REQUIRED SKILLS AND KNOWLEDGE OF A COST ENGINEER

1 Copyright 2000 AACE, Inc. AACE International Recommended Practices and StandardsAACE International Recommended Practice No. 11R-88 REQUIRED SKILLS AND KNOWLEDGEOF A COST ENGINEERC opyright 2000 AACE, Inc. AACE International Recommended Practices and StandardsRecommended Practice No. 11R-88 REQUIRED SKILLS and KNOWLEDGE of a Cost EngineerJanuary, 1999 Table of ContentsSection I - Supporting SKILLS and KNOWLEDGE Engineering Economics Terminology Computers Statistics and Probability Optimization Productivity Management Human Relations-Behavioral Science Organizational Structures MeasurementsSection II - Cost Estimating Estimating Basics Contractor s Costs Owners CostsSection III - Cost Control Work Breakdown Structure and Code of Accounts Earned Value (also Achieved and Accomplished Value)

2 Key Cost Control TechniquesSection IV - Planning and Scheduling Planning Basics Scheduling Basics Schedule ControlSection V - Contract Management Contracting Arrangement Contract AdministrationSection VI - Economic Analysis and Business Planning Budgeting and Cash Flow Value EngineeringCopyright 2000 AACE, Inc. AACE International Recommended Practices and StandardsRequired SKILLS and KNOWLEDGE of a Cost Engineer2 of 13 January 1999 INTRODUCTIONThe AACE Education Board was created in 1982 to provide advice and assistance to the AssociationBoard of Directors in all matters pertaining to education.

3 One of the first dilemmas faced by the EducationBoard was a lack of definition of a professional cost ENGINEER in terms of SKILLS and KNOWLEDGE , since thiswould comprise the target for education program emphasis. Based on a 1983 survey, the numerous costengineering subjects were catalogued as either "core" or "optional." By definition, the core subjects-arethose whose usage was occasional to frequent and which were evaluated by the members as beingdesirable for professional cost engineers to next step by the Education Board was to take the core subjects and expand them into a series ofperformance statements to represent the level of' proficiency expected in each subject area.

4 Thecompilation of these performance statements was published as a proposed AACE RecommendedPractice in May 1985, and membership comments were solicited. Based upon the comments that werereceived, the document was revised, expanded, and republished for comment in August 1986. No furthercomments were received, and the document was therefore formally accepted by the AACE Board ofDirectors as an AACE Recommended Practice in June 1987. Subsequently, all AACE technical activitieswere reorganized into four technical divisions, , cost estimating, cost control, planning and scheduling,and project management and the text of this recommended practice was rearranged to correspond withthe new recommended practice was originally proposed in May 1985 and was formally accepted by the AACEB oard of Directors in June 1987.

5 Editorial changes were subsequently made, and the recommendedpractice was published in its previous form in October changes were made in January 1999 to better reflect the current status of the REQUIRED SKILLS andKnowledge of a Cost ENGINEER . It is anticipated that this document will continue to be modified as currentpractice I -- SUPPORTING SKILLS AND KNOWLEDGEE ngineering Economics1. Calculate simple and compound interest rates and solve interest problems using the basic singlepayments, uniform series, and gradient Calculate present value, future value, and equivalent uniform annual value of a cash flow Perform sensitivity Determine discounted rate of return of a cash flow Evaluate and select the best alternative from two or more alternatives utilizing present value, futurevalue, equivalent uniform annual value.

6 And discounted rate of Compare two alternatives using benefit/cost Calculate the depreciation on an item of equipment using Know the significance and meaning of Life Cycle familiar with cost engineering terms as contained in AACE s Standard Cost EngineeringTerminology .Copyright 2000 AACE, Inc. AACE International Recommended Practices and StandardsRequired SKILLS and KNOWLEDGE of a Cost Engineer3 of 13 January 1999 Computers1. For a major computer installation:a. Describe at least three methods for inputting Identify at least three Explain the function of the central processing unit (CPU).

7 D. Identify two methods of mass data Explain current terms as used in Information Technology (IT), such as:a. Software and hardwareb. Alphanumericc. Baud rated. Bits, bytes, kilobytes, megabytes and gigabytese. Cursorf. Laser printers, ink jet printers, plotters and digitizersg. Emulator, math coprocessorsh. Fields, records, and filesi. Databasej. Random Access Memory (RAM)k. Modeml. Mainframe, desk top and laptop computersm. Remote, hostn. User-friendlyo. Video conferencingp.

8 Floppy disk, hard drives and CD ROMq. Networks (LAN and WAN)r. Disk operating systems (DOS), Windows and Windows NTs. Ports, parallel and serialt. Micro Processors (Pentium, MMX technology)u. Internet, intranet , extranet URL, HTTP, WWW Hypertext and Hyperlinks, HTMLv. Groupware, netware and sharewarew. Plug and Playx. Multimedia system3. Name at least three common computer and Probability1. Given a set of data, determine:a. The arithmetic meanb. The medianc. The moded.

9 The standard deviatione. The Variance2. Given a curve of normal distribution and an accompanying table of areas under the curve, determinethe probability of the Being between two given Not being higher than a given number, or lower than that Given a curve of distribution for a variable that is other than normal, draw the resultant cumulativefrequency curve. Determine the percent probability of a given value not being overrun or under 2000 AACE, Inc. AACE International Recommended Practices and StandardsRequired SKILLS and KNOWLEDGE of a Cost Engineer4 of 13 January 19994.

10 Handle basic statistic exercises involving:a. Chi-Squared Testb. Frequency Distributionsc. Confidence intervals5. Apply the concepts of probability to find expected Discuss risk and how the concept of risk is used in forecasting Understand the difference between Sample Population . Know how sample values of the meanestimate the population Given an optimization goal involving a result Y which is a function of a single variable X, use graphicalor incremental methods to establish the optimum value of Explain any two of the following decision making tools and how they can be used to analyze specificcost problems:a.