Controlling Project Cost, Time and QualityBasic Control Question?Excessive ControlInsufficient ControlProjects as IterationsControl ObjectivesGood Reports Consider:Project ParticipantsCost Engineer ResponsibilitiesCategories of CostCategories of Cost (cont.)Objectives of Cost ControlCost Control SystemCost Control ProceduresCost CodesCost Coding (Example)Tracking ProductionCost ReportsLabor Cost ReportLabor Cost Report (Typical format)Labor Cost Report Source DocumentsProject Cost Summary ReportProgress Evaluation and ControlCost and Schedule PerformanceConclusion – Key ?’sConstruction Project ManagementConstruction Project ManagementFourth EditionFourth EditionConstruction Project Management, 4/eFrederick Gould, Nancy JoyceCopyright © 2014 by Pearson Education, Inc.All Rights ReservedControlling Project Cost, Time and QualityChapter 11Construction Project Management, 4/eFrederick Gould, Nancy JoyceCopyright © 2014 by Pearson Education, Inc.All Rights ReservedBasic Control Question?What elements need to be controlled?Why implement a control system?What is the correct level of control for a project?Remember Pareto’s Law: 80:20Construction Project Management, 4/eFrederick Gould, Nancy JoyceCopyright © 2014 by Pearson Education, Inc.All Rights ReservedExcessive ControlEvery Detail Accounted ForInitiative?FrustrationExpensive $$$$$Construction Project Management, 4/eFrederick Gould, Nancy JoyceCopyright © 2014 by Pearson Education, Inc.All Rights ReservedInsufficient ControlShoot from the hipRely on EmployeesTrustConstruction Project Management, 4/eFrederick Gould, Nancy JoyceCopyright © 2014 by Pearson Education, Inc.All Rights ReservedSTARTESTABLISH RESEARCHPROJECTOBJECTIVESADJUST PROJECT DESIGN, ESTIMATEPLAN AS APPROPRIATE AND SCHEDULEANALYZEPRESENTProjects as IterationsConstruction Project Management, 4/eFrederick Gould, Nancy JoyceCopyright © 2014 by Pearson Education, Inc.All Rights ReservedControl Objectives1. Efficiently Measure, Collect & Verify Data2. Establish Measurement Standards3. Efficiently Convert Data into Information4. Produce Understandable Outputs5. Deliver Right information to Right People6. Report On TimeConstruction Project Management, 4/eFrederick Gould, Nancy JoyceCopyright © 2014 by Pearson Education, Inc.All Rights ReservedGood Reports Consider:1. Appropriate Content2. Are selective and allow sub-reporting3. Show Variances4. Support Mgmt by Exception5. Forecast (Trending)6. Are delivered on-time7. Suggest a Corrective ActionConstruction Project Management, 4/eFrederick Gould, Nancy JoyceCopyright © 2014 by Pearson Education, Inc.All Rights ReservedProject ParticipantsCost CodeEstimatingAccountingPurchasingDesignersForemanSuperintendentSchedulingOwnerConstruction Project Management, 4/eFrederick Gould, Nancy JoyceCopyright © 2014 by Pearson Education, Inc.All Rights ReservedCost Engineer ResponsibilitiesAccounting versus Cost Engineering?Forecasting and TrendingMeasure Project PerformanceTrack costs where they occurMeasure Equipment/Personnel PerformanceConstruction Project Management, 4/eFrederick Gould, Nancy JoyceCopyright © 2014 by Pearson Education, Inc.All Rights ReservedCategories of CostEstimatedEstablished prior to start (award)May be assembled with limited time / knowledgeProper scope essentialParameter for the ‘control budget’BudgetedDeveloped by Project Management, andShould embrace management’s plans for:Productivity (cost) objectivesTime & Quality requirements, andOrganization of the projectConstruction Project Management, 4/eFrederick Gould, Nancy JoyceCopyright © 2014 by Pearson Education, Inc.All Rights ReservedCategories of Cost (cont.)Actual (To date)Costs incurred during performanceObjective – complete for less than BudgetedProjectedForecast cost at completion of an activity/operation Why would they differ from Estimate/Budget?Actual productivity dataBetter understanding of project risk variablesConstruction Project Management, 4/eFrederick Gould, Nancy JoyceCopyright © 2014 by Pearson Education, Inc.All Rights ReservedObjectives of Cost Control Collect project cost data to:comparison with budgeted costsProvide an historical databaseProvide management with data to isolate cost or productivity issues needing attention Provide a management tool to forecast final cost Place responsibility and credit for team playersConstruction Project Management, 4/eFrederick Gould, Nancy JoyceCopyright © 2014 by Pearson Education, Inc.All Rights ReservedCost Control SystemWho establishes the system parameters?How do you identify individual work activities and associated costs?Construction Project Management, 4/eFrederick Gould, Nancy JoyceCopyright © 2014 by Pearson Education, Inc.All Rights ReservedCost Control Procedures Job cost coding Tracking production in placed for each activity Tracking Labor, Materials, Equipment /subcontractor on each activity Determining Est. unit cost; To-date unit cost & Projected costConstruction Project Management, 4/eFrederick Gould, Nancy JoyceCopyright © 2014 by Pearson Education, Inc.All Rights ReservedCost CodesTypically follow Company ‘System’Often ‘align’ with CSI Coding SystemDivisions (01-16)SubdivisionsAccommodate/Designate Work CategoriesLabor, Material, Subcontract, EquipmentPart of a Systematic StructureConstruction Project Management, 4/eFrederick Gould, Nancy JoyceCopyright © 2014 by Pearson Education, Inc.All Rights ReservedCost Coding (Example)01202.03202.LRProject # & YrSubcategory (strip footings)LaborResponsibilityCSI #Construction Project Management, 4/eFrederick Gould, Nancy JoyceCopyright © 2014 by Pearson Education, Inc.All Rights ReservedTracking Production Quantity to datePercentage completionConstruction Project Management, 4/eFrederick Gould, Nancy JoyceCopyright © 2014 by Pearson Education, Inc.All Rights ReservedCost ReportsCategories of Costs to ReportLabor MaterialSubcontractEquipmentWhich documents???Project summary sheetConstruction Project Management, 4/eFrederick Gould, Nancy JoyceCopyright © 2014 by Pearson Education, Inc.All Rights ReservedLabor Cost ReportUnit Cost = Labor / OutputHow often?Functions of the Labor Report:Actual cost of work performedCompares actual w/ estimated costsReports/compares actual w/ estimated