Society of Cost Engineers

05/03/2020

The virus has impacted us all in various ways. Have you thought about how we as Cost Engineers can assist in helping organization better prepare for world changing events in the future? Take a look at this blog, originally created for my other company Center for Strategic Cost Management. I think it belongs here as well.

Please stay safe!

If you have been following the world situation, you know that many countries have been relying on “low cost countries” to supply critical equipment, supplies and pharmaceutical. This has all been based on LOW COST country beliefs. Now, many countries are looking to localize these essential suppl...

04/30/2020

Another fine discussion from one of our co-founders, Leo Hernandez. This one covers amortization of production equipment for cost modeling.

Pay particular attention to the example and how much impact the equipment cost has on a part cost.

https://societyofcostengineers.com/amortization-of-production-equipment-impact-in-part-cost/

Thanks
Jerry Collins.
Owner and Founder
Society of Cost Engineers

Each company has their own period of time and way to recover the investment they do in production assets, i.e. production equipment. But one thing is for sure, the companies we all know are not Non-Profit Organizations and they invest in order to make money. Which is just fine, we wouldn’t be here...

04/22/2020

Have you ever wondered why you are not getting the price reductions you are entitled to? Have you ever wondered why your suppliers seem to derail your cost discussion? Have you ever questioned your negotiation strategy? Well take a look at this blog. It’s my take on why this could be happening. Feel free to comment.

The best way to utilize a Cost Model in a negotiation is to not even hint that you have a cost model. Rarely would I suggest that it is “Open Book” on both sides. I’m sure this goes directly against what a lot of you have been taught and are doing. Afterall, you are the customer and the old ad...

04/22/2020

If you are looking for to understand, implement, sustain or grow you enterprise’s ability in Cost Modeling or any aspect of Cost Management please check out the Independent Contractor Directory on the Society of Cost Engineers webpage.

If you are an independent contractor, please contact me to get your company listed just like Imoran Cost Engineering and Center for Strategic Cost Management have already done. It’s free for 2020 so take advantage of this service.

Cost Engineering Independant Contractor Directory

04/22/2020

Hello everyone,

The Society of Cost Engineers is striving to be a member driven professional organization. The organization’s main objective is to bring the recognition this discipline deserves. To do this we are working with industry leaders to set standards, definitions and common practices.

We are providing areas to post resumes as well as job postings. Our goal is to serve the Cost Engineering community.

We are also working with these industry leaders to provide discounts, services, training and certification on their products. However, to get more of these industry leaders on board, we need to grow our membership. Due to the Coronavirus, the Society has waved all fees for 2020 making it easy for all to join.

Please visit the page for a complete description and how to join. If you have any questions or comments, please let us know.

The Society of Cost Engineers is now offering a 1 year membership for just $50US. This will give you complete access to all the benefits for 1 entire year.

04/11/2020

New post, please check them out.

Total Page Visits: 333 - Today Page Visits: 5

04/07/2020

The Society of Cost Engineers has decided to wave its fees for 2020 due to the impact of the Coronavirus. Please take advantage of this opportunity.

https://societyofcostengineers.com/membership-fee-waved-for-2020/

With the virus and its impact in mind, the Society of Cost Engineers has decided wave the 2020 membership fee for new members. That is correct, no membership fee for 2020. All you need to do is to visit the Membership Page and register FOR FREE. The expectation is that the world will be in a much be...

03/30/2020

Rate and Usage (Debunking the complexity behind cost models)
Cost models are a very complex set of equations that can be basically explain very simply, Rate X Usage. This explanation is a great training aid and helps win over skeptics.
This all boils down to RATE X USAGE. Pretty simple right. How can it be so simple? Let’s look an everyday application of this principle.
Example 1
You want to paint your room a different color. You estimate the USAGE as 5 Gallons. You go to the store and you find the paint you want at $30 per Gallon (RATE). You know it should take a painter about 3 hours to complete (USAGE) and he charges $50 an hour (RATE).
Rate Usage Total
Material (Paint) $30 / Gallon 5 Gallons $150
Labor (Painter) $50 / Hr 3 Hours $150
Total $300

This works for much more complex models.
Net and Gross are USAGES and Material Cost per UoM is the Rate.
Description Gross Usage Net Usage UoM Material Cost per UOM Material Sub Total Scrap Reclaim Rate Scrap Credit Total Material Cost
Stainless Steel 1.00 0.75 Pounds $2.00 $2.00 $0.20 $0.05 $1.95

Cycle Time is USAGE while Fixed, Variable, and Indirect are RATES.
Description Size Cycle Time (hours/pc) Fixed Rate
($/Hr)
Variable Rate ($/Hr) Indirect
($/Hr)
Total Machine Cost ($/PC)
Injection Mold 50 Ton 0.0083 $4.00 $8.00 $15.00 $0.224

This very simple explanation helps breakdown the walls with the skeptics.
Gerald (Jerry) Collins
Owner and Founder of Society of Cost Engineers

03/30/2020

Hello and welcome to the Society of Cost Engineers from the Owner and Founder Jerry Collins. If you’ve read the Founders Bio’s you already know a bit about the three of us, so I’ll try not to bore you too much.
This journey officially started for me in 2003 when I became a member of the first team Delphi Automotive put together to do Cost Management through Should Cost Modeling. I quickly noticed that there was no agreement amongst our team and across the industry. The team would hold quarterly group meetings that would inevitably transgress into long debates on what is in SG&A, what’s in Indirect, how and where are they applied. Should we be doing “SUPPLIER SPECIFIC” models or “BENCHMARK” models? What’s the best method / software to use and why? How do we actually save the company money based on all this work when we don’t have negotiation authority?
Fast forward to 2014, I took a job at a large medical / consumer / pharma company who wanted to start a cost modeling group. The process started all over again, only this time I was pretty much on my own. It became painfully obvious that there was still confusion and no standardization within the Cost Engineering community. Even worse, I would learn very quickly, the term Cost Engineer really is misunderstood.
In 2014 I decided enough was enough and bought the webpage www.societyofcostengineers.com. Not being a web developer, I did my best, but I had a vision. The vision is to finally set standards and get the discipline recognized.
So here we are in 2020. I’m on the verge of retiring from that large medical / consumer / pharma company and ready to dedicate more time to this endeavor. I added two members to my team, Leo and Jeff. Leo is a long-time colleague that has been doing Cost Engineering for nearly as long as I have. Jeff brings the sales perspective. It will be great exposure for our members to get a feel of what sales professionals know and do daily to get the best prices for their perspective companies.
In closing, welcome, we need all of us to pull together to gain the strength in numbers and get us represented and get the respect we so deserve.
Thanks,
Gerald (Jerry) Collins
Owner and Founder Society of Cost Engineers