Cost, Project and Value Engineering for Effective Project Control

Cost Engineering: Overview

Objectives of Cost Engineering

History

Importance

The International Cost Engineering Council (ICEC)

Mathematics of Cost Comparisons

Depreciation

Accelerated Cost Recovery System

Modified Accelerated Cost Recovery System (MACRS)

Cost Comparisons of Unequal Durations

Inflation

The Learning Curve

Profitability

Working Capital

Conceptual Costing

Forecasting

Value Engineering

Optimisation

• Linear Programming
• Dynamic Programming

Nomenclature

Cost Accounting

Project Cost Accounting

Functions of Cost Accounting

Types of Costs

• Direct Costs
• Indirect Costs
• Overhead Costs
• Standard Costs
• Joint Cost
• Job Order and Process Costing

Estimating Cost

Capital Cost Estimation

• Purpose of Estimates
• Fixed Capital and Working Capital
• Current Trends in Capital-Cost Estimating
• Cost Estimates Types
• Functions of Capital-Cost estimates
• Cost of Making Estimates
• Representation of Cost Data
• Factored Estimating
• Codes of Account
• Startup Costs
• Evaluation of the Estimate

Operating Cost Estimation

• Concept
• Purposes of Operating Cost Estimates
• Raw Materials and Utilities
• Operating Labour
• Maintenance
• Indirect Payroll Cost
• Operating Supplies
• Laboratory and Other Service Costs
• Royalties and Rentals
• Indirect Costs
• Distribution Costs
• Avoidance of Nuisances
• Contingencies
• Shortcut Method
• Components of Total Product Cost

Economic Equivalence and Profitability

Introduction

Profitability Analysis

Depreciation

Economic Comparisons and Profitability: Examples

Lease vs. Purchase

Economics for Capital Projects or Replacements

Scheduling a Loan Payment

Cost Control and Reporting

Overview

Project Formats

Establishing Baselines for Control

Status Evaluation and Control

Reporting and Analysis

• Frequency of Reports
• Variance Analysis
• Report Distribution

Cost Indexes, Escalation and Location Factors

Cost Indexes

• Using an Index
• Compiling an Index
• Building Cost Indexes Analysis
• Limitations in Using Published Indexes
• Estimating Escalation

Location Factors

• Background Sources
• International Location Factors
• Country Cost Indexes
• Cost Data Sources

Operations Research Techniques

Linear Programming

• Two-Dimensional Graphical Solution
• Simplex Method
• Conversion to Simplex Form
• Interpretation of Simplex Solutions

Dynamic Programming

Simulation

• Coin Problem
• Random Variables
• Queuing Problem

Risk Analysis

Concept

The Fourth Variable

The Monte Carlo Approach

Contingency

Avoiding Risk Analyst Induced Risk

Conducting the Risk Analysis

Available Risk Analysis Software

International Cost Engineering

Overview

Project Elements

• Project Design
• Bulk Materials
• Engineered Equipment
• Construction Labour
• Construction Equipment
• Construction Management Staffing
• Schedule
• Local Infrastructure Requirements
• Material And Equipment Delivery
• Progress Payments
• Local Taxes
• Insurance
• Project Finance
• Legal Recourse
• Social System

Initiation

Computer Applications for Project Control

The Need for Computerization

Important Terms to Consider

Designing Project Management Systems

Steps in System Design and Implementation

Project Control Software

• Planning and Scheduling Software
• Cost Estimating Software
• Economic Analysis Software
• Management Reporting Software
• Risk Analysis Software

Computer-Aided Design (CAD) Applications for Project Management

• Basic CAD Components and Capabilities
• CAD Applications to Cost Control
• CAD Applications to Weight Control
• CAD Applications to Document Control
• CAD Applications to Maintenance
• CAD Applications to Construction Planning

Project Management

Defining a Project

Benefits of Project Management

What Project Management Helps You to Achieve?

Project Management, Organisation and Execution Conflict

Project Management and Control

Factors Determining Project Success

Project Constraints

• Scope
• Time
• Cost

Project Management Cost Estimating Tools

Project Cycle Management (PCM)

Project Life Cycle

Planning – Conceptualisation, Analysis, Proposal, Justification, Agreement

Doing – Start-Up, Execution, Completion, Hand Over

Checking – Review

Acting – Feedback

Development of a Project Life Cycle, Project Brief and Proposal

The Management of Change

The Systems Approach to Project Management

The Requirements of Successful Project Management

Balancing Costs and Benefits

Managing the Planning Process

Critical Incident Analysis

Project Control Mechanism

The Value Chain: Adding Value to Processes, Products and Processes

Project Decision-Making

Project Coordination: The 5 Bases of Co-Ordination

Developing A CATWOE Focus of Project Management

Why do Project Fails?

PERT, CPM, Arrow and Precedence Scheduling

Introducing Value Engineering

What is Value Engineering?

Value Engineering History

5 Precepts of Value Engineering

Addressing the Problems through Value Engineering

Benefits of Value Engineering

The Reasons for Unnecessary Costs

When to Apply Value Engineering

How is Value Engineering Done?

Concept of Value

VE Methodology and Techniques

Variations in Cost

Interface with Other Programs

Demonstrated Impact of VE

Value Engineering Practical Applications

Project Scope and Budget

• Elements of the Project Budget
• Prevalent Budgeting Techniques
• Contingency Amount
• Cost Control
• Defining Project Scope
• Parameters and Parameter Cost

The Capitalized Income Approach to Project Budgeting (CIAPB)

• CIAPB Objectives
• Measuring Property Value
• The Meaning of Capitalization
• The Capitalization Process
• The Need for Cost Control

Advanced Value Analysis Phases

Phase 1 – Information Phase

Phase 2 – Function Phase

Phase 3 – Creative Phase

• Idea Stimulator Checklist

Phase 4 – Analysis/Judicial Phase

• Analysis/Judicial Phase: Analysis/Development
• Analysis/Judicial Phase: Analysis/Evaluation

Phase 5 – Recommendation

Phase 6 – Presentation and Implementation