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The blog covers:
1. Background
I was five years into my employment with an engineering, procurement, and construction (EPC) company. As part of a job rotation tied to career development, I joined a proposal development team tasked with preparing a competitive bid for a federal government project. We had a mix of technical and managerial staff on this team, and I noticed in the team roster there was a "cost engineer." I was a new face on this type of assignment and was curious to find out what "engineering" tasks a cost engineer does. I, as a chemical engineer on the roster, knew what my day-to-day work was - preparing engineering analysis aided by detailed calculations, drawings, modeling, and simulation. What type of "engineering" deliverables did the cost engineer produce?
My "engineering inquisitiveness" goaded me to find it out. Read on...
2. Traditional Engineering vs. the Adjunct Term: "Cost Engineering"
A traditional engineer, for example, a degreed and licensed structural engineer, is responsible for creating strategic physical assets (a bridge, for example) using calculations and analysis to support the design of that asset.
The creation of this physical asset involves the technical aspects furnished by the structural engineer and duly supported by the critical, yet non-physical aspects of money (cost), time (schedule) and other resources (specialty skills) that are expended to build the subject asset.
These critical expenditures are collectively referred to as "cost," which is initially estimated and continually monitored to assess progress as the design is implemented and the bridge structure (in this case) takes form. In other words, the structural design of the physical asset cannot be brought on to the field without the adjunct, yet critical role of the cost.
Just like the field of Structural Engineering involves scientific calculations and analysis to arrive at a safe design, the cost dimension also requires cost estimating, financial analysis, project planning, and control to execute the design. The approaches are different. From this difference, Cost Engineering as a field of engineering practice was born in 1950. Cost Engineering is commonly considered as an adjunct to traditional engineering, which plays an integral role in getting the engineering design hitherto on paper to stand up.
3. Should We Use the Term "Engineer" When Referring to a Cost Professional?
"In the United States, the practice of professional engineering is highly regulated, and the title 'professional engineer' is legally protected. It is unlawful to use it to offer engineering services to the public unless formally endorsed by the state through a professional engineering license." (The Historical Evolution of Professional Engineering Licensure).
Because the title "engineer" has legal implications in certain United States jurisdictions (e.g., Texas), the Cost Engineering discipline refrains from using the term "engineer" or "engineering," instead refers to the profession as "Project Controls."
However, the American Association of Cost Engineers (AACE) International 1 authorizes the use of the following terminologies:
"COST ENGINEER - A professional whose judgement and experience are used in the application of scientific principles and techniques to the areas of business planning and management science, profitability analysis, estimating, decision and risk management, cost control, planning, scheduling, and dispute resolution, etc. to support asset, project, program, and portfolio management. (April 2019)
COST ENGINEERING - The application of scientific principles and techniques to the areas of business planning and management science, profitability analysis, estimating, decision and risk management, cost control, planning, scheduling, and dispute resolution, etc. to support asset, project, program, and portfolio management."
Distilling the import from the above two terminologies, it can be stated that the discipline of "COST ENGINEERING" encompasses the entire gamut of the cost-related aspects representing the confluence of engineering, program management, and business management. In fact, Cost Engineering establishes the relationship between the physical and fiscal dimensions of assets that are "engineered."
Given the salience Cost Engineering brings to the engineering profession, it is required as the core curricula of Construction Engineering, Engineering Management, and Civil Engineering. Furthermore, the licensing examination for professional engineers considers the knowledge of Engineering Economics foundational and essential.
4. What Are the Professional Titles for Practitioners of Cost Engineering?
According to the AACE® International 2, cost engineering practitioners can specialize in areas like cost estimating, planning, scheduling, and asset management. They are employed by the business owners and operators where their financial analysis skills are utilized and by the project managers who use their expertise in project planning and control. Depending on their specific roles, cost engineers may report professional titles like cost estimator, project controls engineer, cost analyst, claims specialist, pre-construction manager, etc.
5. Discussion
As we have now established the expertise involved in dealing with the costs of an undertaking is markedly different from those required to design and build it - in other words, "engineer" it. The engineering designer, however, will have to engage with the cost professionals, as peers, to install the hitherto "paper" design in the ground. This intimate association of the cost professional with the engineering professional in developing and erecting a project engenders a collective understanding of "scientific principles and techniques," hence justifies the use of the term "engineer" for the cost professional.
To summarize, a cost engineer contributes in the following ways to an engineering project from start to finish:
Before the Start:
- Feasibility Studies and Risk Analysis - whether the project will be a viable one.
- Provides input on engineering and architectural plans - only include value-added aspects.
- Establish the budget using benchmarks - so that there is an "apples-to-apples" comparison.
During Execution:
- Controls cost and manage schedule - stem the cost and schedule overrun.
- Resolves scope creep - through active communication with project manager and client.
- Reviews and assesses the project milestones.
Post Completion:
- Documents lessons learned for use in future endeavor.
- Archives the as-built cost data for future use on similar projects.
- Communicates the areas for improvement.
In fact, the cost engineer keeps all the moving parts of the project lubricated and working till we reach the destination, before running out of fuel!
6. Conclusion
An experienced cost engineer can foresee problems and challenges in a project with regards to debilitating cost-overruns and grinding schedule slow-downs. Because of the value they bring to an engineering project, it is not an exaggeration to say that a skilled cost engineer makes the (traditional) engineer's vision a reality - he/she is justified to be an engineer's peer and a bona fide engineer!
Interested in becoming an engineer? Check out School of PE's engineering exam review courses to get a leg up on the competition!
1 American Association of Cost Engineers (AACE)® International Recommended Practice 10S-90; Cost Engineering Terminology, Rev. February 18, 2022.
2 American Association of Cost Engineers (AACE)® International Recommended Practice 11R-88; Required Skills and Knowledge of Cost Engineering, Rev. June 18, 2013.
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