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(RISK-1100) Quantifying Estimate Accuracy and Precision for the Process Industries: A Review of Industry Data

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Primary Author: Mr Alex Ogilvie Independent Project Analysis
Co-author(s): Mr Robert A Brown Jr Independent Project Analysis; Mr. Frederick P. Biery Independent Project Analysis; Mr. Paul H. Barshop Independent Project Analysis

Audience Focus: Intermediate
Application Type: Experience-Based
Venue: 2012 AACE International Annual Meeting, San Antonio, TX, USA

Abstract: This paper quantifies industry metrics for estimate accuracy based on a sample of 462 capital projects executed by the process industries over the last 20 years, comparing estimated costs at the various stages of project definition to actual costs, normalized for a number of factors. We then contrasted the results from the industry survey with industry expectations, as presented in the AACE International Recommended Practice 18R-97. The results of our survey indicate there is a much greater level of variability in estimate accuracy as compared to industry expectations. Further analysis demonstrates that projects which have completed a definitive project scope at authorization benefit from a reduction in estimate variability as compared to industry.