“cost, Expense And Loss; Accounting Terminology Bulletins, No 4” By American Institute Of Certified Public Accountants Committee On Terminology

PDM FINISH TO FINISH RELATIONSHIP – This relationship restricts the finish of the work item until some specified duration following the finish of another work item. PDM ARROW – A graphical symbol in PDM networks used to represent the lag describing the relationship between work items.

HIERARCHICAL PLANNING – Planning approach where each managerial level breaks planning tasks down into those activities that must be done at that level. Typically, upper-level planning establishes the objectives for the next lower-level manager’s planning. GROSS CONCURRENCY – The method of counting concurrent delay events based purely on contemporaneous occurrence without regard to CPM principles. GENERAL REQUIREMENTS – Non-technical specifications defining the scope of work, payments, procedures, implementation constraints, etc. pertaining to the contract. FUNCTIONAL WORTH, USE VALUE – The monetary measure of the necessary functional properties of a product or service that contribute to performance. FUNCTIONAL REPLACEMENT COST – The current cost of acquiring the same service potential as embodied by the asset under consideration. An estimate and prediction of future conditions and events based on information and knowledge available at the time of the forecast.

1 2       Subset Of ‘full’ Umoja Enterprise Structure

The term ‘concurrent delay’ is often used to describe the situation where two or more delay events arise at different times, but the effects of them are felt at the same time. To avoid confusion, this is more correctly termed the ‘concurrent effect’ of sequential delay events.

NOMINAL DISCOUNT RATE – The rate of interest reflecting the time value of money stemming both from inflation and the real earning power of money over time. This is the discount rate used in discount formulas or in selecting discount factors when future benefits and costs are expressed in current Costing Terminology dollars. NETWORK PLANNING – A broad generic term for techniques used to plan complex projects using logic diagrams . MULTIPLE START NETWORK – A network that has more than one start activity or event. MULTIPLE FINISH NETWORK – A network that has more than one finish activity or finish event.

TIME-LIMITED RESOURCE SCHEDULING – Production of scheduled dates in which resource constraints may be relaxed in order to avoid any delay in project completion. TERMINATION – Actions by the owner, in accordance with contract clauses, to end, in whole or in part, the services of the contractor. Termination may be for the convenience of the owner or for default by the contractor.

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Pricing is the function of determining the amount of money asked in consideration for undertaking the project. Depending on the market and profit considerations, etc., the price may be more or less than the cost. Manual labor is physical work done by people involved in construction the project. All of the various trade workers are included in manual labor, including foremen.

• To help clarify which costs are included in these three categories, let’s look at a furniture company that specializes in building custom wood tables called Custom Furniture Company.
• TIME-CONSTRAINED SCHEDULING – The network schedule calculations are constrained by the time allowed to complete the project as opposed to the resources available to do the work.
• This recommended practice intends to provide clear and concise definitions; it intends to identify common usage in the context of cost engineering.
• ENGINEERED ITEMS – Items that are purchased to be used for a particular purpose and are engineered to unique specifications, as opposed to commodity materials.
• OFFSITES – General facilities outside the battery limits of all process units, such as field storage, service facilities, utilities, main electric substation, administrative buildings, rail tracks and storage yard, etc.
• The common characteristic of a burden is the cost is expressed as a rate on top of the direct costs.

These levels include batch-level activity, unit-level activity, customer-level activity, organization-sustaining activity, and product-level activity. Traditionally, overhead costs are assigned based on one generic measure, such as machine hours. Under ABC, an activity analysis is performed where appropriate measures are identified as the cost drivers. As a result, ABC tends to be much more accurate and helpful when it comes to managers reviewing the cost and profitability of their company’s specific services or products. 2.LEVELS OF SCHEDULES, PROJECT LEVEL SCHEDULE – An activity- and deliverable-centered schedule containing a middle amount of detail in time-scaled network diagrams or bar charts. It integrates the project’s engineering, procurement, and construction activities by network logic, identifies critical path and key project dates, and provides measurement of accomplishments against established objectives. The CPM scheduling technique is used to develop the project level schedule.

DECISIONS UNDER CERTAINTY – Simple decisions that assume complete information and no uncertainty connected with the analysis of the decisions. DECISION IMPLEMENTATION – In decision analysis, this refers to the process step for implementing the selected alternative and performing continuous improvement.

DELAY, CONCURRENT – Two or more delays in the same time frame or which have an independent effect on the end date. The owner/engineer and the contractor may each be responsible for delay in completing the work. This may also refer to two or more delays by the same party during a single time period.

How To Create Standard Costs

This means retiring a payment of capital gradually over time on a schedule which reflects the benefits the capital provides in each period. Like depreciation, amortization typically applies to the retirement of cash payments, where depreciation tends to apply to physical capital equipment. An upfront RI payment can be amortized over the usual lifetime of the RI itself. Activity-based costing is a method of assigning overhead and indirect costs—such as salaries and utilities—to products and services. In contrast to general accounting or financial accounting, the cost accounting method is an internally-focused, firm-specific system used to implementcost controls. Cost accounting can be much more flexible and specific, particularly when it comes to the subdivision of costs and inventory valuation. Cost accounting methods and techniques will vary from firm to firm and can become quite complex.

First call resolution is when customer service agents properly address a customer’s needs the first time they call. Talent management is a process used by companies to optimize how they recruit, train and retain employees. Performance and accountability reporting is the process of compiling and documenting factors that quantify an …

Support effort (e.g. management, security, project controls) that does not lend itself to measurement of discrete accomplishment. LOE work is characterized by a planned and sometimes level of support over a specific period of time. Performance is claimed by the passage of time and may not accurately reflect the amount of work that is actually accomplished. ESTIMATED https://accountingcoaching.online/ ACTUAL COSTS – In earned value management according to the ANSI EIA 748 standard, these are cost added to cost from the accounting system to create the appropriate actual cost of work performed . Estimated actuals are sometimes necessary to ensure the ANSI – EIA 748 requirement that budgeted cost of work performed is on the same basis as the reported ACWP.

Glossary Of Construction Cost Estimating

At the bargaining table, the employer may try to use the “average” rate because it is a higher rate, therefore indicating higher costs per hour that are not valid. WORK SAMPLING – A direct method of measuring and monitoring labor productivity so that labor resources can be minimized and wasted effort eliminated from work processes. Work sampling provides information about the work process (i.e., how work is done) in a way that supports statistical assessment of such processes in order to optimize productivity. In earned value management, it is the level at which EV is assessed and schedule variance is calculated. VARIANCE THRESHOLD – In earned value, it is the schedule, cost, and at-complete variance amounts at which formal variance analysis and typically a variance analysis report is required. VALUE ADDED BY DISTRIBUTION – The portion of the value of a product or service to the consumer or user which results from distribution activities.

• MONITORING – Periodic gathering, validating and analyzing various data on contract status to determine any existing or potential problems.
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• It is usually defined by an interface specification and managed by a system integration organization.
• CURRENT DOLLARS – Dollars of purchasing power in which actual prices are stated, including inflation or deflation.
• SUBCONTRACTOR – One that enters into a subcontract and assumes some of the obligations of the primary contractor.

The updated estimate is often referred to as the current control estimate and becomes the new baseline for cost/schedule control of the project. Class 1 estimates may be prepared for parts of the project to comprise a fair price estimate or bid check estimate to compare against a contractor’s or vendor’s bid estimate, or to evaluate/dispute claims or change orders. CAPITAL, FIXED – The total original value of physical facilities which are not carried as a current expense on the books of account and for which depreciation is allowed by the Federal Government. It includes plant equipment, building, furniture and fixtures, and transportation equipment used directly in the production of a product or service.

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AMBIGUITY – An uncertainty in the meaning of provisions of a contract, document or specification. Mere disagreement about the meaning of a provision does not indicate an ambiguity. There must be genuine uncertainty of meaning based on logical interpretation of the language used in the contract.

SALES REVENUE – Revenue received as a result of sales, but not necessarily during the same time period. RIPPLE EFFECT – The multiplying effect of change and/or productivity impacts to upstream work that may have an adverse impact on the subsequent work to be performed. RETURN ON RATE BASE – For a public utility, that monetary sum established by the proper regulatory authority as a basis for determining the charges to customers and the “fair return” to the owners of the utility. RETIREMENT OF DEBT – The termination of a debt obligation by appropriate settlement with the lender.

Commitment items classify budget transactions and business transactions affecting liquidity into revenue, expenditure, and cash balance items. In Umoja, typically there is one to one relationship between expense and revenue GL accounts in FI, cost elements in CO, and commitment items in FM. During transaction entry, the commitment item can be derived from GL account and/or cost element.

The basis for estimated actuals is documented and reversed which in the cost is accrued in the accounting books of record. Example of records may include invoices received, material purchase orders, submitted journal vouchers. In general terms, the estimated resources (i.e., work hours, costs, time, and/or materials) required to complete a scope of work.

FIRST EVENT NUMBER – The number of the first event in time for a work package or summary item. This event number defines the beginning of the work package or summary item in relation to the network.

• LOWEST MANAGEMENT LEVEL – A term used in the dynamic baseline model hierarchy in which a project may be positioned and is the control point for a project.
• AND RELATIONSHIP – Logical relationship between two or more activities that converges on or diverges from an event.
• The CAM has control either through delegation or supervisory responsibility for all of the staff performing the control account work.
• If a job is to be completed ahead of schedule, it is said to have slack time; if it is likely to be completed behind schedule, it is said to have negative slack time.
• A generic term used for a statement of intentions whether they relate to time, cost or quality in their many forms.
• SHOP PLANNING – The coordination of material handling, material availability, the setup and tooling availability so that a job can be done on a particular machine.

The work breakdown structure, the responsibility assignment matrix, scheduling techniques, cost/schedule performance control and monitoring and configuration management are the hallmarks of level 2 learning. At this level, an employee has the capacity to use the tools to analyze project performance data and to make recommendations for corrective actions accordingly.

SLACK TIME – The difference in calendar time between the scheduled due date for a job and the estimated completion date. If a job is to be completed ahead of schedule, it is said to have slack time; if it is likely to be completed behind schedule, it is said to have negative slack time.

Cost Engineering Terminology

SERVICEABILITY – A measure of the degree to which servicing of an item will be accomplished within a given time under specified conditions. SCHEDULING RULES – Basic rules that are spelled out ahead of time so that they can be used consistently in a scheduling system. SCHEDULE UPDATE NARRATIVE – A schedule narrative describes changes made to the schedule, current issues, problems, and related schedule notifications.

Weighted hourly average- The weighted hourly average is the figure that is arrived at by multiplying the number of employees in each specific wage rate, adding that number, and then dividing it by the total number of employees. This number is a more accurate measure than a simple average of per hour cost because it takes into account the distribution of employees within each pay category.

PRICE – The amount of money asked or given for a product (e.g., exchange value). The chief function of price is rationing the existing supply among prospective buyers. PRELIMINARY ENGINEERING – Includes all design-related services during the evaluation and definition phases of a project. Direction and oversight of an array of assets grouped together for strategic purpose or convenience. PLANNED DURATION OF WORK REMAINING – The unearned portion of the project planned duration. A generic term used for a statement of intentions whether they relate to time, cost or quality in their many forms.

COMPLETED ACTIVITY – An activity with an actual completion date and remaining duration of zero. An activity that is finished, ended and/or concluded in accordance with requirements. CHANGE IN SEQUENCE – A change in the order of work initially specified or planned by the contractor.