Cost Management

Prof. Hashem AlTabtabai gave a set of lectures about Cost Management for Engineers. These lectures contained all the basic knowledge that an engineer needs to be aware of before involving in a project. The main topics which has been explained during the workshop are; project management, conceptual and detailed estimation, direct and indirect costs, cash flow, project finance, cost forecast and earned value.

Next are the top ten new knowledge I learnt in this short course:

1)    Having good project is all about maintaining your budget, quality and time which must be defined in the scope of the project.

2)    The “5M’s” of a good project management are: Manpower, Machine, Material, Money and Management.

3)    It is acceptable to have a 5% delay in the project. Because projects are almost never goes according to our plans 100%.

4)    When estimating the budget needed for a certain project, we must allow extra money of around 5% of the entire budget, in case of any risks occurred. And if no risk has occurred, then this 5% will be a profit.

5)    Facility management involves: IT, security, housekeeping, etc. Without this administration, the project cannot be running according to what it had been designed for.

6)    Cost can be estimated by making a comparison, knowledge or experience.

7)    Direct costs are the money spent on labor, material, equipment and subcontractors.

8)   Indirect costs are variable overheard, fixed overhead and others (taxes and contingences).

9)    Overhead costs refer to all of the fixed expenses; such as, offices, utilities and advertising.

10) The following S-curve represent the cost baseline. It indicates that at the first quarter of the project the money spent should not exceeds a 12.5% of the total budget. However, a 5% extra is acceptable.

At the end, I would like to thank Prof. Hashem AlTabtabai for his excellent explanations and examples, as he kept giving us examples, from his experience in civil engineering projects, for each topic he taught us. Also this course was very intense and covered all of the main areas of cost management. One comment I have is that the course could have been run on a longer period of time. This will allow a more briefer explanation of each topic of cost management.