ABSTRACT
Engineers can quickly gain respect for accurate cost estimation and the ability to perform and coordinate work effectively within allocated budget and time allowances. The price of a product or solution often reflects an assessment of customers’ willingness to pay: the exchange-value. Therefore, the price may be quite different from the estimated cost; the price should normally be higher than the cost for financial success. Much of the estimation may have to be performed by subcontractors who will likely perform aspects of the work if the firm wins the contract. Experienced engineers know how reliable these estimates will be, given past performance by different contractors. The cost of employing a person is much greater than their wages (or salary), the ‘direct’ cost. There are also many ‘indirect’ costs. (Since terms such as direct and indirect costs are used in different ways, it’s best to ask what they mean in our situation).
