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Costing Methodology
Great costing tools are designed to increase your firm's competence in better managing capital through the use of basic Engineering Economy Concepts. Engineering Economy is the logical process of determining to what extent a specific project affects the wealth of the Company. Skye provides a comprehensive set of decision support tools to assist the manger with these decisions.
The purpose of an Engineering Economy study is primarily to determine
from all possible courses of action, which is the most attractive
economically.
The Engineering Economy methodolgy determines the incremental effect of a proposed project on future cash flows in the Company. The effect can be translated into a long term (economic) evaluator (Net Present Value), internal Rate of Return, Present Worth of Annual Charges, etc.) reflecting the time-value of money to the Company , or a short-term (financial) evaluator (Accounting Rate of Return, Payback Period, etc) related to the year-by-year effect.
The Engineering Economy methodolgy determines the incremental effect of a proposed project on future cash flows in the Company. The effect can be translated into a long term (economic) evaluator (Net Present Value), internal Rate of Return, Present Worth of Annual Charges, etc.) reflecting the time-value of money to the Company , or a short-term (financial) evaluator (Accounting Rate of Return, Payback Period, etc) related to the year-by-year effect.
Evaluators resultiong from studies can then be used as criteria in the decisions as to which projects to undertake and which to reject. (There are, of course, other criteria which are not economic but are required in making the final decision, e.g political, social, service, technological. etc.)