Cost Management for Engineers-Cost Terms

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

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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.

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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.

 

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