Cost Analysis (Control)
Introduction
Cost engineering is the engineering practice focused on project management with a particular focus on costs; This includes activities such as estimation and control, forecasting, investment evaluation and risk analysis.[1] The cost engineering budget plans and monitors investment projects. A balance is also sought between the balance of costs, quality and time requirements.[2].
The skills and knowledge of this discipline are similar to those used in Construction Cost Management").[3].
A cost engineer is "an engineer whose judgment and experience are used in the application of scientific principles and techniques to problems of estimating; cost control; science of business planning and management; profitability analysis, project management; and planning and scheduling."[4].
Overview
A key objective in cost engineering is to approximate accurate cost estimates and schedules, avoiding cost overruns and schedule delays. Cost engineering goes beyond estimating and scheduling schedules, as it also provides resource management and useful information to facilitate the decision-making process. "The cost engineering framework can be considered as a wide range of aspects related to cost engineering and project management; in particular, cost forecasting, cost analysis and risk assessment, design for cost, scheduling and schedule analysis."[5] This wide range represents the interaction of the fields of asset management, administration and engineering, although most people are not aware of this. The most obvious perception towards cost engineering is that it "deals with technical issues such as the physical design of a system or structure." However, beyond the physical manifestation in a structure or system (e.g. a building), there are many more other intangible dimensions to consider; for example: the money, time and resources that were invested in the creation, design and construction of the building. Cost engineers refer to these investments as "costs".[6].
Cost engineering can then be considered as a complement to traditional engineering. Furthermore, cost engineering recognizes and focuses on the relationships between physical dimensions and costs, or any other concept that engineering requires for its development. Cost engineering is commonly taught as part of construction engineering, industrial engineering, and civil engineering, and is related to these because its practice is frequent in the engineering and construction of capital projects. Economic engineering is a requirement, both of skill and knowledge, in the cost engineering area.[7].