Risk management in design engineering bids

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Description

Accurate engineering cost estimates are critical in developing bids for new work, and for effective resource allocation and project control. This study reports on design estimating methods found in the literature, and on the results of two empirical studies of how estimating techniques are used in professional practice and their accuracy. The study found great reliance on a classic {open_quotes}activity analysis{close_quotes} approach to estimating design resources, and significant hazards in commonly used parametric techniques. The study found that project managers expect their estimates to be accurate (with 80% confidence interval) of between -10% to +25%. The study also found that ... continued below

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8 p.

Creation Information

Hudgins, D.W. & Lavelle, J.P. June 1, 1995.

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This article is part of the collection entitled: Office of Scientific & Technical Information Technical Reports and was provided by UNT Libraries Government Documents Department to Digital Library, a digital repository hosted by the UNT Libraries. It has been viewed 24 times . More information about this article can be viewed below.

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Authors

  • Hudgins, D.W. AlliedSignal Inc., Kansas City, MO (United States). Kansas City Division
  • Lavelle, J.P. Kansas State Univ., Manhattan, KS (United States). Dept. of Industrial & Manufacturing Systems Engineering

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Publisher

  • Allied-Signal Aerospace Company
    Publisher Info: Allied-Signal Aerospace Co., Kansas City, MO (United States). Kansas City Div.
    Place of Publication: Kansas City, Missouri

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Description

Accurate engineering cost estimates are critical in developing bids for new work, and for effective resource allocation and project control. This study reports on design estimating methods found in the literature, and on the results of two empirical studies of how estimating techniques are used in professional practice and their accuracy. The study found great reliance on a classic {open_quotes}activity analysis{close_quotes} approach to estimating design resources, and significant hazards in commonly used parametric techniques. The study found that project managers expect their estimates to be accurate (with 80% confidence interval) of between -10% to +25%. The study also found that actual bids between engineering firms had a much greater range (-40% to +45%) than can be explained by accuracy. Perhaps most importantly the study found that none of the sampled design firms used probabilistic techniques to optimize their project bids or to manage financial risk in view of the uncertainty of their estimates. The study concludes with techniques to reduce risk, and recommended future study.

Physical Description

8 p.

Notes

OSTI as DE95013996

Source

  • Industrial Engineering Research conference, Nashville, TN (United States), 25-26 May 1995

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  • Other: DE95013996
  • Report No.: KCP--613-5570
  • Report No.: CONF-9505235--1
  • Grant Number: AC04-76DP00613
  • Office of Scientific & Technical Information Report Number: 82391
  • Archival Resource Key: ark:/67531/metadc779409

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Office of Scientific & Technical Information Technical Reports

Reports, articles and other documents harvested from the Office of Scientific and Technical Information.

Office of Scientific and Technical Information (OSTI) is the Department of Energy (DOE) office that collects, preserves, and disseminates DOE-sponsored research and development (R&D) results that are the outcomes of R&D projects or other funded activities at DOE labs and facilities nationwide and grantees at universities and other institutions.

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Creation Date

  • June 1, 1995

Added to The UNT Digital Library

  • Dec. 3, 2015, 9:30 a.m.

Description Last Updated

  • Feb. 20, 2017, 3:07 p.m.

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Hudgins, D.W. & Lavelle, J.P. Risk management in design engineering bids, article, June 1, 1995; Kansas City, Missouri. (digital.library.unt.edu/ark:/67531/metadc779409/: accessed November 15, 2018), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.