Technology & Engineering
Cost Calculation
Cost calculation refers to the process of determining the expenses associated with a particular project, product, or service. It involves analyzing various cost factors such as materials, labor, overhead, and other expenses to arrive at the total cost. This calculation is essential for budgeting, pricing, and decision-making within the technology and engineering sectors.
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3 Key excerpts on "Cost Calculation"
eBook - ePub- Gideon Samid(Author)
- 2020(Publication Date)
- CRC Press(Publisher)
A Computer Technology View of Cost EngineeringCost engineers are civil engineers, mechanical engineers, aeronautical engineers, and nuclear, chemical, and electrical engineers who take engineering a step further-into a cost estimate, into a scheduled plan, into a world of limited resources.In the process, they may write a lot of numbers and sum them up. To the uninitiated, the cost engineer looks like a clerk, or like an accountant. At times he looks like an economist. The term “engineering” seems out of place. How wrong! It is subject-matter expertise that governs the profession. That is why a new high-rise cannot be estimated by a clerk, an industrial plant cannot be cost-assessed by an economist, and a nuclear reactor cannot be dollar-evaluated by accountants. The people in these discliplines have their hands full, and their contribution should not be underemphasized, but they are not cost engineers.Computers gave the cost engineer a tool that added a new dimension to the profession. The use of computers in itself is an engineering endeavor, and so today the term “(cost) engineering” has a dual meaning: expertise not only in the subject matter but also in using computers in the process of optimizing resource allocation. The modern cost engineer is a central player in a competitive economy. His or her responsibility is to find ways to extract more results from finite dollars and limited time. And, conversely, he or she tries to engineer a solution to the problem of achieving a target result with a smaller investment.Available resources are finite; expressive imagination is infinite. This anomaly is the challenge of cost engineering.
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Cost engineering is a two-way window. Looking through this window the business community relates to science and technology. Looking the other way, scientists and engineers hear and see what business wants and does.
eBook - ePub- Thomas J. Day(Author)
- 2022(Publication Date)
- CRC Press(Publisher)
There is a myth that Benefit cannot be priced, as it is an intangible. This notion is only brought forward by teams who champion a very specific solution which may or may not be applicable or proper for any given system or service. Be wary when the notion of ‘intangible benefit’ comes up, as all Benefit can be priced in the same manner and style that Risk can be priced. It is more important to understand market availability and the individual targets to be met. Sometimes, the status-quo is a perfectly acceptable goal. Know the goal, and ensure the Benefit parameter list matches to the goal.Engineering Estimate
For each technology down-selected for consideration, an Engineering Estimate should be developed as a way of comparing them equally. The purpose of the Engineering Estimate is to remove the emotion and bias from any analysis, and see the actual Cost/Benefit side-by-side as part of an Analysis of Alternatives. Engineering Estimates can be done at any stage along the process depending on the complexity of the technology being selected. However, it is always important to have at least one when down-selecting technologies as a bias-free analysis and comparison tool.Previously, the Technology Management team did a first-cut Analysis of Alternatives to determine which technology or technologies are appropriate to solve their issues. Engineering Estimates should always be included as part of any final Analysis of Alternatives to segregate similar solutions into their components and applicability to the solution set desired. A considerable amount of information can be gathered from this relatively unbiased method of determining costs, relative to competing products and services.An Engineering Estimate represents the estimated Technology Life Cycle Costs to acquire, install and operate the technology. As stated previously, the cost is not simply the purchase of the technology, but all the necessary services and supplies to bring the technology into a useful form for the end user. To understand all the costs involved, it is important to understand the Technology Life Cycle as it appears to the Technology Management owner and operator.Technology Life Cycle
It would be difficult to discuss life cycle costs without a good understanding of how the Technology Life Cycle is defined. The concept of Life Cycle was introduced in Chapter 11 , and is referenced here again to understand the concepts in this chapter. A full discussion on the definition of Life Cycle and its characteristics is discussed in Chapter 13 . However, enough of the definition of Life Cycle has to be introduced here as a way of understanding benefit. Life Cycle is defined as the steps or stages an entity passes in its time. For living organisms, there are generally five steps in a life cycle: development, introduction, growth, maturity and decline. Technology Life Cycle follows a similar set of stages: acquisition (development), installation and startup (introduction), beneficial use (growth), maturity (technology refresh/beneficial use), and decline (decommissioning and replacement). Figure 12.4
eBook - PDFIntegrated Product and Process Design and Development
The Product Realization Process, Second Edition
- Edward B. Magrab, Satyandra K. Gupta, F. Patrick McCluskey, Peter Sandborn(Authors)
- 2009(Publication Date)
- CRC Press(Publisher)
35 3 Product Cost Analysis Factors that determine manufacturing and life cycle costs of products and the methods that are used to estimate these costs are presented. Several examples are provided to illustrate the various ways in which design decisions and tradeoffs influence cost. 3.1 INTRODUCTION The value of a product is the ratio of perceived quality to its cost. Therefore, the goals of design activities are to create a product that satisfies the customers’ requirements and to maximize profit. Profit is the difference between the price at which the product is sold and the cost of providing the prod-uct to the customer. Profit is required for a business enter-prise to remain viable. Cost is also important because it is the most accessible and universally understood measure of resource consumption, and can be readily used as an impor-tant metric on which to base engineering design decisions. The effects of engineering decisions on costs were shown in Figure 2.1, where decisions made during the earliest por-tions of the design process set the majority of the product’s ultimate cost. 3.1.1 E NGINEERING E CONOMICS AND C OST A NALYSIS Engineering economics * is the application of accumulated knowledge in engineering and econom-ics to identify alternative uses of resources and to select the best course of action from an economics point of view. Resources refer to time, labor, expertise, materials, money, equipment, etc. Generally, engineering economics deals with capital allocation; that is, which of many available investment alternatives should be selected in order to maximize the long-term wealth of the enterprise. Common key attributes of engineering economics are the time value of money, evaluation of assets, deprecia-tion, taxes, and inflation.
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