Business and Economic Forecasting Chapter 6

1


Project Cost Control

2
Reasons for Project Cost Control

• PROGRESS PAYMENTS
• CHANGE IMPACT
• CONFORMANCE TO PLAN
• PROJECT FINAL COST
• PROJECT DATE OF COMPLETION

3
Reasons For Project Cost Control

• PLANNING PERFORMANCE
• MEASURING PERFORMANCE
• COMPARING ACTUAL AND
• PLANNED PERFORMANCE
• ADJUSTING PLANS AS REQUIRED

4
WORK BREAKDOWN

• REDUCTION OF COMPLEXITY
• SHORT PLANNING INTERVALS
• COST ESTIMATING SIMPLIFICATION
• COST COLLECTION SIMPLIFICATION
• COST / SCHEDULING

5
VARIANCES
COST

• DEVIATION FROM BUDGET.
• NO CONSIDERATION FOR
• PLANNED SEQUENCE.

SCHEDULE
A COMPARISON BETWEEN PLANNED AN SCHEDULED
ACTIVITIES.
6
REPORT DATE
COST
COST
BAC
100 90 80 70 60 50 40 30 20 10
BCWS
BEHIND SCHEDULE
AV ACCOUNT. VARIANCE
ACWP
CV COST VARIANCE TO DATE
SV SCHEDULE VARIANCE
BCWP (EARNED VALUE)
15
10
5
TIME PERIOD
7
Progress by DISCIPLINE
8
ENGINEERING
9
DRAWING MILESTONES
START DRAFT - 20 DRAFT COMPLETE - 65 OFFICE
CHECK - 80 OWNER REVIEW - 85 FINAL DRAFT -
90 APPROVAL WITH HOLDS - 95 FINAL OWNER
APPROVAL - 100
10
DISCIPLINE WGT. VALUE
BUDGETED MANHOURS
ESTIMATED DRAWINGS
DISCIPLINE
CIVIL ARCHITECTURAL STRUCTURAL MECHANICAL PIPI
NG ELECTRICAL INSTRUMENTATION
20 35 20 20 50 40 15 200
1250 2500 1250 1500 4000 3000 1500 15000
8.3 16.7 8.3 10.0 26.7 20.0 10.0 100
TOTAL ENGINEERING VALUE
11
TOTAL PIPE DWGS.
MILESTONE VALUE
DISCIPLINE COMPLETE
DWGS. IN MILESTONE
MILESTONE
50 50 50 50 50 50 50
10 5 5 5 5 5 10
20 65 80 85 90 95 100
4.0 6.5 8.0 8.5 9.0 9.5 20.0
START DRAFT DRAFT COMPLETE OFFICE
CHECK OWNER REVIEW FINAL DRAFT APPRV. W/
HOLDS FINAL APPROVED
TOTAL PIPING DISCIPLINE PROGRESS
65.5
12
PROJECT CONTRIBUTION
WEIGHTED VALUE
COMPLETE
DISCIPLINE
7.5 11.7 6.6 7.5 17.4 12.0 5.0
8.3 16.7 8.3 10.0 26.7 20.0 10.0
CIVIL ARCHITECTURAL STRUCTURAL MECHANICAL PIPI
NG ELECTRICAL INSTRUMENTATION
90 70 80 75 65.5 60 50
TOTAL ENGINEERING PROGRESS
67.7
13
PROCUREMENT MEASUREMENT
14
PROCUREMENT MEASUREMENT

• MATERIAL TAKE OFFS
• PURCHASE REQUISITIONS
• PURCHASE ORDERS

15
FUNCTION WEIGHTED VALUE
ESTIMATED MANHOURS
ESTIMATED QUANTITIES
FUNCTIONS
26.6 46.7 26.7
MATERIAL TAKE-OFF (DWGS) PURCHASE
REQUISITIONS PURCHASE ORDERS
150 200 100
400 700 400
TOTAL PROCUREMENT VALUE 1500
100
16
TAKE OFFS
150 75 50
DRAWINGS REQUIRING TO'S DRAWING WITH TO'S
COMPLETE PHYSICAL PROGRESS
17
PURCHASE REQUISITIONS
ESTIMATED PR's PR's APPROVED FOR
PURCHASE PHYSICAL PROGRESS
200 50 25
18
PURCHASE ORDERS
QUANTITY PLACED 50 DOLLAR VALUE
SHIPPED 50
28 PO's OUT OF 100 14 1 MILLION
DOLLARS EXPLANTED OUT OF 50 MILLI0NS
1 PHYSICAL PROGRESS 14 1 15
19
WEIGHTED VALUE
PROCUREMENT CONTRIBUTION
FUNCTIONS
COMPLETE
13.3 11.7 4.0
MATERIAL TAKE-OFFS PURCHASE REQUISITIONS PURCH
ASE ORDERS
50 25 15
26.6 46.7 26.7
TOTAL PROCUREMENT PROGRESS
29.0
20
WEIGHTED PERCENTAGE
ESTIMATED MANHOURS
MILESTONE
5 12 9 14 25 17 13 5
2000 4800 3600 5600 1000 6800 5200 2000
MOBILIZATION GRADE FOUNDATION
COMPLETE STRUCTURAL COMPLETE EQUIPMENT
ERECTION COMPLETE PIPING COMPLETE ELECTRICAL
COMPLETE MECHANICAL COMPLETION COMMISSIONING
TOTAL PROJECT VALUE 40000
100
21
PROJECT CONTRIBUTION
COMPLETE
WEIGHTED
MILESTONE
100 80 30 10
MOBILIZATION GRADING FOUNDATION STRUCTURAL
STEEL EQUIPMENT ERECTION
5 12 9 14
5 9.6 2.7 1.4
TOTAL PHYSICAL PROGRESS
18.7
22
TOTAL ENGINEERING PROGRESS
23
DESIGN/ENGINEERING OVERALL COMPLETE
WEIGHTED VALUE
BUDGETED MANHOURS
PROJECT CONTRIBU- TION
COMPLETE
60.6 2.6
67.7 29.0
90.9 9.1
15000 1500
ENGINEERING PROCUREMENT
TOTAL CONTRACT
PROGRESS 16500
100
63.2
24
PRODUCTIVITYPROFILES
25
FACTORS AFFECTING PRODUCTIVITY PROFILES

• PROJECT LOCATION
• JOB COMPLEXITY
• WORKING HOURS
• LABOR DENSITY
• SUPERVISION QUALITY
• WEATHER
• MIXTURE OF NATIONALITIES
• DISCIPLINE

26
THEORETICAL BUDGET MANHOURS UTILIZED
PRODUCTIVITY
12 23 33 42 50
57 63 76 87 100
1.2 1.1 1.O 0.9 0.8 0.7 0.6 0.5










10 20 30 40
50 60 70 80 90
100
PHYSICAL COMPLETION
27
CREDIT BY EARNED MANHOURS
2000 MHRS 1000 MHRS 1000 MHRS
ORIGINAL ESTIMATE ESTIMATE REMAINING EARNED