Adding Value To the Organisation through

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Adding Value To the Organisation through

• Cost Engineering

Dave Lewis - Cost Engineering Solutions Dale
Shermon - PriceSystems
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The Problem

• Cost Engineers are
• under funded,
• not appreciated
• capabilities are not being recognised
• by their companies

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• This presentation is provided, through the EACE,
  and aims to address this problem by assisting you
  in presenting the capabilities of the Cost
  Engineering Process and how it adds value to your
  organisation.

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• Take these slides as a starting point for a
  presentation to sell the capabilities of Cost
  Engineering.
• Select Format, Apply Design Template from the
  menu to customise the presentation within your
  organisation
• Delete this slide and add, where appropriate
  information relating to your own organisation.

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Adding Value To the Organisation through the
Application of The Skills Process For

• Cost Engineering

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Agenda Part 1

• Definition Of Cost Engineering
• The Cost Engineer
• Profile
• Primary Skills
• Qualifications
• Requirements
• Cost Data
• Cost Models
• Process Procedures

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Definition Of Cost EngineeringAssociation of
Cost Engineers

• A Cost Engineer is, by education, training and
  experience competent to develop and make
  practical use of the principles of engineering
  cost management which embraces activities such as
  estimating, cost control, value engineering,
  planning, construction management, investment
  appraisal and risk analysis.

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Definition Of Cost EngineeringCost Engineering
Capability Improvement Model

• Cost Estimating
• Cost Modelling
• Cost Control Analysis
• VA/VE Cost Reduction
• Planning(Schedule)
• Risk Management
• Cost Allocation

• DTC CAIV
• Supply Chain Support
• Knowledge Management
• Capital Asset Resource Management
• Business Analysis
• Business Case Development
• Audit

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Why you should have Estimators ?
Accurately forecasting the cost of future work is
vital to the survival of any business. Estimators
develop cost related information for managers to
use in determination of resource and material
requirements, making bids, and assessment of the
profitability of new products. To do this
estimators compile and analyse data on all the
factors that can influence costs such as
materials, labour, machinery, past performance,
commercial conditions etc.
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Meeting The Need 1 gt Experience
Technical Knowledge
Commercial Awareness
Financial Awareness
Profile
Understanding The Business
Communications Interpersonal Skills
Principles Of Project Management, Tasks relate to
PMBOK
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Meeting The Need 1A gt Capabilities
Elements Of Cost
CBS/WBS
Estimating Methods
Costing Pricing
Types Purpose Of Estimates
Primary Skills
Operating Manufacture Costs
Cost Indices Escalation Factors
Risk Analysis/Contingency
Budgeting Cash Flow
HSE
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Meeting The Need 2 gt Cost Data
Historical Project Cost Data
Cost Data
Estimate To Complete Data
Inflation / Cost Trend Indices
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Meeting The Need 3 gt Cost Models
Appropriate to the Organisation and Application
Proprietary Cost Models
Spreadsheets
Cost Models
Rule Of Thumb
Cost Improvement Models
Economic Models
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Meeting The Need 4 gt Process Procedures
Client Specifies
Process Procedures
In House
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Meeting The Need 5 gt Qualifications

• NVQ/SVQ Project Control
• Certified Cost Engineer SCEA/ACostE ?
• Incorporated, Chartered or European Engineer
  thro Engineering Council or Federation Of
  National Engineering associations.
• Certified Parametrician - ISPA

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Agenda Part 2 Approach

• Scope/Definitions
• Project Execution Strategy
• Estimating Strategy
• Information Requirements

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Scope / Definitions
Breakdown Structures
WBS
OBS
CBS
Scope / Definitions
Exclusions
Scope Boundaries
Schedule
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Project Execution Strategy
Commercial Financial
Contracting Arrangements
Project Execution Strategy
Local Issues
Supply Chain Considerations
Competition
Alternative Strategies SWOT Analysis
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Estimating Strategy
Degree Of Definition
Estimating Strategy
Schedule
Adopt Appropriate Technique
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Information Requirements - 1

• Purpose/Use
• Project Stage
• Level quality Of Project scope
• Level quality Of data
• Time for preparation
• Resource Level/Availability
• companies Risk Culture

Type Of Cost Estimate Produced
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Information Requirements - 2

• Project scope
• Project Specification
• Quantity
• Rates
• Schedule data
• Local factors/Performance data
• Escalation norms

Estimating Techniques vary - individual
constituent parts need to be available
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Information Requirements - 3
Estimating Techniques Fall Into 2 Categories
Minimal Project Scope Or Design Definition
Deign Definition Or Project Scope Advanced
Bottoms Up/Detailed
Top Down/Parametric
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Accuracy
Accuracy improves through course of the project
as scope definition firm up as costs move from
estimated to actual.
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Information Requirements - 4
Actual Labour Hours Norms
Statistics
Estimating Manuals
Database
Technical Data
Perfomance data
Procurement data
Indices/Escalation
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Typical Cost / Technical Trend Chart
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Typical Cost Improvement Chart
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Breakdown Of Cost by Element
5 Reduction 40 K
5 Reduction 5K
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Supplier Comparison Graph
Supplier B is Cheaper Than A
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Next Steps
Provide your own inputs on areas of financial
saving and benefits achieved.
Please also provide data to me for collation
presentation in Part 2
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Next Steps 2

• Need to Collect Best Practice Data to include in
  Part 2
• CECIM / Benchmarking Workshops
• Expand Into Cost Analysis(EVA etc) For Part 2.
• Need to generate Strengths Key Benefits
  slides(Competences Training Sub Group)
• Need to generate Financial Benefits
• Cost Of CE relative to Value Of work
• Cost Of CE relative to savings generated.

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Further Information
For Further information please contact
dave.lewis_at_costeng-solutions.com or dale.sherm
on_at_pricesystems.com