Cost Management for Engineers-Cost Terms
Cost management is the process of planning and controlling the budget of a business.
It is a balance between cost and quality to achieve the desired function. Value Engineering (VE), also called:
- Value Management.
- Value Analysis.
- Target costing.
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|
|ACWP||Actual Cost of Work Performed|
|ADM||Arrow Diagramming Method|
|AF||Actual Finish date|
|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|
|CWBS||Contract Work Breakdown Structure|
|EAC||Estimate at Completion|
|EF||Early Finish date|
|ES||Early Start date|
|ETC||Estimate to Complete|
|EVM||Earned Value Management|
|EVT||Earned Value Technique|
|FMEA||Failure Mode and Effect Analysis|
|LF||Late Finish date|
|LS||Late Start date|
|OBS||Organizational Breakdown Structure|
|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|
|RAM||Responsibility Assignment Matrix|
|RBS||Resource Breakdown Structure or Risk Breakdown Structure|
|RFP||Request for Proposal|
|RFQ||Request for Quotation|
|SF||Scheduled Finish date|
|SOW||Statement of Work|
|SPI||Schedule Performance Index|
|SS||Scheduled Start date|
|SWOT||Strengths, Weaknesses, Opportunities, and Threats|
|TC||Target Completion date|
|TF||Target Finish date|
|T&M||Time and Material|
|TQM||Total Quality Management|
|TS||Target Start date|
|WBS||Work Breakdown Structure|
You should be aware of the above-mentioned cost terms to understand the Cost in Project Management.