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Cost Planning & Scheduling

Cost Planning & Scheduling. CTC-415. Bid Estimate. Becomes the project budget upon signing of contract Can cost load the schedule Effective means of cost control Predict time of cash requirements over course of project. Activity Cost. Amount expended by contractor on activity

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Cost Planning & Scheduling

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  1. Cost Planning & Scheduling CTC-415

  2. Bid Estimate • Becomes the project budget upon signing of contract • Can cost load the schedule • Effective means of cost control • Predict time of cash requirements over course of project

  3. Activity Cost • Amount expended by contractor on activity • Includes direct and indirect costs • Activity value • Amount contractor will receive for completed activity • Includes activity direct overhead, overhead allocation, profit

  4. Activity Direct Cost • Cost of all components which can be directly traced to activity • Incurred as a direct result of the performance of an activity • Labor • Production equipment • Material and installed equipment • Subcontractors

  5. Labor • Wage Rate • Does not include fringe benefits, taxes, insurance • Labor Burden • All payments over the basic wage • Varies by trade • Includes fringe benefits (paid holidays and vacations, health & life insurance, pension,training) • Workman’s comp, Unemployment insurance, FICA

  6. Labor • Unit Labor Cost • Wage Rate + Labor Burden • Total Labor Cost • Unit Labor Cost * hours worked per craftsman

  7. Production Equipment • Equipment can be owned or leased by contractor • Contractor owned equipment • Estimated at internal company rate • Ownership costs • Depreciation, interest, taxes, insurance,storage, major overhauls • Operating costs – fuel & oil, routine repairs and maintenance

  8. Production Equipment • Contractor leased equipment • Lease payment is used to determine the equipment cost • How much does that machine cost/day? • (Initial Cost + depreciation + taxes + insurance + storage +overhauls + O&M)/(expected # of days used over life) • Expected days used per year – what percent of year?

  9. Production Equipment • Mobilization/Demobilization Costs • Transportation • Set-up / breakdown • Testing & certification • Costs need to be apportioned to each activity that uses the equipment • Cost of equipment that are used on all of project should be put into overhead

  10. Materials & Installed Equipment • All costs to contractor to • Procure materials • Installing the equipment • Special packing charges • Freight and delivery charges • Taxes and tariffs • Insurance and bonds • Storage and handling • Inspection and testing

  11. Subcontractors • Usually a contracted amount • Activity cost needs to include all subcontractor costs

  12. Overhead Allocation • Activity Indirect Costs • Project Site Costs • Not attributable to any one activity • Home Office costs • O&M of construction firm

  13. Project Site Costs • Include • Project Administration -Project manager, General Super, Non-working foremen, clerical support • Utilities • Equipment & Supplies - Office eqiup & supplies, vehicles, small tools, first aid • Services - Engineering, surveying, testing,legal, security, trash disposal • Facilities - Storage, sanitary, field office • Insurance, Permits & Fees • Mobilization /Demobilization – access road, laydown area,dewatering, fences & barricades

  14. Home Office costs • Salaries & benefits • Office rent • Insurance • Utilities • Supplies • Equipment rental • Furnishings • Communications • Legal • Accounting • Vehicles • Travel & lodging • Advertising • Donations • Assoc dues

  15. Overhead Allocation • Allocate Project and Home office overhead to each activity • Can be based on activity cost • Must be a reasonable allocation

  16. Profit Allocation • Total Revenues – total cost • Need to allocate profit to each activity • Activity profit + activity cost = activity value • Activity value can be used to determine progress payment amounts

  17. Assigning Cost & Value • 4 levels of cost or value that can be assigned to an activity • Dependent on info needs of project team • Level must be consistent thru project

  18. Activity Cost/Value Timing • Cost of work in place • Uniform – work in place is completed at a steady rate • Reasonable assumption when activity is small in relation to project • Non-uniform – work in place is completed in a non-steady rate

  19. Cumulative Cost/Value • Determine the ES and LS cumulative costs • Same method used in resource leveling • Find cost envelope – area between ES and LS cum cost curves • This becomes target area for work in place

  20. Cumulative Cost/Value • Use cum cost curves to determine cash flow • Allows contractor to determine when progress payments are needed • Allows contractor to determine the amount of working capital needed to do work • Working capital pays bills from progress payment to progress payment

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