Cost Management for Engineers-Cost Terms

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

Value Engineering:

It is a balance between cost and quality 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 cost performance & overcome 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: It is the cost that can be directly related to producing the products and services of the project.

Indirect costs: It is the cost that is not directly related to the products or services of the project but is indirectly related to performing the project.

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

Profit: It is revenues minus expenses.

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

Cost budgeting: It involves allocating the project cost estimate to individual work items over time. and there are plenty of cost management software that apply this concept.

 

The Term Cost Centre Definition
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 to understand the Cost in Project Management.

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