Z94.4 - Cost Engineering & Project Management

This section contains terms selected from STANDARD COST ENGINEERING TERMINOLOGY, AACE Standard No. 105-90 (draft), 1990, a document produced by the American Association of Cost Engineers (AACE).  By definition , Cost Engineering incorporates the professional disciplines of  cost control, cost estimation, business planning, management science, profitability analysis, project management, value engineering; and planning and scheduling.

To avoid excessive duplication, many definitions that the reader may expect to find in this chapter will be found in other sections of this terminology, -- especially Section 7, Engineering Economy and Section 1, Analytical Techniques and Operational Research.  The reader should also consult the overall index.

Editing for this section, including selection of the terms from STANDARD COST ENGINEERING TERMINOLOGY, was done by the chair of the Z94 Committee, Dr. Williams.  Comments concerning omissions and errors should be directed to him.  The Z94 Committee on Industrial Engineering Terminology gratefully acknowledges the contributions of the American Association of Cost Engineers for generously allowing their terminology to be used.  Mention must also be made of individual members of the American Association of Cost Engineers who contributed to this effort:

American Association of Cost Engineers

209 Prarie Ave., Suite 100
Morgantown, WV 26505
Telephone: 800-858-2678
Fax: 304-291-5728
e-mail: info@aacei.org
URL: http://www.aacei.org


Jean-Paul Prentice, CCE
Resource Optimization Inc.
e-mail: jproi8000@aol.com


William R. Barry, CCC
ASEC Corporation

Robert C. Creese, PH.D.
Department of Industrial Engineering
West Virginia University

Fred R. Douglas
Texaco, Inc. (retired)

Kenneth Humphreys, Ph.D.
Past Executive Director
American Association of Cost Engineers

Barry G. McMillan
Staff Director – Education and Certification
American Association of Cost Engineers

Robert Templeton
M.W. Kellog Company (retired)

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ACCELERATION. Conduct by the owner or the engineer (either in a directed or constructive manner) in which a contractor is required to complete performance of the contracted scope of work earlier than scheduled. A Directed Acceleration occurs when the owner formally direct such accelerated completion. A Constructive Acceleration generally occurs when a contractor is entitled to an excusable delay; the contractor requests a time extension from the owner; the owner declines to grant a time extension or grants one in an untimely manner; the owner or the engineer either expressly orders completion within the original performance period or implied in a clear manner that timely completion within the original performance period if expected; and the contractor gives notice to the owner or the engineer that the contractor considers this action an acceleration order.

ACCEPTANCE, FINAL (PARTIAL). The formal action by the owner accepting the work (or a specified part thereof), following written notice from the engineer that the work (or specified part thereof) has been completed and is acceptable subject to the provisions of the contract regarding acceptance.

ACCESS TO THE WORK. The right of the contractor to ingress and egress, and to occupy the work site as required to reasonably perform the work described in the contract documents. An example of denial of access to the work would be on the segment of a sewer installation project where no easements or work limits are indicated, but the contractor is ordered, after contract award, to conduct operations within a narrow work corridor necessitating different or unanticipated construction methods (eg, use of sheeting).

ACCOUNTABILITY. Answerable, but not necessarily charged personally with doing the work. Accountability cannot be delegated but it can be shared.

ACCOUNT CODE STRUCTURE. The system used to assign summary numbers to elements of the work breakdown and account numbers to individual work packages.

ACCOUNT NUMBER. A numeric identification of a work package. An account number may be assigned to one or more activities. Syn. Shop Order Number.

ACCOUNTS PAYABLE. The value of goods and services rendered on which payment has not yet been made. (See TAXES PAYABLE.)

ACCOUNTS RECEIVABLE. The value of goods shipped or services rendered to a customer on which  payment has not yet been received. Usually includes an allowance for bad debts.

ACTIVITY. A basic element of work, or task that must be performed in order to complete a project. An activity occurs over a given period of time. (See WORK ITEM.)

ACTIVITY CODE. Any combination of letters, numbers, or blanks which describes and identifies any activity or task shown on the schedule. Syn.: Activity Identifier.

ACTIVITY DESCRIPTION. A concise explanation of the nature and scope of the work to be performed, which easily identifies an activity to any recipient of the schedule.

ACTIVITY DURATION. The length of time from start to finish of an activity, estimated or actual, in working or calendar time units.


ACTIVITY SPLITTING. Dividing (ie, splitting) an activity of stated scope, description and schedule into two or more activities which are rescoped and rescheduled.  The sum of the split activities is normally the total of the original.

ACTIVITY TIMES. Time information generated through the CPM calculation that identifies the start and finish times for each activity in the network.

ACTIVITY TOTAL SLACK. The latest allowable end time minus earliest allowable end time.  The activity slack is always greater than or equal to the slack of the activity ending event.

ACTS OF GOD. (1) an extraordinary interruptions by a natural cause, as a flood or earthquake, or the usual course of events that experience, foresight or care cannot reasonable foresee or prevent; (2) an event in nature over which neither the owner nor the contractor has any control.

ACTUAL COMPLETION DATE. The calendar date on which an activity was completed.  (See ACTUAL FINISH DATE.)

ACTUAL COST. The actual expenditures incurred by a program or project.

ACTUAL COST OF WORK PERFORMED. The direct costs actually incurred and the direct costs actually recorded and assigned in accomplishing the work performed. These costs should reconcile with the contractors incurred cost ledgers when they are audited by the client.

ACTUAL FINISH DATE. The calendar date on which the activity was actually completed. It must be prior to or equal to the data date. The remaining duration of this activity is zero.

ACTUAL START DATE. The calendar date on which work actually began on an activity.

ADDENDA. Written or graphic instruments issued prior to the date for opening of bids which may interpret or modify the bidding documents by additions, deletions, clarification, or corrections.


ADMINISTRATIVE EXPENSE. The overhead cost due to the nonprofit-specific operations of a company. Generally includes top management salaries and the costs of legal, central purchasing, traffic, accounting, and other staff functions and their expenses for travel and accommodations.

AGENT. A person authorized to represent another (the principal) in some capacity.  The agent can only act within this capacity or “scope of authority” to bind the principal. Agency agreements can be oral or in writing.

AGREEMENT. The written agreement between the owner and the contractor covering the work to be performed: other contract documents are attached to the agreement and made a part thereof as provided therein.

ALLOWANCES. Additional resources included in estimates to cover the cost of known but undefined requirements for an individual activity, work item, account or subaccount.

AMBIGUITY. An uncertainty in the meaning of provisions of a contract, document or specification. Mere disagreement about the meaning of a provision does not indicate an ambiguity. There must be genuine uncertainty of meaning based on logical interpretation of the language used in the contract. Generally, ambiguities in contract are construed against the drafter of the agreement.

AMENDMENT. A modification of the contract by a subsequent agreement. This does not change the entire existing contract but does alter the terms of the affected provisions or requirements.

AMORTIZATION. (l) As applied to a capitalized asset, the distribution of the initial cost by periodic charges to operations as in depreciation. Most properly applies to assets with indefinite life; (2) The reduction of a debt by either periodic or irregular payments; (3) A plan to pay off a financial obligation according to some prearranged schedule .

ANALYSIS. The examination of a complex whole and the separation and identification of its constituent parts and their relationships.

ANNUALLY RECURRING COST. Those costs that are incurred in a regular pattern each year throughout the study period.

ANNUITY. (l) An amount of money payable to a beneficiary at regular intervals for a prescribed period of time out of a fund reserved for that purpose; (2) A series of equal payments occurring at equal periods of time.

ANTICIPATORY BREACH. A specific refusal by the contractor to perform within the terms of the contract documents before performance is due; or a clear indication that the contractor is unable or unwilling to perform.

APPLICATION FOR PAYMENT. The form furnished by the owner or the engineer which is to be used by the contractor in requesting progress of final payments and which shall contain an affidavit, if required, in the general or supplementary conditions. The application for payment includes all supporting documentation as required by the contract documents.

APPROVE. To accept as technically satisfactory by person or persons in authority. The approval may still require confirmation by someone else at a higher level of authority for legal or commercial considerations.

ARBITRATION. A method for the resolution of disputes by an informal tribunal in which a neutral person or persons with specialized knowledge in the field in question renders a decision on the dispute. An arbitrator may grant any award which is deemed to be just and equitable after having afforded each party full and equal opportunity for the presentation of the case. Arbitration does not strictly follow the rules of evidence and discovery procedures found in litigation. Arbitration may be conducted under the auspices of an organization (eg, the American Arbitration Association) which is available as a vehicle for conducting an arbitration.

ARROW. The graphic representation of an activity in the ADM network. One arrow represents one activity. The tail (see I-NODE) of the arrow represents the start of the activity. The head (see J-NODE) of the arrow represents the finish. The arrow is not a vector quantity and is not drawn to scale. It is uniquely defined by two event codes.

ARROW DIAGRAM. A network (logic diagram) on which the activities are represented by arrows between event nodes.

ARROW DIAGRAMMING METHOD. A method of constructing a logical network of activities using arrows to represent the activities and connecting them head to tail.  This diagramming method shows the sequence, predecessor and successor relationships of the activities.

AS-BUILT SCHEDULE. The final project timetable, which depicts for each activity actual start and completion date, actual duration, costs, and consumed resources.

ASSESSED VALUE. That value entered on the official assessors records as the value of the property applicable in determining the amount of taxes to be assessed against that property.

AUTHORIZED WORK. Activity that has been approved to proceed by the client. The cope may or may not be well defined at the time authorized; it is usually defined by contract.

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