Cost Engineering

Cost engineering

the engineering practice devoted to the management of project cost, 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.

Skills and knowledge of cost engineers are similar to those of quantity surveyors. In many industries, cost engineering is synonymous with project controls.

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.

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 decision making. 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".

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.