Project and Cost Engineers' Handbook, Fourth Edition

by Humphreys; Kenneth K.

• ISBN13: 9780824757465
• ISBN10: 0824757467
• Edition: 4th
• Format: Hardcover
• Copyright: 2004-11-30
• Publisher: CRC Press

Summary

Making the specifics of a complex concern accessible and its handling quite manageable, this fourth edition of the Project and Cost Engineers' Handbook examines the variables associated with international projects and project risk analysis. It provides instruction on contingency planning, delves into ethical considerations, considers the impact of the Internet on project and cost engineering, and examines the field's ever increasing reliance on software. It also offers a detailed checklist of actions that must be taken to assure the successful completion of an international project, and presents updated information on AACE International certification programs.

Table of Contents

Preface	v
Acknowledgments	vii
Contributors	xv
1. Cost Engineering Basics
1.1 Mathematics of Cost Comparisons	1	(3)
1.2 Depreciation	4	(5)
1.3 Accelerated Cost Recovery System: 1981-1986	9	(1)
1.4 Modified Accelerated Cost Recovery System (MACRS)	10	(1)
1.5 Cost Comparisons of Unequal Durations	11	(7)
1.5.1 Continuous Interest	16	(2)
1.6 Inflation	18	(4)
1.7 The Learning Curve	22	(4)
1.8 Profitability	26	(3)
1.9 Working Capital	29	(1)
1.10 Conceptual Costing	30	(1)
1.11 Forecasting	30	(2)
1.12 Value Engineering	32	(3)
1.13 Optimization	35	(5)
1.13.1 Linear Programming	35	(3)
1.13.2 Dynamic Programming	38	(2)
1.14 Nomenclature	40	(1)
Recommended Reading	41	(2)
2. Cost Accounting	43	(14)
2.1 Project Cost Accounting	43	(1)
2.2 Role of Cost Accounting	44	(3)
2.2.1 Accounting Terms	44	(3)
2.3 Classification of Costs	47	(8)
2.3.1 Direct Costs	49	(1)
2.3.2 Indirect Costs	49	(1)
2.3.3 Overhead Costs	50	(1)
2.3.4 Standard Costs	51	(1)
2.3.5 Joint Costs	52	(2)
2.3.6 Job Order and Process Costing	54	(1)
References	55	(1)
Recommended Reading	55	(2)
3. Cost Estimating	57	(30)
3.1 Capital Cost Estimation	57	(1)
3.1.1 Purpose of Estimates	57	(1)
3.1.2 Fixed Capital and Working Capital	58	(1)
3.1.3 Current Trends in Capital-Cost Estimating	58	(1)
3.1.4 Types of Estimates	59	(1)
3.1.5 Functions of Capital-Cost Estimates	61	(1)
3.1.6 Cost of Making Estimates	61	(1)
3.1.7 Representation of Cost Data	62	(1)
3.1.8 Factored Estimating	63	(1)
3.1.9 Codes of Account	73	(1)
3.1.10 Startup Costs	74	(2)
3.1.11 Evaluation of the Estimate	76	(1)
3.2 Operating Cost Estimation	77	(1)
3.2.1 Definitions	77	(1)
3.2.2 Purposes of Operating Cost Estimates	77	(1)
3.2.3 Raw Materials and Utilities	78	(1)
3.2.4 Operating Labor	79	(1)
3.2.5 Maintenance	79	(1)
3.2.6 Indirect Payroll Cost	80	(1)
3.2.7 Operating Supplies	80	(1)
3.2.8 Laboratory and Other Service Costs	80	(1)
3.2.9 Royalties and Rentals	80	(1)
3.2.10 Indirect Costs	81	(1)
3.2.11 Distribution Costs	81	(1)
3.2.12 Avoidance of Nuisances	81	(1)
3.2.13 Contingencies	81	(1)
3.2.14 Shortcut Methods	82	(3)
3.2.15 Components of Total Product Cost	85	(1)
3.3 Summary	85	(1)
References	85	(1)
Recommended Reading	86	(1)
4. Economic Equivalence and Profitability	87	(30)
4.1 introduction	87	(2)
4.2 Profitability Analysis	89	(26)
4.2.1 Depreciation	90	(2)
4.2.2 Practical Examples of Economic Comparisons and Profitability	92	(3)
4.2.3 Lease Versus Purchase	95	(2)
4.2.4 Economics for Capital Projects or Replacements	97	(4)
4.2.5 Scheduling a Loan Payment	101	(14)
References	115	(1)
Recommended Reading	116	(1)
5. Cost Control and Reporting	117	(20)
5.1 Introduction	117	(1)
5.2 Project Formats	118	(1)
5.2.1 Contracting Party Viewpoints	118	(1)
5.3 Establishing Baselines for Control	119	(5)
5.3.1 Cost Control Variables	120	(4)
5.4 Status Evaluation and Control	124	(4)
5.4.1 Cost/Schedule Integration	124	(4)
5.5 Reporting and Analysis	128	(6)
5.5.1 Frequency of Reports	129	(1)
5.5.2 Variance Analysis	129	(1)
5.5.3 Report Distribution	129	(5)
References	134	(1)
Recommended Reading	135	(2)
6. Project Management and Schedule Control	137	(32)
6.1 Project Management, Organization, and Execution Conflict	137	(4)
6.2 Project Management and Control	141	(15)
6.3 PERT, CPM, Arrow and Precedence Scheduling	156	(11)
Recommended Reading	167	(2)
7. Cost Indexes, Escalation, and Location Factors	169	(32)
7.1 Cost Indexes	169	(12)
7.1.1 How to Use an Index	171	(2)
7.1.2 How an Index is Compiled	173	(2)
7.1.3 Analysis of some Building Cost Indexes	175	(2)
7.1.4 Limitations in Using Published Indexes	177	(2)
7.1.5 Procedure for Estimating Escalation	179	(2)
7.2 Location Factors	181	(16)
7.2.1 Background Sources	182	(2)
7.2.2 International Location Factors	184	(13)
7.2.3 Country Cost Indexes	197	(1)
7.2.4 Cost Data Sources	197	(1)
References	197	(1)
Recommended Reading and Other Information Sources	198	(3)
8. Operations Research Techniques	201	(20)
8.1 Linear Programming	201	(11)
8.1.1 Two-Dimensional Graphical Solution	205	(2)
8.1.2 Simplex Method	207	(1)
8.1.3 Conversion to Simplex Form	208	(3)
8.1.4 Interpretation of Simplex Solutions	211	(1)
8.2 Dynamic Programming	212	(1)
8.3 Simulation	213	(7)
8.3.1 Coin Problem	214	(1)
8.3.2 Random Variables	215	(1)
8.3.3 Queuing Problem	216	(2)
8.3.4 Discussion	218	(2)
Recommended Reading	220	(1)
9. Risk Analysis: How to Do it and How Not to Do it	221	(8)
9.1 Introduction	221	(1)
9.2 The Fourth Variable	222	(1)
9.3 The Monte Carlo Approach	223	(1)
9.4 Contingency	224	(1)
9.5 Avoiding Risk Analyst Induced Risk	225	(1)
9.6 Conducting the Risk Analysis	226	(1)
9.7 Available Risk Analysis Software	226	(1)
References	227	(1)
Recommended Reading	228	(1)
10. Cost Engineering in a Worldwide Economy	229	(10)
10.1 Introduction	229	(1)
10.2 Project Elements Checklist	230	(1)
10.2.1 Project Design	230	(1)
10.2.2 Bulk Materials	230	(1)
10.2.3 Engineered (Process) Equipment	231	(1)
10.2.4 Construction Labor	231	(1)
10.2.5 Construction Equipment	232	(1)
10.2.6 Construction Management Staffing	232	(1)
10.2.7 Schedule	232	(1)
10.2.8 Local Infrastructure Requirements	232	(1)
10.2.9 Material & Equipment Delivery (Shipping & Customs)	233	(1)
10.2.10 Progress Payments (Cash Flow)	234	(1)
10.2.11 Local Taxes	234	(1)
10.2.12 Insurance	235	(1)
10.2.13 Project Finance	235	(1)
10.2.14 Legal Recourse	235	(1)
10.2.15 Social System	235	(1)
10.3 How Do You Begin?	236	(1)
10.4 Conclusion	237	(1)
Recommended Reading	238	(1)
11. Computer Applications for Project Control	239	(26)
11.1 Why Consider Computerization?	239	(1)
11.2 Definition of Terms	240	(4)
11.3 Considerations in the Design of Project Management Systems	244	(1)
11.4 Basic Steps in System Design and Implementation	245	(12)
11.5 A Review of Project Control Software	257	(4)
11.5.1 Planning and Scheduling Software	257	(1)
11.5.2 Cost Estimating Software	258	(2)
11.5.3 Economic Analysis Software	260	(1)
11.5.4 Management Reporting Software	260	(1)
11.5.5 Risk Analysis Software	260	(1)
11.6 Computer-Aided Design Applications for Project Management	261	(3)
11.6.1 Basic CAD Components and Capabilities	261	(1)
11.6.2 CAD Applications to Cost Control	262	(1)
11.6.3 CAD Applications to Weight Control	262	(1)
11.6.4 CAD Applications to Document Control	262	(1)
11.6.5 CAD Applications to Maintenance	263	(1)
11.6.6 CAD Applications to Construction Planning	263	(1)
Recommended Reading	264	(1)
12. Cost Engineering Ethics	265	(10)
12.1 Black and White, or Gray?	265	(1)
12.2 The International Cost Engineering Council Canons of Ethics	266	(1)
12.3 Computer-Aided Nightmares	267	(2)
12.4 A Computer-Assisted Catastrophe	269	(3)
12.5 International Project Ethics	272	(2)
References	274	(1)
Recommended Reading	274	(1)
Appendix A. AACE International Certification Programs	275	(10)
A.1 Introduction	275	(1)
A.2 Certified Cost Engineer/Certified Cost Consultant Examination	275	(8)
Exam Basis	275	(1)
Exam Schedule	276	(1)
Exam Format	276	(2)
Preparation Guidance	278	(1)
The Professional Paper	278	(2)
Sample Exam Questions	280	(3)
Answers to Sample Exam Questions	283	(1)
A.3 Interim Cost Consultant Examination	283	(1)
Exam Basis, Schedule and Format	283	(1)
ICC Sample Exam Questions	283	(1)
A.4 Planning and Scheduling Professional Certification Examination	284	(1)
Appendix B. Standard Cost Engineering Terminology	285	(30)
Appendix C. Guide to Project and Cost Related Internet Sites	315	(12)
C.1 Introduction	315	(1)
C.2 Cost Engineering, Quantity Surveying, and Project Management Associations and Institutes	315	(5)
C.3 Cost Engineering and Project Management Software	320	(2)
C.3.1 Cost Estimating Software	320	(1)
C.3.2 Project Management, Planning and Scheduling Software	321	(1)
C.3.3 Risk Analysis and Range Estimating Software	322	(1)
C.4 Publishers of Cost Data and Information	322	(2)
C.5 Other Web Sites of Interest	324	(3)
Index	327