"Cost engineering [is] the
engineering practice devoted to the project cost management, involving such
activities as estimating, cost control, cost forecasting, investment appraisal,
and risk analysis”. "Cost Engineers budget, plan and monitor investment
projects. They seek the optimum balance between cost, quality and time
requirements”.
A cost engineer is "an engineer
whose judgment and experience are utilized in the application of scientific
principles and techniques to problems of estimation; cost control; business
planning and management science; profitability analysis; project management;
and planning and scheduling
Overview
One key objective of cost engineering
is to arrive at accurate cost estimates and schedules and to avoid cost
overruns and schedule slips. Cost engineering goes beyond preparing cost
estimates and schedules by supporting assessment and decisionmaking. "The
discipline of ‘cost engineering’ can be considered to encompass a wide range of
cost-related aspects of engineering and programme management, but in particular
cost estimating,cost analysis/cost assessment, design-to-cost, schedule
analysis/planning and risk assessment." The broad array of cost
engineering topics represent the intersection of the fields of project
management, business management, and engineering. Most people have a limited
view of what engineering encompasses. The most obvious perception is that
engineering addresses technical issues such as the physical design of a
structure or system. However, beyond the physical manifestation of a design of
a structure or system (for example, a building), there are other dimensions to
consider such as the money, time, and other resources that were invested in the
creation of the building. Cost engineers refer to these investments
collectively as "costs".
Cost engineering then can be considered
an adjunct of traditional engineering. It recognizes and focuses on the
relationships between the physical and cost dimensions of whatever is being
"engineered". Cost engineering is most often taught at universities
as part of construction engineering, engineering management, civil engineering,
and related curricula because it is most often practiced on engineering and
construction capital projects. Engineering economics is a core skill and
knowledge area of cost engineering.
AACE International "is dedicated
to the tenets of furthering the concepts of Total Cost Management and Cost
Engineering. Total Cost Management is the effective application of professional
and technical expertise to plan and control resources, costs, profitability and
risk. Simply stated, it is a systematic approach to managing cost throughout the
life cycle of any enterprise, program, facility, project, product or service.
This is accomplished through the application of cost engineering and cost
management principles, proven methodologies and the latest technology in
support of the management process. Total Cost Management is that area of
engineering practice where engineering judgment and experience are utilized in
the application of scientific principles and techniques to problems of business
and program planning; cost estimating; economic and financial analysis; cost
engineering; program and project management; planning and scheduling; and cost
and schedule performance measurement and change control. In summary, the list
of practice areas are collectively called cost engineering; while the “process”
through which these practices are applied is called total cost management or
TCM
History
Cost engineering is a field of
engineering practice that began in the 1950s (AACE International was founded in
1956). The skills and knowledge areas of Cost Engineers are similar to those of
Quantity Surveyors. AACE International is one of many international engineering
organizations representing practitioners in these fields. The International
Cost Engineering Congress (ICEC) was founded in 1976 as a Worldwide
Confederation of Cost Engineering, Quantity Surveying and Project Management
Societies.
In 2006, AACE published the Total Cost
Management (TCM) Framework which outlines an integrated process for applying
the skills and knowledge of cost engineering (see References). This has also
been called the world's first process for portfolio, program and project
management.
Professional
Titles or Positions in Cost Engineering
"Cost engineering practitioners
tend to be: a) specialized in function (e.g., cost estimating, planning and
scheduling, etc.); b) focused on either the asset management or project control
side of the TCM process; and c) focused on a particular industry (e.g.,
engineering and construction, manufacturing, information technology, etc) or
asset type (e.g., chemical process, buildings, software, etc.). They may work
for the business that owns and operates the asset (emphasis on economics and
analysis), or they may work for the contractor that executes the projects
(emphasis on planning and control)."
Some titles or positions in Cost
Engineering practice include:
§ Claims and Changes Specialist
§ Construction Manager
§ Contract Management Specialist
§ Cost Analyst
§ Cost Engineer
§ Cost Estimator (or Estimator)
§ Planner/Scheduler (or Scheduling
Engineer)
§ Pre-Construction Manager
§ Project Controls Engineer
§ Project Manager
§ Quantity Surveyor
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