ASTM E1946-07

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Designation: E1946 – 07
Standard Practice for
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Measuring Cost Risk of Buildings and Building Systems
This standard is issued under the fixed designation E1946; the number immediately following the designation indicates the year of
original adoption or, in the case of revision, the year of last revision. A number in parentheses indicates the year of last reapproval. A
superscript epsilon (´) indicates an editorial change since the last revision or reapproval.
1. Scope 4.1.6 Conduct a Monte Carlo simulation.
4.1.7 Interpret the results.
1.1 This practice covers a procedure for measuring cost risk
4.1.8 Conduct a sensitivity analysis.
for buildings and building systems, using the Monte Carlo
simulation technique as described in Guide E1369.
5. Significance and Use
1.2 A computer program is required for the Monte Carlo
5.1 Building cost risk analysis (BCRA) provides a tool for
simulation. This can be one of the commercially available
building owners, architects, engineers, and contractors to
software programs for cost risk analysis, or one constructed by
measure and evaluate the cost risk exposures of their building
the user.
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construction projects. Specifically, BCRA helps answer the
2. Referenced Documents following questions:
2 5.1.1 Whataretheprobabilitiesfortheconstructioncontract
2.1 ASTM Standards:
to be bid above or below the estimated value?
E631 Terminology of Building Constructions
5.1.2 How low or high can the total project cost be?
E833 Terminology of Building Economics
5.1.3 Whatistheappropriateamountofcontingencytouse?
E1369 Guide for Selecting Techniques for Treating Uncer-
5.1.4 What cost elements have the greatest impact on the
tainty and Risk in the Economic Evaluation of Buildings
building’s cost risk exposure?
and Building Systems
5.2 BCRA can be applied to a building project’s contract
E1557 Classification for Building Elements and Related
cost, construction cost (contract cost plus construction change
Sitework—UNIFORMAT II
orders), and project cost (construction cost plus owner’s cost),
E2168 Classification for Allowance, Contingency and Re-
depending on the users’ perspectives and needs. This practice
serve Sums in Building Construction Estimating
shall refer to these different terms generally as “building cost.”
3. Terminology
6. Procedure
3.1 Definitions—For definition of terms used in this guide,
6.1 Identify Critical Cost Elements:
refer to Terminologies E631 and E833.
6.1.1 A building cost estimate consists of many variables.
4. Summary of Practice
Eventhougheachvariablecontributestothetotalbuildingcost
risk, not every variable makes a significant enough contribu-
4.1 The procedure for calculating building cost risk consists
tion to warrant inclusion in the cost model. Identify the critical
of the following steps:
elements in order to simplify the cost risk model.
4.1.1 Identify critical cost elements.
6.1.2 A critical element is one which varies up or down
4.1.2 Eliminate interdependencies between critical ele-
enough to cause the total building cost to vary by an amount
ments.
greater than the total building cost’s critical variation, and one
4.1.3 Select Probability Density Function.
which is not composed of any other element which qualifies as
4.1.4 Quantify risk in critical elements.
a critical element. This criterion is expressed as:
4.1.5 Create a cost model.
IF V . V (1)
Y CRIT
1 AND Y contains no other element X where V . V
X CRIT
This practice is under the jurisdiction of ASTM Committee E06 on Perfor-
mance of Buildings and is the direct responsibility of Subcommittee E06.81 on
THEN Y is a critical element
Building Economics.
where:
Current edition approved April 1, 2007. Published April 2007. Originally
approved in 1998. Last previous edition approved in 2002 as E1946 – 02. DOI:
10.1520/E1946-07.
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For referenced ASTM standards, visit the ASTM website, www.astm.org, or
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contact ASTM Customer Service at service@astm.org. For Annual Book of ASTM This practice is based, in part, on the article, “Measuring Cost Risk of Building
Standards volume information, refer to the standard’s Document Summary page on Projects,”byDouglasN.MittenandBensonKwong,ProjectManagementServices,
the ASTM website. Inc., Rockville, MD, 1996.
Copyright © ASTM International, 100 Barr Harbor Drive, PO Box C700, West Conshohocken, PA 19428-2959, United States.
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E1946 – 07
V 5 (2)
the risk element. The change element in allowance covers the
Y
additional cost due to incomplete design (design allowance).
~Max. percentage variation of the element Y! * ~Y’s anticipated cost!
The change element in contingency covers the additional cost
Total Building cost
due to construction change orders (construction contingency).
The risk element in contingency covers the additional cost
required to reduce the r
...