What are the most common cost engineering challenges in your industry and how do you overcome them?

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Cost engineering is the discipline of managing the cost, schedule, and performance of projects and programs. It involves applying engineering principles, techniques, and tools to plan, estimate, budget, monitor, control, and optimize the resources and risks of complex endeavors. As a cost engineer, you may face various challenges in your industry, depending on the nature, scope, and complexity of your projects. Here are some of the most common ones and how you can overcome them.

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1 Uncertainty and volatility

One of the biggest challenges in cost engineering is dealing with uncertainty and volatility in the project environment. Uncertainty refers to the lack of information or knowledge about the future outcomes or events that may affect the project. Volatility refers to the degree of change or variation in the project conditions or requirements over time. Both uncertainty and volatility can increase the risk of cost overruns, delays, rework, and quality issues. To overcome this challenge, you need to adopt a proactive and flexible approach to cost engineering. This means identifying and assessing the sources and impacts of uncertainty and volatility, developing contingency plans and buffers, using probabilistic and scenario-based methods for cost estimation and analysis, and updating and revising your cost plans and forecasts as the project progresses.

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Roger Franco

Project Manager at New-Com, Inc.
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Long lead items that will have a direct impact into the Project's overall duration. Therefore general conditions costs increments into the Project's Budget, and will affect the final cost.

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Moorthy Senthilnathan, BE, PMP?

Lead Engineer cost control at Heavy Engineering Industry & Shipbuilding Company, Kuwait
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common cost engineering challenges include budget overruns, scope changes, and resource allocation. Overcoming these challenges involves rigorous monitoring, proactive risk management, and effective communication among project stakeholders.

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2 Stakeholder alignment and communication

Another common challenge in cost engineering is ensuring stakeholder alignment and communication throughout the project lifecycle. Stakeholders are the individuals or groups who have an interest or influence in the project, such as clients, sponsors, managers, team members, suppliers, regulators, and end-users. Stakeholder alignment and communication are essential for establishing and maintaining a shared vision, scope, and expectations for the project, as well as for resolving issues, conflicts, and changes that may arise. To overcome this challenge, you need to implement a stakeholder management and communication plan that defines the roles, responsibilities, and expectations of each stakeholder group, the frequency and mode of communication, the type and format of information to be shared, and the feedback and escalation mechanisms to be used.

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Hareesh N.
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In my experience, communication with stakeholders like expectations on doing the right things at right time and right way especially when it comes to month end reporting in a short frame of time is critical. Each part must be arranged meticulously to complete the reporting cycle in a timely and accurate manner. Ensuring budgets are aligning with each WBS, keeping track of costs in period and ensuring forecast at completion is to the tee etc.

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3 Data quality and integration

A third common challenge in cost engineering is ensuring data quality and integration across the project lifecycle. Data quality refers to the accuracy, completeness, consistency, reliability, and timeliness of the data used for cost engineering purposes. Data integration refers to the ability to combine and consolidate data from different sources, systems, and formats into a coherent and usable form. Data quality and integration are critical for producing reliable and meaningful cost estimates, budgets, reports, and analyses that support decision making and performance measurement. To overcome this challenge, you need to establish and follow data quality and integration standards and procedures that specify the sources, methods, tools, and formats for collecting, processing, storing, and sharing data, as well as the quality checks, validations, and audits to be performed.

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Elan Kent

Operations and Financial Analyst
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In my experience this is one of biggest challenge when it comes to cost engineering. Trying to gather data from different departments/divisions each using different software is challenging. For example when I need data on travel related costs (Fuel, tracker & insurance) I have to get this from fleet/logistics, but when I need other transport related costs (finance, depreciation) I need to get this from finance. Wage related data comes from Payroll. Purchase related data comes from Creditors, the list goes on. It's challenging to collate this data and then turn it into useable information.

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Jonathan Soto Rosado - Senior Cost Manager

Cost Management consultant | Senior Cost Manager | Cost Manager | Construction | Projects | Project Management | Project Control
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In my experience, one relevant aspect is the quality of the data, so we must ensure that the data is captured in a determined and consistent way. Establish tools and processes to collect, process, store and share data in an appropriate way. And so data can be compared from project to project, both in the private and public sector. To improve data quality in cost management, it is key to establish quality standards, automate data collection, analyse and cleanse data. Organisations can make more informed decisions, optimise their processes and improve their financial performance if they invest in improving the quality of their data.

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4 Technology adoption and innovation

A fourth common challenge in cost engineering is keeping up with technology adoption and innovation in the project environment. Technology adoption refers to the use of new or improved technologies, such as software, hardware, platforms, or devices, that can enhance the efficiency, effectiveness, or quality of cost engineering processes and outputs. Technology innovation refers to the creation or development of new or improved technologies that can offer new or better solutions or opportunities for cost engineering challenges or goals. Technology adoption and innovation can offer significant benefits for cost engineering, such as reducing errors, increasing productivity, improving accuracy, enabling automation, and facilitating collaboration. However, they can also pose challenges, such as requiring new skills, training, or support, increasing costs or complexity, or introducing new risks or uncertainties. To overcome this challenge, you need to adopt a learning and adaptive mindset to cost engineering. This means staying updated and informed about the latest trends and developments in technology, evaluating and selecting the most suitable and feasible technologies for your projects, and continuously learning and improving your skills and capabilities in using them.

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Hareesh N.
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In my experience, technology adoption in infrastructure projects is at a very slow pace compared to well established industries. This requires a significant overhaul in thinking process, training and efforts to drive the change from top to bottom. Once adopted, following it through for accuracy and transparency in reporting.

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5 Ethical and professional standards

A fifth common challenge in cost engineering is adhering to ethical and professional standards in your practice. Ethical and professional standards are the principles, rules, and guidelines that govern the conduct and performance of cost engineers. They are based on the values of honesty, integrity, accountability, respect, competence, and excellence. Ethical and professional standards are important for ensuring the quality, credibility, and reputation of cost engineering as a discipline and a profession. They are also essential for protecting the interests and rights of the stakeholders involved in or affected by the projects. To overcome this challenge, you need to be aware of and comply with the ethical and professional standards that apply to your industry, organization, association, or certification. You also need to exercise sound judgment, critical thinking, and moral courage in your cost engineering decisions and actions.

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Hareesh N.
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Without a doubt, upholding ethical and professional standards when it comes to cost engineering comes first and foremost. It is necessary to have the courage and integrity to call it out when you feel something is not right when dealing with stakeholders.

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6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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Harry Oriander

Management &Construction Services p/l
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Many issues in many building projects emanate from the design or design information of not being fully complete or not fit for final purpose I would suggest that the designers put their designs out to the builders that they know and trust to review the design and design information to try to prevent any of these issues from getting out into the field , thus eliminating delays, confusion,and increased costs ? Thanks for reading !

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What are the most common cost engineering challenges in your industry and how do you overcome them?

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1 Uncertainty and volatility

2 Stakeholder alignment and communication

3 Data quality and integration

4 Technology adoption and innovation

5 Ethical and professional standards

6 Here’s what else to consider

Cost Engineering

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