Cost Control in Consulting Engineering Firms

Abstract

Consulting engineering companies need an adequate cost control system to improve their profitability and productivity. Cost control enables the firm to make decisions if the measurements do not comply with the initial targets. This paper introduces a new theoretical approach to cost control and its implementation procedure. Technical (or productive) personnel costs are considered as indirect costs. A general principle stated is the total absorption of overhead costs by billable time of technical personnel. The proposed methodology establishes time as the key element of control in a professional services company. It considers production of consulting engineering firms as a function of time; therefore the productivity of the personnel can be controlled.