What are the most common cost engineering tools and how do you compare them?

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Cost engineering is the application of scientific principles and techniques to the management of project costs, schedules, risks, and quality. It involves estimating, planning, controlling, and optimizing the resources and performance of complex engineering projects. As a cost engineer, you need to use various tools and methods to support your decision-making and communication with stakeholders. In this article, we will explore some of the most common cost engineering tools and how to compare them.

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Anubhav Shukla

Cost Engineering| Sustainability | Certified Supply Chain Professional(CSCP)| Certified Product Cost Expert (CPCE)
Sadegh Yazdani

Strategic Business Architect | Empowering Success in Projects, Costs, and Contracts

1 Cost Estimating Software

Cost engineering requires the use of cost estimating software, which can vary from simple spreadsheets to complex programs that integrate with other software systems and databases. When selecting cost estimating software, you should consider the accuracy and reliability of the data sources and algorithms, the flexibility and customization to fit different project types, scopes, and requirements, the ease of use of the interface and features, the compatibility and integration with other tools and platforms, as well as the cost and availability of the software license and support.

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Sadegh Yazdani

Strategic Business Architect | Empowering Success in Projects, Costs, and Contracts
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The choice of tool depends on the specific context, industry, and project requirements. Each tool has its strengths and limitations, so it's essential to select the most suitable one based on your needs. Let's explore some of the most common tools: 1.Cleansheet Cost Modeling: - Purpose: To understand how product costs accrue through the value chain. 2. Analytical and Parametric Models: - Purpose: Cost estimation. 3.Project Cost Estimating Techniques: -Purpose: Estimating costs for projects. -Description: Techniques include analogous estimating (using historical data), bottom-up estimating (detailed breakdown), and parametric estimating (using statistical relationships).

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Kumarentran Sundra Pandian

Total Cost, Added Value, Objective Quality and Sustainable Innovation.
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Most organizations have their own, and some like Apriori can be subscribed. These work well over a range of manufacturing types. The most important things are the databases, data refresh intervals and user friendliness. IF these are good, then any software can be handy. I still am a big fan of customizing my own formulas via excel, as I cover a wide range of cost model types. It also depends what kind of cost modelling you need. A simple €/kg multiplier, or a bottom up cost calculation or even an MLPP(multi linear parametric pricing). Still revolves around a lot math, regression and quality inputs.

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Varun Bhargava

Cost Engineer | Sustainability | Design for Manufacturing
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One of the most popular cost estimating software is aPriori. aPriori can identify manufactured features on a part and apply first principles to estimate corresponding cycle times, eventually calculating the cost based on overheads. It boasts of in-built algorithms and the ability to build your own to add customized processes for cost estimation. It is, however, an expensive tool if the scale is not substantial. The requirement of any software depends on the use case and cost-benefit analysis. It also varies with the depth to which an organization might want to perform its estimation. For small to medium-scale industries, a simple tool like MS Excel can serve the same purpose, albeit making the process time-consuming.

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Sasan Hashemi

Co-Founder & CEO @ Tset // Enabling scalable cost and sustainability management.
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Choosing the right cost estimating software is a strategic decision that impacts project accuracy, efficiency and profitability. It’s not just about features, it is also about compatibility with existing systems, ease of use and overall if it is the right choice for the business. Tools designed with this in mind, such as Tset, can help businesses adapt to evolving demands.

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2 Cost Breakdown Structure

Cost breakdown structure (CBS) is a common tool for cost engineering, which provides a hierarchical representation of the project costs by categories, elements, and sub-elements. This tool helps to organize, analyze, and report the project costs in a systematic and logical way. It also assists in identifying and allocating the cost drivers, risks, and contingencies of the project. When developing a CBS, it is important to compare factors such as the level of detail and granularity of the cost elements, the alignment with the project scope and objectives, the clarity of definitions, assumptions, and calculations of cost elements, the adaptability to accommodate changes in the project, and the compatibility with other tools and systems.

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Kumarentran Sundra Pandian

Total Cost, Added Value, Objective Quality and Sustainable Innovation.
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Cost and price are always 2 different things. Its good that one understands the component that need to be costed, the volumes, MOQ and other commercial aspects before drawing a plan. A cost breakdown can be derived from looking at just the component( drawing with specs). A more detailed version can be achieved by looking at the manufacturing process itself.

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3 Cost Control Techniques

A third common tool for cost engineering is cost control techniques, which are the methods and procedures used to monitor, measure, and adjust the project costs during its execution. Cost control techniques can help you ensure the project is completed within the budget, as well as identify and mitigate any deviations or issues that may affect the project costs. Earned value management (EVM), variance analysis, trend analysis, forecasting, and change management are some of the cost control techniques you may use to compare. However, depending on your project needs, preferences, and standards there are many other tools and methods available. The key is to select and apply the tools that best suit your project goals, context, and constraints.

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4 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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Anubhav Shukla

Cost Engineering| Sustainability | Certified Supply Chain Professional(CSCP)| Certified Product Cost Expert (CPCE)
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How to decide cost estimation software for your use case? Cost Estimation softwares can be broadly categorized into two segments: 1) Project Cost Estimation: This type of software focuses on estimating the costs associated with specific projects. It helps organizations plan, budget, and control expenses for projects by providing detailed cost breakdowns, forecasts, and analysis. Example: Aspen Capital Cost Estimator (ACCE),ProEst 2) Product Cost Estimation Product Cost Estimation software is designed to estimate the costs involved in producing a particular product. It includes the assessment of raw materials, manufacturing processes, labor, and other production-related expenses. Example: aPriori, MTI Systems Costimator, Hyperlean

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What are the most common cost engineering tools and how do you compare them?

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1 Cost Estimating Software

2 Cost Breakdown Structure

3 Cost Control Techniques

4 Here’s what else to consider

Cost Engineering

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