Cost indicators – A cost index is a coefficient for a given time that represents the ratio of the price of a good at that time to the price of the same good at the right time.
Most of the information used in the preliminary estimate or design is valid only at the time of data collection. Due to the significant changes that occur over time due to changes in economic conditions in prices, to use the information provided in the past, they must be updated in appropriate ways to reflect the real price in the future. To be. This is done using the cost index.
A cost index is a coefficient for a given time that represents the ratio of the price of a good at that time to the price of the same good at the right time. If the price is fixed at a given time in the past, the equivalent price at the present time can be calculated by multiplying the price at the base time by the ratio of the cost index at the present time to the cost index at the base time as follows:
Cost indicators can be used for general estimates, but no indicator can account for all factors such as specific technological advances or cross-cutting conditions. If the time difference is less than 10 years, the usual indicators give relatively accurate estimates. Indices are often used to predict prices for the near future.
For example, price estimates may be made at the time of the study until the projected start-up time. These bids are made using the extruded values of an indicator or based on the projected inflation rate.
Many types of cost indicators are published regularly. Some of them can be used to estimate the price of devices and others can be used to estimate the cost of labor, construction, materials and other specific areas. farrar refinery Engineering News- Record construction ±, construction chemical engineering plant for process industry equipment.
Numerous other cost indicators have been published in scientific papers that can be used for specific purposes. For example, cost indicators for materials and labor in various industries are published monthly by the US Department of Labor under the title monthly labor review. These indicators can be used for specific types of material estimates or labor force estimates that have unusual conditions.
Another example of a cost index used to compare global costs over time is alternately published in the International Journal of Production Economics (formerly published as Engineering Costs and Production Economics).
The magazine provides cost indexes for factories in Australia, Belgium, Canada, Denmark, France, Germany, Italy, India, Norway, Japan, Sweden, the United Kingdom and the United States.
All cost indicators are based on limited samples of goods and services available in the field. Therefore, applying two different indicators to a project may have very different results. The most that can be expected from an indicator is to present a general behavior and approximation.
These approximations may not work well when applied to a particular item at the desired time. For example, a contractor may accept a construction job in a recession just to keep its experts at a minimum profit.
On the other hand, due to the lack of native labor, a project may become significantly more expensive than a similar project in another geographical area.Cost indicators
Cost indices Marshall and swift, chemical eng.plant are proposed for process equipment and cost estimation of chemical processes.
These two indicators give very similar results, while the Eng.news-record index, due to the lack of efficiency improvement factor, changes rapidly over the previous two indicators over time. The Nelson-farrar refinery index has also risen sharply over time and should be used with caution and only for refinery construction.