Cost _ Time Control in Construction Projects- Part -3.pdf
1. JO JEWE-JAWESSA IN THE JUNGLE CIVIL ENGINEERING
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Nothing found in me but everything is belonged to the almighty God –Glory to the Lord
Cost & Time Control in Construction Projects- Part -3
3.1.Necessity of cost control
Cost control in projects has great value in order to lead projects within the hold budget. Unfortunately many construction
companies either state owned or private mostly don’t give time & bother about the system & method that they should
develop which help them for controlling.As a rule, the control of work deadlines is done through the monitoring of critical
activities and eventually those that consume resources with critical availability in doing the work. One of the schedule
control techniques is to analyze the yield of resources and to monitor the start and end dates of the activities. In several
studies [See-I. Shohet and S. Frydman, 2003. Communication Patterns in Construction at Construction Manager
Level. ASCE - Journal of Construction Engineering and Management, T. Hegazy and K. Zhang, 2005. Daily
Windows Delay Analysis. ASCE - Journal of Construction, vol. Vol. 131, no. Issues 5, H. Lee, H. Ryu, J. Yu and J.
Kim, 2005. Method for Calculating Schedule Delay Considering Lost Productivity. ASCE - Journal of
Construction Engineering and Management, vol. Vol. 131, no. Issue 11] related with the control of deadlines, the
main factors responsible for the delays (negative time deviations) were the failures of productivity in the execution phase,
the poor estimation of productivity in the planning phase, errors and omissions of design and communication between the
various stakeholders in the process. As a norm, cost control is based on budget control, and has the purpose of evaluating
the conditioning factors arising from the implementation and to quantify the impact of any decision of the project
manager's budget, always with the objective of minimizing these effects.
✓ Cost control for an engineering project is limited to the cost of labor, equipment, materials and site overheads
and
✓ Control of cost and time should be linked together.
It is argued that cost control of a work should serve to support future budgets of works of identical nature and
characteristics. It is based on yields obtained from production that data is obtained for the determination of labor income
indices to be used in budgeting; such data also allows the assessment of the economic and commercial risks related to the
works. That is, the absence of cost control may lead to:
2. JO JEWE-JAWESSA IN THE JUNGLE CIVIL ENGINEERING
2
Nothing found in me but everything is belonged to the almighty God –Glory to the Lord
a. commercial risks, if the contract is awarded not because the price is competitive but because the price is
unduly calculated (low price);
b. economic risks, if the cost estimate is deficient, the work may cause loss (loss of value).
As stated in [ See-N. Sousa, 2008. Gestão de Projectos na Construção - Modelo de avaliação do desempenho em
projectos. Instituto Superior Técnico da Universidade Técnica de Lisboa, Lisboa], monitoring and control time and
cost should be carried out from the beginning
of the project and based on a realistic and reliable budget, through:
1.research technical solutions compatible with the required quality in the execution of the work;
2.detection and correction of systematic deviations between the actual and the planned;
3.progress reports on the deadline and actual cost, and the estimated deadline and final cost of the work.
3.2. Influencing Factors Affecting Cost Performance
The growing need at maintaining steady cost projection of construction projects has been an issue of serious concern to
both the clients and the construction practitioners on sites. Also, cost deviation from initial cost plan and cost budget has
been prevalent on construction sites and no concerted efforts have been made at addressing this phenomenon. In some
researches the results revealed that:
• poor leadership and inappropriate management,
• inefficient deployment of resources,
• excessive wastage of materials on sites,
• complex payment mechanisms,
• theft of materials on sites and variation during construction works.
3. JO JEWE-JAWESSA IN THE JUNGLE CIVIL ENGINEERING
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Nothing found in me but everything is belonged to the almighty God –Glory to the Lord
Those described above are the prevailing factors affecting construction cost management practice in some research study
area. In some research papers it was concluded that extra focus to be placed on the identified factors with a view to
reducing cost of construction, enhancing construction performance and building confidence within the construction
industry in this research study area.
The growing need for construction of all types coupled with tight monetary supply has provided the construction industry
with a big challenge in cost management. Client needs are generally in terms of time, cost and quality and indeed the
project success radiates on these terms (Fagbenle & Owolabi, 2012). It is a complex task undertaken by construction
firms/project managers in practice which involves constantly measuring progress, evaluating plans and taking corrective
actions when needed (Kerzner, 2003). In recent years, a number of studies have been carried out on the identification of
influencing factors of project cost overruns in the construction industries in the globe. For instance, Mansfield et al. (1994)
discovered that the most important variables causing construction delays and cost overruns in Nigeria are:
➢poor contract management,
➢financing and payment of completed works,
➢changes in site conditions,
➢shortage of materials,
➢imported materials and plant items,
➢design changes, and
➢subcontractors and nominated suppliers.
Akinsola et al. (1997) identified and examined factors influencing the magnitude/frequency of
variations in building projects. These were:
• client characteristics, especially lack of prior experience and knowledge of construction project
organization/production processes;
• characteristics such as:
✓ type,
4. JO JEWE-JAWESSA IN THE JUNGLE CIVIL ENGINEERING
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Nothing found in me but everything is belonged to the almighty God –Glory to the Lord
✓ size,
✓ complexity and duration of the project; and,
✓ project organization factors like:
▪ design duration,
▪ percentage of design completed before tender,
▪ procurement and contract type,
▪ adequacy of information provided and number of subcontractors.
Kaming et al. (1997) identified six factors influencing construction cost overruns on high-rise building projects in
Indonesia as:
➢ materials cost increased by inflation,
➢ inaccurate quantity takeoff,
➢ lack of experience of project location,
➢ lack of experience of project type,
➢ inadequate planning, and
➢ inaccuracy of material estimate.
Chimwaso (2000) evaluated the cost performance of public projects in Botswana by identifying the factors that influence
construction cost overruns. He concluded that seven out of ten projects investigated had reported cost overruns and that
the five influencing factors were:
➢ incomplete design at time of tender,
➢ technical omissions at design stage,
➢ additional work at the clients request,
➢ adjustments of prime cost and
➢ provisional sums as well as contractual claims.
Table 3.2.1: Factors influencing cost management
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S/N Factors affecting cost management Source(s)
1 Poor leadership and coordinating skills
Fagbenle et al. (2018);Iyer and Jha (2005);
Enshassi et al. (2006); Akinsola et al.
(1997);
2 Poor resources deployment
Fagbenle et al. (2018);Meeampol and
Ogunlan (2006);
3 Excessive materials wastages on site
Fagbenle et al. (2018); Enshassi et al.
(2006); Akinsola et al. (1997);
4 Complex payment mechanism Fagbenle et al. (2018);
5 Variations/design changes during construction
Fagbenle et al. (2018); Olawale & Sun
(2010); Annor-Asubonteng et al. (2018);
Chigara et al. (2013);Kissi et al. (2016)
6 Materials theft on sites
Fagbenle et al. (2018); Enshassi et al.
(2006); Akinsola et al. (1997);
7 Weak management support and control
Iyer and Jha (2005); Enshassi et al. (2006);
Akinsola et al. (1997); Fagbenle et al.
(2018);Meeampol and Ogunlan (2006);Obi
et al. (2017);
8
the experience and competence of project
managers
Iyer and Jha (2005); Al-Juwairah (1997);
Divakar and Jebin (2018);Kissi et al.
(2016)
9 Unstable construction materials prices,
Iyer and Jha (2005); Al-Juwairah (1997);
Zhao et al. (2017);
10 climatic conditions Iyer and Jha (2005);
11 Impracticable estimates by the estimators
Enshassi et al. (2006); Akinsola et al.
(1997); Al-Juwairah (1997);Ikediashi et al.
(2014); Divakar and Jebin (2018);
12 Poorly developed project brief
Enshassi et al. (2006); Akinsola et al.
(1997); Divakar and Jebin (2018);
13 Poor risks management
Enshassi et al. (2006); Akinsola et al.
(1997);Ikediashi et al. (2014); Olawale &
Sun (2010);
14 underutilization of plant and equipment
Enshassi et al. (2006); Akinsola et al.
(1997);
15 poor pricing during tendering
Enshassi et al. (2006); Akinsola et al.
(1997);
16 poor construction methods
Ikediashi et al. (2014); Meeampol and
Ogunlan (2006);
17 Poor project communications Annor-Asubonteng et al.
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Nothing found in me but everything is belonged to the almighty God –Glory to the Lord
(2018);Meeampol and Ogunlan (2006);Obi
et al. (2017);
18 Poor planning Al-Juwairah (1997); Kissi et al. (2016);
19 poor contract administration and management
Al-Juwairah (1997);Annor-Asubonteng et
al. (2018);
20 insufficient project information
(Peeters and Madauss (2008); Divakar and
Jebin (2018);Obi et al. (2017);
21 poor evaluation of project time and cost, Olawale & Sun (2010);
22 complexity of works Olawale & Sun (2010);
23 poor contractors’ performance Olawale & Sun (2010);
24
The conflict between project
parties/stakeholders
Annor-Asubonteng et al. (2018);
25 Unexpected ground conditions Annor-Asubonteng et al. (2018);
26 shortage of skilled personnel Chigara et al. (2013);Kissi et al. (2016)
27
building materials unavailability in the local
market Chigara et al. (2013);Zhao et al. (2017);
28 weak cost control systems
Annor-Asubonteng et al. (2018); Chigara
et al. (2013); Divakar and Jebin (2018);
29 Often changing subcontractors, Divakar and Jebin (2018);
30 Low productivity of labour, Divakar and Jebin (2018);
31
poor updating of cost management information
systems
Divakar and Jebin (2018);Kissi et al.
(2016)
32
Lack of use of project management tools
(technology)
Divakar and Jebin (2018); EduPristine
(2015)
33 key stakeholders influences Zhao et al. (2017); Obi et al. (2017)
34 quality of project team Obi et al. (2017)
35 Regulations regarding building and construction Obi et al. (2017)
36 external economic environment
Zhao et al. (2017);Obi et al. (2017); Kissi
et al. (2016)
3.3. Benefit of EVM model in monitoring and control schedule and cost
In monitoring and controlling deadlines and costs of a work, sometimes, we question whether their costs are lower than
expected because the work is behind schedule so, we do not check the inherent expenses, or if we are spending less than
7. JO JEWE-JAWESSA IN THE JUNGLE CIVIL ENGINEERING
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Nothing found in me but everything is belonged to the almighty God –Glory to the Lord
planned. Often, in the assessment of the work carried out on site, we are led to believe that costs are below the expected,
when this is because the work that should have been carried out has not yet been completed. So, an indicator that would
seem good is in fact, bad. To control these situations, we can use the EVM (Earned Value Management) model that allows
an analysis of the performance of the work, based on the integration of scope, deadlines and costs. The EVM differs from
the traditional approaches used to control deadlines and costs, since it is based on comparing the expected values with the
actual values and expenditures and makes it possible to compare the expected work with the actual work performed and
its respective costs. It allows the calculation of the gain value of the work from three data: the planned value of the work,
the value of the work performed (value of the work measured) and the value of the actual costs incurred to perform the
work. According to [A. Sousa and P. Henriques, 2014. Aplicação do Conceito do Earned Value Management ao
Controlo e Gestão de Obras. IST – Isntituto Suprior Técnico, Lisboa] the use of EVM makes it possible to obtain
warning signals from the initial phase of the work until its conclusion. At any moment it is possible to evaluate the
deadlines and costs, check the deviations from the planned, and reformulate the deadlines and costs related to the work
that is yet to be completed, in function of the actual performance without harming the completion of the work as initially
planned.
• Three Key Indicators in performance
1. Budgeted Cost of Work Scheduled (BCWS) is the budgeted amount of cost of the work scheduled to be accomplished
in a given time period (including support and allocated overhead). (This is can be referred to as “planned value of work
to be accomplished [PV]”.)
2. Budgeted Cost of Work Performed (BCWP) is the budgeted amount of cost for the work completed in a given time
period, including support effort and allocated overhead. (This is can be referred to as “earned value of work
accomplished [EV]”.)
• How to calculate BCWP
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Nothing found in me but everything is belonged to the almighty God –Glory to the Lord
➢ Budgeted cost for work performed (BCWP) = Earned value of an activity =
Percent completed for the activity * the activity budget
➢ Percent completed for an activity = [(Projected duration – Remaining duration) / Projected duration] * 100
3.Actual Cost of Work Performed (ACWP) OR [AC] is the amount reported as actually expended in completing the
particular work accomplished within a given time period
The application of EVM requires an initial effort in the planning of work to be done, particularly with regards to the
definition of the activities to consider, the estimate of its duration and the costs inherent in each. According to [See-A.
Henriques, 2008. Metodologia de Gestão Integrada de Prazos e Custos. IST - Instituto Superior Técnico -
Universidade Técnica de Lisboa, Lisboa.] this model can be used as a technique to support the management in
performance evaluation of the execution of the work, providing status and performance indicators relating schedule and
cost; on the valuation date, based on the amount of actual work performed it compares its performance against what was
planned and facilitates forecasts for the completion of the work. EVM uses three reference variables that are based on the
fundamental concepts of values:
1. Planned Value (PV) or Budgeted Cost of Work Scheduled (BCWS) is the budgeted cost for the planned
work (estimated cost), which is the value of the approved budgets in accordance with planned, it gives an
indication of the overall cost of the work in the baseline, and allows to predict the costs to be invested
throughout the execution;
Budgeted Cost of Work Scheduled (BCWS), also called the Planned Value (PV), is the sum of the budget for all work
scheduled to be accomplished within a given time period. It also includes the cost of previous work completed and can
address a specific period of performance or a date in time.
![JO JEWE-JAWESSA IN THE JUNGLE CIVIL ENGINEERING
1
Nothing found in me but everything is belonged to the almighty God –Glory to the Lord
Cost & Time Control in Construction Projects- Part -3
3.1.Necessity of cost control
Cost control in projects has great value in order to lead projects within the hold budget. Unfortunately many construction
companies either state owned or private mostly don’t give time & bother about the system & method that they should
develop which help them for controlling.As a rule, the control of work deadlines is done through the monitoring of critical
activities and eventually those that consume resources with critical availability in doing the work. One of the schedule
control techniques is to analyze the yield of resources and to monitor the start and end dates of the activities. In several
studies [See-I. Shohet and S. Frydman, 2003. Communication Patterns in Construction at Construction Manager
Level. ASCE - Journal of Construction Engineering and Management, T. Hegazy and K. Zhang, 2005. Daily
Windows Delay Analysis. ASCE - Journal of Construction, vol. Vol. 131, no. Issues 5, H. Lee, H. Ryu, J. Yu and J.
Kim, 2005. Method for Calculating Schedule Delay Considering Lost Productivity. ASCE - Journal of
Construction Engineering and Management, vol. Vol. 131, no. Issue 11] related with the control of deadlines, the
main factors responsible for the delays (negative time deviations) were the failures of productivity in the execution phase,
the poor estimation of productivity in the planning phase, errors and omissions of design and communication between the
various stakeholders in the process. As a norm, cost control is based on budget control, and has the purpose of evaluating
the conditioning factors arising from the implementation and to quantify the impact of any decision of the project
manager's budget, always with the objective of minimizing these effects.
✓ Cost control for an engineering project is limited to the cost of labor, equipment, materials and site overheads
and
✓ Control of cost and time should be linked together.
It is argued that cost control of a work should serve to support future budgets of works of identical nature and
characteristics. It is based on yields obtained from production that data is obtained for the determination of labor income
indices to be used in budgeting; such data also allows the assessment of the economic and commercial risks related to the
works. That is, the absence of cost control may lead to:](https://image.slidesharecdn.com/costtimecontrolinconstructionprojects-part-3-240410200639-0ccd68f3/85/Cost-_-Time-Control-in-Construction-Projects-Part-3-pdf-1-320.jpg)
![JO JEWE-JAWESSA IN THE JUNGLE CIVIL ENGINEERING
2
Nothing found in me but everything is belonged to the almighty God –Glory to the Lord
a. commercial risks, if the contract is awarded not because the price is competitive but because the price is
unduly calculated (low price);
b. economic risks, if the cost estimate is deficient, the work may cause loss (loss of value).
As stated in [ See-N. Sousa, 2008. Gestão de Projectos na Construção - Modelo de avaliação do desempenho em
projectos. Instituto Superior Técnico da Universidade Técnica de Lisboa, Lisboa], monitoring and control time and
cost should be carried out from the beginning
of the project and based on a realistic and reliable budget, through:
1.research technical solutions compatible with the required quality in the execution of the work;
2.detection and correction of systematic deviations between the actual and the planned;
3.progress reports on the deadline and actual cost, and the estimated deadline and final cost of the work.
3.2. Influencing Factors Affecting Cost Performance
The growing need at maintaining steady cost projection of construction projects has been an issue of serious concern to
both the clients and the construction practitioners on sites. Also, cost deviation from initial cost plan and cost budget has
been prevalent on construction sites and no concerted efforts have been made at addressing this phenomenon. In some
researches the results revealed that:
• poor leadership and inappropriate management,
• inefficient deployment of resources,
• excessive wastage of materials on sites,
• complex payment mechanisms,
• theft of materials on sites and variation during construction works.](data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7)