There is an abysmal difference between cost accounts coding versus CPM activity coding, to say they are the same is misleading, the difference is on the sheer number of accounts and on the use of same codes when using cost accounts versus thousands of different activity codes per job that is not equal among different jobs. CPM based costing is a theoretical illusion.
Most Construction Contractors do their cost control at the process level and not at the individual activities level. For a construction Contractor a process might be tile installation, a single process across the duration of the job that spans many activities. The activity schedule assists in activity timing and resource planning. In a single job there might be hundreds of activities for tile installation but a single cost code to track the unit cost for tile installation. It is almost universal in construction accounting software to break down each cost code into cost-types for labor, equipment, materials, subcontract and other.
There is a relevant difference between Job Cost Budgeting and Unit Costing, Budgeting uses only dollar amount, unit costing relates dollar amount to volume of work quantities. Many of today Job Costing modules misses to link dollar amount to volume of work, they lack the weekly reports on unit costs and productivity, they simply do not provide for contractor to input the quantities, just dollar amounts. As a result some contractors end up without these valuable reports because transferring the raw data to worksheets is too time consuming.
None of the contractors I know use RS Means Database, they use the paper book editions and use it to plug in those items they have no or little experience or cost records, and this happens very rarely. After over 25 years of PM experience I make most of my living as estimator, CPM scheduling is the fun part. What I am saying is not taken from foreign reference books but real life experience with my few former employers and many more as clients. Those who have formal unit costing, at time of costing the quantity take off use their Unit Cost records, those who have non formal unit costing use their imagination as well as reference cost books foreign to their company experience. There is a consensus there is more reliability on estimates based on the actual experience of each particular company.
To say all contractors use EVM is misleading they do not use EV as a management tool but a few as a progress reporting tool. They do not make use of the flawed part of EVM, the part that relates to schedule, they understand that EVM misses the link with critical path activities. A few use it as another view that is far from perfect, a very few [rare birds around here] I believe might use it if doing non-fixed price work for the DOD.
Member for
21 years 8 months
Member for21 years8 months
Submitted by Rafael Davila on Mon, 2016-02-01 21:57
08.6.3.3 What is Activity Based Costing - Advantages in using activity-based detailed or unit cost estimating methods include: better ability to match the cost budget to the CPM schedule. Figure 4 - Listing of the Components Comprising Activity Based Costing (courtesy of Gary Cokins) - (1) Activity Based Costing (ABC) and Activity Based Management (ABM) is based on the horizontal work flow, which makes it ideally suited to use with CPM schedules.
For the reasons previously stated activity based costing tied to the CPM as described above does not happens and most probably will never be.
Imagine a 20,000 activities schedule being cost managed tracking labor, equipment, materials, subcontract and other costs (such as insurances) for every activity.
Contractors usually create a uniform Job Costing Chart of accounts they use along all jobs. My experience is that they use something near 100 such cost codes and within a few weeks an accounting clerk will memorize most of them. At time of coding time cards, invoices, purchase orders etc. they will use these codes and add a job number to it. The job costing module will then create the weekly reports.
Some of the referenced books to me are a joke from the Public Library of Utopia.
Member for
21 years 8 months
Member for21 years8 months
Submitted by Rafael Davila on Mon, 2016-02-01 15:12
Managerial cost accounting is the process of accumulating, measuring, analyzing, interpreting, and reporting cost information useful to both internal and external groups concerned with the way in which the organization uses, accounts for, safeguards, and controls its resources to meet its objectives. Managerial cost accounting is therefore the servant of budgeting, financial accounting, and reporting because it assists those functions in providing information. In addition, managerial cost accounting provides useful information directly to management.
There are a variety of acceptable costing methods, including:
• Standard Costing, where standard cost rates are established based upon historical data (or some other reasonable source). This costing methodology is most appropriate for repetitive type outputs (e.g., widgets delivered) and relies on on-going comparisons with actual costs to identify any material variances (which would lead to rate adjustments).
• Job Order Costing, where discrete units of work are identified and used to accumulate the appropriate direct costs (via direct assignment) and indirect costs (based upon a causal beneficial relationship). This costing methodology is most appropriate for organizations that produce non-repetitive outputs (e.g., case management, engineering and construction, research and development).
• Process Costing, where products are created by flowing through a series of organizations/steps, accumulating a unit cost as they flow from one step to the next. This methodology is most appropriate for the production of homogeneous goods or services, where the same process is used in the production of each output (e.g., Medicare claims processed).
• Activity Based Costing (ABC), where the cost of an output is determined by the activities required to produce the output and the resources consumed by these activities. This methodology is most appropriate for organizations that can clearly define their outputs, activities and cost drivers (used to assign resource costs to activities). The major benefits of ABC are: 1) improved accuracy of cost assignments (by more accurately assigning both indirect and direct costs) and 2) identification of non-value added activities (those activities that do not directly or indirectly support an organization’s outputs).
Each organization must determine the optimal methodology to be used, based upon their specific situation. It is important to note that the methodologies are not mutually exclusive. It is appropriate to utilize more than one methodology in some circumstances.
Oracle paper is right when it says it is appropriate to utilize more than one methodology in some circumstances. Oracle paper is right when it says Job Order Costing, is most appropriate for organizations that produce non-repetitive outputs but misses when it says Construction falls under this category. Perhaps biased because of their products offer.
After many decades of experience our local Construction Industry have adopted a combination of some of the described above, a combination some call "unit-cost-production".
We do not experience that much contractor failures, they do not go broke by the hundreds every year even when markup is a small percentage of total project cost. The jobs rarely finish on time and contractor is usually not to blame. It is on the management at the Owner's side where they mostly fail. Usually they pay for it in the form of Change Orders. I do not know of a single Owner that issue change orders as a give away.
My experience has been that it is mostly government jobs that are mishandled by the agencies from the very beginning, prior to construction start. Most of the problems I have seen start because the Owner do fail to get involved at the design phase, so it is not on the designers but on the Owner themselves. Of course there are errors and omissions and unforeseen conditions but the statistics I got, and my own perception, is that they pale in relation to the management of the project by the Owner/Sponsor.
Our laws require contractors to submit Bid Bond and Payment and Performance Bonds by qualified Sureties. There is not much room for an unqualified contractor to even make it into the bidding.
If we keep looking for the needle exactly on the same place it will be very difficult to find it, impossible if we keep looking on the wrong haystack. It does not helps much to tell everyone the problem is always on the contractor and never on the owner/agency when the statistics say otherwise, by doing so we are helping to perpetuate the problem.
Therefore I welcome very much the idea of this venture to give guidance to Owners, we pay the agencies with our taxes we need them to be better.
Best Regards,
Rafael
Member for
21 years 8 months
Member for21 years8 months
Submitted by Rafael Davila on Mon, 2016-02-01 01:57
Frequently Owners specify the CPM software to be used, at times Microsoft Project, at times Primavera P6, at times require CPM to be on their own computers such as the case of NY [NEW YORK] DTOP and CALTRANSP [CALIFORNIA], it is not a totalitarian system but it feels like it when you are not free to select your planning tool to take charge of your own means and methods.
Most contractors track costs through their financial and accounting systems using auxiliary Job-unit-Costing systems. They select their accounting system based on many factors, frequently Best of Breed according to their needs, never CPM software determines which accounting and financial system they will use, by the same token never the financial and accounting system determines which scheduling software they will use, when free to do so.
The Accounting software most used by my clients is Sage.
I know of no single contractor that integrates Accounting software with CPM software, they just do not do it.
Usually Contractors do not prepare a detailed CPM before any project is awarded, estimating and bidding comes first. * Estimators prepare summary schedules in the hope that if they are awarded the job they will have no major scheduling issues. * They do not know for every cost component how it will eventually fall along the final CPM activities.
Contractors use the financial system to track unit costs the way they estimate their jobs, usually they follow time tested methods such as R.S.Means. Take for example the installation of masonry units, they estimate by how drawings are divided, perhaps showing on a single page the required masonry on several areas that eventually will fall under different CPM activities.
If basic formal job costing is done by 50% or less of our contractors’ further subdivision by CPM activities is done by 0% +/- 0%. Imagine segregating labor, equipment, materials, subcontracts and other costs for 50,000 masonry units, delivered in 20 truckloads to be installed under 80 CPM activities, IT IS NUTS!
At time of preparing a schedule they cost load the Billings as usually required in our contracts but keep confidential their costs.
There is a reason why some are also againtsBOQ loading.
(2) Creating a CPM Schedule- In most contractor organizations (at least in North America) both the CPM schedule and the Cost Estimate are done simultaneously, often by the same person or team of people.
The above statement is not true in America, maybe in a place called Utopia, an imaginary island described in Sir Thomas More's Utopia (1516) as enjoying perfection in law, politics, etc.
It is most likely the CPM will be prepared after contract award, current practice is that it is prepared during the initial construction days. I do not see that after award American contractors will be given reasonable time to prepare the CPM before construction starts, current practice is a sensible approach but it is not simultaneous with the Cost Estimate.
The Contractor submits his Preliminary Schedule during the Pre-Construction Conference. The Preliminary Schedule details the contractor’s planned work for the first 120 days of the project and shows summary activities for the remainder of the work covering the entire scope of the project. The Preliminary Schedule does not need to be CPM generated and does not need to show critical paths. The CEI should review the schedule to check that all scope for the project is included and that the correct schedule milestone dates are shown.
Within 90 days of the Notice to Proceed, the Contractor prepares a Baseline Schedule in accordance with contract documents. The Contractor's schedule is submitted to the Project Engineer. The Project Engineer, reviews the schedule, and if it meets contract requirements, submits a letter of acceptance to the contractor. If the schedule does not reflect a reasonable or feasible plan to construct the project in the authorized contract time or the schedule is not prepared according to the specifications, the schedule will be returned to the Contractor for modification.
The contractor should not be expected to have its as-planned CPM schedule available on day one of the project. Normally, the contractor should expect to submit within 10 to 15 days after contract award a preliminary as-planned schedule that would cover the first 60 to 90 days of a project in detail and include a general outline or concept of the remaining work. Within the first 60 to 90 days, the contractor would develop it s detailed as-planned schedule and submit this schedule to the owner within that time frame.
The CPM Schedule for the entire duration of the Project, with full resource loading, is due 30 calendar days after AWARD of the Contract. LMDC may withhold all or a portion of the progress payments until the Contractor submits a complete CPM Schedule acceptable to LMDC.
If in New York only after contract award the contractor is granted permission to use the DOT Agency computer.
If a VA job the contractor is prohibited from preparing a CPM schedule prior to Scheduler approval that have some meaning other than a Dummy CPM, this after contract award. Unbelievable a contractor's Schedule by someone not tied to the Contractor, no wonder VA is notorious for poor contract performance.
The original Baseline can remain valid or it can change as soon as there is a slightest change in scope and be updated but actual performance is usually different to Baseline. To say contractual changes, no matter how small, are not to be considered is wrong, a flawed premise. Actual performance is not what you want it to be be but what it is. No matter if achievable actual performance can be better or worse than as originally planned, better or worse than as originally contracted, better or worse than current contract.
The following was CPM software generated, in the old times of P3 it was equally easy and everyone understood the difference between Baseline S curves and Current Schedule, at a single click of the mouse it would generate Current Actual single line and projected Early and Late plus two comparisons schedules Actual, Early and Late S curves.
Progress S-curves indicate cumulative progress of all work, not just critical work. The project may be behind due to over-emphasis on non-critical work at the expense of the critical work and still show excellent S-curve progress up to DD. If the project is ahead or behind for whatever reasons the Current Schedule Forecast S-curves will tell.
We all know s single S-Curve is not enough, we all know there are Early and late S-Curves for the Baseline as well as for the Current Schedule. The Baseline tells us about a frozen target plan while the Current tells us the history at the left of the Data Date and the Projection at the right of the Data Date.
Previously I debated the fact that AACERP-59R-09 completely missed to mention the most important S Curve component, the Current Schedule Projection. They never realized the importance of schedule projections and to my knowledge their document have never been revised as to include it. I can see the same people taking over this Cost Standard because I know the names.
Standards are intended for regulatory purposes contrary to Recommended Practice which is optional, still some people insist on adopting by reference any Recommended Practice as a Standard, at times first time releases of a new RP.
I do not believe how you cost shall be standardized. Just the single topic on whether to use unit production costing or activity costing can be of much controversy, and each advocate will swear their method is the ultimate truth.
Member for
21 years 8 months
Member for21 years8 months
Submitted by Rafael Davila on Sat, 2016-01-30 03:43
To say but that the actual ("leveled") progress should fall someplace in between is wrong.
If there is actual progress then to the left of the DD the curve that represents progress is a single line and to the right another pair [Remaining Early & Remaining Late] that will not necessarily end at the same point as the Resource Leveled Baseline Pair. Usually two sets of resource leveled curves are overlaid.
If the schedule is way ahead or way late from the beginning the actual line at left to the DD might fall outside the Baseline boundaries.
I do not find the meaning of the following figure.
We all know there is an Early and Late S curve for the unleveled schedule as well as an usually shifted Early and Late S curve set for the leveled schedule. As the project progress each update will have its own set of "Banana Curves" that will usually move up and to the right.
When I started my career as a builder (1962) I was an assistant estimator for a Main Contractor.
The company employed its own labour and the estimators were responsible for building up unit rates from first principles for all trades.
ie: 4.5 inch standard stretcher bond = 40 bricks per hour for a good brickie in a 2:1 gang.
ie: 1 sq yard of 9 inch brick wall in english bond took 98 bricks = 100 bricks plus waste.
This is where I got my grounding in construction economics which is of immense use in my current practice.
In todays construction world Main Contractors do not carry out an estimating function for their tenders.
They are merely an agency for collecting sub contractor's quotes and putting together a tender.
The real task of calculating labour resource costs and taking the risk of converting time related costs into measured value usually falls on the 3rd tier sub contractor.
At this level they have no interest in the suggested GBOK processes such as Validating Horizontal and Vertical Integration.
I thought I might try to add some value by posting this here as it relates to the Cost Management table of contents. I have pasted below the current taxonomy / index for this Module...
Develop Written Basis and Cost Estimate/Cost Budget Narrative
Benchmark & Freeze the Schedule & Cost Performance Measurement Baseline
Rev 1.01
As you can appreciate it needs to be read in conjunction with other Modules / aspects of Project Controls such as building your schedule, manging progress or managing risks and opportunities etc.
There is a growing team of junior and senior practitioners helping to provide comment and ideas on how to improve the GPCCAR as well as how to propose your own additions or changes to the Modules.
As a basic principle the industry needs to understand its unique position in the worlds market place.
In every other market place you buy your product as cheaply as you can and then try to sell it for as much as you can - thus creating a profit.
In the construction industry we sell it as cheap as we can and then try to buy it a bit cheaper - a complete inverse of normal commercial practice.
The problem lies in the situation that the people who are buying have no idea of the true sold price.
In my seminars I often ask the delegates what they were doing yesterday - and not one has ever given the true answer - which is "making money". If we can change that mindset then we are well on the way to real cost control.
Best regards
Mike Testro
PS
Please don't make it a total American document - there is the rest of the world to consider.
I have built a school in the middle of a West African jungle where the aggregate came from a blown up granite out crop - the sand from a beach by the lake - and the cement by bribing the local Sultan. How do you cost that?
Member for
21 years 8 monthsDELETED by RD
DELETED by RD
Member for
21 years 8 monthsThere is an abysmal
There is an abysmal difference between cost accounts coding versus CPM activity coding, to say they are the same is misleading, the difference is on the sheer number of accounts and on the use of same codes when using cost accounts versus thousands of different activity codes per job that is not equal among different jobs. CPM based costing is a theoretical illusion.
Most Construction Contractors do their cost control at the process level and not at the individual activities level. For a construction Contractor a process might be tile installation, a single process across the duration of the job that spans many activities. The activity schedule assists in activity timing and resource planning. In a single job there might be hundreds of activities for tile installation but a single cost code to track the unit cost for tile installation. It is almost universal in construction accounting software to break down each cost code into cost-types for labor, equipment, materials, subcontract and other.
There is a relevant difference between Job Cost Budgeting and Unit Costing, Budgeting uses only dollar amount, unit costing relates dollar amount to volume of work quantities. Many of today Job Costing modules misses to link dollar amount to volume of work, they lack the weekly reports on unit costs and productivity, they simply do not provide for contractor to input the quantities, just dollar amounts. As a result some contractors end up without these valuable reports because transferring the raw data to worksheets is too time consuming.
None of the contractors I know use RS Means Database, they use the paper book editions and use it to plug in those items they have no or little experience or cost records, and this happens very rarely. After over 25 years of PM experience I make most of my living as estimator, CPM scheduling is the fun part. What I am saying is not taken from foreign reference books but real life experience with my few former employers and many more as clients. Those who have formal unit costing, at time of costing the quantity take off use their Unit Cost records, those who have non formal unit costing use their imagination as well as reference cost books foreign to their company experience. There is a consensus there is more reliability on estimates based on the actual experience of each particular company.
To say all contractors use EVM is misleading they do not use EV as a management tool but a few as a progress reporting tool. They do not make use of the flawed part of EVM, the part that relates to schedule, they understand that EVM misses the link with critical path activities. A few use it as another view that is far from perfect, a very few [rare birds around here] I believe might use it if doing non-fixed price work for the DOD.
Member for
21 years 8 months08.6.3.3 What is Activity
08.6.3.3 What is Activity Based Costing - Advantages in using activity-based detailed or unit cost estimating methods include: better ability to match the cost budget to the CPM schedule. Figure 4 - Listing of the Components Comprising Activity Based Costing (courtesy of Gary Cokins) - (1) Activity Based Costing (ABC) and Activity Based Management (ABM) is based on the horizontal work flow, which makes it ideally suited to use with CPM schedules.
For the reasons previously stated activity based costing tied to the CPM as described above does not happens and most probably will never be.
Imagine a 20,000 activities schedule being cost managed tracking labor, equipment, materials, subcontract and other costs (such as insurances) for every activity.
Contractors usually create a uniform Job Costing Chart of accounts they use along all jobs. My experience is that they use something near 100 such cost codes and within a few weeks an accounting clerk will memorize most of them. At time of coding time cards, invoices, purchase orders etc. they will use these codes and add a job number to it. The job costing module will then create the weekly reports.
Some of the referenced books to me are a joke from the Public Library of Utopia.
Member for
21 years 8 monthshttp://www.oracle.com/us/solu
http://www.oracle.com/us/solutions/business-intelligence/fed-gov-manage…
Managerial cost accounting is the process of accumulating, measuring, analyzing, interpreting, and reporting cost information useful to both internal and external groups concerned with the way in which the organization uses, accounts for, safeguards, and controls its resources to meet its objectives. Managerial cost accounting is therefore the servant of budgeting, financial accounting, and reporting because it assists those functions in providing information. In addition, managerial cost accounting provides useful information directly to management.
There are a variety of acceptable costing methods, including:
• Standard Costing, where standard cost rates are established based upon historical data (or some other reasonable source). This costing methodology is most appropriate for repetitive type outputs (e.g., widgets delivered) and relies on on-going comparisons with actual costs to identify any material variances (which would lead to rate adjustments).
• Job Order Costing, where discrete units of work are identified and used to accumulate the appropriate direct costs (via direct assignment) and indirect costs (based upon a causal beneficial relationship). This costing methodology is most appropriate for organizations that produce non-repetitive outputs (e.g., case management, engineering and construction, research and development).
• Process Costing, where products are created by flowing through a series of organizations/steps, accumulating a unit cost as they flow from one step to the next. This methodology is most appropriate for the production of homogeneous goods or services, where the same process is used in the production of each output (e.g., Medicare claims processed).
• Activity Based Costing (ABC), where the cost of an output is determined by the activities required to produce the output and the resources consumed by these activities. This methodology is most appropriate for organizations that can clearly define their outputs, activities and cost drivers (used to assign resource costs to activities). The major benefits of ABC are: 1) improved accuracy of cost assignments (by more accurately assigning both indirect and direct costs) and 2) identification of non-value added activities (those activities that do not directly or indirectly support an organization’s outputs).
Each organization must determine the optimal methodology to be used, based upon their specific situation. It is important to note that the methodologies are not mutually exclusive. It is appropriate to utilize more than one methodology in some circumstances.
Oracle paper is right when it says it is appropriate to utilize more than one methodology in some circumstances. Oracle paper is right when it says Job Order Costing, is most appropriate for organizations that produce non-repetitive outputs but misses when it says Construction falls under this category. Perhaps biased because of their products offer.
After many decades of experience our local Construction Industry have adopted a combination of some of the described above, a combination some call "unit-cost-production".
http://www.foundationsoft.com/unit-cost-production-reporting/
Member for
21 years 8 monthsPaul,It makes sense and agree
Paul,
It makes sense and agree 100%+ common practice is not necessarily the best practice. Best practice shall be not only feasible but also pragmatic.
Same as you we make use of the "Ghost Schedule".
http://www.fplotnick.com/constructioncpm/2016Presentations/MON37-PPR.pdf
We do not experience that much contractor failures, they do not go broke by the hundreds every year even when markup is a small percentage of total project cost. The jobs rarely finish on time and contractor is usually not to blame. It is on the management at the Owner's side where they mostly fail. Usually they pay for it in the form of Change Orders. I do not know of a single Owner that issue change orders as a give away.
http://ascpro0.ascweb.org/archives/cd/2012/paper/CPGT166002012.pdf
My experience has been that it is mostly government jobs that are mishandled by the agencies from the very beginning, prior to construction start. Most of the problems I have seen start because the Owner do fail to get involved at the design phase, so it is not on the designers but on the Owner themselves. Of course there are errors and omissions and unforeseen conditions but the statistics I got, and my own perception, is that they pale in relation to the management of the project by the Owner/Sponsor.
Our laws require contractors to submit Bid Bond and Payment and Performance Bonds by qualified Sureties. There is not much room for an unqualified contractor to even make it into the bidding.
If we keep looking for the needle exactly on the same place it will be very difficult to find it, impossible if we keep looking on the wrong haystack. It does not helps much to tell everyone the problem is always on the contractor and never on the owner/agency when the statistics say otherwise, by doing so we are helping to perpetuate the problem.
Therefore I welcome very much the idea of this venture to give guidance to Owners, we pay the agencies with our taxes we need them to be better.
Best Regards,
Rafael
Member for
21 years 8 monthsFrequently Owners specify the
Frequently Owners specify the CPM software to be used, at times Microsoft Project, at times Primavera P6, at times require CPM to be on their own computers such as the case of NY [NEW YORK] DTOP and CALTRANSP [CALIFORNIA], it is not a totalitarian system but it feels like it when you are not free to select your planning tool to take charge of your own means and methods.
Most contractors track costs through their financial and accounting systems using auxiliary Job-unit-Costing systems. They select their accounting system based on many factors, frequently Best of Breed according to their needs, never CPM software determines which accounting and financial system they will use, by the same token never the financial and accounting system determines which scheduling software they will use, when free to do so.
The Accounting software most used by my clients is Sage.
http://www.sage.com/us/erp/sage-300
http://www.sage.com/us/sage-construction-and-real-estate/sage-100-contractor
https://www.sage.com/na/~/media/site/sage-100-erp/assets/datasheets/Sage_100_ERP_Job_Cost_spec.pdf
I know of no single contractor that integrates Accounting software with CPM software, they just do not do it.
Usually Contractors do not prepare a detailed CPM before any project is awarded, estimating and bidding comes first. * Estimators prepare summary schedules in the hope that if they are awarded the job they will have no major scheduling issues. * They do not know for every cost component how it will eventually fall along the final CPM activities.
Contractors use the financial system to track unit costs the way they estimate their jobs, usually they follow time tested methods such as R.S.Means. Take for example the installation of masonry units, they estimate by how drawings are divided, perhaps showing on a single page the required masonry on several areas that eventually will fall under different CPM activities.
If basic formal job costing is done by 50% or less of our contractors’ further subdivision by CPM activities is done by 0% +/- 0%. Imagine segregating labor, equipment, materials, subcontracts and other costs for 50,000 masonry units, delivered in 20 truckloads to be installed under 80 CPM activities, IT IS NUTS!
At time of preparing a schedule they cost load the Billings as usually required in our contracts but keep confidential their costs.
There is a reason why some are also againts BOQ loading.
http://www.nflaace.org/index_files/john_orr_cost_loaded_schedule_updati…
Member for
21 years 8 months08.1.1.3.2 - CONTRACTOR’S
08.1.1.3.2 - CONTRACTOR’S PERSPECTIVE
(2) Creating a CPM Schedule- In most contractor organizations (at least in North America) both the CPM schedule and the Cost Estimate are done simultaneously, often by the same person or team of people.
The above statement is not true in America, maybe in a place called Utopia, an imaginary island described in Sir Thomas More's Utopia (1516) as enjoying perfection in law, politics, etc.
It is most likely the CPM will be prepared after contract award, current practice is that it is prepared during the initial construction days. I do not see that after award American contractors will be given reasonable time to prepare the CPM before construction starts, current practice is a sensible approach but it is not simultaneous with the Cost Estimate.
https://www.cfxway.com/constructiondocs/ACPAM%20Files/3.0%20Preconstruction.htm
3.2.2 Contractor's Schedule Review
The Contractor submits his Preliminary Schedule during the Pre-Construction Conference. The Preliminary Schedule details the contractor’s planned work for the first 120 days of the project and shows summary activities for the remainder of the work covering the entire scope of the project. The Preliminary Schedule does not need to be CPM generated and does not need to show critical paths. The CEI should review the schedule to check that all scope for the project is included and that the correct schedule milestone dates are shown.
Within 90 days of the Notice to Proceed, the Contractor prepares a Baseline Schedule in accordance with contract documents. The Contractor's schedule is submitted to the Project Engineer. The Project Engineer, reviews the schedule, and if it meets contract requirements, submits a letter of acceptance to the contractor. If the schedule does not reflect a reasonable or feasible plan to construct the project in the authorized contract time or the schedule is not prepared according to the specifications, the schedule will be returned to the Contractor for modification.
http://www.long-intl.com/articles/Long_Intl_Contract_Scheduling_Provisi…
The contractor should not be expected to have its as-planned CPM schedule available on day one of the project. Normally, the contractor should expect to submit within 10 to 15 days after contract award a preliminary as-planned schedule that would cover the first 60 to 90 days of a project in detail and include a general outline or concept of the remaining work. Within the first 60 to 90 days, the contractor would develop it s detailed as-planned schedule and submit this schedule to the owner within that time frame.
http://www.renewnyc.com/content/rfps/cleaning_addendum3/vol1_2.pdf
The CPM Schedule for the entire duration of the Project, with full resource loading, is due 30 calendar days after AWARD of the Contract. LMDC may withhold all or a portion of the progress payments until the Contractor submits a complete CPM Schedule acceptable to LMDC.
https://www.dot.ny.gov/main/business-center/contractors/construction-di…
If in New York only after contract award the contractor is granted permission to use the DOT Agency computer.
If a VA job the contractor is prohibited from preparing a CPM schedule prior to Scheduler approval that have some meaning other than a Dummy CPM, this after contract award. Unbelievable a contractor's Schedule by someone not tied to the Contractor, no wonder VA is notorious for poor contract performance.
https://www.dot.ny.gov/main/business-center/contractors/construction-di…
It is not until contract award and after critical procurement is done that the American Contractor have a complete and real CPM Schedule, get real.
Member for
21 years 8 monthsThe original Baseline can
The original Baseline can remain valid or it can change as soon as there is a slightest change in scope and be updated but actual performance is usually different to Baseline. To say contractual changes, no matter how small, are not to be considered is wrong, a flawed premise. Actual performance is not what you want it to be be but what it is. No matter if achievable actual performance can be better or worse than as originally planned, better or worse than as originally contracted, better or worse than current contract.
The following was CPM software generated, in the old times of P3 it was equally easy and everyone understood the difference between Baseline S curves and Current Schedule, at a single click of the mouse it would generate Current Actual single line and projected Early and Late plus two comparisons schedules Actual, Early and Late S curves.
Progress S-curves indicate cumulative progress of all work, not just critical work. The project may be behind due to over-emphasis on non-critical work at the expense of the critical work and still show excellent S-curve progress up to DD. If the project is ahead or behind for whatever reasons the Current Schedule Forecast S-curves will tell.
We all know s single S-Curve is not enough, we all know there are Early and late S-Curves for the Baseline as well as for the Current Schedule. The Baseline tells us about a frozen target plan while the Current tells us the history at the left of the Data Date and the Projection at the right of the Data Date.
Previously I debated the fact that AACE RP-59R-09 completely missed to mention the most important S Curve component, the Current Schedule Projection. They never realized the importance of schedule projections and to my knowledge their document have never been revised as to include it. I can see the same people taking over this Cost Standard because I know the names.
Standards are intended for regulatory purposes contrary to Recommended Practice which is optional, still some people insist on adopting by reference any Recommended Practice as a Standard, at times first time releases of a new RP.
I do not believe how you cost shall be standardized. Just the single topic on whether to use unit production costing or activity costing can be of much controversy, and each advocate will swear their method is the ultimate truth.
Member for
21 years 8 monthsPaul,To say but that the
Paul,
To say but that the actual ("leveled") progress should fall someplace in between is wrong.
If there is actual progress then to the left of the DD the curve that represents progress is a single line and to the right another pair [Remaining Early & Remaining Late] that will not necessarily end at the same point as the Resource Leveled Baseline Pair. Usually two sets of resource leveled curves are overlaid.
If the schedule is way ahead or way late from the beginning the actual line at left to the DD might fall outside the Baseline boundaries.
http://www.mediafire.com/view/femao5y54ba2nm2/SCurves.jpg
Rafael
Member for
21 years 8 monthsIn the following link you
In the following link you will find a couple of reasons why I do not agree with GAO new schedule assessment guide.
http://www.linkedin.com/groups/45942/45942-6088481665007501315?trk=hp-f…
I was called anti-American, hope you do not call me anti-British.
Member for
21 years 8 monthsI do not find the meaning of
I do not find the meaning of the following figure.
We all know there is an Early and Late S curve for the unleveled schedule as well as an usually shifted Early and Late S curve set for the leveled schedule. As the project progress each update will have its own set of "Banana Curves" that will usually move up and to the right.
If you see a twisted banana, just run!
http://www.planningplanet.com/forums/planning-scheduling-programming-di…
Member for
19 years 10 monthsWhen I started my career as a
When I started my career as a builder (1962) I was an assistant estimator for a Main Contractor.
The company employed its own labour and the estimators were responsible for building up unit rates from first principles for all trades.
ie: 4.5 inch standard stretcher bond = 40 bricks per hour for a good brickie in a 2:1 gang.
ie: 1 sq yard of 9 inch brick wall in english bond took 98 bricks = 100 bricks plus waste.
This is where I got my grounding in construction economics which is of immense use in my current practice.
In todays construction world Main Contractors do not carry out an estimating function for their tenders.
They are merely an agency for collecting sub contractor's quotes and putting together a tender.
The real task of calculating labour resource costs and taking the risk of converting time related costs into measured value usually falls on the 3rd tier sub contractor.
At this level they have no interest in the suggested GBOK processes such as Validating Horizontal and Vertical Integration.
Best regards
Mike Testro
Member for
11 years 4 monthsHello,I thought I might try
Hello,
I thought I might try to add some value by posting this here as it relates to the Cost Management table of contents. I have pasted below the current taxonomy / index for this Module...
08 MANAGING PROJECT COST ESTIMATING & BUDGETING
Module 08.1 - Introduction to Managing Cost Estimating & Budgeting
Rev 1.01
Module 08.2 - Develop Cost Estimating & Budgeting Policies & Procedures Manual
Rev 1.01
Module 08.3 - Define The Estimates Purpose And Scope Of Work (Owner)
Rev 1.01
Module 08.4 - Creating The Owners Cost Estimate (Top Down)
Rev 1.01Module 08.5 - Define The Estimates Purpose & Interpret The Scope Of Work (Contractor)
Rev 1.01Module 08.6 - Developing The Contractors Cost Estimate (Bottom Up)
Rev 1.01Module 08.7 - Validate The Time & Cost Trade-Offs
Rev 1.00Module 08.8 - Validating Horizontal And Vertical Integration
Rev 1.01Module 08.9 - Conducting A Cost Risk Analysis
Rev 1.01Module 08.10 - Baselining And Communicating The Cost Estimate/Cost Budget
Rev 1.01
As you can appreciate it needs to be read in conjunction with other Modules / aspects of Project Controls such as building your schedule, manging progress or managing risks and opportunities etc.
There is a growing team of junior and senior practitioners helping to provide comment and ideas on how to improve the GPCCAR as well as how to propose your own additions or changes to the Modules.
You can read about (and help improve) the team and the GPCCAR change process here. You can also join that team :)
Member for
11 years 10 monthsIt was the first time i have
It was the first time i have gone through such an informational post really enjoyed it very much
Member for
19 years 10 monthsHi ChrisAs a basic principle
Hi Chris
As a basic principle the industry needs to understand its unique position in the worlds market place.
In every other market place you buy your product as cheaply as you can and then try to sell it for as much as you can - thus creating a profit.
In the construction industry we sell it as cheap as we can and then try to buy it a bit cheaper - a complete inverse of normal commercial practice.
The problem lies in the situation that the people who are buying have no idea of the true sold price.
In my seminars I often ask the delegates what they were doing yesterday - and not one has ever given the true answer - which is "making money". If we can change that mindset then we are well on the way to real cost control.
Best regards
Mike Testro
PS
Please don't make it a total American document - there is the rest of the world to consider.
I have built a school in the middle of a West African jungle where the aggregate came from a blown up granite out crop - the sand from a beach by the lake - and the cement by bribing the local Sultan. How do you cost that?