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When our company began to shed its fixed costs by leveraging out much of the project work to full-service contractors, many of us in the corporate staff cost engineering organization realized that we had to revisit and redefine exactly what value we brought to the corporation. Corporate management needed to know, simply, what role the cost engineer was currently performing before they could make any strategic organizational decisions. The purpose of this paper is to try and capture an exercise that a group of cost engineers went through trying to define those roles within that owner organization. This paper focuses on the capital project programs and their associated noncapital costs only.
BACKGROUND
Our company is made up of approximately 22 businesses producing around 100 different products. The company had already identified capital project execution as something that could be purchased on the outside. In-house forces were being reduced by attrition and incentive retirement offerings. The engineering, detail design, purchasing, field engineering, and detailed cost control was being accomplished using full-service contractors. Responsibility for major projects still resided with corporate staff engineering but now required far less involvement and far fewer employees. These contractors were to act as a buffer to ensure the jobs of the remaining employees during the downturns in our construction spending. Total project execution by corporate engineering was being relegated to highly specialized or proprietary project work. We in cost engineering were looking for the design and construction contractors to pick up the detailed estimating and cost control. This shift in project execution caused us to focus on exactly what our new roles might be. As simple as the shift might have seemed, it brought with it some brand new issues and a whole lot of opportunity for cost engineers to improve on the performance of our capital project programs.
Boarding and Sharing
Working with a large company, the services a cost engineer provides to its assigned businesses often become very tailored. Each business has its own specific needs and very limited resources to accomplish those needs. The cost engineer often filled in gaps of responsibility that were vacated in the businesses by workforce reductions. So, to begin our exercise, we decided to board activities that each of us were performing...