Cost Engineering

Cost engineering course provides the engineering practice dedicated to project cost leadership, incorporating operations such as estimation, cost control, cost forecasting, asset assessment, and risk assessment. Cost engineers budget, schedule, and track capital projects, seeking the optimum equilibrium between cost, performance, and time specifications. Cost engineering skills and expertise are comparable to those of quantity surveyors, and cost engineering is synonymous with project checks in many sectors. Since in many countries the term engineer has legal prerequisites, the practice of cost management is often renamed project controls. A cost engineer is an investigator whose judgement and knowledge is used to apply scientific concepts and methods to assessment issues; cost control; business planning and leadership science; profitability assessment; project governance; and planning and scheduling.

 

Why?

 

The main goal of cost engineering is to arrive at precise projections and schedules of costs and to prevent overruns of costs and plans. In addition to preparing cost projections and plans, cost engineering helps handle funds and supports evaluation and decision-making. The’ cost engineering’ discipline can be regarded to cover a broad variety of cost-related elements of design and program leadership, but in specific; cost estimation, cost evaluation, cost-to-cost design, scheduling/planning analysis and risk evaluation.

The wide range of subjects related to cost engineering course is a result of its position at the crossroads of project leadership, company management, and engineering. Most individuals have a restricted understanding of what technology is all about. The most evident view is that engineering covers technical problems such as a structure or system’s physical layout. However, beyond the physical expression of a structure or system layout (such as construction), there are other aspects to consider, such as cash, time, and other assets that have been invested in construction. Cost engineers generally refer to these investments as “cost.”

Relationship between the dimensions

Cost engineering acknowledges and focuses on the interactions between what is being “designed” physically and the cost aspects. Cost engineering is most often studied at colleges as a component of building engineering, engineering governance or civil engineering, as it is most commonly practiced as part of engineering and building capital initiatives. Engineering economics is a key area of cost engineering skills and expertise.

 

Under certain limitations, any project, however large or small or regardless of the sector undertaken, must be carried out and executed. Cost is one of those limitations that must be efficiently controlled by project leadership, and it may be the driving force or an obstacle in determining a project’s future. Hence, the need for comprehensive cost estimation procedures and methods to ensure if a project is feasible can be readily identified.

 

What are the focus regions and cost estimation performance that render the project leadership method so important?  To get a straightforward summary of the cost estimate input in project management, let us just look at project management operations from a broad view and immerse ourselves in their fundamentals.

 

Project management in construction

 

Project management includes various expertise fields, correctly incorporated and organized to guarantee that a project meets the expectations of the stakeholder and is finished within a defined timeframe and budget. Knowledge areas of project management include integration and management of communication, time management, quality management, management of human resources, risk management and cost management.

 

 

Cost management in construction

 

Cost leadership involves the procedures necessary to complete the project within the agreed budget. It includes operations such as scheduling resources, estimating costs, budgeting, and monitoring of costs. These operations are continuously recurring and occur throughout the life process of the venture. Cost management, as can be seen, forms a pillar in the method of cost leadership and consequently in project leadership.

 

Cost estimating

It is essential to provide a strong project schedule to be prepared to create precise cost projections. Cost estimation uses many techniques that translate the scope of the project into milestones and develop a cost-approximation of the resources required to complete the project activities.

 

Cost estimation contribution involves shaped deliverable-oriented job packages (generally in the form of a well-defined job breakdown structure), historical information, records graph, hazards, activity length, assets and resource unit costs. Based on this assessment of input expenses, estimating methods and instruments are used to generate an estimate of the cost of each deliverable venture. Estimating techniques provide analogies with comparable initiatives, parametric modelling, comprehensive methods for estimating individual operations or job packages, and rolling expenses into a complete project or bid evaluation. The use of each method relies primarily on the project phase, which determines the amount of definition of range and information accessibility.

 

Accuracy of an estimate

For a given scope of work, each estimate is a forecast of the anticipated final cost of a project. Each assessment is connected with ambiguity and is therefore also linked with the likelihood of overrunning or underrunning the forecast cost. The accuracy of the assessment is an indication of the extent to which the actual final cost result for a given project differs from its cost estimate. It is essential to realize that an assessment should never be considered as a single point amount, but as a spectrum of future cost results and related event probabilities.

 

Parametric estimating

 

Once the purview of our project, the existing phase of the project, and the precision we expect the estimate to have are established, the method to estimate which best fits the situation can be determined. Factor estimation, parametric estimation and thorough estimation are the most significant estimation methodologies: factor estimation, also recognized as top-down estimation, is focused on a restricted range of the venture and is usually used in the stage of detection. To provide appropriate cost information, it utilizes parametric patterns or historical records. Parametric estimation involves cost assessment and cost driver recognition for cost model development. The strategy basically correlates data about costs and resources with parameters that describe the product that is to be costed. This method was used in previous project stages extraneous jargon when there’s not much particular project knowledge but historical data from past comparable initiatives are available.

 

Detail estimating

 

Detail estimation, also known as bottom-up estimation, is used when the maturity level of the project description is high. Detailed estimates in the job breakdown framework are produced at comparatively small concentrations, typically at the job set or assignment level. This strategy is strongly linked to scheduling, planning and allocating resources and is both time-consuming and expensive. It involves a strong understanding of the operation and a decent amount of interpretation is also required. It also leads to the most precise projections.

 

The output of applying these methods is a quantitative examination of the likely cost of the resources required to complete a project with a set of info to support it. This is the foundation for budgeting a project, i.e. allocating costs to personal operations or job plans so that the project can be formally started. Furthermore, a precise assessment forms the foundation for the development of a cost leadership scheme and the foundation for monitoring expenses during the implementation stage of the project. The cost basis will be used to evaluate and track cost efficiency on the project through cost control.

Cost estimation is an important basis for project management and should be correctly incorporated among other operations related to cost management. Above all elements are included in the cost engineering course at the college of contract management.