0
$\begingroup$

How would I write a Cost Engineering support plan which reflects the Project Control Cycle?

A wine company is wondering if they should invest in another factory. Only this time it will be in the USA. This will be their first factory in the USA and they are wondering what the cost will be and what kind of steps you could take to support the business case through the different project phases.

What are the steps that need to be taken to successfully support a business case decision?

The problem is I haven't done anything like that before and I don't know what the structure of the report should be and to which things I should focus on. Any help would be greatly appreciated!

$\endgroup$
0
1
$\begingroup$

Cost engineering is

"the engineering practice devoted to the management of project cost, involving such activities as estimating, cost control, cost forecasting, investment appraisal and risk analysis." "Cost Engineers budget, plan and monitor investment projects. They seek the optimum balance between cost, quality and time requirements."

With Regard the project control cycle, Project Management Body Of Knowledge is a good place to get started. Below is short overview get to started.

Five Phases of Project Management

Some other items to consider are

  • Location: Following a short list of regions to consider. Finger Lakes, NY, Willamette Valley, OR, Sonoma County, CA, Napa Valley, CA, Charlottesville/Central Virginia, Santa Barbara County, CA, Walla Walla, WA.
  • Resources: This includes labor, raw material, land, regulations (Federal, state and local)
  • Regulations: It is important to take a look are Federal, State and Local regulation as they could have impact on cost.
  • Tariffs: With on going trade negotiations between USA and other countries it might good idea to review if the project might be impacted by Tariffs
  • Communication: Language barriers also can have impact on the project. You might have language translator if the medium of communication is something other than English.
  • Measurement Units: Unfortunately the is still following United States customary units, while the rest of the world has moved on. This could have an effect on the project.
  • Risk: Some type of risks to consider are Default risk, Inflation risk, Maturity risk and Liquidity risk

Default risk refers to the likelihood that you will fail to get your money back or receive the return you are due. Assessing this risk means deciding if the company in which the investment is made is likely to default. Startup companies typically have high default risk for example.

Inflation risk addresses the chances that the predictable overall economic rise in prices for goods and services will cause the investment to lose some of its value. Investment in long-term ventures presents greater inflation risk than short-term investing.

Maturity risk refers to the gamble taken when investors tie up their cash in investments that require a set period. When money is tied up in long-term investments, it cannot be used for other, perhaps more profitable, purposes.

Liquidity risk refers to the possibility that an investment may need to be sold to free up cash. An investment's liquidity is how readily it can be converted back into cash prior to maturation, or if that's even possible. The easier it is to sell off assets when needed, the lower the liquidity risk.


References:

$\endgroup$

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.