and detailed methods.

Unit-Rate Estimating

Method pricing defined quantities at rates composed of labor, material, equipment, and indirect components. Requires quantities and applicable rates.

Monte Carlo Simulation

Probabilistic technique sampling cost distributions repeatedly to produce a total cost probability distribution, supporting contingency sizing at chosen confidence levels.

Cost versus Price Analysis

Cost analysis examines reasonableness of individual cost elements; price analysis judges total price reasonableness without examining elements, often via competitive comparison.

Learning Curve

Model where each doubling of cumulative production reduces unit labor hours by a constant percentage (e.g., 80% curve). Y = aX^b with b = log(rate)/log 2.

Cost Index Escalation

Adjusting historical cost to a new time base using C2 = C1 × (I2/I1), where indices such as CEPCI or ENR reflect price change over time.

Location Factor

Multiplier adjusting cost from a base location to another, reflecting differences in labor rates, material costs, and productivity across regions.

Should-Cost Analysis

Cost analysis technique building an independent model of what a product or service should cost from its elements, then comparing to the proposed price.

Estimate Plan

Document defining estimate class, method, WBS, coding, schedule basis, review cycle, and roles before estimating begins, ensuring consistent execution.

Quantity Takeoff

Process converting design documents into measurable quantities (e.g., meters of pipe, cubic meters of concrete) that are then priced with unit rates.

Estimate Reconciliation

Comparison of successive estimate versions documenting the causes of change between them, separating scope, quantity, rate, and methodology effects.

Estimate Coding Structure

Use of WBS, cost breakdown structure, and cost codes to enable roll-up, benchmarking, and integration of the estimate with cost control and accounting.

Estimate Review

Structured validation of an estimate's completeness, methodology, and reasonableness - including check estimates and peer or gate reviews - before approval.

Contingency

Allowance in the estimate for known-unknowns: identified risks and estimating uncertainty within defined scope. It excludes scope changes and unforeseeable events.

Management Reserve

Allowance for unknown-unknowns and scope changes, typically held outside the project estimate and controlled above the project manager.

Expected Value

Risk metric computed as probability times impact. Summing expected values of identified risks supports risk-adjusted estimating.

P80 Cost Estimate

Cost value at the 80th percentile of a simulated distribution, meaning an 80% probability the actual cost will not exceed it. Commonly used for contingency targets.

Escalation

Anticipated price change over time due to inflation or market conditions, distinct from contingency and currency effects. Computed via rates or published indices.

Risk Register

Log of identified risks with probability, impact, owners, and response strategies. It feeds risk-adjusted estimating and contingency sizing.

Estimate Version Control

Document management practice ensuring the current approved estimate is traceable, auditable, and distinguishable from superseded versions.

Benchmarking

Comparing estimate metrics such as cost per unit capacity or factor ratios against historical projects to validate reasonableness and identify outliers.

Historical Cost Database

Repository of normalized actual costs used to calibrate future estimates, parametric models, and factors. Its quality directly drives estimate accuracy.