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Analysis of Cost loaded schedule
Last Post 30 Jul 2011 01:26 PM by 4 Replies.
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Rick Hayes Posts:1

04 May 2011 10:17 AM
    Is there a simple metric or formula to review cost loading in a project schedule. I have the cumulative total each month graphed and the cost curve is always above the schedule straight line, which tells me it is front loaded to a degree. I appreciate this approach by the contractor, but it must be within a reasonable range. Any suggestions on a reasonable deviation?

    This is my first post.
    Jeff Adamo Posts:1

    22 Jun 2011 06:33 AM
    I would be interested to see any metrics if available. The only way, in my experience, to check the cost loading is to prepare an independent estimate of the project broken down into similar divisions to get an apples to apples comparison. Unfortunately the clients I have worked with so far as a CM have not requested this service. Consequently we take a general look at the SOV and point out any obvious irregularities.
    Sorry I wasn't able to provide any rule of thumb.

    Best Regards,
    Jeff Posts:1

    11 Jul 2011 11:49 AM
    I think it depends on who you are and what you're using for a cost figure. If you're using the pay request as your measure of actual cost and that's really a billing instrument for the contractor, then they might be front loading their cash flow. This puts you over the barrel when it comes to incentivizing them through the project, particularly at the end. If you're using an independent estimate of the cost of the work, then I'd be worried about the cost curve coming in over the estimate when you run out of time (at project completion). Then you've spent more than your budget.

    Like the other poster said, you really need to have an objective estimate to start with and use the same standard to record costs as you move through the project. If you're over on cost vs. progress, then get a handle on it ASAP and start documenting things that are out of scope.
    Henry Hattenrath Posts:29

    25 Jul 2011 06:12 PM
    At the outset of the project, the cost loaded schedule establishes the earned value for each construction activity, and this can be shown in a cost curve time scaled monthly. Earned value occurs when the labor and material translate into an on-site asset. The contractor's expenses may exceed the cost curve on the approved schedule due to up front outlays for purchasing materials, but that is his risk. The owner is not obligated to pay for upfront expenses unless contract provisions allow for advance payment of materials delivered to the site.
    There is no reasonable deviation for payments to the contractor. Payments to the contractor are based on progress/earned value for material and equipment installed on site. If the contractor earns more value than planned, the actual earned value will be above the baseline, and consequently payments to the contractor will be higher because he is ahead of schedule. However, unless there is a contract change, the total payments due at completion can not exceed the contract amount, which equates to 100% earned value.
    An independent estimate is used to evaluate and adjust/validate the contractor's cost loaded schedule prior to approval. Thereafter, the only negotiable item is estimating the physical progress on each of the construction activities, which validates the contractor's and owner’s agreement on cumulative progress/earned value. Posts:4

    30 Jul 2011 01:26 PM
    Rick it can be done but you need to set up the Contract resource loaded schedule requirements in the contract formation phase for maximum accuracy. Basically you want the following:
    1- Schedule Activities limited to one CSI Section and one subcontractor
    2 - Activities exceeding one month in time will be broken at the first of each month to reflect monthly activities with thier own seperate resources
    3 - Activities should be geographically seperated into a minimum of 4 zones.

    If you have the above or something similiar you can setup an excel spread sheet utilizing data from a cost manual to identify both staffing and frontend loading. Use the Cost Manual to calculate the percentage of labor associated with an hours work in each specific CSI section of work. For example an hours work for Concrete labor will run from .35 to .42 of the total cost depending on where placed (Slab. elevated. foundations ....)

    Say its on grade non-structural slab at .38 labor percentage and the cost for this activity is $10,000 - this will give you $3,800 of labor cost. Devide that number by the going skill labor rate in your area (Payroll+adds) and divide that into the $3,800 and you have a calculated number of manhours to compare to the hours given by the contractor. Now take both the Contractor's number (hours) and your calculated hours and divide each into the total value of the work for that activity. This will give you an hourly cost for the work.

    Now with the monthly segmenting and geographical phasing of the schedule you can simply dump the schedule into an excel spread sheet and compare similiar hourly cost for similiar work in different phases of the work. You can look at foundation concrete in month one and compare it to foundations in month 6. If you have front end loading, and you do, it will show up at this time.

    Its also good to look at other indicators such as staffing curves and cost curves. Get printouts on both for the total job and each subcontractor. All staffing curves will be the typical plateau curve where the staffing will build to a maximum staff level then flatten out for most of the job and drop off drastcally at the end of the contractor's schedule - any other shape should be a concern.

    The standard S-Curve (15-10 where 15% progress is earned in the first 1/4 of the project and 10% in the last 1/4 of time) is a good comparision for progress. Over my 40 year career, actual progress has rarely deviated from this curve on successful projects.

    Cost can lead progress by as much as 8% in the first half of the schedule on generous projects, anything greater should raise red flags.

    Over the years I have created excell spred sheets with look up tables for all the CSI activities and local wage rates such that I can simply get an excel dump of the schedule and imediately identify scheduling staffing accuracy and front end loading.

    This should get you started on solving one of the biggest problems in construction that no one wants to discuss - front end loading

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