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Cost engineering
From Wikipedia, the free encyclopedia
"Cost engineering [is] the engineering practice devoted to the management of project cost, involving such
activities as cost- and control- estimating, which is cost control and 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."(7!
Skills and knowledge of Cost Engineers are similar to those of Quantity Surveyors.
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."°)
Contents
1 Overview
2 History
3 Professional 1
4 See also
5 References
6 Further reading
7 Extemal links
itles or Positions in Cost Engineering
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
helping manage resources and 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."(4] 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
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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 engincering; 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.!*1
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 funetion (¢.g., cost estimating, planning and
scheduling, ete.); 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 (¢.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)."(61
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
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= Project Controls Engineer
= Project Manager
= Quantity Surveyor
= Construction Estimator
See also
AACE International
Building estimator
Construction Management
Cost estimate
Construction Estimating Software
Cost overrun
Cost-plus contract
International Cost Engineering Council
Optimism bi
Pre-construction services
Project management
Quantity surveyor
Reference class forecasting
Value engineering
References
1. "Provoc - Glossary of Common Project Control Terms,” The Association of Cost Engineers (ACostE),
http:/éwww acoste org. uk
2. "Home - DACE," Dutch Assocsiation of Cost Engineers, http://wwww.dace.nl/
3. AACE International Recommended Practice No. 10S-90, COST ENGINEERING TERMINOLOGY, TCM
Framework: General Reference, AACE, 2010, pg 24
4. David Greves & Herve Joumier, "Cost Engineering for Cost-Effective Space Programmes," esa bulletin 115 -
august 2003, pgl
5. John K. Hollman, PE CCE, AACE International Recommended Practice No. 11R-8, REQUIRED SKILLS
AND KNOWLEDGE OF COST ENGINEERING, TCM Framework: General Reference, AACE, 2010, pg 2
6. John K. Hollman, PE CCE, AACE International Recommended Practice No. 11R-8, REQUIRED SKILLS
AND KNOWLEDGE OF COST ENGINEERING, TCM Framework: General Reference, AACE, 2010, pg 3
Further reading
= Amos, Scott (editor), "Skills and Knowledge of Cost Engineering," Fifth Edition, AACE,
Intemational, Morgantown, West Virginia, 2004
= Humphreys, Kenneth K (editor), "Jelen’s Cost and Optimization Engineering" 3rd Edition, MeGraw-
Hill, 1991
= Hollmann, John K. (editor), "Total Cost Management Framework", AACE Intemational,
Morgantown WV, 2006
= Dale Shermon, Systems Cost Engineering, Gower publishing, 2009, ISBN 978-0-566-08861-2
External links
tpl wikipedia. orghkitCost_ergineering 4eas Cesteninetng- Wikipedia. the fe eneydopata
AACE International (Association for the Advancement of Cost Engineering) (http://www.aacei.org)
International Cost Engineering Council (ICEC) (http://www icoste.org/)
Society for Cost Analysts and Forecasting (SCAF) (nttp://www-scaf org/)
Association of Cost Engineers (ACostE) (http://www. acoste.org.uk)
Dutch Association of Cost Engineers (DACE) (http:/www.dace.nl)
Engineering at Cranfield University, UK (http://www. cranfield.ac.uk/sas/cost/)
Cost Engineering at Cost Engineering Academy, NL
(http://www. costengineering.ewacademy/academy-overview)
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Categories: Cost engineering | Engineering disciplines
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