Z94.4 - Cost Engineering & Project Management

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DAMAGES, ACTUAL. The increased cost to one party resulting from another party’s acts or omissions affecting the contract but not incorporated into a contract modification.

DAMAGES, LIQUIDATED. An amount of money stated in the contract as being the liability of a contractor for failure to complete the work by the designated time(s). Liquidated damages ordinarily stop at the point of substantial completion of the project or beneficial occupancy by the owner.


DATA DATE (DD). The calendar date that indicates when the project has been updated.

DATE FOR THE COMMENCEMENT OF THE CONTRACT TIME. The date when the contract time commences to run and on which the contractor shall start to perform the contractor’s obligations under the contract documents.

DECELERATION. The opposite of acceleration. A direction, either expressed or implied, to slow down job progress.

DECLINING BALANCE DEPRECIATION. Method of computing depreciation in which the annual charge is a fixed percentage of the depreciated book value at the beginning of the year to which the depreciation applies. Syn: Percent on Diminishing Value

DE-ESCALATE. A method to convert present-day costs or costs of any point in time to costs at some previous date via applicable indexes.

DEFECT. A deviation of a severity sufficient to require corrective action.

DEFECTIVE. An adjective which, when modifying the work, refers to work that is unsatisfactory, faulty or deficient, or does not conform to the contract documents, or does not meet the requirements of any inspection, reference standard, test or approval referred to in the contract documents, or has been damaged prior to the engineer’s recommendation of final payment (unless responsibility for the protection thereof has been assumed by the owner at substantial completion in accordance with the contract documents).

DEFECTIVE SPECIFICATIONS. Specifications and/or drawings which contain errors, omissions, and/or conflicts, which affect or prevent the contractors performance of the work.

DEFECT, LATENT. A defect in the work which cannot be observed by reasonable inspection.

DEFECT, PATENT. A defect in the work which can be observed by reasonable inspection.

DEFLATION. An absolute price decline for a commodity; also, an operation by means of which a current dollar value series is transformed into a constant dollar value series (ie, is expressed in “real terms using appropriate price indexes as deflators).

DELAY, COMPENSABLE. Any delay beyond the control and without the fault or negligence of the contractor resulting from the owner-caused changes in the work, differing site conditions, suspensions of the work, or termination for convenience by the owner.

DELAY, CONCURRENT. Two or more delays in the same time frame or which have an independent effect on the end date. The owner/engineer and the contractor may each be responsible for delay in completing the work. This may bar either party from assessing damage against the other. This may also refer to two or more delays by the same party during a single time period.

DELAY, EXCUSABLE. Any delay beyond the control and without the fault or negligence of the contractor or the owner, caused by events or circumstances such as, but not limited to, acts of God or of the public enemy, acts of intervenors, acts of government other than the owner, fires, floods, epidemics, quarantine restrictions, freight embargoes, hurricanes, tornadoes, labor disputes, etc. Generally, a delay caused by an excusable delay to another contractor is compensable when the contract documents specifically void recovery of delay costs.

DELAY, INEXCUSABLE. Any delay caused by events or circumstances within the control of the contractor, such as inadequate crewing, slow submittals, etc., which might have been avoided by the exercise of care, prudence, foresight, or diligence on the part of the contractor.

DELAY, NONPREJUDICIAL. Any delay impacting a portion of the work within the available total float or slack time, and not necessarily preventing completion of the work within the contract time.

DELAY, PREJUDICIAL. Any excusable or compensable delay impacting the work and exceeding the total float available in the progress schedule, thus preventing completion of the work within the contract time unless the work is accelerated.

DELIVERABLE. A report or product of one or more tasks that satisfy one or more objectives and must be delivered to satisfy contractual requirements.

DEMAND FACTOR. (l) The ratio of the maximum instantaneous production rate to the production rate for which the equipment wag designed; (2) the ratio between the maximum power demand and the total connected load of the system.

DEMOGRAPHIC INDEX. Cost indexes developed to deal with geographic cost differences.

DEMURRAGE. A charge made on cars, vehicles, or vessels held by or for consignor or consignee for loading or unloading, for forwarding directions or for any other purpose.

DEPLETION. (l) A form of capital recovery applicable to extractive property (eg, mines). Depletion can be on a unit-of-output basis related to original or current appraisal of extent and value of the deposit. (Known as percentage depletion.) (2) lessening of the value of an asset due to a decrease in the quantity available. Depletion is similar to depreciation except that it refers to such natural resources as coal, oil, and timber in forests.

DEPRECIATED BOOK VALUE. The first cost of the capitalized asset minus the accumulation of annual depreciation cost charges.

DEPRECIATION. (l) Decline in value of a capitalized asset; (2) a form of capital recovery applicable to a property with a life span of more than one year, in which an appropriate portion of the asset’s value is periodically charged to current operations.

DETAILED ENGINEERING. The detailed design, drafting, engineering, and other related services necessary to purchase equipment and materials and construct a facility.

DETAILED SCHEDULE. A schedule which displays the lowest level of detail necessary to control the project through job completion. The intent of this schedule is to finalize remaining requirements for the total project.

DEVELOPMENT COSTS. Those costs specific to a project, either capital or expense items, which occur prior to commercial sales and which are necessary determining the potential of that project for consideration and eventual promotion. Major cost areas include process, product, and market research and development.

DEVIATION. A departure from established requirements. A deviation in the work product may be classified as an imperfection, nonconformance, or defect, based on its severity in failing to meet or unnecessarily exceed the requirements.

DEVIATION COSTS. The sum of those costs, including consequential costs such as schedule impact, associated with the rejection or rework of a product, process, or service due to a departure from established requirements. Also may include the cost associated with the provision of deliverables that are more than required.

DIFFERENTIAL PRICE ESCALATION RATE. The expected percent difference between the rate of increase assumed for a given item of cost (such as energy), and the general rate of inflation.

DIFFERING SITE CONDITIONS. Subsurface or latent physical conditions at the site differing materially from those conditions indicated in the contract documents or unknown physical conditions at the site, of an unusual nature, differing materially from conditions normally encountered and generally recognized as inherent in work of the nature provided for in the contract.

DIRECT COST. (1) In construction, cost of installed equipment, material and labor directly involved in the physical construction of the physical construction of the permanent facility. (2) in manufacturing, service and other non-construction industries, the portion of operating costs that is generally assignable to a specific product or process area. Usually included are:

a. Input Material

b. Operating, Supervision, and Clerical Payroll

c. Fringe Benefits

d. Maintenance

e. Utilities

f. Catalysts, Chemicals and Operating Supplies

g. Miscellaneous (Royalties, Services, Packaging, etc.)

Definitions of the above classifications are:

a. Input Material – raw materials which appear in some form as a product. For example, water added to resin formulation is an input material, but sulfuric acid catalyst, consumed in manufacturing high octane alkylate, is not.

b. Operating, Supervision, and Clerical Payroll – wages and salaries paid to personnel who operate the production facilities.

c. Fringe Benefits – payroll costs other than wages not paid directly to the employee. They include costs for: (1) Holidays, vacations, sick leave; (2) Federal old age insurance; (3) Pensions, life insurance, savings plans, etc.

In contracts with some governmental agencies these items are included in indirect cost.

d.Maintenance Cost – expense incurred to keep manufacturing facilities operational. It consists of: (1) Maintenance Payroll Cost; (2) Maintenance Materials and Supplies Costs.

Maintenance materials which have a life of more than one year are usually considered capital investment in detailed cash flow accounting.

e. Utilities – the fuel, steam, air, power and water which must be purchased or generated to support the plant operation.

f. Catalysts, Chemicals and Operating Supplies – materials consumed in the manufacturing operation, but not appearing as a product. Operating supplies are a minor costs in process industries and are sometimes assumed to be in the maintenance materials estimate; but in many industries, mining for example, they are a significant proportion of direct cost.

g. Miscellaneous (1) Costs paid to other for the use of a proprietary process. Both paid-up and “running” royalties are used. Cost of paid-up royalties are usually on the basis of production rate. Royalties vary widely, however, and are specific for the situation under consideration. (2) Packaging Cost – material and labor necessary to place the product in a suitable container for shipment. Also called Packaging and Container Cost or Packing Cost. Sometimes considered an indirect cost together with distribution costs such as for warehousing, loading and transportation. (3) Although the direct costs described above are typical and in general use, each industry has unique costs which fall into the”direct cost” category. A few examples are equipment rental, waste disposal, contracts, etc.

DISINFLATION. A downward trend in inflation rates, effected by weak or declining demand. It may well portend deflation.

DISPERSION. The scattering of values from the mean.

DISPUTE. A disagreement between the owner and the contractor as to a question of fact or contract interpretation which cannot be resolved to the mutual satisfaction of the parties.

DISRUPTION. An action or event that hinders a party from proceeding with construction. If such disruption is caused by owner or engineer action (or failure to act), the contractor may be entitled to recover any resulting costs.

DISTRIBUTABLES. The field portion of a construction project that can be associated with any specific account. Includes the field nonmanual staff, field office, office supplies, temporary construction, utilities, small tools, construction equipment, weather protection, snow removal, lost time, labor burden, etc. When completion cost reports are prepared, the distributable costs may be distributed across the direct accounts.

DISTRIBUTION. The broad range of activities concerned with efficient movement of finished products from the end of the production line to the consumer; in some cases it may include the movement of raw materials from the source of supply to the beginning of the production line. These activities include freight transportation, warehousing, material handling, protective packaging, inventory control, plant and warehouse site selection, order processing, market and sales forecasting, customer service, attendant management information systems; and in some cases, buying activities.

DRAWINGS, PLANS. The drawings, plans or reproductions thereof, which show location, character, dimensions, and details of the work to be performed and which are referred to in the contract documents.

DUMMY ACTIVITY. An activity, always of zero duration, used to show logical dependency when an activity cannot start before another is complete, but which does not lie on the same path through the network. Normally, these dummy activities are graphically represented as a dashed line headed by an arrow and inserted between two nodes to indicate a precedence relationship or to maintain a unique numbering of concurrent activities.

DUMMY START ACTIVITY. An activity entered into the network for the sole purpose of creating a single start for the network.

DURABLE GOODS. Generally, any producer or consumer goods whose continuous serviceability is likely to exceed three years (eg, trucks, furniture).

DURATION. The time required to accomplish an activity. (See ACTIVITY DURATION.)

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