Cost Management Methods

 Cost Management Methods

 

 

 

There are many ways that cost elements and cost structure can be displayed to provide information for cost management . the most common methods are listed as below:

Cost Estimating

cost estimating predicts the quantity and cost of resources needed to accomplish an activity or create an asset. the building blocks of  acost estimate are 

-a well-defind scope
-a cost element structure
-Historical  acost data

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Cost Trending

Cost trends areestablished from historical cost accounting information. cost management questions may focus on how expenditures are trending relative to phisical accomplishments.

 

Cost Forecasting

Forecast are much like estimates. forecasts are predections of the cost at completion for cost elements in progress. therfore.3 a sound cost forecast will be based on cost element data from inception of the work to the data of the forecast .the cost trend  of that data compared to accomplishments . and a cost estimate of the work remaining to be completed  .cost element history in the proper activity structure is essential for realistic cost forecasts.

Life-Cycle Costing

Life-cucle costs (LCC) are associated with an asset and extend the cost management information beyond the acquisition (creation) of the asset to the use and disposal of the asset. Asset acquistion consists of the desighn /development phase and the production/construction phase.Generally . cost elements are segregated into these phases because desighn / development costs are often recovered over more than on asset

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The Author: Babak Nikoofar , MSc, PMP

                                                        

About:

Oil & Gas Professional

roject Planner/Scheduler Engineer in oil and gas industries EPCM projects. Well-developed interpersonal and communication skills, persevering , self-motivated and interested in learning new skills.  

Specialties:  

- Planning & Scheduling 

- Cost Estimation  

- Cost Control 

- Budgeting & Cost Analysis 

- Project Progress Monitoring and Control 

- Project Management 

- Projects Coordination 

- Resource Planning 

- Critical Analysis 

- Risk Analysis 

- EVPM 

- System Designing & Planning.