Pros and Cons of a Career in Cost Analysis
A cost analyst helps a business estimate the money and resources needed to complete manufacturing, construction or other projects. To determine if this field is right for you, weigh some of the ups and downs of a career in cost analysis.
|Pros of Being a Cost Analyst|
|Excellent job prospects (26% expected employment growth from 2012-2022)*|
|High salary potential (top 10% earned $99,000 or more in 2014)*|
|Several majors can lead to this career (finance, statistics, building science, etc.)*|
|Opportunity to work in two of the largest industries (construction and manufacturing)*|
|Work with a variety of people (architects, engineers, contractors, clients, etc.)*|
|Cons of Being a Cost Analyst|
|Usually requires a college degree*|
|Must have industry-related experience*|
|Stress related to working under deadlines*|
|Frequent travel to project work sites*|
|May require overtime to meet project goals*|
|Employment can be irregular (outlook depends on the economic conditions)*|
|Requires precise accuracy and attention to detail*|
Source: *U.S. Bureau of Labor Statistics.
Essential Career Info
Job Description and Duties
A cost analyst, often called a cost estimator, gathers and analyzes information to approximate how much a project will cost and how profitable or cost effective the end product will be. Analysts often specialize in either construction or manufacturing. When estimating construction work, they're generally hired by construction, engineering or architectural firms to determine the costs of erecting structures like bridges or buildings. They may also be hired by contractors to calculate costs for specific aspects of larger structural projects, like plumbing or electrical costs. Analysts who specialize in manufacturing determine the costs and potential profits of producing a new good or service.
The cost estimation process involves calculating how much time, materials, equipment, labor and other resources a project will entail and how much these expenses will cost. In this career, you may travel to construction sites or factories to gather such information, but you'll spend a large amount of your time in an office, analyzing data and blueprints and using specialized software to calculate estimates. During the process, you might collaborate with various building professionals, like architects and engineers. Additionally, you may advise clients on ways to make the project more cost effective and help develop manufacturing or construction plans as the project unfolds.
These professionals typically work full-time schedules, though they often work overtime when deadlines are approaching. This job can be stressful due to the pressure of working under strict deadlines.
Salary and Job Growth
The U.S. Bureau of Labor Statistics (BLS) states that the average salary of a cost analyst was nearly $64,000 as of May 2014, which equates to a mean hourly wage of more than $30. The bottom 10% of cost analysts earned $34,000 or less per year, while the top 10% earned $99,000 or more per year. The highest-paid cost analysts worked in the oil and gas extraction, natural gas distribution, wired telecommunications carriers (with and without satellite) and scientific research and development services industries.
The BLS also projected that jobs for cost analysts would grow by 26% between 2012 and 2022. This increase will be due to growth in the construction industry and companies' increasing demand for more accurate cost estimates. Employment in this occupation, however, is driven by the economic condition; economic declines can lead to a more competitive job market, while an economic upswing can mean an excess of open jobs.
Training and Education Requirements
The BLS notes that a bachelor's degree is usually required for this career. Costs analysts may hold degrees in building science, construction management or other majors related to their industries. A bachelor degree that is heavily quantitative, such as in mathematics, statistics or engineering, can also prepare an analyst to calculate costs. Additionally, the BLS states that many employers seek cost analysts who understand business principles. Therefore, a job candidate with a degree in finance or accounting and a strong background in mathematics may also be seen as an ideal candidate. After getting hired, you'll likely continue training on the job by shadowing experienced cost analysts for anywhere from months to years.
Analytical and mathematical skills are obviously essential to this career, but you'll also need to be detail-oriented in order to catch the small details that can have large impacts on project costs. Technical skills are important, since you'll be working with specialized software and must be able to understand industrial processes. Cost analysts typically present their estimates in reports, so you'll need to be able to write clearly and succinctly. Since you'll be working on strict deadlines, you'll also need to be good at managing your own time working under pressure.
What Do Employers Look for?
A common qualification employers seek is experience in the specific job sector in which the cost analyst will be working. For example, a job candidate with a mathematics degree but no experience in manufacturing may not be seen as a good candidate for a manufacturing job. Statistical and accounting skills are also preferred by many employers. Check out this sample of job postings in March 2012 for an idea of what an employer will expect from you:
- A New York financial company that consults with manufacturers needs a financial cost analyst. A bachelor's degree in finance or accounting is required, but a Master of Business Administration is a plus. The candidate should have some experience with the distribution and manufacturing industry.
- A Michigan architectural company that supports industries from mining to nuclear facilities needs a cost analyst. The cost analyst should have a bachelor degree in accounting or finance and 3-5 years of cost accounting experience in manufacturing.
- A Wisconsin metal fabrication company needs a cost analyst who holds a bachelor's in accounting with an emphasis on cost accounting. The applicant should also have two years of experience in cost accounting in the manufacturing sector.
How to Maximize Your Skills
As job postings and the BLS reveal, cost analysts typically need applicable work experience to gain employment. Employers desire analysts who understand and are familiar with how their specific job sector operates on a day-to-day basis. You might gain such experience by working in an industry-related job, like as a construction or factory worker. You could also pursue an internship or cooperative education program while in college.
Certification is voluntary, and employers seldom require it for a job; however, becoming certified by organizations like the American Society of Professional Estimators (ASPE) or the Society of Cost Estimating and Analysis (SCEA) can show your commitment to the profession and understanding of the industry. It is important to note that each organization has different standards and requirements for cost analysis certification. For example, the ASPE requires attending an online workshop, writing a 2,500-word technical paper and passing two exams.
An alternative career to cost analysis is budget analysis. A budget analyst is a professional who evaluates the projected budget of a company, organization or government agency to see if the finances are calculated correctly. Budget analysts also serve as consultants, who provide advice on implementing cost-saving policies to companies. Unlike a cost analyst, a budget analyst is focused on long-term issues with a company's or government's investments for the year. This career entails at least a bachelor's degree in finance or a related field, however, it tends to lead to higher salaries than that of a cost analyst; as of May 2011, budget analysts earned a mean salary of more than $71,000.
Another career option is to become an accountant. An accountant prepares and maintains an individual's or company's financial records. The purpose of this is to help make a ledger of all the revenue and spending coming in and from the individual or business. Usually, an accountant consults with individuals or business management about their financial records and investments as well as preparing taxes during tax seasons. Accountants typically need bachelor's degrees in accounting or other applicable majors, and many need to be certified. These professionals earned a mean salary of about $70,000 as of May 2011.