Cost Engineers: Who are they and what do they do?

Cost Engineers: Who are they and what do they do?

So just what is cost engineering and who are the people we call cost engineers? The first place to seek an answer is the AACE International Constitution and Bylaws (Association of Cost Engineers), which states the following:

Section 2. The Association is dedicated to the tenets of furthering the concepts of Total Cost

Management and Cost Engineering

Total Cost Management or Total Cost Engineering 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 man- aging 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.

Section 3. 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 pro- gram 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.

What this says is that the list of practice areas in Section 3 are collectively called cost engineering; while the “process” through which these practices are applied is called total cost management or TCM. Let’s elaborate a bit more.

TCM and its subprocesses (strategic asset management and project control) are defined in the “integration” chapter that follows this preface. However, we can summarize that chapter by saying that TCM is a management process focused on coming up with ideas for creating things (i.e., a strategic assets), analyzing and deciding upon the best idea, and finally planning and creating the selected thing (i.e., by doing projects) in a controlled way (i.e., project control). So, that’s the process; but who performs the process?

Many people would say that “engineers” and engineering are most often responsible for creating functional things (or strategic assets as we call them). They are correct. However, there are multiple elements to engineering. Most look at engineering and see the element of physical “design” and the calculation and analysis tasks that are done to support that physical design (e.g., design a bridge). Again they are correct. However, many people don’t see that beyond the physical dimension of the design (e.g., the bridge structure), there are less tangible dimensions of money, time, and other resources that are invested in the creation of the asset. We refer to these investments collectively as “costs”. Someone needs to estimate what the bridge might cost, determine the activities needed to design and build it, estimate how long these activities will take, and so on. Furthermore, someone needs to continually monitor and assess the progress of the bridge design and construction (in relation to the expenditure of money and time) to ensure that the completed bridge meets the owner’s objectives. This is a lot of work. It requires special skills and knowledge.

The cost dimension requires calculation, analysis, planning, and control. No bridge has ever been built without dealing with both the physical and cost dimensions. However, the engineering skills and knowledge required to deal with “costs” are quite different from those required to deal with the physical design dimension. From that difference, the field of cost engineering was born. So, cost engineers work alongside of and are peers with engineers (or software analysts, play producers, architects, and other creative fields) to handle the cost dimension. And, returning to the Constitution and Bylaws definition, the skills and knowledge needed by that dimension are “business and program planning; cost estimating; economic and financial analy- sis; cost engineering; program and project management; planning and scheduling; and cost and schedule performance measurement and change control.” All these functions are performed in an integrated way through the process of TCM.

Engineering Costs On Construction Projects is essential specially in large projects and Cost engineers often specialize in one function with a focus on one side of the asset and project business. They may have titles such as cost estimator, parametric analyst, strategic planner, scheduler, cost/schedule engineer, project manager, or project control lead. 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). But, no matter what their job title or business environment, a general knowledge of, and skills in, all areas of cost engineering are required to perform their job effectively.