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FIXED PRICE CONTRACT

2 replies [Last post]
Muhammad Mehmood
User offline. Last seen 12 years 38 weeks ago. Offline
Joined: 22 Jan 2010
Posts: 10
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Hi,
Let’s suppose if the project is of fixed price or lump sum i-e $ 5000
How we will do the settings in P6 for fixed price contract project because if we go by resources cost, Suppose average / person rate is $ 50 and Totals hrs are 20 then total cost will be different than fixed price $ 5000.
Please advise ASAP.
Regards,
MUHAMMAD

Replies

Rodel Marasigan
User offline. Last seen 3 weeks 1 day ago. Offline
Joined: 25 Oct 2006
Posts: 1699
Muhammad,
You can use P6 Top Down Estimation. It will automatically spread your Fixed value against Resource assigned on your project. It is more meaningful if you will weighted your WBS and or Activity so when using Top Down Estimation, it will automatically spread Fixed Value using the weight you assign per WBS and or Activities.
Rafael Davila
User offline. Last seen 6 days 17 hours ago. Offline
Joined: 1 Mar 2004
Posts: 5241
Muhammad

Cost accounts are available to store income as well as cost, in a way all can be viewed as cost, income as the negative of cost and vice-versa, the sign is up to you. For BOQ you can use a set of cost accounts while for your actual costs you can use a separate set of accounts. You will have to cost load both to your activities and/or resources as need be.

I use other software and we have cost centers, a cost account can belong to several cost centers. Perhaps you can mimic cost centers using custom fields or just use a prefix/suffix for BOQ cost accounts while another for tracking your actual costs, you can use prefix/suffix BOQ for BOQ accounts, L for labor, E for equipment, M for materials, S for Subcontracts, O for other and so on. In this way it will be easier for you to filter and set up your reports.

For BOQ use the coding as required by the Owner of each job while for tracking your costs use the standard of your company. The purpose of BOQ is not the same as the purpose of a Job Costing System so keep them apart. For example on a BOQ you will not have labor cost accounts but a “cost price” assigned to a deliverable. Setting forms is quite an important cost element to be tracked in Concrete Works but it is not a deliverable and usually not allowed to be included as a BOQ item. Here bonding companies can refuse liability if the BOQ is unbalanced or payments are done on non-delivered value, under the claim they had nothing to do with the negotiation of the BOQ breakdown, therefore most Owner representatives will only allow for physical deliverables on the BOQ.

There are various approaches, among them:

A)     You can create a resource named BOQ (or any other name) and cost load the activities assigning a BOQ resource for every BOQ cost code that you are in need to assign to the particular activity.
B)     Other way is to assign a single BOQ resource with the total of all costs to be assigned and keep a separate spreadsheet to track the budget and actual assignments.
C)     You can also mimic the Application for Payment Worksheet within your schedule but this would require for you to assign a unique resource for each BOQ item.

I believe approach marked B is the most widely used, but I favor approach marked A. I find approach marked C unnecessary for tracking BOQ if you use a worksheet to compute and present your payment requests, I do not see added benefit of option C over options A or B. Is up to you, but my recommendation is keep it simple and make better use of your time than the duplication of a worksheet.

Best Regards,
Rafael