Construction Management 525

Cost Analysis and Management

Course Introduction

Welcome to Construction Management 525. Course material covers cost management procedures applicable to the construction process, from the conceptual phase through owner operations. Emphasis is placed on advanced estimating practices, including conceptual estimating and project cost analysis.

Methods for determining the economic feasibility and performance of any project are emphasized, from the point of view of the clients, contractors, and owners with whom you might work, including how design decisions impact the financial success of any construction project. The intent is not to encumber you with economic theory, but to cover the full scope of construction economic theory through the life of a project.

Is this Course for You?

This is a required course for the Certificate Program in Heavy Construction Project Management, and for the distance learning Master of Science in Construction Management, or Master of Science in Civil and Environmental Engineering. You should possess an undergraduate degree in either construction management, or civil or environmental engineering before seeking enrollment in this course. You also need to be familiar with the construction industry, and the roles of the project owner, designer, and general contractor, as well as the concepts involved in detailed estimating, and project planning and controls.

The course is intended to provide construction management professionals with a practical background in the economic concerns of all parties, and the skills to respond constructively to these concerns when making decisions.

Objectives

When you complete this course you will be able to use the advanced information management techniques of Excel to formulate:

• strategies for estimating and controlling initial and future construction costs;
• how design decisions affect and influence economic benefits;
• how construction costs relate to economic performance; and
• how to apply financial feasibility analyses to case studies.

Primary Content

Topics to be covered will include, but not be limited to:

1. Cost-Benefit Analysis—a method of evaluating projects or investments by comparing the present value equivalent, annual value equivalent, or expected benefits to the present value equivalent (or annual value) of expected costs.
2. Economic Performance Analysis—covers "Incremental Analysis," "Rate of Return Analysis," and "Financial Feasibility Analysis." The choice of procedures is not exhaustive, and application usually involves some modification.
3. Advanced Conceptual Estimating Techniques—several methods of estimating the initial costs of a building project that examine the combined costs involved. For this course, these techniques are defined as quick methods of determining approximate costs of a project without the benefit of a detailed scope definition.
4. Life Cycle Cost Analysis—a technique of economic evaluation that sums the costs of initial investments, replacements, operations, and maintenance and repair of an investment decision over a given study period.

Elements of the Course

Lessons

The course is organized into seven, one-week online lessons to be completed in ten weeks. Each lesson runs Monday through Sunday. In addition, there are a case study and term project at the end of the course that cover two weeks each.

Reading

The online reading provides a general discussion of major teaching points in each lesson. You should read the online lesson narrative first. After completing the reading assignment, you should answer the discussion forum questions. Some lessons also include online articles to read.

Assignments

The assignments in the seven one-week lessons involve problem-solving and model development, as well as answering questions at the end of the lesson. In most cases the cost model in the homework is provided "mostly" completed in the form of an Excel spreadsheet, and you need to complete the remainder of the model in order to answer the questions at the end of the unit. These graded assignments help you develop an understanding of the concepts presented, so you can apply those concepts to the case study and term project at the end of the course.

Discussion Forum

An online discussion forum will be conducted most weeks to discuss questions posed in the assignment for the lesson, and to address any of your questions. Each of you is expected to provide a written response, or posting, to each of the questions posed in the assignment by the due date indicated on the course schedule.

Case Study

For Lesson Eight, you will prepare an analysis of a case study (first week) and critique the analysis of another student (second week). You are encouraged to work with one or more students in preparing the case study.

The case study is used to provide a context for applying the major tools developed in the previous lessons. However, when responding to case study requirements, you are expected to both apply the basic knowledge attained from past work, and acquire any additional information needed.

Term Project

For your term project, you will work individually. You will choose your own construction project to analyze. This enables you to personalize the project so that it relates to what you are most interested in.

Required Materials

Textbook

There is no required text in this course.

Articles

Supplemental reading includes the following articles attached to the relevant lessons:

1. Pace, C. and Gilda, G. 1998. "Cost and Risk Analysis in Building Systems." Proceedings of the International Computing Congress, October 18-21, 1998, Boston, MA, pp. 235-246. Wang, K., Adams, T., Maher, M., and Songer, A., eds.
2. Pace, C. and Harlow, R. "SBR vs. Continuous Flow: A Cost Comparison of Waste Treatment Technologies." Paper.
3. Pace, C. and Huppert, M. 1998. "Financial Feasibility in Implementing Process Change." AACE International Transactions, IT/IM.09, pp. IT/IM.09.1-IT/IM.09.8 AACE International, Morgantown, WV.
4. Pace, C. and Septelka. 1997. "Evaluating and Communicating Design Alternatives." Construction Congress V: Managing Engineered Construction in Expanding Global Markets. Proceedings of the Congress. Minneapolis, MN, October 5-7, 1997. pp. 913-920. Anderson, S.D.,Ed.

Technology Requirements and Skills

In addition to the technology requirements and skills noted in the Online Student Handbook, for this course you will need to be able to demonstrate a high level of expertise in using Microsoft Excel.

Assessment

Grades are assigned to these three components:

1. Weekly Assignments—Calculating cost management measures for most building projects is often not very demanding, but it does involve numerous variables and lengthy, repetitious computations. As a result, creating spreadsheet applications for aspects of project cost management systems is required. This component is worth 25% of your final grade.
2. Case Study—You will use the tools studied in the first half of the course, applying them to a given case study in order to assess the economic viability of the project. This component is worth 25% of your final grade.
3. Term Project—You will research and develop a detailed project report. This component is worth 50% of your final grade.

No assignments will be accepted later than the due date specified on the course schedule.

Study Tips

• The reading provides a general discussion of the major teaching points of each lesson. Read the online lesson narrative before attempting the assigned work.
• After completing the reading, answer the discussion forum questions. You may not find specific answers to all questions in the reading. Many of the questions require you to apply the concepts discussed in the reading assignments to hypothetical construction situations. The objective is to understand the major concepts, and be able to apply them to realistic scenarios.
• After completing the discussion forum questions, and reviewing responses from other students and the instructor, answer the weekly assignment questions. These questions require you to apply the concepts learned in the lesson in the context of the economic performance model you develop as part of the assignment. There is often more than one correct answer to the questions, but your choice may be limited based on your answers to preceding questions.

Starting Out

Before you begin your work in this course, please post a short biography to the Student Biography Forum, available from the syllabus. Tell us a bit about yourself, including your professional background, why you are interested in this course, and, if you wish, a few personal details about your family or hobbies.

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