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    Project Management

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    • Cost Management for Engineers-Cost Terms

    Cost Management for Engineers-Cost Terms

    • Posted by Hany Ismail, MSC, PMP
    • Categories Project Management
    • Date December 31, 2012
    • Comments 4 comments

    Cost management is the process of planning and controlling the budget of a business

    Cost management Terms:

    Value Engineering: Value engineering is a balance between cost and quality in order to achieve the desired function. Value Engineering (VE), also called:

    •           Value Management

    •           Value Analysis

    •           Target costing


    Cost Management:

    It is a powerful systematic methodology to optimize the cost performance &overcome the cost constraints

    Cash flow analysis determines the estimated annual costs and benefits for a project and the resulting annual cash flow.

    Cost budgeting: Allocating the overall cost estimate to individual work items to establish a baseline for measuring performance.

    Cost control: Controlling changes to the project budget.

    Cost estimating: Developing an approximation or estimate of the costs of the resources needed to complete a project.

    Direct costs are costs that can be directly related to producing the products and services of the project.

    Indirect costs are costs that are not directly related to the products or services of the project, but are indirectly related to performing the project.

    Life cycle costing considers the total cost of ownership, or development plus support costs, for a project.

    Profits are revenues minus expenses.

    A cost management plan is a document that describes how the organization will manage cost variances on the project.

    Cost budgeting involves allocating the project cost estimate to individual work items over time. and there are plenty of Cost Management Software which applying this concept.


     

    Define the Term Cost Centre:

    AC                   Actual Cost

    ACWP             Actual Cost of Work Performed

    ADM                Arrow Diagramming Method

    AF                   Actual Finish date

    AOA                Activity-on-Arrow

    AON                Activity-on-Node

    AS                   Actual Start date

    BAC                 Budget at Completion

    BCWP             Budgeted Cost of Work Performed

    BCWS             Budgeted Cost of Work Scheduled

    BOM                Bill Of Materials

    CAP                 Control Account Plan

    COQ                Cost of Quality

    CPI                  Cost Performance Index

    CPM                Critical Path Method

    CV                   Cost Variance

    CWBS             Contract Work Breakdown Structure

    DD                   Data Date

    EAC                 Estimate at Completion

    EF                   Early Finish date

    ES                   Early Start date

    ETC                 Estimate to Complete

    EV                   Earned Value

    EVM                Earned Value Management

    EVT                 Earned Value Technique

    FF                    Finish-to-Finish

    FF                    Free Float

    FMEA              Failure Mode and Effect Analysis

    FS                   Finish-to-Start

    LF                    Late Finish date

    LS                    Late Start date

    OBS                Organizational Breakdown Structure

    OD                   Original Duration

    PC                   Percent Complete

    PDM                Precedence Diagramming Method

    PF                   Planned Finish date

    PM                   Project Management     or   Project Manager

    PMBOK®          Project Management Body of Knowledge

    PMIS               Project Management Information System

    PMO                Program Management Office    or       Project Management Office

    PMP®               Project Management Professional

    PS                   Planned Start date

    PSWBS           Project Summary Work Breakdown Structure

    PV                   Planned Value

    QA                   Quality Assurance

    QC                   Quality Control

    RAM                Responsibility Assignment Matrix

    RBS                 Resource Breakdown Structure    or      Risk Breakdown Structure

    RD                   Remaining Duration

    RFP                 Request for Proposal

    RFQ                Request for Quotation

    SF                   Scheduled Finish date

    SF                   Start-to-Finish

    SOW               Statement of Work

    SPI                  Schedule Performance Index

    SS                   Scheduled Start date

    SS                   Start-to-Start

    SV                   Schedule Variance

    SWOT             Strengths, Weaknesses, Opportunities, and Threats

    TC                   Target Completion date

    TF                    Target Finish date

    TF                    Total Float

    T&M                Time and Material

    TQM                Total Quality Management

    TS                   Target Start date

    VE                   Value Engineering

    WBS                Work Breakdown Structure

     

    You should be aware of the above mentioned Cost terms in order to understand the Cost in Project Management.

     


     

    Tag:Actual Cost, Bill Of Materials, Budget At Completion, Cash flow analysis, controlling, Cost budgeting, Cost control, Cost estimating, Cost management, Cost of Quality, Critical Path Method, Data Date, Direct costs, free float, Indirect costs, planning, Profits, Value Engineering

    • Share:
    Hany Ismail, MSC, PMP
    Hany Ismail, MSC, PMP

    Hany Ismael is the founder and CEO of Planning Engineer Est. in Egypt. He has started his career back in 2003 as a site engineer, technical office engineer, planning engineer, planning manager, and finally planning department manager where he has been involved in several mega construction projects in Egypt and Saudi Arabia. In 2016, he established his own company in Egypt “Planning Engineer Est.” Hany gained his MSc degree in project management from Liverpool University-UK 2013-2016, PMP certified from PMI-USA 2010, and BSc Civil Engineer Tanta University-Egypt 2003. Hany provided more than 3,500 hours of planning and project management training on his website planningengineer.net, YouTube channel, and offline courses since 2011. He enjoys teaching project management in simple and practical way, and he developed several planning tools, techniques and courses.

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      4 Comments

    1. blank
      Anonymous
      January 8, 2013
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      Project time and cost management is really important for businesses these days.

    2. blank
      Jam Afzal
      January 9, 2013
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      Thanx

    3. blank
      mohamed
      October 8, 2015
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      thanks alot

    4. blank
      Sawailal Jangid
      August 20, 2019
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      Great content. It is really very informative. Thank you for sharing it with us. Keep up doing a great job.

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