New RP 137R-25: Owner’s Costs: Definition and Considerations for Estimating
This recommended practice (RP) of AACE® International defines the term owner’s costs as used in capital project cost estimating and project control. It also provides a code of accounts structure guideline for owner’s costs. The RP also discusses considerations for effective estimation of and accounting for these costs. In summary, the main objectives of this RP are to improve business, project team and stakeholder communication by:
- Providing a common industry reference definition
- Providing a guideline for a code of accounts structure
- Documenting considerations for effective estimation of and accounting for these costs
This RP is focused on engineering and construction (E&C) type projects and excludes non-E&C projects such as information technology, research and development, aerospace, and defense. However, the principles of organizational breakdowns in a code of accounts are generally applicable across industries.
This RP provides no quantitative cost or cost metric data. However, it references several AACE Transactions papers that provide data and metrics.
This RP is intended to provide guidelines (i.e., not a standard) to be used for the estimation of and accounting for owner’s costs.
Contributors:
John K. Hollmann, CCP CEP DRMP FAACE Hon. Life (Primary Contributor)
Raminder S. Bali, PEng
Jeffery J. Borowicz, CCP CEP PSP FAACE
Very Cao, PEng CCP CEP PSP
Karen C. Chew
Corey L. Coleman
Francisco Cruz, PE CCP
Martin R. Darley, CCP FAACE
Reza Dogaheh
Shoshanna Fraizinger, CCP FAACE
Alexandra Gagnon
Russ J. Gentile
Terrance K. Ginter
Peter A. Jackso
Christopher L. Kinney
Dr. Luis Henrique Martinez
Dr. Dan Melamed, CCP EVP FAACE
Kenneth Ng
Nader Rahmaty
Nick Sebastian
Gregory C. Sillak
Nurullah Sonmez, CCP
Khushboo Tibrewala
Kevin Tong, PEng
Mirela Tsagkari, CEP
About John:
John joined AACE in 1986 and is a passionate leader in the cost engineering field, holding multiple certifications from AACE (CCP, CEP, and DRMP). He has authored and contributed to numerous AACE recommended practices plus many papers and led development of AACE’s Decision and Risk Management Professional (DRMP) certification. He was the principal author of the first edition of AACE’s 2006 landmark publication The Total Cost Management Framework: An Integrated Approach to Portfolio, Program, and Project Management and also authored two books: Project Risk Quantification, Volumes 1 and 2 in 2016 and 2024.
John has served AACE in various roles including chairs of multiple technical subcommittees. He was elected to and served on AACE’s Board of Directors for one year (1996-1997) where he was instrumental in the reorganization that created the three Associate Boards (Technical/Education/Certification). John was a member of the Technical Board for several years where he served as Director of Recommended Practices and Director of Total Cost Management. John contributed to over 70 Recommended Practices and was primary contributor on over 20 of them.
He has previously been recognized by AACE with the Outstanding Technical Committee Chair Award (1994, 1996), O.T. Zimmerman Founder’s Award (2005), Fellow (2006), Award of Merit (2008), Technical Excellence (2010), Honorary Life Membership (2011), the Lifetime Achievement Award (2018), and the TCM Excellence Award (2022).
John helps companies improve their cost engineering competencies and capabilities by evaluating processes, organization, tools and practices for cost engineering related functionality; assisting in implementing practice improvements; validating and reviewing major project estimates; performing risk analyses, contingency and escalation estimates; and by developing and conducting training.
He is currently the owner of Validation Estimating, LLC and alliance partner in ValidRisk software.
You can find the new RP here: 137R-25: Owner’s Costs: Definition and Considerations for Estimating