Survey Results: Where Is Cost Engineering Within The Org Chart ?

Cost engineering, a critical aspect of organizational efficiency, manifests itself differently across companies and industries.  To delve deeper into this dynamic, SPCEA recently conducted a survey on LinkedIn, aiming to understand where exactly the cost engineering function resides within different organizational structures.  The results and associated feedback shed light on some intriguing rationales:

• Finance (38% of the survey respondents):  Companies often place cost engineering within their Finance organization due to the inherent financial acumen required for accurate cost estimates.   Additionally, some companies believe that this placement helps maintain impartiality in cost assessments.

• Product Development / Engineering (24% of the survey respondents):  Here the aim is to optimize costs during the early stages of product design, when design changes can be made with low cost and minimal effort.  These companies view cost as a design parameter for purposes of target costing.  Integrating cost engineering techniques within product development helps to ensure cost-consciousness from inception.

• Procurement (22% of the survey respondents):   For organizations including the cost engineering function within Procurement, the focus typically lies on developing should-cost estimates and aiding in supplier negotiations – vital for the effective sourcing and cost management.

• Other (16% of the survey respondents):   Notably, some companies opt for unconventional arrangements, such as an independent cost engineering organization (reporting directly to the CEO) or distributing the function across various departments.

These insights underscore the diverse strategies employed by companies to leverage cost engineering for operational excellence.   Each approach has its respective strengths and weaknesses – hence, understanding these nuances is key for organizations seeking to enhance their cost management practices and drive sustainable excellence.

Written by Jeff Miller, President and Co-Founder of SPCEA
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