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(CSC-2137) An Overview of Cost Forecasting of Construction Contracts

Primary Author: Syd Daneshyar, P.Eng. CCP
Co-Author(s): A. Hagire Emrani

Audience Focus: Intermediate
Application Type: Practice
Venue: 2016 AACE International Annual Meeting, Toronto, ON, Canada

Abstract: When it comes to cost forecasting, owners and contractors share the same goal: to establish a reliable cost baseline at the beginning of the job, conducting regular cost (at completion) forecasting exercise throughout the project and managing the project to the cost. The cornerstone of any cost forecasting is a baseline budget. A reliable progress measurement system is another important pre-requisite to cost forecasting. In this paper, authors have proposed a global formula for cost forecasting, which includes actual costs, remaining budget to be earned and a set of different (future) trends. This formula has then been examined from the angle of different contract types, as well as design completion percentages. Finally, some key factors affecting the success or failure of cost forecasting have been presented. Among others they include management and client support and change management.