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Estimating environmental remediation projects is a difficult problem to say the least. Not only are the scopes of work most environmental remediation projects virtually impossible to quantify because of the nature of the work, but also the nearly exclusive use of cost-plus contracts introduces another factor of variation into the data that can be used to build an estimating database. This paper demonstrates how parametric estimating can be used to get a handle on the variation and improve the accuracy of estimates for these types of projects.
INTRODUCTION TO PARAMETRIC ESTIMATING IN THE ENVIRONMENTAL FIELD
Parametric estimating at its simplest is a methodology that allows an estimator to develop a model, which allows for a quick and accurate cost estimate. The models, based typically in algorithms, uses statistics, historical data, and process knowledge to develop the estimate. "The algorithm is an estimating relationship that has one or more independent variable (the parameters) which most nearly explain or predict the magnitude of a dependent variable - cost for example" [4]. To properly use parametric estimating, one must have a base of historical data from which to prepare the estimate. Without a statistically reliable database, it is impossible to prepare a parametric estimate. "A well defined, accessible database is mandatory if you are to have a reliable and dependable estimating capability" [4].
AACE International identifies three types of cost estimating: order of magnitude, budget, and definitive. Order of magnitude estimates are used to determine the feasibility of a project quickly or screen several alternate designs. They have an accuracy range of +50 percent to -30 percent. Budget estimates utilize preliminary scope and engineering information. "These are used to determine project feasibility and to establish definitive budgets for the owner, not the project" [8]. They have an accuracy range of +30 percent to -15 percent. The third level is definitive estimates. These are prepared through detailed engineering data and once the scope of work is well defined. The accuracy range for a definitive cost estimate is +15 percent to -5 percent.
Parametric estimates typically straddle the line between order of magnitude and budget in an area commonly referred to as conceptual estimates. These estimates are based on conceptual design development where it is impossible to do the...