Abstract:
Cost has become a major business driver in many industries. It is observed that
there is a lack of understanding about the process to estimate, manage and
control costs across the lifecycle of a product. This report presents a business
case to understand the principles of ‘Cost Engineering’ within the manufacturing
industries. The main focus of the report is in the techniques and tools used in
cost estimating – one of the major activities in cost engineering. Five
different methods of cost estimating are discussed in the report along with cost
management issues including risk analysis. The report also presents research
findings on ‘industry practice’ in hardware and software development cost
estimating. The study shows the lack of research in hardware cost estimating and
highlights the lack of communication within different groups of people involved
in cost engineering. The report then focuses on the research trends in cost
engineering and presents two case studies from recent research projects at
Cranfield University. The case studies clearly show the progress in formalising
the cost engineering process and the improvements in the current understanding
about the domain. Two major areas of research as identified in the report are:
i) integrating the cost engineering capability with the ERP (enterprise resource
planning) environment so that data can be shared effectively, and ii) capture
and reuse of human expertise in cost engineering for performance improvement.
Finally, the report also identifies the need for simpler and cheaper cost
engineering software for Small and Medium scale Enterpris