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i
 
Helwan University
Faculty of Engineer matarya
Civil Department
Cost Control Process for Construction
Projects
Dissertation Research in Partial Fulfillment of the Requirements for the Degree of master 
 
Prepared By 
Yasser M. Abouzeid
 
Supervision by
Prof. Dr. Adel El-Samadony
Prof. Dr. Randa kamel
ii
 
ACKNOWLEDGMENTS
First and foremost, I would like to extend my heartiest gratitude to Prof. 
Dr. Adel El‐Samadony, as my supervisor during obtain M.SC degree. He
gave me the chance to finish the study and with his guidance, the study
can finish smoothly. Besides that, his patience and encouragement leads
me to complete this study in time.
In addition, I would like to thank Eng. Amr Dawood, as the
representative from the staff in Rowad modern Engineer (RME) for their
kindly advised and assistance in giving the information to complete this
study.
Not forgetting to present this research to spirit of my father. Mother,
brothers and sister, for their full support and coaching throughout this
research.
Lastly but not the least, to all my friends for their support, advise and
their help when the time I need them.
iii
 
ABSTRACT
With the competition in the construction market is fierce increasingly,
profit margin of construction enterprises is getting smaller and smaller,
and cost control of construction projects become more and more
important. The control of construction project cost becomes one of the
cores in project management.
Construction project management is a systematic, comprehensive,
dynamic subject, requiring construction project manager to regularize and
standardize the organization, goal, quality, safety, and cost of
construction project. In order to achieve the project cost control
effectively and create greater economic benefits. A study is carried out to
study the cost control method in a constructions project, to identify the
cost control process method frequently used by contractors in controlling
the cost of projects.
From the study, the main problem faced by contractors are shortage of
material, Labor costing more than estimated, difficulty in collection of cost
data, ever-changing environment of construction work ,qualified expertise
,duration of project and additional costs to carry out the cost control.
iv
 
INTRODUCTION
The cost control is a process that should be continued through the
construction period to ensure that the cost of the project is kept within the
agreed cost limits. The cost control can divide into two major areas; the
control of cost during design stages and the control of cost by the
contractors once the constructions of project have started.
Cost control of a project involves the measuring and collecting the cost
record of a project and the work progress. It also involves the comparison
of actual progress with planning. The main objective of cost control of a
project is to gain the maximum profit within the designated period and
satisfactory quality of work
Purpose: Due to the ever increasing competition and current climate in
the construction industry, this has lead construction companies to become
more competitive in their projects. The aim of this research was to
highlight the importance of proper monitoring construction and examine
what cost control Process that is in place. This will help all staff realise the
importance of monitoring constructions and cost control system by
suggesting recommendations to implement in future projects.
Objectives: The objective for this research is:
1- To study cost control Process in a construction project.
2- To identify the cost control method frequently used by contractor
during the construction stage.
3- To identify the main problem faced by contractor in controlling the
cost on site.
Methodology: A comprehensive review was under taken to get a better
understanding of cost control system knowledge transfer. For the current
research a case study was conducted on medium scale contractors by
means of semi- structured interview and questionnaire to look at how
their cost control system we monitored and any recommendation for
improvement the research will illustrate the basic process used in cost
control of construction project, in each process we explain the basic
information need to this process and who is responsible to do this process
and the form need to do the process (spreadsheets controls).
v
 
CONTENTS
Title Page
Number
INTRODUCTION iv
1 State of Art
1.1 Project Cost Control 1 
1.1.1 Purposes of Project Evaluation 1 
1.1.2 Cost Control Definition 2 
1.2 Important Questions 3
1.2.1 Why we need Cost Management? 3 
1.2.2 What the Project Manager Controls? 3 
1.2.3 Who Needs Cost Management? 5 
1.3 Project Life Cycle and Project Cost 5 
1.4 Characteristics of a Project Control System 7 
1.4.1 Elements of A Planning And Control System 8 
2 Proposed approach to construct model of cost
control
2.1 What Information do you need to construct the
model?
10
2.1.1 Estimating/Budgeting 10 
2.1.2 Work Breakdown Structure (WBS) 33
2.1.2.1 Types of Work Breakdown Structures 36 
2.1.2.2 Work Breakdown Structure Development 39 
2.1.3 Cost Codes 41 
2.1.4 Depreciation 44 
2.2 Construct model template –Excel-Format 47
2.2.1 WBS template sheet 47 
2.2.1.1 WBS sheet template Consist 47 
2.2.1.2 WBS sheet template Form 49 
2.2.2 Expenses template sheet 50 
2.2.2.1 Expenses template sheet Consist 50 
2.2.2.2 Expenses template sheet Form 51 
2.2.3 Storage template sheet 53 
2.2.3.1 Storage template sheet Consist 53 
2.2.3.2 Storage template sheet Form 54
vi
 
3 the application steps & methods
3.1 Collect Actual Cost data 55
3.1.1 Sources of information 55 
3.1.2 Data Required From Procurement Department 59 
3.1.3 Data Required From Storages 63 
3.1.4 Data Required From Projects 68 
3.1.5 Data Required From Finance Department 83 
3.2 Actual Cost Allocations 85
3.2.1 WBS Sheet template form 85 
3.2.1.1 Client Invoices 86
3.2.1.2 Variations Order 87 
3.2.2 Expenses Sheet template form 88 
3.2.3 Finance Report 90 
3.2.4 Storage sheet template form 91 
3.2.4.1 Storage Report 92 
3.3 How do you make sure you are getting good
information?
93 
4 Techniques of outputs & reports
4.1 The Earned Value Measurement System (EVMS) 96 
4.1.1 Variance and Earned Value 98 
4.1.2 Methods for Physical Progressing 100 
4.1.3 Example – Synthetic EVA 104 
4.2 Reporting Techniques 108
4.2.1 Report Content 108 
4.2.2 Reporting Considerations 109 
4.2.3 Sample Reports 110
4.2.4 Responses on Reports 125 
4.3 Construction Cost Control Software 126
4.3.1 Advantages of Used Software in Construction Cost
Control
127 
4.3.2 The Disadvantages of Used Software in Construction
Cost Control
130 
5 Conclusions
5.1 Common Causes of Cost Control Problems 131 
5.2 Keys to Effective Project Cost Control 134 
References 144
vii
 
List of Table
Table
number
Title Page
number
2.1 Calculating the Estimate 21
2.2 Subcontractor /vendor list 23
2.3 Estimate summary for Office Building 24
2.4 General Overhead 25
2.5 Straight Line Depreciation 45
2.6 Sum of the Years’ Digits 46
2.7 Double Declining Balances 47
2.8 WBS sheet forms 49
2.9 Direct Expenses sheet forms 51
2.10 indirect Expenses sheet forms 52
2.11 Storage sheet forms 54
3.1 Time Cards 57
3.2 Log of material imported 60
3.3 Quotations Comparison Sheet 61
3.4 Recommended Subcontractors for Quotations list 62
3.5 Monthly Report about store movement 65
3.6 Monthly Report about material distributions 66
3.7 Monthly Report about material distributions and
location
67
3.8 Daily man power for Sub contractor 70
3.9 Daily man power for self performed time card 71
3.10 Weekly man power for self performed time card 71
3.11 Subcontractor productivity by location 72
3.12 man power daily production report 73
3.13 man power estimation & actual quantity 73
3.14 man power distribution by work package 74
3.15 Monthly Status log for manpower 75
3.16 Daily Equipment time card 76
3.17 Equipment distribution by work package 77
3.18 Monthly Status log for Equipment 78
3.19 Value of rent Equipment by work package 79
3.20 log for Concrete Casting 80
3.21 Report about Performance by activity 81
3.22 Monitor Report for Finishing item (masonry) 81
3.23 Cost report include labor, Equipment and material 82
3.24 Monthly Report for Finance department 83
viii
 
3.25 WBS Sheet Form 85
3.26 Sample of Client Invoice 86
3.27 Sample of Cover for Variation Order 87
3.28 Sample of Variation Order 87
3.29 Direct Expenses sheet forms 88
3.30 indirect Expenses sheet forms 89
3.31 Finance Report forms 90
3.32 Deduction /Increase Storage Sheet Form 91
3.33 Storage Sheet Form 92
3.34 equate of (client/subcontractor) quantity 93
3.35 Concrete Casting Report 94
3.36 Steel losses Report 95
4.1 Example of Earned value report 107
4.2 Variance analysis Report 113
4.3 Overall Progress Report 114
ix
 
List of Figure
Figure
number
Title Page
number
1.1 Project Manager Controls 4
1.2 Project Control Cycle 7
1.3 Project Planning and Control System 9
2.1 Types of Estimates 13
2.2 the Estimating Process 15
2.3 the Estimation Build 16
2.4 Cost estimation Process 27
2.5  Forms of Cost Estimate 28
2.6  Forms of Cost Estimate 29
2.7  Forms of Cost Estimate 30
2.8  Forms of Cost Estimate 31
2.9  Forms of Cost Estimate 32
2.10 Diagram of WBS hierarchy 35
2.11  Product-based WBS 36
2.12  Example of OBS 37
2.13  example of a process-oriented WBS 38
2.14  The cost account intersection 43
2.14  Cost Account code breakdown 43
3.1  data flow between Procurement team and other 59
3.2  step of enter material to the project 63
3.3  data flow between Storage team and other
department
64
3.4  data flow between Projects team and other
department
69
3.5  data flow between Finance team and other
department
83
4.1 Determining the Status 96
4.2  Controlling both project schedule and cost 97
4.3  Earned value formulae 99
4.4  Analysis showing use of 50/50 rule 102
4.5  Cost data contractual 103
4.6  Physical progress versus time expended 103
4.7  Methods for physical progressing 104
4.8  Representation of Variance on a S- curve 105
4.9  graphical project status 106
4.10  Schedule Performance index 107
x
 
4.11 Graphical status reports 111
4.12  Data accumulation 111
4.13  Cost control and report flow 112
4.14  Performance Report 112
4.15  Progress Trends Report 113
4.16  Sample cost report 115
4.17  Cumulative cost report 115
4.18  Cumulative cost report 116
4.19  Cumulative cost line graph 117
4.20  Schedule status report 118
4.21  Summary Schedule status report 118
4.22  Weeks Status Performance 118
4.23  millstones Summary report 119
4.24  Sample report instructions 119
4.25  Event report 120
4.26  note on performance report 120
4.27  Critical Issues Report 121
4.28  Traffic signal as indicator of project status 121
4.30  Project Performance metric Definitions 122
4.31  Project Performance report 122
4.32  Sample of other Report 124
xi
 
LIST OF APPENDIX
APPENDIX Title Page
number
A Cost Control Process Flow Chart 136
B Responsibility Matrix for Cost Control Process 143
Chapter  1  State of Art""
 
1-State of Art 
Chapter 1  "State of Art"
 
/91 
1-State of Art
1.1-Project Cost Control
1.1.1-Purposes of Project Evaluation
Sports teams that practice without reviewing performance may get really
good at playing very badly. That is why they review game films to see
where they need to improve; there are two kinds of organizations those
that are getting better and those that are dying.
An organization that stands still is dying. It just doesn’t know it yet.
The reason? Your competitors are not sitting by idly. In fact, good
project management can give you a real competitive advantage,
especially in product development. If you are poor in managing your
projects, you don’t have good control of development costs.
That means that you have to sell a lot of product or else charge large
margins to cover your development costs so that the project is worth
doing in the first place. If you can’t sell a lot of widgets, then you have to
charge the large margin. In order to learn, people require feedback.
Furthermore, people tend to learn more from mistakes than from
successes, painful though that may be to admit. If your competitors, on
the other hand, have good cost control, they can charge smaller margins
and still be sure that they recover their investment and make money.
They have a competitive advantage over you because of their better
control of project work. In order to learn, people, like the team reviewing
game films, require feedback. The last phase of a project should be a final
audit so that the management of future projects can be improved.
However, such an audit should not be conducted only at the end of the
project. Audits should be done at major milestones in the project so that
learning can take place as the job progresses.
Another reason to do periodic audits is that, if a project is getting into
serious trouble, the audit should tell the difficulty so that a decision can be
made whether to continue or to terminate the work.
Periodic audits should enable you to:
• Improve project performance together with the management of the
Project.
• Ensure that quality of project work does not take a back seat to
schedule and cost concerns.
• Reveal developing problems early so that action can be taken to deal
with them.
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Chapter 1  "State of Art"
 
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• Identify areas where other projects (current or future) should be
managed differently.
• Keep client(s) informed of project status. This can also help ensure
that the completed project will meet the needs of the client.
1.1.2-COST CONTROL Definition
Cost control is the process of comparing actual expenditures to the
baseline cost plans to determine variances, evaluate possible alternatives,
and take appropriate action. To effectively control costs, be sure cost
plans are prepared with sufficient detail.
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1.2- Important Questions
1.2.1-Why We Need Cost Management?
The project manager is primarily concerned with the direct cost of the
project, but the trend in project management is that the role of the
project manager in cost control will increase to include more of the
nontraditional areas of cost control. In the future it will be expected that
more project managers will have a great deal of input into the indirect
costs and expenses of the project.
Regardless of what the project manager is or is not responsible for, it is
critical that the project be measured against what the project manager is
responsible for and nothing else. If the project manager does not have
responsibility for the material cost of the project, then it makes no sense
for the project manager to be measured against this metric.
Timing of the collection of cost information is also important to the cost
measurement system. The project budgets must be synchronized with the
collection of the project’s actual cost. For example, if a project team is
responsible for material cost, should the budget show the expenditure
when the commitment by the project team to buy the product is made,
when the item is delivered, when it is accepted, or when it is paid for?
Timing issues like these can make project cost control a nightmare.
If the project team does not properly control cost, the project will
invariably go out of control, and more money will be spent
1.2.2-What the Project Manager Controls?
The project manager has to measure many things during the course of a
project, and he or she must take actions to guarantee that control (see
Figure 1.1). The project manager must.
• Measure and review the project schedule progress against the plan
• Measure and review the project cost progress against the plan
• Measure and review project quality
• Anticipate possible changes and alternatives
• Manage issues and risks
• Control scope creeps through a change management process
• Ensure that delivery of milestones takes place according to client
expectations
• Coordinate the project team
• Monitor physical resources by controlling the scheduling of
resources during the project
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pter 1 
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"SState of AArt"
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Chapter 1  "State of Art"
 
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1.2.3-Who Needs Cost Management?
In every firm, cost management will exist in some form, usually under the
control of the finance function. Our problem as project managers is that
often that form is not consistent with the project management function, and
that the cost data cannot be integrated with the other project data. As a
result, many of the critical management questions concerning cost go
unanswered.
For instance, if the monthly accounting report notes that Omega Project has
accumulated costs of $123,999, is this good or bad? Without integrating
the accounting data with the other project data, much of the data is
worthless. How do we go about answering such common questions as?
• How much are you going to spend?
• How much did you spend? Is this good or bad?
• How much will you have spent when the project is over? Is this
good or bad?
• If I’m in trouble on costs, what can I do to turn things around?
• How shall the costs be distributed?
• How can I control my resource costs?
Effective cost management must address such questions. This requires an
integrated schedule and budget plan. It also requires integrated participation
by leaders of the projects, resources, and financial disciplines.
1.3-Project Life Cycle and Project Cost
Construction is a dynamic process, and no two projects are ever alike.
Even if you have years of experience, every job presents a new set of
circumstances and challenges no matter how good a job you do preparing
during the pre-construction stage. The project manager and
superintendent work together to come up with the best plan they can,
trying to anticipate every obstruction and difficulty that might delay
progress and put at risk the successful completion of the project, but they
still can’t foresee every contingency.
Even with this entire expert planning, the project must be monitored from
beginning to end to ensure that all of the targets for time, cost, and
quality are met. The whole process must be properly managed through a
project control system that utilizes the plans, specs, estimate, and
schedule. All of these documents taken together establish the road map
for getting from the start of construction to the final completion of the
project. Using this road map, the project manager and superintendent
must maneuver all of the resources in the right direction, making
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Chapter 1  "State of Art"
 
/96 
adjustments as they go, to keep the project on track and on target.
Project control requires continuous monitoring and evaluation of actual
performance relative to the estimated performance for all aspects of the
job that have an impact on cost, time, and quality.
The project control cycle begins with the project plan and ends with the
final project debriefing and evaluation. There are seven fundamental steps
to the process:
• Develop the project plan.
• Establish the project benchmarks.
• Monitor the project performance.
• Identify performance deviations.
• Evaluate corrective options.
• Make adjustments as needed.
• Document, report, and evaluate results. (see Figure 1.2)
It is important to track every aspect of project performance all the way
back to the planning stage. This is where every project begins, and it is
where every project should end with a complete debriefing and evaluation
of what worked and what didn’t work.
It is also a time to resolve actual costs and labor productivity information
to update existing company records in preparation for the next cycle of
project planning and estimating. It is an excellent opportunity to capture
lessons learned and to create some best practices for future
implementation.
Unfortunately, many construction teams fail to complete the last step in
the cycle and never properly assess their project’s overall performance.
Everyone is usually worried to move on to the next project, and it’s very
tough to get all of the parties together for even a couple of hours at the
end of the job. It takes a great deal of discipline to consistently take
advantage of this opportunity and learn from it.
In my experience, I have found the project debriefing to be one of the
most effective training mechanisms for every member of the team, from
the project engineer to the project manager.
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2. A system for taking corrective action.
A control system should focus on response. If control data do not result
in action, then the system is ineffective. That is, a control system must
use deviation data to initiate corrective action; otherwise, it is simply a
monitoring system, not a control system.
3. An emphasis on timely responses.
The response to control data must be timely. If action occurs too late, it
will be ineffective. This is frequently a serious problem. Data on project
status are sometimes delayed by four to six weeks, making it useless for
taking corrective action. Ideally, information on project status should be
available on a real-time basis. In most cases, however, that is not
possible. For many projects, weekly status reports are adequate.
Ultimately, you want to find out how many hours people actually work on
your project and compare that figure to what was planned.
This means that you want accurate data. Some people may fill out weekly
time reports without having kept track of their daily working times. since
most of us cannot remember with any accuracy what we did a week ago.
When people fill out time reports each week without having written down
what they did daily, they are writing fiction. Such made-up data are
almost worse than none at all.
As difficult as it may be, you need to get people to record their working
times daily so that the data will mean something when you collect them.
What’s in it for the workers? Perhaps nothing. However, their better
estimates (made as a result of collecting accurate information on this
project) will help everyone who works on the next project. In any case,
you need accurate data, or it isn’t worth the effort at all. When
information collection is delayed for too long, the manager may wind up
making things worse instead of better
1.4.1-Elements of Planning and Control System
Figure 1-3 shows a generic model for a project planning and control
system that allows a project to react to the changing conditions of the
world.
• Define the problem or opportunity.
The first phase of project planning is to clearly define the problem to be
solved by the project or the opportunity of which the project will take
advantage.
This includes understanding the business reasons for the project and the
client’s motive in requesting it.
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Chapter  2  " Proposed approach to construct model of cost control "
 
2- Proposed approach to
construct model of cost control 
Chapter 2  "Proposed approach to construct model of cost control"
 
/451 
 
2-Proposed approach to construct model
of cost control
2.1-What Information do you need to construct the
model?
So exactly what kind of information should you be gathering to create your
system of control which will maintain control of your Project? Below are
listed the specific pieces of information you should be requesting
2.1.1-Estimating/Budgeting
What Is an Estimate?
An estimate is an educated guess. We are all familiar with estimates. We
have obtained estimates for work on our car, for getting our house painted,
or for closing costs on a mortgage. And most of us have actually engaged in
doing an estimate. We’ve guessed or estimated or calculated how many
gallons of paint we needed to paint the living room.
The main differences between these simple estimating activities and the
estimates used to price construction are the complexity and what’s at stake.
When you estimate how many gallons of paint are needed to paint your
living room and you are off by a gallon or two, the stakes are pretty small.
But when you estimate the cost to build a nuclear plant or a super highway
or a hospital or even a house, the stakes are much, much higher. The
estimate is a summary, based on the best information available, of probable
quantities and costs of materials, labor, equipment, and subcontracts to
complete a project, including taxes, overhead, and profit.
It is the number used to develop the project bid price. The bid price is what
goes in the contract, and the contract obligates you to perform all work
needed to complete the project in accordance with the plans and
specifications. The consequences of any errors or omissions in the estimate
are borne by the contractor, and the contractor will not actually know what
the true cost of the construction is until the project is complete. If the
estimated cost is equal to or greater than the actual cost, the project makes
money for the contractor.
If the estimated cost is less than the actual cost, the contractor loses money
on the project. As you can see, estimators have an awesome responsibility.
First, they must come up with an accurate but competitive estimate that will
win the job. Second, their planning and calculations set the stage for the
overall management targets for the entire project. Once the estimator turns
the project over to the project manager and the on-site team, the estimator
shifts to a support role and really has no direct management duties
10/144
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Chapter 2  "Proposed approach to construct model of cost control"
 
/453 
 
possible. An experienced estimator can help out in a situation like this by
offering a rough order of magnitude (ROM) estimate. These estimates are
based upon a cost per primary unit for the facility.
For example, for hospitals, the primary unit of measure would be beds, and
you would multiply the proposed number of beds by the appropriate unit
cost. For a school, the calculation would be cost per pupil; for a highway,
the estimate would be based on a cost per mile. Once the owner suggests
how many primary units they would like to build, an estimator can whip out
a rough order of magnitude estimate within minutes; however, the accuracy
is limited.
2. Preliminary Estimates
If you have a preliminary set of drawings with overall dimensions, you can
move to the next level of estimating. Preliminary estimates provide a
somewhat higher level of accuracy and may be used to establish initial
budgets and preliminary financing scenarios. However, these estimates
should never be used to commit to a contract price because too many
factors can influence the reliability of the numbers.
Although there are numerous preliminary estimate methodologies, the most
common is probably the square foot method. In its simplest form, the
estimator calculates the area of the floor plan and multiplies that number by
a unit price. There are various levels of skill and detail that can be applied to
the square foot estimating method, and the degree of accuracy increases
with each step up, as will the time it takes to calculate the price.
3. Detailed Estimates
Whenever you have a complete set of plans and specs, you should do a
detailed estimate. This is where you count every brick and stick, so to
speak. Quantities and costs are calculated for every aspect of the project,
and this is by far the most reliable estimate if the contractor is being asked
to give a firm bid on a project.
Detailed estimates are the most accurate. But keep in mind that as the
accuracy increases, so does the time, effort, and skill required to complete
the estimate. Although computerized estimating has reduced the time
needed to compile project costs, it can still take two to three weeks and a
team of estimators to put together a detailed estimate for a large,
multistory commercial building such as an office or retail complex. The
estimators still have to put the bid packages together and spend time
soliciting subcontractor and vendor pricing. Throughout the rest of this
chapter, I will be talking about detailed estimates.
12/144
Cha 
The
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• How m
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/454 
the funda
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t manager
rs, and oth
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model of
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e things:
estimate a
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he estimat
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ate, the q
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ntrol"
 
 
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13/144
Chapter 2  "Proposed approach to construct model of cost control"
 
/455 
 
1. thoroughly reviewing the plans and specs
2. developing a list of questions and needed clarifications
3. attending the pre bid meeting
4. visiting the project site
1. Reviewing the Plans and Specs
It is important to get a “big picture” perspective of the project before you
get into the details of the work. Having an overall understanding of the
difficulty of the construction will assist the estimator when making judgment
calls that inevitably affect the accuracy of the estimate.
Ideally, the plans and specs are reviewed in detail before any estimating
takes place. Among the first things to look for when making the initial
review are any special conditions, clauses, or criteria that could adversely
affect the project schedule or cause unusual risks to be taken. Such items
should be highlighted during this process and red flagged for the project
team when the job is passed from the estimator to the project manager.
Remember the earlier example regarding the imported Italian marble tile.
Many of these red flag clauses are found at the front end of the project
manual in the instructions to bidders and supplemental conditions.
Taken into account during the estimating process.
2. Developing a list of Questions and needed Clarifications
In addition to discovering red flag issues, the plan and spec review provides
an opportunity for the estimator to uncover details that require clarification
or questions about the project that are not addressed in the contract
documents.
As the estimator thumbs through the drawings, they will prepare a query list
in anticipation of the pre bid meeting, site visit, or phone conference with
the designer. The designer typically responds to each of the questions in
writing. Those responses that result in a change to the original plans and
specifications become official addendum to the contract.
Checklists are a common tool used to make sure that nothing gets left out
or overlooked.
14/144
Cha 
Prio
pre
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ans
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sen
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tho
at t
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are
plan
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3. The P
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4. The S
one shoul
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"Propo
Pre bid M
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is very im
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because t
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view of the
ng, and co
Site Visit
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Meeting
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meeting. T
hat is the
ge and who
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ontractors
t
timate a jo
t just cann
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help you m
pricing. Ev
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d. Visiting
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/456 
r the owne
ften occur
ontractors
hat each o
The estima
person wh
o has deve
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who fail t
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not be und
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make the
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er and/or
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of the pre
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you can
ntrol"
 
 
t a
ides
ns
ds a
ve
ith
ance
id.
ere
the
he lay
t
e bid
15/144
Cha 
Est
How
You
faci
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pter 2
imators sh
• Distan
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w You B
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ility. Gene
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ch CSI divi
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cide to org
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this way, t
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imate see
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"Propo
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ty needs
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disposal
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uild the
estimate i
erally, you
he 2004 C
ision is bro
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Figure (2
he
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/457 
following w
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uch the sa
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n into deta
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it is very
divisions a
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ake sure t
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mate. How
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build the a
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This form
wever you
with a
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hat should
ft out of th
ntrol"
 
 
actual
48
mat is
roject.
be
he
16/144
Chapter 2  "Proposed approach to construct model of cost control"
 
/458 
 
Organizing the Work of the Estimate
Estimating the cost of a multistory office building, high-tech manufacturing
facility, or state-of-the-art concert hall is no easy task. It is a big job and takes
great deal of planning and organization. So, how do you conquer this challenge?
Well, the same way you eat an elephant—one bite at a time! Although the
CSI Master Format 2004 gives us an overall outline to follow, thousands of
activities and materials must be considered before you can begin to price
the project. As large as the task may seem, there actually is a logical
method for organizing all of the work activities, materials, and labor
associated with a project. Let’s take a look at just how you eat this
elephant!
1. The Work Breakdown Structure
The primary organizational tool utilized by the construction estimator is the
work breakdown structure (WBS). The work breakdown structure establishes
the basic building blocks of both the estimate and the schedule. The purpose
of the work breakdown structure as it applies to the estimate is to organize
and identify the work of the project by breaking each division of work into a
separate work package or bid package.
The work package identifies each step in the process of that work item.
Work packages are usually assembled around the work activities typically
performed by a single subcontractor or work group.
Obviously, being familiar with construction materials and methods is pretty
important here. One of the primary goals in creating a work package is to
not overlook any of the steps needed to complete the work.
A sample work package looks something like this:
Work Package—Concrete Floor Slab
• Excavate the footings.
• Install the edge forms.
• Install under slab fill.
• Install vapor barrier.
• Install the reinforcing.
• Place anchor bolts.
• Place the concrete.
• Finish the concrete.
• Strip the form work.
Once each step associated with a particular item of work is identified, it can
be quantified and priced. But let me stop here and back up a minute to
make sure that you remember how the work of the project is actually
accomplished. The contractor has two options:
• self-perform the work with their own forces
• Subcontract the work to various trade contractors.
17/144
Chapter 2  "Proposed approach to construct model of cost control"
 
/459 
 
The contractor will have to do all of the quantifying and pricing of each step
of the work if the contractor decides to self-perform a particular section of
work. If the contractor decides to subcontract out some of the work, then
the subcontractor will quantify and price the work and submit a bid to the
general contractor. The greatest challenge either way is to make sure that
nothing gets overlooked or left out of the estimate.
Sometimes the general contractor calculates their own quantities and
estimates for subcontracted work even though the subcontractor will be
submitting a bid. This is called a fair value estimate; it’s done as a check to
guard against inaccurate quantity surveying by the subcontractor and
unreasonable pricing.
2. Calculating Quantities
Now that you have assembled all of your work packages and identified all of
the steps necessary to do the work, you can start doing your quantity
takeoff. You must quantify all of your materials, labor, and general
conditions before you can price any of the work. You need to calculate “how
many” before you can calculate “how much.” Once you determine the
quantities, you can apply a unit price factor to the equation. Junior
estimators often start off as quantity surveyors.
The primary attributes of a good quantity surveyor are the ability to read
and interpret plans, knowledge of common units of measure for construction
materials and labor, and basic estimating mathematics.
You will use algebra to measure ratio and proportion, plane geometry for
lineal and area measurements, solid geometry for cubic measurements, and
plane trigonometry for lineal, area, and cubic measurements.
3. Quantifying Materials
Quantifying materials is the least risky of all the estimating activities. You
are simply counting and calculating all of the parts and pieces that will go
into the project. Quantity surveying represents more of the science of
estimating. That’s because you are working with known sizes and
dimensions depicted in the drawings.
If the plans are drawn correctly and include all of the information needed to
do the takeoff, the estimator should be able to come up with very accurate
quantities, assuming the estimator doesn’t overlook anything and doesn’t
make mathematical errors. The estimator reviews the plans, the elevations,
the sections, and the details; pulls the dimensions needed to make the
appropriate calculations; and comes up with the lengths, areas, and
volumes of work and material required for the project.
Probably the most difficult part of the quantity survey is making sure that
the quantity is taken off in the proper unit of measure. The unit of measure
18/144
Cha 
for
exa
tak
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lear
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In t
of c
of a
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253
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This
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for
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takeoff m
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nvert to cu
rn all of th
owledge is
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a foot. Her
• Section
oting = 2.0
ll = 0.66 f
tal section
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3.44 cubic
e answer is
4. Quant
antifying la
al with cre
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cause of si
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apter.
s is where
about judg
any given
"Propo
ust be the
ncrete is p
oncrete by
ubic yards
he pricing
an absolu
al quantity
needed for
re are the
n area of f
0 feet *0.6
feet *2.0 f
area = 1.
eter of bui
24.0 feet +
n area*pe
feet *96 fe
rt to cubic
feet ÷ 27
s 9.39 cub
ifying La
abor and e
w sizes an
rs of const
ensions on
placed or i
te conditio
f the proje
e estimatin
gment. Th
n crew reg
osed appr
e same as
riced by th
y the cubic
to match
units for t
ute necess
surveying
this found
steps
foundation
66 feet =
feet = 1.3
32 square
lding:
+ 24.0 fee
rimeter =
eet = 253
c yards (un
7 cubic fee
bic yards o
abor and
equipment
nd product
truction is
n a set of d
nstalled in
ons, weath
ect, and se
ng moves
he individu
arding any
roach to c
/4510 
the unit o
he cubic y
c foot (leng
the pricing
the various
sity if you
g exercise,
dation. All
n:
1.32 squa
2 square f
e feet + 1.
et + 24.0 f
cubic feet
.44 cubic
nit of mea
et = 9.39 c
of concrete
d Equipm
t is a little
tivity rates
not quite
drawings.
n a specifie
her, crew
everal oth
way over
ual estimat
y given ite
construct
of measure
yard. The q
gth × widt
g unit. It t
s material
are an est
, you will e
inches ar
re feet
feet
.32 square
feet = 96 f
t
feet
sure for co
cubic yard
e in found
ment
e riskier. T
s. In other
the same
Productiv
ed unit of
makeup, c
er factors
on the art
tor will det
em of work
model of
e for pricin
quantity su
th × depth
takes a litt
s and labo
timator.
estimate t
re converte
e feet = 2.
feet
oncrete):
s
ation.
hat’s beca
r words, w
e as workin
ity is the a
time. Prod
crew skill
discussed
t side of th
termine th
k. Fortuna
f cost con
ng. For
urveyor m
h) and the
tle time to
or, but this
the cubic y
ed to deci
.64 square
ause you m
working wit
ng with ha
amount of
ductivity v
level,
d earlier in
he equatio
he product
ately,
ntrol"
 
 
must
en
o
s
yards
mals
e feet.
must
th the
ard
f work
varies
the
on. It’s
tivity
19/144
Cha 
pro
con
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size
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est
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Tem
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oductivity i
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n help the
uipment qu
es and pro
5. Quant
o called jo
sociated w
measure fo
imator is t
e estimato
nths, or y
general co
6. Gener
pervision (
b trailer (re
terial stora
mporary ut
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mpsters (r
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b office sup
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ce all of yo
u have to d
uipment, a
ensions di
ere the co
"Propo
is somethi
industry,
estimator
uantity tak
oductivity
ifying G
ob overhea
ith any giv
or general
to come u
or must ma
ears the c
ondition ite
ral Cond
(salary) W
ent) Month
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tilities (us
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rent) Mont
phs Lump
cam Lump
pplies Lum
Work
our quanti
do is plug
and genera
isplayed in
sts will co
osed appr
ing that is
and there
make sen
keoffs. In
rates for c
eneral C
ad, genera
ven projec
l condition
p with a ti
ake an edu
constructio
ems and th
ition Ite
Week
h
rs (rent) M
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th
p sum
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mp sum
ities are ca
in the uni
al conditio
n Table 2.1
ome from a
roach to c
/4511 
studied q
are datab
nsible judg
the follow
concrete w
Conditio
al condition
ct. Time, n
ns. Therefo
ime estima
ucated gu
on will take
heir respec
em Comm
Month
th
alculated,
t cost for
ons in your
1. As an e
and their r
construct
uite exten
bases and
gment reg
wing, I sho
work:
ns
ns make u
not produc
ore, the pr
ate for the
ess as to h
e to comp
ctive units
mon Uni
you are h
each item
r estimate
estimator,
reliability.
model of
nsively in t
reference
arding lab
w some av
up the indi
ctivity, is t
rimary tas
e overall jo
how many
lete. Here
s of measu
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alfway the
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your prim
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s available
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irect costs
he norma
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ob duratio
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e’s a samp
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asure
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ial, labor,
see the p
mary conce
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e that
ew
s
l unit
on.
eeks,
ling
all
rice
ern is
20/144
Cha 
Som
the
and
Wh
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Onc
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If t
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dril
7
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The
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Table 2
pter 2
metimes it
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owance” n
time.
ce the info
wn to refle
he actual
plus funds
ent pays th
owances a
arding sty
y also be
e to accur
ling.
7. Source
cing inform
terials, yo
lding supp
ch as R.S.
terial, and
ny constru
torical per
er a numbe
rformed wo
ce, then th
ve such a s
cing.
ere is one
imators ch
n calculat
-1
"Propo
t is not po
he estimat
hat simply
appens, it
number, fu
ormation n
ect the act
cost is les
s to the cli
he differen
re often u
yle, color,
used when
rately quan
es of Inf
mation com
ou can obv
pliers. Or y
Means. Th
d equipme
uction com
rformance.
er of years
ork. If a c
his may be
system in
more alte
hoose to u
e their ow
osed appr
ssible to a
te because
y can’t be
is a comm
ully disclos
needed is a
ual cost o
s than the
ient. If the
nce.
sed for fin
or quality
n there ar
ntify the c
formatio
mes from a
viously get
you can ch
hey list un
nt.
mpanies cre
. They trac
s and com
ompany h
e the best
place, and
rnative wh
use the pro
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roach to c
/4512 
accurately
e there are
made unt
mon practic
sed to the
available,
f the item
e allowanc
e cost is g
nish items
such as c
e simply t
ost of the
on
a variety o
t prices dir
heck the v
nit costs fo
eate their
ck actual j
me up with
as an exc
t way to go
d many re
hen it com
oductivity
ces by usi
construct
determine
e decision
il the proje
ce for estim
client, ba
the allowa
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ce, the est
reater tha
that requ
carpet, tile
too many u
work, suc
of sources
rectly from
arious con
or every se
own cost
job costs f
average u
ellent cost
o. Howeve
ely on pub
mes to pric
data from
ng local w
model of
e the costs
s regardin
ect is unde
mators to
ased upon
ance is adj
imator ret
n the allow
ire owner
e, or light f
unknown v
ch as rock
. When it
m your ven
nstruction
ection of w
databases
from vario
unit prices
t reporting
er, not all
lished cos
ing labor.
m the vario
wage rates
f cost con
s of items
ng quantiti
er constru
plug in an
a best gu
justed up
turns the
wance, the
involveme
fixtures. T
variables t
excavatio
comes to
ndors and
cost guide
work for la
s based on
ous project
s for their
g system i
companies
t data for
Some
ous guides
in the for
ntrol"
 
 
at
es
uction.
n
ess at
or
e
ent
They
to be
on or
retail
es
bor,
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ts
self-
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their
but
mula.
21/144
Cha 
8
The
Tod
est
Wh
per
the
The
equ
ver
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pro
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9
Afte
list
of w
ven
sub
pter 2
8. Obtain
e final com
day, subco
imate.
ile the est
rformed wo
work they
e team mu
uipment as
ry importa
vered, ther
oblem on b
subcontra
• Solicit
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9. Solicit
er a comp
or chart r
work or tra
ndor quote
bcontracto
"Propo
ning Sub
mponents o
ontractor a
timating te
ork, they
y are not g
ust also be
ssociated w
nt. If one
re will be a
bid day. Th
acted wor
the bids.
ve the bids
ze the bids
e the bids
ing the
lete review
representin
ades will b
es, and wh
r/vendor l
osed appr
bcontrac
of your est
and vendo
eam is put
must also
going to s
e soliciting
with the w
of the tra
a big hole
here are fo
k and ven
s.
s.
.
Bids
w of the p
ng all the
be self-per
hich will re
list.
roach to c
/4513 
ctor and
timate are
r bids mak
tting toget
be gather
elf-perform
vendor p
work. The
des neede
in the est
our steps t
dor pricing
lans and s
work of th
rformed, w
equire both
construct
Vendor
e subcontr
ke up the
ther their
ring prices
m.
ricing for a
managem
ed to comp
timate, wh
to ensure
g are com
specs, the
he contrac
which will r
h. Table 2
model of
r Bids
ractor and
bulk of th
own pricin
s from sub
all of the m
ent of this
plete the p
hich will le
that the s
plete and
estimator
ct, showing
require su
.2 shows a
f cost con
vendor bi
e construc
ng for self-
bcontracto
materials a
s process
project is n
ad to a big
solicitation
thorough
r will creat
g which ar
bcontracto
a sample
ntrol"
 
 
ids.
ction
-
rs for
and
is
not
g
of
:
te a
reas
or or
22/144
Cha 
Afte
ven
Alth
con
con
quo
hav
rep
It is
to g
the
of w
not
quo
est
can
And
play
Put
sub
on
as w
num
Mas
num
the
up
ons
Table 2-2
pter 2
er it is det
ndor or a s
hough sub
nstruction
ntractors d
otation to
ve a past h
presenting
s importan
give the su
ir decision
whom they
t want to b
ote that do
imated co
n to avoid
d even tho
y it safe th
tting It All
bcontracte
the mater
well. The e
mbers. As
ster Forma
mbers hav
project, y
with your
s.
"Propo
termined w
subcontrac
bcontracto
news serv
do, most e
a selected
history. Th
the same
nt that the
ubcontract
n not to bi
y can expe
be left han
oesn’t arriv
st of the w
this situat
ough it tak
han to be
Together
d work int
rial takeoff
estimator
you can s
at discusse
ve been ad
you must a
final bid.
osed appr
which area
ctor, a form
rs and ven
vices for b
stimators
d list of su
hey usually
trade.
ese reques
tors enoug
d on the p
ect to rece
nging on b
ve. At the
work in qu
tion.
kes a lot of
left standi
It’s time t
to one est
f sheets ar
must be v
see in Tabl
ed earlier
dded down
also apply
These last
roach to c
/4514 
as of work
mal solicit
ndors watc
id notices
choose to
bcontracto
y send out
sts go out
gh time to
project. It
eive quote
id day wa
last minu
estion mig
f time to s
ing withou
to compile
imate sum
re transfer
very carefu
le 2.3, the
in the cha
n at the bo
y taxes, ge
t few item
construct
will requi
tation proc
ch the trad
as closely
o send out
ors and ve
t requests
very early
o put toget
is crucial t
es from on
iting for a
ute, you w
ght be. Es
solicit all o
ut a trade
e all of you
mmary. All
rred to the
ul to accur
e estimate
apter. How
ottom. Onc
eneral ove
s are ofte
model of
re a price
cess gets u
de journal
y as the ge
their own
endors wit
to severa
y in the es
ther a pric
that the e
bid day. T
n expecte
ill be left t
timators d
of the bids
covered b
ur self-perf
of the su
e estimate
rately tran
summary
wever, a fe
ce you cal
rhead, and
n referred
f cost con
quote fro
underway.
s and
eneral
n requests
h whom th
al compani
stimating p
ce or notify
stimator b
Trust me,
d subcont
to guess w
do everyth
, it is far b
by a reliabl
formed wo
btotals ca
e summary
nsfer all of
y follows th
ew very im
culate the
d profit to
d to as pro
ntrol"
 
 
m a
.
for
hey
ies
process
y you of
be aware
you do
ractor
what the
hing they
better to
le price.
ork and
lculated
y sheet
f the
he CSI
mportant
e cost of
come
oject add-
23/144
Cha 
1
You
pay
colu
wor
mu
the
fam
pay
to k
Wh
app
mu
alon
the
clas
Table 2-3
pter 2
10. Taxes
u include t
yroll taxes
umns: ma
rk and equ
st be adde
labor colu
miliar with
yroll add-o
keep it sim
en I was r
proximatel
ch “burde
ne will cau
y might se
ssifying as
• Employ
• Worke
• Unemp
• Employ
holiday
3
"Propo
s
two types
. That’s w
terial, lab
uipment b
ed to the m
umn. We a
payroll ta
ons are no
mple.
running m
ly 14 to 20
n” labor re
use a gene
elf-perform
s payroll ta
yer’s porti
rs’ compe
ployment t
yee benef
ys, and so
osed appr
of taxes in
hy it is im
or, equipm
ids will alr
material c
all know w
xes (also
t taxes at
y own con
0 people, i
eally did p
eral contra
m. The per
axes includ
ion of Soc
nsation
tax
its (health
o on)
roach to c
/4515 
n your con
mportant to
ment, and
ready have
olumn, an
what sales
referred to
all, but yo
nstruction
it really su
put on the
actor to su
rcentage i
de the foll
ial Securit
h insurance
construct
nstruction
o divide yo
subcontra
e taxes inc
nd payroll t
taxes are
o as labor
ou merely
company,
urprised m
payroll. S
ubcontract
s significa
owing:
ty tax
e, life insu
model of
estimate:
our summa
acts. The s
cluded, bu
taxes mus
, but you
burden).
refer to t
, employin
me to learn
Sometimes
work that
nt. Those
urance, va
f cost con
sales tax
ary into fo
subcontrac
ut sales tax
st be adde
may not b
Some of t
hem as ta
ng
n just how
s this facto
t otherwis
costs that
cation, pa
ntrol"
 
 
and
our
cted
x
ed to
be as
the
axes
or
e
t I am
aid
24/144
Chapter 2  "Proposed approach to construct model of cost control"
 
/4516 
 
11. General Overhead
I’ve already mentioned job-specific overhead. These costs include such
things as the job site office trailer, portable toilets, and job photographs.
They are estimated item by item relative to a specific job.
General overhead is a different story. Basically, general overhead
represents the cost of doing business. These are expenses that would be
incurred by the company whether they had a job to build or not, such as
office expenses, executive salaries, and automobile insurance. General
overhead is applied to the estimate as a percentage of total cost. This
percentage will vary from company to company see Table (2-4).
Table 2-4 General Overhead
25/144
Chapter 2  "Proposed approach to construct model of cost control"
 
/4517 
 
12. Profit
The goal for every project is to make a profit. Profit is what’s left after all
costs and expenses associated with the job have been paid. The estimate
represents the contractor’s best guess as to what those costs and expenses
are going to be. Profit is expressed as a percentage of the total estimated
cost. Profit is rarely a fixed percentage in construction.
The estimating team will make a determination as to how much that
percentage should be for any given job. As previously stated, when times
are tight in construction and there is very little work to bid, profit margins
may be quite small. On the other hand, when there is a lot of construction
going on in a particular market and demand is high, profit margins will be
adjusted upward. Either way, profit is an estimated number just like every
other number in the bid. It is highly unusual for the actual cost of the
project to exactly match the estimated cost of the project.
If we consider each division of our estimate summary, and each of our add-
ons, the most likely scenario will be that some divisions (and add-ons) will
be over the individual division estimates, and some will be under the
individual estimates. However, it’s the final number that you are most
concerned with. The goal is to have the actual overall cost of the project at
the estimate or under after all point we described we can illustrate the cost
estimation in figure (2-4).
26/144
Cha  pter 2
Figure 2
"Propo
-4
osed apprroach to c
/4518 
construct model off cost con
 
ntrol"
 
 
27/144
Cha 
Sa
pter 2
ample F
"Propo
Forms o
Fig
osed appr
of Cost E
gure 2-5 F
roach to c
/4519 
Estimat
Forms of
construct
te
Cost Esti
model of
imate
f cost conntrol"
 
 
28/144
Cha  pter 2 "Propo
Figure
osed appr
e 2-6 Form
roach to c
/4520 
ms of Cos
construct
st Estima
model of
ate
f cost conntrol"
 
 
29/144
Cha  pter 2 "Propo
Figu
osed appr
ure 2-7 Fo
roach to c
/4521 
orms of C
construct
Cost Estim
model of
mate
f cost conntrol"
 
 
30/144
Cha  pter 2 "Propo
Figure
osed appr
2-8 Form
roach to c
/4522 
ms of Cos
construct
st Estimat
model of
te
f cost conntrol"
 
 
31/144
Cha  pter 2 "Propo
Figure
osed appr
2-9 Form
roach to c
/4523 
ms of Cos
construct
t Estimat
model of
te
f cost conntrol"
 
 
32/144
Chapter 2  "Proposed approach to construct model of cost control"
 
/4524 
 
2.1.2- Work Breakdown Structure (WBS)
To plan the project we must convert these into individual pieces of work that
must be done to complete the project. For this we need the ‘‘work breakdown
structure,’’ or WBS .The work breakdown structure is the most central item in
the project plan. Without it we do not have a definition of the work that has to
be done to complete the project.
Without knowing the work that has to be done we cannot possibly determine
the cost of the project or determine the schedule of the project.
Without knowing the cost or schedule of the project how will it be possible to
control the project or determine how much should be spent to complete it?
The amount of resources that must be used on the project and when they
must be made available cannot be determined without knowing the schedule.
Funding to do the project cannot be scheduled to be in place when the project
needs it without a time-phased budget for the project.
According to the Guide to the PMBOK, the definition of a work breakdown
structure is: ‘‘a deliverable oriented grouping of project components that
organizes and defines the total scope of the project work. To create a WBS is
a simple task: the project is first broken down into a group of subprojects.
Each of these subprojects can be broken down to sub subprojects. The sub-
subprojects can be broken down again and again until the desired level of
detail is reached. The level of detail is termed the' work package’’ level. The
work package is the lowest level of management that the project manager
needs to manage.
Below the work package other project team members may break down their
parts of the project into additional levels .Work packages can be broken down
into ‘‘activities,’’ and activities can be further broken down into ‘‘tasks.’’ The
reason that technique is so effective is that it follows the principle of ‘‘divide
and conquer. 'So, initially the project is broken up into a group of subprojects.
These subprojects are further broken down into sub-subprojects, and so on.
In this way the largest project we can imagine could be broken down into
subprojects. Since each of these subprojects could be considered to be a
project in its own right, any large project can be thought of as a family of
smaller projects that are interrelated. The important thing about project
management is that it is a powerful Methodology that adapts to any size
project or program. The tools and methodology that are used are similar in all
projects. The WBS is the tool that allows all projects to be broken down into
smaller, more manageable projects.
The end result of the WBS is a group of individual pieces of work defined.
Each of these small individual pieces of work must be assigned to. It is then
33/144
Chapter 2  "Proposed approach to construct model of cost control"
 
/4525 
 
possible to break the work packages down further before the actual work
assignments at the detail level are made.
The WBS is a hierarchical structure in which all of the major phases of project
work are organized in a logical manner. Simply stated, it is a layout of how
the work of the project ought to be performed and managed.
The WBS links together the project scope, the schedule, and the cost
elements, and forms the basis for the entire project information structure. It
provides the framework that captures the project’s work information flows, as
well as the mechanism for tracking the project’s schedule and progress.
It also provides the basis for summarizing and reporting the project’s cost
data. In essence, the WBS creates a common framework that.
• Presents the entire project as a series of logically interrelated
elements
• Facilitates project planning
• Provides the basis for estimating and determining project costs and
budgets
• Provides the mechanism for tracking project performance, cost, and
schedule
• Provides the basis for determining the resources needed to
accomplish project objectives
• Provides the mechanism for generating project schedule and status
Reports
• Triggers the development of the project network and control
systems
• Facilitates the assignment of responsibilities for each work element
of the project
• Graphically, we can imagine a WBS along the lines shown in Figure
2.10
34/144
Cha 
Th
pro
thro
finis
elem
act
Alo
of d
Pro
the
term
pter 2
ere are so
oject activi
ough spec
shing with
mental tas
ivities for
ng with a
detail is an
ject scope
appropria
ms of reso
"Propo
ome impor
ties is hie
cific projec
h work pac
sks at the
which dur
well-defin
n invaluab
e can easil
ate work p
ources and
Figur
osed appr
rtant featu
rarchical,
ct delivera
ckages. Ac
lowest lev
ration and
ned project
le tool for
y be expa
packages,
d schedule
re 2-10
roach to c
/4526 
ures to not
moving fr
bles (and
ccording to
vel in the W
budget fig
t scope do
managing
anded or d
and by ma
es.
construct
te here. Fi
om the ov
sometime
o the Proje
WBS and
gures can
ocument, a
g scope ch
iminished
aking the
model of
rst, the br
verall proje
es sub deli
ect work p
represent
be assign
a WBS wit
hange.
by includ
necessary
f cost con
reakdown
ect level, d
verables),
packages a
basic proj
ed.
th sufficien
ing or elim
y adjustme
ntrol"
 
 
of
down
, and
are the
ject
nt levels
minating
ents in
35/144
Cha 
2.1.2
It is
use
gen
to u
the
use
Con
info
buy
tha
Pro
Out
pro
rela
ulti
faci
pro
exa
org
unit
inte
esta
rep
com
pter 2
2.1- Ty
s importan
ed in proje
nerate the
use the W
identifica
ed that sho
ntractual
ormation a
yer. It is u
t is going
oduct-bas
tcome, suc
ototype. In
atively eas
mately int
ilitates cos
ovides a ba
ample of a
ganization
ts respons
egrated int
ablishes, i
porting rela
mpleting th
"Propo
pes of W
nt to recog
ects. The W
individua
BS to deve
tion of wo
ould not b
WBS (CW
and the tim
sually not
to be don
sed WBS
ch as the
n these kin
sy to break
to manage
st estimat
asis for co
product-b
nal break
sible for co
to the stru
n a hierar
ationships
he work. E
osed appr
Work B
gnize that
WBS that w
l pieces of
elop anyth
ork less eff
e confused
WBS). Thi
meliness o
t as detaile
e.
is most su
design and
nds of prod
k the proje
eable work
ion of the
mparison
based WBS
kdown str
ompleting
ucture. Th
rchical form
for the va
Example o
Figure
roach to c
/4527 
Breakdo
there are
we have b
f work tha
hing else w
fective. Ot
d With the
is breakdo
of informat
ed as the W
uitable for
d construc
duct-based
ect into de
k packages
various p
with the p
S is shown
ructure, k
the work
e clear ad
mat, accou
arious orga
f OBS is s
2-11
construct
own Str
many oth
een discus
t must be
would conf
ther break
e WBS are
own is use
tion that a
WBS that
projects t
ction of a t
d work bre
eliverables
s. A produ
roduct com
project’s a
n in Figure
known as
requireme
vantage o
untability,
anizationa
hown in F
model of
ructures
her types o
ssing mus
done in th
fuse the e
kdown stru
:
d to defin
a supplier w
is used to
that have
tunnel, or
eakdown s
s, sub deliv
uct-based
mponents,
ctual cost
e 2.11
OBS, the
ents of the
of an OBS
responsib
al units tha
igure 2.12
f cost con
s
of breakdo
st be used
he project
ffort and m
uctures tha
e the repo
will supply
o plan the
a tangible
a new fig
structures,
verables,
WBS Also
, which in
Performa
organizati
e project a
is that it
bility, and
at are invo
2 that proj
ntrol"
 
 
owns
only to
t. To try
make
at are
orting
y to the
work
e
hter Jet
, it is
and
turn
nce. An
onal
are
olved in
ject
36/144
Cha 
invo
pro
Pro
pro
pro
inte
low
pro
com
be
pter 2
olves a se
oject,
ocess-orie
ocess-orien
oject evolv
egrated wi
west level,
oduct cost
mbination
used. An e
"Propo
ries of pha
ented WB
nted WBS
ves over tim
ith the ove
while the
 informat
of feature
example o
osed appr
ases or ta
BS is more
involves c
me. In gen
erall proje
product-b
ion. In add
s from bot
of a proces
Figure 2
roach to c
/4528 
sks, such
e appropri
completion
neral, a pr
ct, becaus
based WBS
dition, a h
th product
ss-oriented
-12
construct
as in an in
ate. Unlike
n of major
rocess-orie
se the task
S is most u
hybrid stru
t- and pro
d WBS is s
model of
nformation
e a produc
r tasks in s
ented WBS
ks can be
useful for
cture that
cess-base
shown in F
f cost con
n systems
ct-based W
sequence a
S can be b
delineated
accumulat
t involves
ed structur
Figure 2.1
ntrol"
 
 
WBS, a
as the
better
d to the
ting
a
res can
3
37/144
Cha 
In t
pro
be
pur
oth
Bill
BOM
of a
pter 2
the presen
oject mana
used. How
rpose, the
er organiz
l of mate
M in a hier
assembly a
"Propo
nt-day pro
agement s
wever, the
organizat
zational un
rial (BOM
rarchical w
are shown
Figure 2-
osed appr
oject enviro
ystems, b
choice re
tion’s infor
nits, and,
M). The va
way. Produ
n as a ‘‘goe
-13
roach to c
/4529 
onment, w
oth types
ally depen
rmation sy
ultimately
arious prod
ucts produ
es into’’ hi
construct
with its pro
(product
nds on the
ystem and
, how use
duct comp
uced, suba
ierarchy
model of
oliferation
and proce
e particula
how it int
ful it is as
ponents are
assemblies
f cost con
of compu
ess) of WB
r project,
terfaces w
a plannin
e included
s, and lowe
ntrol"
 
 
terized
S can
its
with the
ng aid.
d in the
er level
38/144
Chapter 2  "Proposed approach to construct model of cost control"
 
/4530 
 
2.1.2.2 Work Breakdown Structure Development
Before any Work Breakdown Structure can be produced, it is essential that
careful thought is given to the number and size of networks required. Not only
is it desirable to limit the size of network, so we should be considered in
relation to the following aspects:
1. The geographical location of the various portions of the project.
2. The size and complexity of each Project.
3. The process or work being carried out in the Project when the plant is
complete.
4. The engineering disciplines required during the design and construction stage
5. The erection procedures.
6. The stages at which individual Project or systems have to be
completed.
7. The site organization envisaged.
8. Any design or procurement priorities.
So Constructing a WBS is a group effort. The responsibility for the top three
levels usually lies with the project manager, who typically works with other
managers to develop the major deliverables found there. At the lower levels,
however, input into the details should come from that Responsible for the
day-to-day work. In addition to the project team, each person responsible for
a specific work package must be consulted.
There are no universal standards as to the number of levels to use in a WBS.
This is typically dictated by the complexity of the project, and the number and
nature of the activities. Most have three or four levels at a minimum, although
more may be needed if there are significantly more sub deliverables and work
packages.
As a rule, the greater the number of work packages, the greater the amount
of time, effort, and cost incurred in developing the WBS. However, the
increased number of packages also significantly enhances the accuracy of
project status monitoring and reporting. On the other hand, larger but fewer
work packages reduce the cost of WBS development, but the accuracy of
project status monitoring and reporting suffers.
In most practical situations, a compromise on the number and size of work
packages is struck.
The most important levels in the WBS development process are the top few
levels, which represent the project and associated major deliverables, and the
lowest levels, which represent the work activities that are to be scheduled and
resourced.
39/144
Chapter 2  "Proposed approach to construct model of cost control"
 
/4531 
 
Typically, the intermediate levels are an aggregation of the lower-level
activities, and serve as the mechanism for reporting. The intermediate levels
can also be used to set up cost accounts through which cost and budgetary
information can be gathered and monitored. A WBS should be constructed by
separating the total work, in a hierarchical framework, into discrete and
logical sub elements that reflect completeness, compatibility, and linkage to
the project’s end item.
This hierarchical structure facilitates the aggregation of budget and actual
costs incurred into larger cost accounts. In this way, the total value of the
work at one level is an aggregation of all the work completed one level below,
which enables project work and cost performance to be monitored. The WBS
should also reflect all of the project requisites, as well as functional
requirements, and should incorporate both recurring and nonrecurring costs.
In a WBS, the lowest level consists of tasks of short duration that have a
discrete start and end point. Because they consume resources, costs are often
reported at this work package level. Work packages serve as control point
mechanisms for monitoring and reporting performance, in terms of whether
associated tasks were completed according to specifications, on time, and
within budget.
The responsibility for completing work Packages should be assigned to the
appropriate organizational units and individuals, and the resulting WBS should
reflect the reporting requirements of the organization. We can develop a WBS
by one of two methods:
• Top-down approach begins with the total work required to
produce the project’s end product. This is successively broken down,
First into major work blocks and then into more detailed work
package levels until a required level of detail has been achieved.
• Bottom-up approach begins with a comprehensive list of all the
activities or tasks required to complete the project. Then it moves
up, in a hierarchical format, first to work packages, then to cost
accounts, and so on, until the top level represents the total work to
be performed. It is highly unlikely that the first version of the WBS
will be the last.
More often than not, it will undergo frequent revisions in response to
Feedback that works must be broken into more detailed tasks. Clearly, only
individuals who have a thorough knowledge of the work to be performed can
conduct the appropriate level of detailed breakdown.
In addition, it is impossible to establish estimates of task duration, resource
requirements, and the network of precedence relationships among activities
without complete agreement on details at the lowest level.
40/144
Chapter 2  "Proposed approach to construct model of cost control"
 
/4532 
 
2.1.3- Cost Codes
Once the budget, WBS is confirmed, each activity in the budget is assigned a
cost code. Cost codes are used to track all items of work contributing to the
overall project Costs. That includes material, labor, equipment, subcontracts,
and overhead. All job information regarding cost is tracked via these cost
codes as shown in Figure 2.14
Every item on a material invoice, every man-hour logged on a time card, and
every subcontractor payment are assigned a cost code and recorded. These
codes are used to compare actual job costs with the estimated job costs
throughout the construction process. These cost codes usually start with the
original CSI reference number associated with the activity, and then for
further detail another number is assigned that represents the type of cost. For
example:
Activity Code
• Material 1
• Self-performed labor 2
• Subcontracted labor 3
• Equipment 4
• Job site overhead 5
So, if I were the job superintendent tracking building insulation cost on a
project, I would assign the following cost codes to the invoices that came
across my desk:
Item Cost Code (CSI Number — Type of Cost)
• Material invoice 07 21 00-1
• Subcontractor bill 07 21 00-2
• Equipment rental 07 21 00-3
Larger contractors will also assign a year and job number to the cost code.
For example, assuming that the previous project was a large contractor’s 14th
job of this year, the material invoice might be coded as follows:
• Year project started: 2010
• Project no.: 14
• CSI division: 07 21 00
• Type of cost: 1 (material)
• Cost code: 2010 14 07 21 00-1
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Chapter 2  "Proposed approach to construct model of cost control"
 
/4533 
 
Smaller contractors might simply identify each of the invoices by the client
name along with the cost code.
Smith 07 21 00-1 the point is to make the codes as user-friendly as possible
while still providing the level of detail needed to properly analyze the project
costs. Each invoice amount would be recorded according to the cost code
assigned to it by the superintendent.
Material costs, labor costs, and equipment costs could be tracked separately,
or you could combine them into a single work package total. Either way, you
could compare the actual cost to do the building insulation with the budgeted
amount and note any discrepancies.
All invoices and subcontractor billings are eventually transferred to the
contractor’s cost accounting department. The accounting department also
tracks the project according to the cost codes and submits reports identifying
total material, labor, subcontract, equipment, and overhead costs incurred on
the job. The project manager uses these and other reports to monitor the
project performance from a big-picture perspective.
Spot Check the Cost Coding
It’s not uncommon for a vendor to list more than one cost code item on a
single invoice. For example, the same invoice could have materials that fall
under three different divisions — let’s say lumber (Work packages 6), mortar
(Work packages 4), and rebar (Work packages 3). When this happens, it is
important to make sure that someone is taking the time to separate the
material costs according to their respective Codes as shown in Figure 2.14.
Unfortunately, people get lax, and they start lumping all of the material under
one code. This, of course, taints the accuracy of the information, which results
in faulty reporting. As a construction manager, I was always vigilant about
doing random checks on job tickets just to make sure everything was being
properly coded. It was part of my management systems quality assurance
program.
42/144
Cha 
Figur
pter 2
re 2-14
Figu
"Propo
ure 2-14
osed apprroach to c
/4534 
construct model off cost conntrol"
 
 
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Chapter 2  "Proposed approach to construct model of cost control"
 
/4535 
 
2.1.4- Depreciation
Depreciation is a necessary function in financial management, because
without Depreciation the irregularities in the fundamental financial reports of a
company would vary considerably and make it difficult to compare one year or
one quarter to the next. This is because large investments in assets do not
occur on a regular basis.
If the total cost of an investment were reflected in the financial time period in
which it occurred, the effect on net profits would be considerable in this
period, and then the net profit would rise significantly in the next period. What
is done with depreciation? The cost of the new asset is spread out over the life
of the asset. This allows the company to claim some of the cost each year
rather than the total cost of the asset all at one time.
• Straight Line Depreciation
Straight line depreciation is the depreciation method that allows an equal
amount of depreciation to be taken each year. The amount of depreciation is
determined by subtracting the salvage value of the asset at the end of its
useful life from the purchase price of the asset. The remaining value is called
the book value. The book value is divided by the number of years, and this
amount is expensed from the asset each year.
For example, a company buys a large machine for $1 million. The purchase is
made with cash. In the accounts for this transaction, the cash account is
reduced by $1 million, and the machine account is increased by the amount of
$1 million. There is no effect on the liabilities or owner’s equity side of the
accounting equation and it remains balanced.
The cost of this machine must eventually be recognized. The machine has a
useful life of ten years and is worth $100,000 at the end of its useful life in
terms of scrap value or the ability to sell the machine to someone else. This
means that the value of the machine that must be depreciated is $900,000.
Since the life of the machine is ten years, the value depreciated each year is
$90,000. This is known as straight line depreciation (table 2-5).
44/144
Cha 
Acc
dep
The
red
am
is t
mu
This
paid
the
Be
yea
acc
dou
T
pter 2
• Accele
celerated d
preciated f
e reason fo
uced in a
ount. In a
he same a
ch earlier
s means t
d in the ea
taxes wil
cause of t
ars allow u
celerated d
uble declin
Table 2-5
"Propo
erated De
depreciatio
from the a
or this is t
given yea
ccelerated
as in straig
in the use
hat more
arly part o
l be highe
the presen
us to use t
depreciatio
ning balanc
osed appr
epreciatio
on method
assets to b
to reduce t
r, the amo
d deprecia
ght line de
eful life of
equipmen
of the usef
r than in s
nt value of
hat money
on are com
ces.
roach to c
/4536 
on
ds are use
be applied
the net pro
ount of tax
tion meth
epreciation
the asset.
nt expense
ful life of t
straight lin
f the mone
y in the pr
mmonly us
construct
d to allow
earlier in
ofit after t
x that a co
ods the to
n, but the
.
e is recogn
he asset p
ne depreci
ey, taxes t
resent Yea
sed: sum o
model of
the expen
the useful
taxes (NO
ompany pa
otal amoun
time that
nized and l
purchased
ation.
that are de
ars. Two ty
of the yea
f cost con
nses that
l life of the
PAT). If N
ays is less
nt of depre
it is taken
ower taxe
. In later y
eferred to
ypes of
rs’ digits a
ntrol"
 
 
are
e asset.
OPAT is
s by this
eciation
n is
es are
years
later
and
45/144
Cha 
The
fina
acc
the
6, f
The
hig
yea
num
low
divi
Lik
the
me
sta
dep
rem
rea
yea
T
pter 2
• Sum o
ere is no s
ancial reas
counting p
years of t
for a ten Y
e amount o
hest digit
ar the last
mber is the
wer year’s
iding 9 by
• Doubl
ke the sum
double de
thod for a
ndard acco
preciable v
maining de
ched. With
ars is much
Table 2-6
Table 2-7
"Propo
of the Yea
cientific ba
son for usi
ractice. Th
the useful
Year usefu
of depreci
year and
year’s dig
en multipl
digit is use
55. Each
le Declini
m of the ye
eclining ba
cceleratin
ounting pr
value of th
epreciable
h this met
h higher t
osed appr
ars’ Digits
asis for th
ng this ca
he calculat
life of the
l life, the t
ation in th
dividing th
git is used,
ied by the
ed. In the
year the n
ing Balan
ears’ digits
alance calc
g the depr
ractice. Th
he item. Th
value of t
thod the a
han in the
roach to c
/4537 
ts.
e sum of t
lculation e
tion is mad
e equipme
total is 55
he first yea
his by the
, making t
e book val
second ye
numerator
ces
s deprecia
culation ei
reciation o
he percent
he next ye
he item, a
mount tak
e later yea
construct
the Years’
except tha
de by tota
nt. Thus,
ar is deter
sum of th
the calcula
ue. In the
ear the de
r declines
tion, there
ither. It is
of equipme
t of deprec
ear’s depre
and so on
ken as dep
rs (table 2
model of
’ digits me
at it has be
aling the d
as can be
rmined by
he years’ d
ation 10 di
remaining
epreciation
by one ye
e is no scie
, however
ent and ha
ciation is t
eciation is
until the s
preciation
2-7).
f cost con
ethod. The
ecome a s
igits repre
seen in ta
taking the
digits. In th
ivided by 5
g years, th
n is calcula
ear.
entific bas
r, a consist
as become
taken on th
taken on
salvage va
in the ear
ntrol"
 
 
re is no
tandard
esenting
able 2-
e
he first
55. This
he next
ated by
sis for
tent
e a
he
the
alue is
rly
46/144
Chapter 2  "Proposed approach to construct model of cost control"
 
/4538 
 
2.2- Construct model template –Excel-Format
2.2.1- WBS template sheet
2.2.1.1- WBS sheet template consist:
The sheet consist of a group of column which we will fill it with date which we
will knowing later the kind of date but first we will know the format of data
but before illustrate the sheet format we must know the difference between
budget & price
Budget: it consist of dry cost only the direct cost of item
Price: it consist of direct cost, percentage of in direct cost & over head
1- The first set will consist of WBS code according to BOQ
2- The second set will consist of item description and unit of measure
3- Third set it will consist of rate the budget rate (direct cost) & price rate
4- it will the Quantities column that is:
• Contract Quantity which we sign our contract about this Quantity
• Actual Quantity it describe the situation of our quantity if it is above or
below the contract quantities
• Invoice Quantity it describe the quantity we take from the client
• Provision Quantity it describe we are execute but it doesn't add to the
invoice quantity
5- it will the Budget / price column that is
• Contract Amount it describe the amount of money according to Price this
by multiply the contract rate with contract quantity
• Budget Amount it describe the amount of money according to budget this
by multiply the budget rate with contract quantity
• budget Forecast Amount it describe the amount of money according to
budget after change of quantity this by multiply the budget rate with
Actual Quantity
• budget Allowance Amount it describe the amount of money according to
budget but for invoice quantity this by multiply the budget rate with
Invoice Quantity and Provision Quantity
• invoice Amount it describe the amount of money according to Price but for
invoice quantity this by multiply the Price rate with Invoice Quantity and
Provision Quantity
47/144
2.2.
Ta
Cha 
1.2- WBS
ble (2-8) W
pter 2
S sheet te
WBS shee
"Propo
emplate
et forms
osed appr
forms: a
roach to c
/4539 
as shown
construct
in table
model of
(2-8)
f cost conntrol"
 
 
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Chapter 2  "Proposed approach to construct model of cost control"
 
/4540 
 
2.2.2- Expenses template sheet
2.2.2.1- Expenses sheet template consist:
Expenses sheet it contain with every pent we spend on the project which
consist of two major item
1- Direct Expenses which are
• first set of column it describe the codes which we used with direct
expenses
• The second ser will consist of item description and unit of measure
• the third set of columns it describe the monthly expenses (unit, cost)
• that last set is the cumulative cost , units
2- indirect Expenses which are
• first set of column it describe the codes which we used with direct
expenses
• The second ser will consist of item description and unit of measure
• the third set of columns it describe the monthly expenses (unit, cost)
• That last set is the cumulative cost , units
49/144
Cha 
2.2.2
pter 2
2.2- Expe
• Direct
"Propo
enses sh
Expenses
Table (
osed appr
eet temp
sheet form
(2-9) Dire
roach to c
/4541 
plate for
ms
ct Expens
construct
rms: as s
es sheet f
model of
hown in ta
forms
f cost con
ble (2-9),
ntrol"
 
 
(2-10)
50/144
Cha  pter 2
• Indirec
T
"Propo
ct Expense
Table (2-10
osed appr
es sheet te
0) indirect
roach to c
/4542 
emplate fo
t Expenses
construct
orms
s sheet for
model of
rms
f cost conntrol"
 
 
51/144
Chapter 2  "Proposed approach to construct model of cost control"
 
/4543 
 
2.2.3- Storage template sheet
2.2.3.1- Storage template sheet consist:
1- material storage
• first set of column it describe the codes which we used with material
• The second ser will consist of item description and unit of measure
• the third set of columns it describe the amount of material that will
deduct or increase about expenses sheet (unit, cost) this material that
doesn't include in work
2- Subcontractors reserve
• first set of column it describe the codes which we used with material
• The second ser will consist of item description and unit of measure
• the third set of columns it describe the amount of work that will deduct
or increase about expenses sheet (unit, cost) but to Subcontractors
52/144
Cha 
2.2.3
pter 2
3.2- Stor
"Propo
age tem
Table (2-
osed appr
plate sh
-11) Stora
roach to c
/4544 
eet form
age sheet
construct
ms: as sho
forms
model of
own in table
f cost con
e (2-11)
ntrol"
 
 
53/144
Chapter  3  " the application steps & methods "
 
3- the application steps & methods
Chapter 3  " the application steps & methods "
 
/421 
 
3- The application steps & methods
3.1-Collect Actual Cost data
Once project work begins, the project manager systematically collects
status information according to the methods and frequency previously
determined. When status information is collected, the project manager
compares it with the schedule, budgets, and scope identified in the project
plan to determine the variances.
So before the project begins, the project manager should consult with the
project team, the customer, and the client to determine the information
needs, data collection methods, and frequency of data collection.
 
 
3.1.1- Sources of information
At the heart of every project control system are information and a good
reporting process. Successful construction management and project control
depend on sound information, which comes from actual project performance
data. This data originates in the field and is reported on a daily, weekly, and
monthly basis. The following are some of the sources of information used
to track job performance and feedback into the project control system:
1. Job logs
2. Diaries
3. Daily field reports
4. Time cards
5. Visual Records
6. Correspondence
7. Subcontractor billing statements
However, this information serves two critical functions: It is used to detect
variances between the actual cost, time, and productivity performance and
the planned estimate and schedule. It is used to develop the historical
estimating databases and productivity factors used on future projects. Let’s
take a look at some of these mechanisms now.
1. Job Logs
Logs are used to track a number of regular activities occurring on the job
site.
• Transmittal logs track the dates and addressees of all transmittals
as well as the actual information being transmitted, such as shop
drawings; product cut sheets, samples, or some other submittal.
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Chapter 3  " the application steps & methods "
 
/422 
 
• Delivery logs help keep up with all of the material and equipment
deliveries that are made to the site. The log contains the date of the
delivery and the material received, and it notes any problems with
the order and the actions taken.
• RFI logs track all requests for information submitted to the project
participants and their responses. The date the RFI was sent and the
date that the response was received are also noted in the log.
2. Diaries
Every member of the project team, but especially the superintendent,
should be encouraged to keep a project diary. The diary is used to track all
of the day’s events in a summarized fashion and in the individual’s own
words. Diaries are used to note daily work activities, conversations,
observations, and any other information worth recording.
It is important that each member of the team keeps their own diary,
because different people will have different interactions and conversations
throughout the day. The diaries provide a reliable historic record and can
become very important when disagreements or discrepancies arise on the
job. Handwritten diaries are often permissible in courts as evidence of
actual events and conversations.
3. Daily Field Reports
In addition to the informal project diaries, most construction companies
require that a more formal record be kept. These field reports are intended
to simplify the capture of some fundamental information needed to track
job progress and confirm that various project requirements are being met
the following are the types of information recorded:
• The name of the individual making the report
• The date, project name, and location
• A brief description of the day’s activities
• The temperature and general weather conditions
• The contractor’s own work forces on the job
• The subcontractors’ personnel on the job site
• Materials or equipment delivered
• Equipment used on the job
• Visitors to the job site
• Other notable events
Daily reports are often summarized into weekly or monthly reports that are
distributed to upper management within the company. These reports make
up some of the data used to analyze project performance and make
adjustments to the overall project plan.
55/144
Cha
4. T
If t
gre
labo
ma
ext
The
to c
esp
car
ma
On
eac
wor
car
for
The
labo
sup
asp
pur
the
tea
pter 3 
Time card
he popula
eatest risk
or records
nagers in
remely va
e time card
calculate w
pecially if y
ds provide
nager to t
large proj
ch trade or
rkers reco
ds are com
accuracy
e informat
or report,
perintende
pects of th
rpose of th
m with bu
m keep th
ds
r adage “T
to the con
s is one of
the field.
aluable to t
ds provide
wages and
you are on
e the fund
track and m
jects, time
r labor gro
rd their ho
mpleted, t
before bei
ion gather
typically p
ent. The re
e work. La
he report i
udgeted la
he project
Time is mo
nstruction
the most
The data t
the constr
e the payro
d distribute
ne of the w
amental in
monitor pr
e cards are
oup workin
ours on a
hey should
ing sent to
red from t
prepared b
eport track
abor is cat
s to summ
bor costs.
on target
Table (3-1)
" the a
/423 
oney” hold
schedule
important
that they
ruction com
oll clerk w
e paycheck
workers ex
nformation
roductivity
e usually f
ng on the j
weekly tim
d be revie
o the payr
he time ca
by the sup
ks labor ho
tegorized a
marize cum
This infor
for meeti
Time Cards
applicatio
ds true, th
and budge
t functions
collect by
mpany.
with all of t
ks which i
xpecting a
n needed b
y and labo
filled out b
job. If it is
me card. I
ewed and c
roll clerk s
ards is use
perintende
ours and d
and tracke
mulative la
rmation he
ng its cost
s
on steps &
en labor r
et Keepin
s of constr
way of tim
the inform
s pretty im
check. In
by the con
or expendit
by supervis
s a small j
n either in
checked by
ee table (
ed to creat
ent or assis
dollars spe
ed by cost
abor costs
elps the m
t and sche
& method
represents
ng accurate
ruction
me cards i
ation need
mportant,
addition,
nstruction
tures.
sory perso
ob, the in
nstance, o
y the supe
3-1).
te a week
stant
ent on vari
t codes, th
and comp
manageme
edule goals
ds "
 
 
s the
e
s
ded
time
onnel for
dividual
nce the
erintenden
ly
ous
he
pare
nt
s.
nt
56/144
Cha
5. V
You
cert
rec
con
writ
6. C
Eve
par
arc
sup
gro
the
incl
pter 3 
Visual Re
u’ve heard
tainly the
ording wo
nstruction
tten repor
Correspon
ery day, nu
rticipants.
hitects, en
ppliers, tes
oups. All of
duration
lude the fo
• Submi
• Payme
• Punch
• Chang
• Reques
• Letters
• Emails
• Faxes
cords
the expre
case in co
rk progres
methods,
rts.
ndence
umerous c
Emails, le
ngineers, o
sting organ
f the corre
of the pro
ollowing:
ttals
ent reques
lists
e orders
sts for info
s
s
ession “A p
onstruction
ss on the j
highlight
communic
etters, and
owner rep
nizations,
espondenc
oject. The
sts
ormation
" the a
/424 
picture is w
n. There a
job site. P
and captu
ations are
d faxes fly
s, building
governme
ce must be
types of d
applicatio
worth a th
re many r
rogress ph
ure problem
e generate
back and
g officials,
ent agenci
e field and
ocuments
on steps &
housand w
reasons fo
hotos help
m areas, a
d among t
forth amo
subcontra
es, and co
recorded
s that mus
& method
words.” Thi
r visually
p documen
and supple
the projec
ong the
actors, ma
ommunity
througho
st be saved
ds "
 
 
is is
nt
ement
ct
aterial
ut
d
57/144
Chapter 3  " the application steps & methods "
 
/425 
 
3.1.2- Data Required From Procurement Department
 
1. Requirements
• Log every 15 days with all material imported to each project log contain
(material item ,code of material , supplier name , unit of price & quantity of PO)
• List of material that finished its finance benefits to double check on the
data from finance department.
• The procurement team shall record every material item in this log and
attached with statement.
• The sub contractor contract shall be review by control team and soft copy
of the contract shall be send to our team.
2. Flow chart
It describe the process between Procurement team and other department
as shown in figure (3-1)
58/144
 
Cha
3. For
We
we
pter 3 
rms
will descr
shown in
ribe differe
table (3-2
Figure
ent form re
2), (3-3), (
 
e (3-1) data
" the a
/426 
equired fr
(3-4)
a flow betw
applicatio
om Procur
ween Procu
on steps &
rement De
rement tea
& method
epartment
am and othe
ds "
 
 
as
er
 
59/144
Chapter 3 
Taable (3-2) L
" the a
/427 
Log of mate
applicatio
erial import
on steps &
ted
& methodds "
 
 
 
60/144
 
 
Chapter 3 
Taable (3-3) Q
" the a
/428 
Quotations
applicatio
s Compariso
on steps &
on Sheet
& methodds "
 
 
 
61/144
Chapter 3 
Table (3--4) Recomm
for Quo
" the a
/429 
mended Su
otations list
applicatio
bcontracto
t
on steps &
ors
& methodds "
 
 
 
62/144
Cha
3.1.3-
1. Req
 
• d
a
• T
 
2. Ste
 
• H
i.
ii.
iii.
iv.
v.
• O
i.
ii.
iii.
• T
i.
ii.
pter 3 
- Data R
quiremen
deliver per
asset in pr
The import
eps of wo
How we en
Record th
The man
The stora
after chec
The stora
manger
The accou
material d
Out of mat
The sign
The place
The purp
The roll of
Get daily
The accou
must invo
Require
nts 
riodic repo
roject and
tant of thi
ork
nter the m
he importe
on the ga
age man re
ck of exist
age make
unt take t
daily ,wee
terial from
of the For
e will take
ose of tak
site accou
report fro
unt make
olve the co
Figure (3
ed From
ort from th
date of in
s report to
material to
ed materia
ate sign off
eceive the
t the sign
material c
he informa
ekly month
m the stora
rman or en
it
ken materi
unt
om the sto
every 15
ode of ma
-2) step of
" the a
/4210 
m Storag
he storage
n and out t
o specify t
the projec
al on the e
f the bill o
e material
of entranc
card and ta
ation and
hly
age
ngineer
al
orage abou
day repor
terial the
enter mate
applicatio
ges
e team con
the value o
the accura
ct see figu
entrance g
or receiving
and take c
ce gate
ake the ap
make the
ut in/out m
t about in
amount of
erial to the
on steps &
ntain the c
of bill if it
ate losses o
ure (3-2)
ate
g balance
copy of th
pproval fro
report of
material
/out mate
f money fr
project
& method
code of ma
exist.
of materia
e bill or PO
om the pro
received
erial the re
rom the b
ds "
 
 
aterial , all
al
O
oject
eport
ill
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Cost Control Process for Construction
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Cost Control Process for Construction
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Cost Control Process for Construction
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Cost Control Process for Construction
Cost Control Process for Construction
Cost Control Process for Construction
Cost Control Process for Construction
Cost Control Process for Construction
Cost Control Process for Construction
Cost Control Process for Construction
Cost Control Process for Construction
Cost Control Process for Construction
Cost Control Process for Construction
Cost Control Process for Construction
Cost Control Process for Construction
Cost Control Process for Construction
Cost Control Process for Construction
Cost Control Process for Construction
Cost Control Process for Construction
Cost Control Process for Construction
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Cost Control Process for Construction
Cost Control Process for Construction
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Cost Control Process for Construction
Cost Control Process for Construction
Cost Control Process for Construction
Cost Control Process for Construction
Cost Control Process for Construction
Cost Control Process for Construction
Cost Control Process for Construction
Cost Control Process for Construction
Cost Control Process for Construction
Cost Control Process for Construction
Cost Control Process for Construction
Cost Control Process for Construction
Cost Control Process for Construction
Cost Control Process for Construction
Cost Control Process for Construction
Cost Control Process for Construction
Cost Control Process for Construction
Cost Control Process for Construction
Cost Control Process for Construction
Cost Control Process for Construction
Cost Control Process for Construction
Cost Control Process for Construction
Cost Control Process for Construction
Cost Control Process for Construction
Cost Control Process for Construction
Cost Control Process for Construction
Cost Control Process for Construction
Cost Control Process for Construction

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Cost Control Process for Construction

  • 1. i   Helwan University Faculty of Engineer matarya Civil Department Cost Control Process for Construction Projects Dissertation Research in Partial Fulfillment of the Requirements for the Degree of master    Prepared By  Yasser M. Abouzeid   Supervision by Prof. Dr. Adel El-Samadony Prof. Dr. Randa kamel
  • 2. ii   ACKNOWLEDGMENTS First and foremost, I would like to extend my heartiest gratitude to Prof.  Dr. Adel El‐Samadony, as my supervisor during obtain M.SC degree. He gave me the chance to finish the study and with his guidance, the study can finish smoothly. Besides that, his patience and encouragement leads me to complete this study in time. In addition, I would like to thank Eng. Amr Dawood, as the representative from the staff in Rowad modern Engineer (RME) for their kindly advised and assistance in giving the information to complete this study. Not forgetting to present this research to spirit of my father. Mother, brothers and sister, for their full support and coaching throughout this research. Lastly but not the least, to all my friends for their support, advise and their help when the time I need them.
  • 3. iii   ABSTRACT With the competition in the construction market is fierce increasingly, profit margin of construction enterprises is getting smaller and smaller, and cost control of construction projects become more and more important. The control of construction project cost becomes one of the cores in project management. Construction project management is a systematic, comprehensive, dynamic subject, requiring construction project manager to regularize and standardize the organization, goal, quality, safety, and cost of construction project. In order to achieve the project cost control effectively and create greater economic benefits. A study is carried out to study the cost control method in a constructions project, to identify the cost control process method frequently used by contractors in controlling the cost of projects. From the study, the main problem faced by contractors are shortage of material, Labor costing more than estimated, difficulty in collection of cost data, ever-changing environment of construction work ,qualified expertise ,duration of project and additional costs to carry out the cost control.
  • 4. iv   INTRODUCTION The cost control is a process that should be continued through the construction period to ensure that the cost of the project is kept within the agreed cost limits. The cost control can divide into two major areas; the control of cost during design stages and the control of cost by the contractors once the constructions of project have started. Cost control of a project involves the measuring and collecting the cost record of a project and the work progress. It also involves the comparison of actual progress with planning. The main objective of cost control of a project is to gain the maximum profit within the designated period and satisfactory quality of work Purpose: Due to the ever increasing competition and current climate in the construction industry, this has lead construction companies to become more competitive in their projects. The aim of this research was to highlight the importance of proper monitoring construction and examine what cost control Process that is in place. This will help all staff realise the importance of monitoring constructions and cost control system by suggesting recommendations to implement in future projects. Objectives: The objective for this research is: 1- To study cost control Process in a construction project. 2- To identify the cost control method frequently used by contractor during the construction stage. 3- To identify the main problem faced by contractor in controlling the cost on site. Methodology: A comprehensive review was under taken to get a better understanding of cost control system knowledge transfer. For the current research a case study was conducted on medium scale contractors by means of semi- structured interview and questionnaire to look at how their cost control system we monitored and any recommendation for improvement the research will illustrate the basic process used in cost control of construction project, in each process we explain the basic information need to this process and who is responsible to do this process and the form need to do the process (spreadsheets controls).
  • 5. v   CONTENTS Title Page Number INTRODUCTION iv 1 State of Art 1.1 Project Cost Control 1  1.1.1 Purposes of Project Evaluation 1  1.1.2 Cost Control Definition 2  1.2 Important Questions 3 1.2.1 Why we need Cost Management? 3  1.2.2 What the Project Manager Controls? 3  1.2.3 Who Needs Cost Management? 5  1.3 Project Life Cycle and Project Cost 5  1.4 Characteristics of a Project Control System 7  1.4.1 Elements of A Planning And Control System 8  2 Proposed approach to construct model of cost control 2.1 What Information do you need to construct the model? 10 2.1.1 Estimating/Budgeting 10  2.1.2 Work Breakdown Structure (WBS) 33 2.1.2.1 Types of Work Breakdown Structures 36  2.1.2.2 Work Breakdown Structure Development 39  2.1.3 Cost Codes 41  2.1.4 Depreciation 44  2.2 Construct model template –Excel-Format 47 2.2.1 WBS template sheet 47  2.2.1.1 WBS sheet template Consist 47  2.2.1.2 WBS sheet template Form 49  2.2.2 Expenses template sheet 50  2.2.2.1 Expenses template sheet Consist 50  2.2.2.2 Expenses template sheet Form 51  2.2.3 Storage template sheet 53  2.2.3.1 Storage template sheet Consist 53  2.2.3.2 Storage template sheet Form 54
  • 6. vi   3 the application steps & methods 3.1 Collect Actual Cost data 55 3.1.1 Sources of information 55  3.1.2 Data Required From Procurement Department 59  3.1.3 Data Required From Storages 63  3.1.4 Data Required From Projects 68  3.1.5 Data Required From Finance Department 83  3.2 Actual Cost Allocations 85 3.2.1 WBS Sheet template form 85  3.2.1.1 Client Invoices 86 3.2.1.2 Variations Order 87  3.2.2 Expenses Sheet template form 88  3.2.3 Finance Report 90  3.2.4 Storage sheet template form 91  3.2.4.1 Storage Report 92  3.3 How do you make sure you are getting good information? 93  4 Techniques of outputs & reports 4.1 The Earned Value Measurement System (EVMS) 96  4.1.1 Variance and Earned Value 98  4.1.2 Methods for Physical Progressing 100  4.1.3 Example – Synthetic EVA 104  4.2 Reporting Techniques 108 4.2.1 Report Content 108  4.2.2 Reporting Considerations 109  4.2.3 Sample Reports 110 4.2.4 Responses on Reports 125  4.3 Construction Cost Control Software 126 4.3.1 Advantages of Used Software in Construction Cost Control 127  4.3.2 The Disadvantages of Used Software in Construction Cost Control 130  5 Conclusions 5.1 Common Causes of Cost Control Problems 131  5.2 Keys to Effective Project Cost Control 134  References 144
  • 7. vii   List of Table Table number Title Page number 2.1 Calculating the Estimate 21 2.2 Subcontractor /vendor list 23 2.3 Estimate summary for Office Building 24 2.4 General Overhead 25 2.5 Straight Line Depreciation 45 2.6 Sum of the Years’ Digits 46 2.7 Double Declining Balances 47 2.8 WBS sheet forms 49 2.9 Direct Expenses sheet forms 51 2.10 indirect Expenses sheet forms 52 2.11 Storage sheet forms 54 3.1 Time Cards 57 3.2 Log of material imported 60 3.3 Quotations Comparison Sheet 61 3.4 Recommended Subcontractors for Quotations list 62 3.5 Monthly Report about store movement 65 3.6 Monthly Report about material distributions 66 3.7 Monthly Report about material distributions and location 67 3.8 Daily man power for Sub contractor 70 3.9 Daily man power for self performed time card 71 3.10 Weekly man power for self performed time card 71 3.11 Subcontractor productivity by location 72 3.12 man power daily production report 73 3.13 man power estimation & actual quantity 73 3.14 man power distribution by work package 74 3.15 Monthly Status log for manpower 75 3.16 Daily Equipment time card 76 3.17 Equipment distribution by work package 77 3.18 Monthly Status log for Equipment 78 3.19 Value of rent Equipment by work package 79 3.20 log for Concrete Casting 80 3.21 Report about Performance by activity 81 3.22 Monitor Report for Finishing item (masonry) 81 3.23 Cost report include labor, Equipment and material 82 3.24 Monthly Report for Finance department 83
  • 8. viii   3.25 WBS Sheet Form 85 3.26 Sample of Client Invoice 86 3.27 Sample of Cover for Variation Order 87 3.28 Sample of Variation Order 87 3.29 Direct Expenses sheet forms 88 3.30 indirect Expenses sheet forms 89 3.31 Finance Report forms 90 3.32 Deduction /Increase Storage Sheet Form 91 3.33 Storage Sheet Form 92 3.34 equate of (client/subcontractor) quantity 93 3.35 Concrete Casting Report 94 3.36 Steel losses Report 95 4.1 Example of Earned value report 107 4.2 Variance analysis Report 113 4.3 Overall Progress Report 114
  • 9. ix   List of Figure Figure number Title Page number 1.1 Project Manager Controls 4 1.2 Project Control Cycle 7 1.3 Project Planning and Control System 9 2.1 Types of Estimates 13 2.2 the Estimating Process 15 2.3 the Estimation Build 16 2.4 Cost estimation Process 27 2.5  Forms of Cost Estimate 28 2.6  Forms of Cost Estimate 29 2.7  Forms of Cost Estimate 30 2.8  Forms of Cost Estimate 31 2.9  Forms of Cost Estimate 32 2.10 Diagram of WBS hierarchy 35 2.11  Product-based WBS 36 2.12  Example of OBS 37 2.13  example of a process-oriented WBS 38 2.14  The cost account intersection 43 2.14  Cost Account code breakdown 43 3.1  data flow between Procurement team and other 59 3.2  step of enter material to the project 63 3.3  data flow between Storage team and other department 64 3.4  data flow between Projects team and other department 69 3.5  data flow between Finance team and other department 83 4.1 Determining the Status 96 4.2  Controlling both project schedule and cost 97 4.3  Earned value formulae 99 4.4  Analysis showing use of 50/50 rule 102 4.5  Cost data contractual 103 4.6  Physical progress versus time expended 103 4.7  Methods for physical progressing 104 4.8  Representation of Variance on a S- curve 105 4.9  graphical project status 106 4.10  Schedule Performance index 107
  • 10. x   4.11 Graphical status reports 111 4.12  Data accumulation 111 4.13  Cost control and report flow 112 4.14  Performance Report 112 4.15  Progress Trends Report 113 4.16  Sample cost report 115 4.17  Cumulative cost report 115 4.18  Cumulative cost report 116 4.19  Cumulative cost line graph 117 4.20  Schedule status report 118 4.21  Summary Schedule status report 118 4.22  Weeks Status Performance 118 4.23  millstones Summary report 119 4.24  Sample report instructions 119 4.25  Event report 120 4.26  note on performance report 120 4.27  Critical Issues Report 121 4.28  Traffic signal as indicator of project status 121 4.30  Project Performance metric Definitions 122 4.31  Project Performance report 122 4.32  Sample of other Report 124
  • 11. xi   LIST OF APPENDIX APPENDIX Title Page number A Cost Control Process Flow Chart 136 B Responsibility Matrix for Cost Control Process 143
  • 12. Chapter  1  State of Art""   1-State of Art 
  • 13. Chapter 1  "State of Art"   /91  1-State of Art 1.1-Project Cost Control 1.1.1-Purposes of Project Evaluation Sports teams that practice without reviewing performance may get really good at playing very badly. That is why they review game films to see where they need to improve; there are two kinds of organizations those that are getting better and those that are dying. An organization that stands still is dying. It just doesn’t know it yet. The reason? Your competitors are not sitting by idly. In fact, good project management can give you a real competitive advantage, especially in product development. If you are poor in managing your projects, you don’t have good control of development costs. That means that you have to sell a lot of product or else charge large margins to cover your development costs so that the project is worth doing in the first place. If you can’t sell a lot of widgets, then you have to charge the large margin. In order to learn, people require feedback. Furthermore, people tend to learn more from mistakes than from successes, painful though that may be to admit. If your competitors, on the other hand, have good cost control, they can charge smaller margins and still be sure that they recover their investment and make money. They have a competitive advantage over you because of their better control of project work. In order to learn, people, like the team reviewing game films, require feedback. The last phase of a project should be a final audit so that the management of future projects can be improved. However, such an audit should not be conducted only at the end of the project. Audits should be done at major milestones in the project so that learning can take place as the job progresses. Another reason to do periodic audits is that, if a project is getting into serious trouble, the audit should tell the difficulty so that a decision can be made whether to continue or to terminate the work. Periodic audits should enable you to: • Improve project performance together with the management of the Project. • Ensure that quality of project work does not take a back seat to schedule and cost concerns. • Reveal developing problems early so that action can be taken to deal with them. 1/144
  • 14. Chapter 1  "State of Art"   /92  • Identify areas where other projects (current or future) should be managed differently. • Keep client(s) informed of project status. This can also help ensure that the completed project will meet the needs of the client. 1.1.2-COST CONTROL Definition Cost control is the process of comparing actual expenditures to the baseline cost plans to determine variances, evaluate possible alternatives, and take appropriate action. To effectively control costs, be sure cost plans are prepared with sufficient detail. 2/144
  • 15. Chapter 1  "State of Art"   /93  1.2- Important Questions 1.2.1-Why We Need Cost Management? The project manager is primarily concerned with the direct cost of the project, but the trend in project management is that the role of the project manager in cost control will increase to include more of the nontraditional areas of cost control. In the future it will be expected that more project managers will have a great deal of input into the indirect costs and expenses of the project. Regardless of what the project manager is or is not responsible for, it is critical that the project be measured against what the project manager is responsible for and nothing else. If the project manager does not have responsibility for the material cost of the project, then it makes no sense for the project manager to be measured against this metric. Timing of the collection of cost information is also important to the cost measurement system. The project budgets must be synchronized with the collection of the project’s actual cost. For example, if a project team is responsible for material cost, should the budget show the expenditure when the commitment by the project team to buy the product is made, when the item is delivered, when it is accepted, or when it is paid for? Timing issues like these can make project cost control a nightmare. If the project team does not properly control cost, the project will invariably go out of control, and more money will be spent 1.2.2-What the Project Manager Controls? The project manager has to measure many things during the course of a project, and he or she must take actions to guarantee that control (see Figure 1.1). The project manager must. • Measure and review the project schedule progress against the plan • Measure and review the project cost progress against the plan • Measure and review project quality • Anticipate possible changes and alternatives • Manage issues and risks • Control scope creeps through a change management process • Ensure that delivery of milestones takes place according to client expectations • Coordinate the project team • Monitor physical resources by controlling the scheduling of resources during the project 3/144
  • 17. Chapter 1  "State of Art"   /95  1.2.3-Who Needs Cost Management? In every firm, cost management will exist in some form, usually under the control of the finance function. Our problem as project managers is that often that form is not consistent with the project management function, and that the cost data cannot be integrated with the other project data. As a result, many of the critical management questions concerning cost go unanswered. For instance, if the monthly accounting report notes that Omega Project has accumulated costs of $123,999, is this good or bad? Without integrating the accounting data with the other project data, much of the data is worthless. How do we go about answering such common questions as? • How much are you going to spend? • How much did you spend? Is this good or bad? • How much will you have spent when the project is over? Is this good or bad? • If I’m in trouble on costs, what can I do to turn things around? • How shall the costs be distributed? • How can I control my resource costs? Effective cost management must address such questions. This requires an integrated schedule and budget plan. It also requires integrated participation by leaders of the projects, resources, and financial disciplines. 1.3-Project Life Cycle and Project Cost Construction is a dynamic process, and no two projects are ever alike. Even if you have years of experience, every job presents a new set of circumstances and challenges no matter how good a job you do preparing during the pre-construction stage. The project manager and superintendent work together to come up with the best plan they can, trying to anticipate every obstruction and difficulty that might delay progress and put at risk the successful completion of the project, but they still can’t foresee every contingency. Even with this entire expert planning, the project must be monitored from beginning to end to ensure that all of the targets for time, cost, and quality are met. The whole process must be properly managed through a project control system that utilizes the plans, specs, estimate, and schedule. All of these documents taken together establish the road map for getting from the start of construction to the final completion of the project. Using this road map, the project manager and superintendent must maneuver all of the resources in the right direction, making 5/144
  • 18. Chapter 1  "State of Art"   /96  adjustments as they go, to keep the project on track and on target. Project control requires continuous monitoring and evaluation of actual performance relative to the estimated performance for all aspects of the job that have an impact on cost, time, and quality. The project control cycle begins with the project plan and ends with the final project debriefing and evaluation. There are seven fundamental steps to the process: • Develop the project plan. • Establish the project benchmarks. • Monitor the project performance. • Identify performance deviations. • Evaluate corrective options. • Make adjustments as needed. • Document, report, and evaluate results. (see Figure 1.2) It is important to track every aspect of project performance all the way back to the planning stage. This is where every project begins, and it is where every project should end with a complete debriefing and evaluation of what worked and what didn’t work. It is also a time to resolve actual costs and labor productivity information to update existing company records in preparation for the next cycle of project planning and estimating. It is an excellent opportunity to capture lessons learned and to create some best practices for future implementation. Unfortunately, many construction teams fail to complete the last step in the cycle and never properly assess their project’s overall performance. Everyone is usually worried to move on to the next project, and it’s very tough to get all of the parties together for even a couple of hours at the end of the job. It takes a great deal of discipline to consistently take advantage of this opportunity and learn from it. In my experience, I have found the project debriefing to be one of the most effective training mechanisms for every member of the team, from the project engineer to the project manager. 6/144
  • 19. Cha   1.4 All The 1. T e s pter 1  4 Chara good proje ese include A focus The contro ensure tha system sho • What is • What a • Which a • What a be placed acteris ect contro e: s on what ol system m at the proj ould be de s importan re we atte aspects of re the crit d? stics of ol systems is importa must focu ect missio esigned wi nt to the o empting to f the work tical points /97  f a Pro have seve ant. s on proje on is achie ith these q organizatio o do? are most s in the pr oject Co eral chara ect objectiv ved. To do questions on? important rocess at w "S ontrol cteristics ves. The a o that, the in mind: t to track which cont State of A Syste in commo aim is to e control and contro trols shoul Art" m n. ol? ld 7/144
  • 20. Chapter 1  "State of Art"   /98  2. A system for taking corrective action. A control system should focus on response. If control data do not result in action, then the system is ineffective. That is, a control system must use deviation data to initiate corrective action; otherwise, it is simply a monitoring system, not a control system. 3. An emphasis on timely responses. The response to control data must be timely. If action occurs too late, it will be ineffective. This is frequently a serious problem. Data on project status are sometimes delayed by four to six weeks, making it useless for taking corrective action. Ideally, information on project status should be available on a real-time basis. In most cases, however, that is not possible. For many projects, weekly status reports are adequate. Ultimately, you want to find out how many hours people actually work on your project and compare that figure to what was planned. This means that you want accurate data. Some people may fill out weekly time reports without having kept track of their daily working times. since most of us cannot remember with any accuracy what we did a week ago. When people fill out time reports each week without having written down what they did daily, they are writing fiction. Such made-up data are almost worse than none at all. As difficult as it may be, you need to get people to record their working times daily so that the data will mean something when you collect them. What’s in it for the workers? Perhaps nothing. However, their better estimates (made as a result of collecting accurate information on this project) will help everyone who works on the next project. In any case, you need accurate data, or it isn’t worth the effort at all. When information collection is delayed for too long, the manager may wind up making things worse instead of better 1.4.1-Elements of Planning and Control System Figure 1-3 shows a generic model for a project planning and control system that allows a project to react to the changing conditions of the world. • Define the problem or opportunity. The first phase of project planning is to clearly define the problem to be solved by the project or the opportunity of which the project will take advantage. This includes understanding the business reasons for the project and the client’s motive in requesting it. 8/144
  • 21. Cha   • E Onc is t sco • D Wit dev req • B Wh Per • M As info dev act • C pter 1  Establish p ce you hav o define th ope. Develop th thin the fra veloped, in uired to co Begin proj hen all pla rsonnel, pr Monitor. project w ormation a viations fro ion should Close proje project obj ve clearly he basic o he plan. amework o ncluding th omplete th ect work. ns are in roject wor work progre and compa om the pla d be taken ect. jectives. identified bjectives of the proj he activitie he project place, app k can beg esses, the are it to th an are the . /99  the proble of the proj ject object es, schedu t work. proved, an in. e project m he plan to n analyzed em or opp ject in ter tives, deta ules, cost p nd commun manager g determine d to deter "S portunity, t rms of time ailed plans plans, and nicated to ather stat e variance mine if co State of A the next s e, cost, an s are d resources project us s. These rrective Art" step nd s 9/144
  • 22. Chapter  2  " Proposed approach to construct model of cost control "   2- Proposed approach to construct model of cost control 
  • 23. Chapter 2  "Proposed approach to construct model of cost control"   /451    2-Proposed approach to construct model of cost control 2.1-What Information do you need to construct the model? So exactly what kind of information should you be gathering to create your system of control which will maintain control of your Project? Below are listed the specific pieces of information you should be requesting 2.1.1-Estimating/Budgeting What Is an Estimate? An estimate is an educated guess. We are all familiar with estimates. We have obtained estimates for work on our car, for getting our house painted, or for closing costs on a mortgage. And most of us have actually engaged in doing an estimate. We’ve guessed or estimated or calculated how many gallons of paint we needed to paint the living room. The main differences between these simple estimating activities and the estimates used to price construction are the complexity and what’s at stake. When you estimate how many gallons of paint are needed to paint your living room and you are off by a gallon or two, the stakes are pretty small. But when you estimate the cost to build a nuclear plant or a super highway or a hospital or even a house, the stakes are much, much higher. The estimate is a summary, based on the best information available, of probable quantities and costs of materials, labor, equipment, and subcontracts to complete a project, including taxes, overhead, and profit. It is the number used to develop the project bid price. The bid price is what goes in the contract, and the contract obligates you to perform all work needed to complete the project in accordance with the plans and specifications. The consequences of any errors or omissions in the estimate are borne by the contractor, and the contractor will not actually know what the true cost of the construction is until the project is complete. If the estimated cost is equal to or greater than the actual cost, the project makes money for the contractor. If the estimated cost is less than the actual cost, the contractor loses money on the project. As you can see, estimators have an awesome responsibility. First, they must come up with an accurate but competitive estimate that will win the job. Second, their planning and calculations set the stage for the overall management targets for the entire project. Once the estimator turns the project over to the project manager and the on-site team, the estimator shifts to a support role and really has no direct management duties 10/144
  • 24. Cha  ass a jo It is The risk Types The amo estimate estimate estimate (2-1). Con no in t whe spe pter 2 sociated w ob and sub s a high-st e construc k to a succ of Esti ount of info e that can es are not e. But som 1. Conce nceptual e drawings the idea or ether their ending mo "Propo ith the day bmit a bid takes gam tion mana cessful out mates ormation a be prepar equal the metimes ow eptual E estimates a available a r concept s r idea is e ney on de osed appr y-to-day o , they are mble, and m agement te tcome. available r red. Howev less infor wners don’ Estimate are often c at all. You stage of a conomical esign until roach to c /452  operations taking a r many fact eam is on regarding ver, you m mation av ’t need a h es called ballp can use c project. O ly feasible they know construct s. Every tim risk. ors may in the front the projec must keep vailable, th high level park estim conceptua Often an o e, and they w that the model of me contra nfluence th lines of m ct will dicta in mind th he less acc of accurac mates. Typ l estimate owner does y don’t wa project is f cost con ctors estim he outcom managing t ate the ty hat all curate the cy see Fig pically ther es when yo sn’t really ant to star s at least ntrol"     mate me. his pe of ure re are ou are know rt 11/144
  • 25. Chapter 2  "Proposed approach to construct model of cost control"   /453    possible. An experienced estimator can help out in a situation like this by offering a rough order of magnitude (ROM) estimate. These estimates are based upon a cost per primary unit for the facility. For example, for hospitals, the primary unit of measure would be beds, and you would multiply the proposed number of beds by the appropriate unit cost. For a school, the calculation would be cost per pupil; for a highway, the estimate would be based on a cost per mile. Once the owner suggests how many primary units they would like to build, an estimator can whip out a rough order of magnitude estimate within minutes; however, the accuracy is limited. 2. Preliminary Estimates If you have a preliminary set of drawings with overall dimensions, you can move to the next level of estimating. Preliminary estimates provide a somewhat higher level of accuracy and may be used to establish initial budgets and preliminary financing scenarios. However, these estimates should never be used to commit to a contract price because too many factors can influence the reliability of the numbers. Although there are numerous preliminary estimate methodologies, the most common is probably the square foot method. In its simplest form, the estimator calculates the area of the floor plan and multiplies that number by a unit price. There are various levels of skill and detail that can be applied to the square foot estimating method, and the degree of accuracy increases with each step up, as will the time it takes to calculate the price. 3. Detailed Estimates Whenever you have a complete set of plans and specs, you should do a detailed estimate. This is where you count every brick and stick, so to speak. Quantities and costs are calculated for every aspect of the project, and this is by far the most reliable estimate if the contractor is being asked to give a firm bid on a project. Detailed estimates are the most accurate. But keep in mind that as the accuracy increases, so does the time, effort, and skill required to complete the estimate. Although computerized estimating has reduced the time needed to compile project costs, it can still take two to three weeks and a team of estimators to put together a detailed estimate for a large, multistory commercial building such as an office or retail complex. The estimators still have to put the bid packages together and spend time soliciting subcontractor and vendor pricing. Throughout the rest of this chapter, I will be talking about detailed estimates. 12/144
  • 26. Cha  The Acc con gre con The the est be look Get Alth of a tea sub bas Th an tea doi pter 2 Estima curacy and nstruction eater than nstruction • How m • How m • How lo ese three c managem imate sets used throu k at what tting St hough an e an estimat m. Fellow bcontracto se when tr e team wo edge in th m become ng the foll "Propo ating Pr d complete estimate. or equal t estimate, many (quan much (prici ong (produ componen ment targe s the para ughout the it actually tarted estimator te improve estimator rs, materi rying to m orks toget he bidding es complet lowing: osed appr rocess eness are The ultim to the actu you are c ntities) ing) uctivity) nts make u ets for the meters for e construc y takes to can work es when th rs, project al supplie ake decisi ther to dev process. I tely famili Figure roach to c /454  the funda ate goal is ual cost of oncerned up the con project te r the proje ction proce put an est alone in d here is inp t manager rs, and oth ons during velop a un In prepara ar with th 2-1 Types construct mental ob s to have t f the proje with three struction e eam. You w ect budget ess to mon timate tog developing put from ot s, superin hers can a g the estim ique strat ation for th e requirem s of Estim model of bjectives o the estima ct. When e things: estimate a will discov t and sche nitor succe gether see g an estim ther mem tendents, all add to t mating pha egy that m he estimat ments of th ates f cost con f the ated cost b you do a and establ ver that th edule and w ess. Now l Figure (2 ate, the q bers of the the resour ase. might prov ting task, he project ntrol"     be ish e will et’s -2). uality e rce vide the t by 13/144
  • 27. Chapter 2  "Proposed approach to construct model of cost control"   /455    1. thoroughly reviewing the plans and specs 2. developing a list of questions and needed clarifications 3. attending the pre bid meeting 4. visiting the project site 1. Reviewing the Plans and Specs It is important to get a “big picture” perspective of the project before you get into the details of the work. Having an overall understanding of the difficulty of the construction will assist the estimator when making judgment calls that inevitably affect the accuracy of the estimate. Ideally, the plans and specs are reviewed in detail before any estimating takes place. Among the first things to look for when making the initial review are any special conditions, clauses, or criteria that could adversely affect the project schedule or cause unusual risks to be taken. Such items should be highlighted during this process and red flagged for the project team when the job is passed from the estimator to the project manager. Remember the earlier example regarding the imported Italian marble tile. Many of these red flag clauses are found at the front end of the project manual in the instructions to bidders and supplemental conditions. Taken into account during the estimating process. 2. Developing a list of Questions and needed Clarifications In addition to discovering red flag issues, the plan and spec review provides an opportunity for the estimator to uncover details that require clarification or questions about the project that are not addressed in the contract documents. As the estimator thumbs through the drawings, they will prepare a query list in anticipation of the pre bid meeting, site visit, or phone conference with the designer. The designer typically responds to each of the questions in writing. Those responses that result in a change to the original plans and specifications become official addendum to the contract. Checklists are a common tool used to make sure that nothing gets left out or overlooked. 14/144
  • 28. Cha  Prio pre an ans rep sen the tho at t No are plan of t ulti me ass mit Figure stimat pter 2 3. The P or to biddi e bid meet opportunit swered. It presentativ nt, simply project at rough rev this meetin 4. The S one shoul site cond ns and spe the land, w mately aff eting, it is sociated w tigate thos e 2-2 the ting Proce "Propo Pre bid M ng, it is co ing. This m ty for the is very im ve to this m because t t this stag view of the ng, and co Site Visit d ever est itions that ecs. Only which will fect your p s your obli ith the bid se risks ess osed appr Meeting ommon fo meeting of bidding co mportant th meeting. T hat is the ge and who e plans and ontractors t timate a jo t just cann by walking help you m pricing. Ev gation to d. Visiting roach to c /456  r the owne ften occur ontractors hat each o The estima person wh o has deve d specs. S who fail t ob without not be und g around w make the ven if the s make eve the site is construct er and/or rs at the p to get ma of the bidd ator is ofte ho is the o eloped a q Some proje to attend a t first visit derstood b will you ge necessary site visit is ry effort to s one way model of designer t roject site any of the ding contra en the rep one most f query list a ects requir are not allo ting the jo by merely et a good s y judgment s not part o mitigate in which y f cost con to conduct e and prov ir question actors sen presentativ familiar wi after a re attenda owed to b b site. The looking at sense of t t calls tha of the pre e risks you can ntrol"     t a ides ns ds a ve ith ance id. ere the he lay t e bid 15/144
  • 29. Cha  Est How You faci divi Eac one dec con In t con est Figu Estim pter 2 imators sh • Distan • Site co • Site ac • Soil da • Ground • Securit • Traffic • adjace • possib • Water, • Obstru • Parking • Debris • Local w • Local l w You B u build an ility. Gene isions of th ch CSI divi e of the m cide to org nsistent fo this way, t nsulted for imate see ure 2-3 th mation Bu "Propo hould cons ce from of onditions ccess ata dwater ty needs considera ent structu le contam , electricity uctions g and stor disposal weather pa abor and s uild the estimate i erally, you he 2004 C ision is bro ost comm ganize the rmat, eve the estima r every pro Figure (2 he uild osed appr sider the f ffice ations ures ination y, and tele rage atterns sub trades e Estim in very mu start from CSI Master oken down on ways t estimate, n if some ate outline oject to m -3). roach to c /457  following w ephone se s ate? uch the sa m the grou r Format o n into deta o organize it is very divisions a e acts as a ake sure t construct when visiti ervice ame order und up and outline. ailed items e the estim important are not ap master ch that nothin model of ng the site that you b d work thr s of work. mate. How t to stick w pplicable to hecklist th ng gets lef f cost con e: build the a rough the This form wever you with a o every pr hat should ft out of th ntrol"     actual 48 mat is roject. be he 16/144
  • 30. Chapter 2  "Proposed approach to construct model of cost control"   /458    Organizing the Work of the Estimate Estimating the cost of a multistory office building, high-tech manufacturing facility, or state-of-the-art concert hall is no easy task. It is a big job and takes great deal of planning and organization. So, how do you conquer this challenge? Well, the same way you eat an elephant—one bite at a time! Although the CSI Master Format 2004 gives us an overall outline to follow, thousands of activities and materials must be considered before you can begin to price the project. As large as the task may seem, there actually is a logical method for organizing all of the work activities, materials, and labor associated with a project. Let’s take a look at just how you eat this elephant! 1. The Work Breakdown Structure The primary organizational tool utilized by the construction estimator is the work breakdown structure (WBS). The work breakdown structure establishes the basic building blocks of both the estimate and the schedule. The purpose of the work breakdown structure as it applies to the estimate is to organize and identify the work of the project by breaking each division of work into a separate work package or bid package. The work package identifies each step in the process of that work item. Work packages are usually assembled around the work activities typically performed by a single subcontractor or work group. Obviously, being familiar with construction materials and methods is pretty important here. One of the primary goals in creating a work package is to not overlook any of the steps needed to complete the work. A sample work package looks something like this: Work Package—Concrete Floor Slab • Excavate the footings. • Install the edge forms. • Install under slab fill. • Install vapor barrier. • Install the reinforcing. • Place anchor bolts. • Place the concrete. • Finish the concrete. • Strip the form work. Once each step associated with a particular item of work is identified, it can be quantified and priced. But let me stop here and back up a minute to make sure that you remember how the work of the project is actually accomplished. The contractor has two options: • self-perform the work with their own forces • Subcontract the work to various trade contractors. 17/144
  • 31. Chapter 2  "Proposed approach to construct model of cost control"   /459    The contractor will have to do all of the quantifying and pricing of each step of the work if the contractor decides to self-perform a particular section of work. If the contractor decides to subcontract out some of the work, then the subcontractor will quantify and price the work and submit a bid to the general contractor. The greatest challenge either way is to make sure that nothing gets overlooked or left out of the estimate. Sometimes the general contractor calculates their own quantities and estimates for subcontracted work even though the subcontractor will be submitting a bid. This is called a fair value estimate; it’s done as a check to guard against inaccurate quantity surveying by the subcontractor and unreasonable pricing. 2. Calculating Quantities Now that you have assembled all of your work packages and identified all of the steps necessary to do the work, you can start doing your quantity takeoff. You must quantify all of your materials, labor, and general conditions before you can price any of the work. You need to calculate “how many” before you can calculate “how much.” Once you determine the quantities, you can apply a unit price factor to the equation. Junior estimators often start off as quantity surveyors. The primary attributes of a good quantity surveyor are the ability to read and interpret plans, knowledge of common units of measure for construction materials and labor, and basic estimating mathematics. You will use algebra to measure ratio and proportion, plane geometry for lineal and area measurements, solid geometry for cubic measurements, and plane trigonometry for lineal, area, and cubic measurements. 3. Quantifying Materials Quantifying materials is the least risky of all the estimating activities. You are simply counting and calculating all of the parts and pieces that will go into the project. Quantity surveying represents more of the science of estimating. That’s because you are working with known sizes and dimensions depicted in the drawings. If the plans are drawn correctly and include all of the information needed to do the takeoff, the estimator should be able to come up with very accurate quantities, assuming the estimator doesn’t overlook anything and doesn’t make mathematical errors. The estimator reviews the plans, the elevations, the sections, and the details; pulls the dimensions needed to make the appropriate calculations; and comes up with the lengths, areas, and volumes of work and material required for the project. Probably the most difficult part of the quantity survey is making sure that the quantity is taken off in the proper unit of measure. The unit of measure 18/144
  • 32. Cha  for exa tak con lear kno In t of c of a Foo Wa Tot 24. 2.6 253 The 4 Qua dea hum and tha bec com cha This all a for pter 2 takeoff m ample, con e off all co nvert to cu rn all of th owledge is this typica concrete n a foot. Her • Section oting = 2.0 ll = 0.66 f tal section • Perime 0 feet + 2 • Section 4 square f • Conve 3.44 cubic e answer is 4. Quant antifying la al with cre man factor d fast dime t can be p cause of si mplexity of apter. s is where about judg any given "Propo ust be the ncrete is p oncrete by ubic yards he pricing an absolu al quantity needed for re are the n area of f 0 feet *0.6 feet *2.0 f area = 1. eter of bui 24.0 feet + n area*pe feet *96 fe rt to cubic feet ÷ 27 s 9.39 cub ifying La abor and e w sizes an rs of const ensions on placed or i te conditio f the proje e estimatin gment. Th n crew reg osed appr e same as riced by th y the cubic to match units for t ute necess surveying this found steps foundation 66 feet = feet = 1.3 32 square lding: + 24.0 fee rimeter = eet = 253 c yards (un 7 cubic fee bic yards o abor and equipment nd product truction is n a set of d nstalled in ons, weath ect, and se ng moves he individu arding any roach to c /4510  the unit o he cubic y c foot (leng the pricing the various sity if you g exercise, dation. All n: 1.32 squa 2 square f e feet + 1. et + 24.0 f cubic feet .44 cubic nit of mea et = 9.39 c of concrete d Equipm t is a little tivity rates not quite drawings. n a specifie her, crew everal oth way over ual estimat y given ite construct of measure yard. The q gth × widt g unit. It t s material are an est , you will e inches ar re feet feet .32 square feet = 96 f t feet sure for co cubic yard e in found ment e riskier. T s. In other the same Productiv ed unit of makeup, c er factors on the art tor will det em of work model of e for pricin quantity su th × depth takes a litt s and labo timator. estimate t re converte e feet = 2. feet oncrete): s ation. hat’s beca r words, w e as workin ity is the a time. Prod crew skill discussed t side of th termine th k. Fortuna f cost con ng. For urveyor m h) and the tle time to or, but this the cubic y ed to deci .64 square ause you m working wit ng with ha amount of ductivity v level, d earlier in he equatio he product ately, ntrol"     must en o s yards mals e feet. must th the ard f work varies the on. It’s tivity 19/144
  • 33. Cha  pro con can equ size 5 Also ass of m est The mo of g 6 Sup Job Mat Tem Por Dum Job On- Job Pric Onc you equ ext whe pter 2 oductivity i nstruction n help the uipment qu es and pro 5. Quant o called jo sociated w measure fo imator is t e estimato nths, or y general co 6. Gener pervision ( b trailer (re terial stora mporary ut rtable toile mpsters (r b photogra -site webc b office sup cing the W ce all of yo u have to d uipment, a ensions di ere the co "Propo is somethi industry, estimator uantity tak oductivity ifying G ob overhea ith any giv or general to come u or must ma ears the c ondition ite ral Cond (salary) W ent) Month age trailer tilities (us ets (rent) M rent) Mont phs Lump cam Lump pplies Lum Work our quanti do is plug and genera isplayed in sts will co osed appr ing that is and there make sen keoffs. In rates for c eneral C ad, genera ven projec l condition p with a ti ake an edu constructio ems and th ition Ite Week h rs (rent) M sage) Mont Month th p sum sum mp sum ities are ca in the uni al conditio n Table 2.1 ome from a roach to c /4511  studied q are datab nsible judg the follow concrete w Conditio al condition ct. Time, n ns. Therefo ime estima ucated gu on will take heir respec em Comm Month th alculated, t cost for ons in your 1. As an e and their r construct uite exten bases and gment reg wing, I sho work: ns ns make u not produc ore, the pr ate for the ess as to h e to comp ctive units mon Uni you are h each item r estimate estimator, reliability. model of nsively in t reference arding lab w some av up the indi ctivity, is t rimary tas e overall jo how many lete. Here s of measu it of Mea alfway the m of materi . You can your prim f cost con the s available bor and verage cre irect costs he norma sk of the ob duratio y days, we e’s a samp ure: asure ere. Now a ial, labor, see the p mary conce ntrol"     e that ew s l unit on. eeks, ling all rice ern is 20/144
  • 34. Cha  Som the and Wh “all the Onc dow If t sur clie Allo reg ma able dril 7 Pric ma bui suc ma Man hist ove per plac hav pric The est the Table 2 pter 2 metimes it time of th d quality th en this ha owance” n time. ce the info wn to refle he actual plus funds ent pays th owances a arding sty y also be e to accur ling. 7. Source cing inform terials, yo lding supp ch as R.S. terial, and ny constru torical per er a numbe rformed wo ce, then th ve such a s cing. ere is one imators ch n calculat -1 "Propo t is not po he estimat hat simply appens, it number, fu ormation n ect the act cost is les s to the cli he differen re often u yle, color, used when rately quan es of Inf mation com ou can obv pliers. Or y Means. Th d equipme uction com rformance. er of years ork. If a c his may be system in more alte hoose to u e their ow osed appr ssible to a te because y can’t be is a comm ully disclos needed is a ual cost o s than the ient. If the nce. sed for fin or quality n there ar ntify the c formatio mes from a viously get you can ch hey list un nt. mpanies cre . They trac s and com ompany h e the best place, and rnative wh use the pro wn unit pric roach to c /4512  accurately e there are made unt mon practic sed to the available, f the item e allowanc e cost is g nish items such as c e simply t ost of the on a variety o t prices dir heck the v nit costs fo eate their ck actual j me up with as an exc t way to go d many re hen it com oductivity ces by usi construct determine e decision il the proje ce for estim client, ba the allowa . ce, the est reater tha that requ carpet, tile too many u work, suc of sources rectly from arious con or every se own cost job costs f average u ellent cost o. Howeve ely on pub mes to pric data from ng local w model of e the costs s regardin ect is unde mators to ased upon ance is adj imator ret n the allow ire owner e, or light f unknown v ch as rock . When it m your ven nstruction ection of w databases from vario unit prices t reporting er, not all lished cos ing labor. m the vario wage rates f cost con s of items ng quantiti er constru plug in an a best gu justed up turns the wance, the involveme fixtures. T variables t excavatio comes to ndors and cost guide work for la s based on ous project s for their g system i companies t data for Some ous guides in the for ntrol"     at es uction. n ess at or e ent They to be on or retail es bor, n ts self- n s their but mula. 21/144
  • 35. Cha  8 The Tod est Wh per the The equ ver cov pro the 9 Afte list of w ven sub pter 2 8. Obtain e final com day, subco imate. ile the est rformed wo work they e team mu uipment as ry importa vered, ther oblem on b subcontra • Solicit • Receiv • Analyz • Choose 9. Solicit er a comp or chart r work or tra ndor quote bcontracto "Propo ning Sub mponents o ontractor a timating te ork, they y are not g ust also be ssociated w nt. If one re will be a bid day. Th acted wor the bids. ve the bids ze the bids e the bids ing the lete review representin ades will b es, and wh r/vendor l osed appr bcontrac of your est and vendo eam is put must also going to s e soliciting with the w of the tra a big hole here are fo k and ven s. s. . Bids w of the p ng all the be self-per hich will re list. roach to c /4513  ctor and timate are r bids mak tting toget be gather elf-perform vendor p work. The des neede in the est our steps t dor pricing lans and s work of th rformed, w equire both construct Vendor e subcontr ke up the ther their ring prices m. ricing for a managem ed to comp timate, wh to ensure g are com specs, the he contrac which will r h. Table 2 model of r Bids ractor and bulk of th own pricin s from sub all of the m ent of this plete the p hich will le that the s plete and estimator ct, showing require su .2 shows a f cost con vendor bi e construc ng for self- bcontracto materials a s process project is n ad to a big solicitation thorough r will creat g which ar bcontracto a sample ntrol"     ids. ction - rs for and is not g of : te a reas or or 22/144
  • 36. Cha  Afte ven Alth con con quo hav rep It is to g the of w not quo est can And play Put sub on as w num Mas num the up ons Table 2-2 pter 2 er it is det ndor or a s hough sub nstruction ntractors d otation to ve a past h presenting s importan give the su ir decision whom they t want to b ote that do imated co n to avoid d even tho y it safe th tting It All bcontracte the mater well. The e mbers. As ster Forma mbers hav project, y with your s. "Propo termined w subcontrac bcontracto news serv do, most e a selected history. Th the same nt that the ubcontract n not to bi y can expe be left han oesn’t arriv st of the w this situat ough it tak han to be Together d work int rial takeoff estimator you can s at discusse ve been ad you must a final bid. osed appr which area ctor, a form rs and ven vices for b stimators d list of su hey usually trade. ese reques tors enoug d on the p ect to rece nging on b ve. At the work in qu tion. kes a lot of left standi It’s time t to one est f sheets ar must be v see in Tabl ed earlier dded down also apply These last roach to c /4514  as of work mal solicit ndors watc id notices choose to bcontracto y send out sts go out gh time to project. It eive quote id day wa last minu estion mig f time to s ing withou to compile imate sum re transfer very carefu le 2.3, the in the cha n at the bo y taxes, ge t few item construct will requi tation proc ch the trad as closely o send out ors and ve t requests very early o put toget is crucial t es from on iting for a ute, you w ght be. Es solicit all o ut a trade e all of you mmary. All rred to the ul to accur e estimate apter. How ottom. Onc eneral ove s are ofte model of re a price cess gets u de journal y as the ge their own endors wit to severa y in the es ther a pric that the e bid day. T n expecte ill be left t timators d of the bids covered b ur self-perf of the su e estimate rately tran summary wever, a fe ce you cal rhead, and n referred f cost con quote fro underway. s and eneral n requests h whom th al compani stimating p ce or notify stimator b Trust me, d subcont to guess w do everyth , it is far b by a reliabl formed wo btotals ca e summary nsfer all of y follows th ew very im culate the d profit to d to as pro ntrol"     m a . for hey ies process y you of be aware you do ractor what the hing they better to le price. ork and lculated y sheet f the he CSI mportant e cost of come oject add- 23/144
  • 37. Cha  1 You pay colu wor mu the fam pay to k Wh app mu alon the clas Table 2-3 pter 2 10. Taxes u include t yroll taxes umns: ma rk and equ st be adde labor colu miliar with yroll add-o keep it sim en I was r proximatel ch “burde ne will cau y might se ssifying as • Employ • Worke • Unemp • Employ holiday 3 "Propo s two types . That’s w terial, lab uipment b ed to the m umn. We a payroll ta ons are no mple. running m ly 14 to 20 n” labor re use a gene elf-perform s payroll ta yer’s porti rs’ compe ployment t yee benef ys, and so osed appr of taxes in hy it is im or, equipm ids will alr material c all know w xes (also t taxes at y own con 0 people, i eally did p eral contra m. The per axes includ ion of Soc nsation tax its (health o on) roach to c /4515  n your con mportant to ment, and ready have olumn, an what sales referred to all, but yo nstruction it really su put on the actor to su rcentage i de the foll ial Securit h insurance construct nstruction o divide yo subcontra e taxes inc nd payroll t taxes are o as labor ou merely company, urprised m payroll. S ubcontract s significa owing: ty tax e, life insu model of estimate: our summa acts. The s cluded, bu taxes mus , but you burden). refer to t , employin me to learn Sometimes work that nt. Those urance, va f cost con sales tax ary into fo subcontrac ut sales tax st be adde may not b Some of t hem as ta ng n just how s this facto t otherwis costs that cation, pa ntrol"     and our cted x ed to be as the axes or e t I am aid 24/144
  • 38. Chapter 2  "Proposed approach to construct model of cost control"   /4516    11. General Overhead I’ve already mentioned job-specific overhead. These costs include such things as the job site office trailer, portable toilets, and job photographs. They are estimated item by item relative to a specific job. General overhead is a different story. Basically, general overhead represents the cost of doing business. These are expenses that would be incurred by the company whether they had a job to build or not, such as office expenses, executive salaries, and automobile insurance. General overhead is applied to the estimate as a percentage of total cost. This percentage will vary from company to company see Table (2-4). Table 2-4 General Overhead 25/144
  • 39. Chapter 2  "Proposed approach to construct model of cost control"   /4517    12. Profit The goal for every project is to make a profit. Profit is what’s left after all costs and expenses associated with the job have been paid. The estimate represents the contractor’s best guess as to what those costs and expenses are going to be. Profit is expressed as a percentage of the total estimated cost. Profit is rarely a fixed percentage in construction. The estimating team will make a determination as to how much that percentage should be for any given job. As previously stated, when times are tight in construction and there is very little work to bid, profit margins may be quite small. On the other hand, when there is a lot of construction going on in a particular market and demand is high, profit margins will be adjusted upward. Either way, profit is an estimated number just like every other number in the bid. It is highly unusual for the actual cost of the project to exactly match the estimated cost of the project. If we consider each division of our estimate summary, and each of our add- ons, the most likely scenario will be that some divisions (and add-ons) will be over the individual division estimates, and some will be under the individual estimates. However, it’s the final number that you are most concerned with. The goal is to have the actual overall cost of the project at the estimate or under after all point we described we can illustrate the cost estimation in figure (2-4). 26/144
  • 40. Cha  pter 2 Figure 2 "Propo -4 osed apprroach to c /4518  construct model off cost con   ntrol"     27/144
  • 41. Cha  Sa pter 2 ample F "Propo Forms o Fig osed appr of Cost E gure 2-5 F roach to c /4519  Estimat Forms of construct te Cost Esti model of imate f cost conntrol"     28/144
  • 42. Cha  pter 2 "Propo Figure osed appr e 2-6 Form roach to c /4520  ms of Cos construct st Estima model of ate f cost conntrol"     29/144
  • 43. Cha  pter 2 "Propo Figu osed appr ure 2-7 Fo roach to c /4521  orms of C construct Cost Estim model of mate f cost conntrol"     30/144
  • 44. Cha  pter 2 "Propo Figure osed appr 2-8 Form roach to c /4522  ms of Cos construct st Estimat model of te f cost conntrol"     31/144
  • 45. Cha  pter 2 "Propo Figure osed appr 2-9 Form roach to c /4523  ms of Cos construct t Estimat model of te f cost conntrol"     32/144
  • 46. Chapter 2  "Proposed approach to construct model of cost control"   /4524    2.1.2- Work Breakdown Structure (WBS) To plan the project we must convert these into individual pieces of work that must be done to complete the project. For this we need the ‘‘work breakdown structure,’’ or WBS .The work breakdown structure is the most central item in the project plan. Without it we do not have a definition of the work that has to be done to complete the project. Without knowing the work that has to be done we cannot possibly determine the cost of the project or determine the schedule of the project. Without knowing the cost or schedule of the project how will it be possible to control the project or determine how much should be spent to complete it? The amount of resources that must be used on the project and when they must be made available cannot be determined without knowing the schedule. Funding to do the project cannot be scheduled to be in place when the project needs it without a time-phased budget for the project. According to the Guide to the PMBOK, the definition of a work breakdown structure is: ‘‘a deliverable oriented grouping of project components that organizes and defines the total scope of the project work. To create a WBS is a simple task: the project is first broken down into a group of subprojects. Each of these subprojects can be broken down to sub subprojects. The sub- subprojects can be broken down again and again until the desired level of detail is reached. The level of detail is termed the' work package’’ level. The work package is the lowest level of management that the project manager needs to manage. Below the work package other project team members may break down their parts of the project into additional levels .Work packages can be broken down into ‘‘activities,’’ and activities can be further broken down into ‘‘tasks.’’ The reason that technique is so effective is that it follows the principle of ‘‘divide and conquer. 'So, initially the project is broken up into a group of subprojects. These subprojects are further broken down into sub-subprojects, and so on. In this way the largest project we can imagine could be broken down into subprojects. Since each of these subprojects could be considered to be a project in its own right, any large project can be thought of as a family of smaller projects that are interrelated. The important thing about project management is that it is a powerful Methodology that adapts to any size project or program. The tools and methodology that are used are similar in all projects. The WBS is the tool that allows all projects to be broken down into smaller, more manageable projects. The end result of the WBS is a group of individual pieces of work defined. Each of these small individual pieces of work must be assigned to. It is then 33/144
  • 47. Chapter 2  "Proposed approach to construct model of cost control"   /4525    possible to break the work packages down further before the actual work assignments at the detail level are made. The WBS is a hierarchical structure in which all of the major phases of project work are organized in a logical manner. Simply stated, it is a layout of how the work of the project ought to be performed and managed. The WBS links together the project scope, the schedule, and the cost elements, and forms the basis for the entire project information structure. It provides the framework that captures the project’s work information flows, as well as the mechanism for tracking the project’s schedule and progress. It also provides the basis for summarizing and reporting the project’s cost data. In essence, the WBS creates a common framework that. • Presents the entire project as a series of logically interrelated elements • Facilitates project planning • Provides the basis for estimating and determining project costs and budgets • Provides the mechanism for tracking project performance, cost, and schedule • Provides the basis for determining the resources needed to accomplish project objectives • Provides the mechanism for generating project schedule and status Reports • Triggers the development of the project network and control systems • Facilitates the assignment of responsibilities for each work element of the project • Graphically, we can imagine a WBS along the lines shown in Figure 2.10 34/144
  • 48. Cha  Th pro thro finis elem act Alo of d Pro the term pter 2 ere are so oject activi ough spec shing with mental tas ivities for ng with a detail is an ject scope appropria ms of reso "Propo ome impor ties is hie cific projec h work pac sks at the which dur well-defin n invaluab e can easil ate work p ources and Figur osed appr rtant featu rarchical, ct delivera ckages. Ac lowest lev ration and ned project le tool for y be expa packages, d schedule re 2-10 roach to c /4526  ures to not moving fr bles (and ccording to vel in the W budget fig t scope do managing anded or d and by ma es. construct te here. Fi om the ov sometime o the Proje WBS and gures can ocument, a g scope ch iminished aking the model of rst, the br verall proje es sub deli ect work p represent be assign a WBS wit hange. by includ necessary f cost con reakdown ect level, d verables), packages a basic proj ed. th sufficien ing or elim y adjustme ntrol"     of down , and are the ject nt levels minating ents in 35/144
  • 49. Cha  2.1.2 It is use gen to u the use Con info buy tha Pro Out pro rela ulti faci pro exa org unit inte esta rep com pter 2 2.1- Ty s importan ed in proje nerate the use the W identifica ed that sho ntractual ormation a yer. It is u t is going oduct-bas tcome, suc ototype. In atively eas mately int ilitates cos ovides a ba ample of a ganization ts respons egrated int ablishes, i porting rela mpleting th "Propo pes of W nt to recog ects. The W individua BS to deve tion of wo ould not b WBS (CW and the tim sually not to be don sed WBS ch as the n these kin sy to break to manage st estimat asis for co product-b nal break sible for co to the stru n a hierar ationships he work. E osed appr Work B gnize that WBS that w l pieces of elop anyth ork less eff e confused WBS). Thi meliness o t as detaile e. is most su design and nds of prod k the proje eable work ion of the mparison based WBS kdown str ompleting ucture. Th rchical form for the va Example o Figure roach to c /4527  Breakdo there are we have b f work tha hing else w fective. Ot d With the is breakdo of informat ed as the W uitable for d construc duct-based ect into de k packages various p with the p S is shown ructure, k the work e clear ad mat, accou arious orga f OBS is s 2-11 construct own Str many oth een discus t must be would conf ther break e WBS are own is use tion that a WBS that projects t ction of a t d work bre eliverables s. A produ roduct com project’s a n in Figure known as requireme vantage o untability, anizationa hown in F model of ructures her types o ssing mus done in th fuse the e kdown stru : d to defin a supplier w is used to that have tunnel, or eakdown s s, sub deliv uct-based mponents, ctual cost e 2.11 OBS, the ents of the of an OBS responsib al units tha igure 2.12 f cost con s of breakdo st be used he project ffort and m uctures tha e the repo will supply o plan the a tangible a new fig structures, verables, WBS Also , which in Performa organizati e project a is that it bility, and at are invo 2 that proj ntrol"     owns only to t. To try make at are orting y to the work e hter Jet , it is and turn nce. An onal are olved in ject 36/144
  • 50. Cha  invo pro Pro pro pro inte low pro com be pter 2 olves a se oject, ocess-orie ocess-orien oject evolv egrated wi west level, oduct cost mbination used. An e "Propo ries of pha ented WB nted WBS ves over tim ith the ove while the informat of feature example o osed appr ases or ta BS is more involves c me. In gen erall proje product-b ion. In add s from bot of a proces Figure 2 roach to c /4528  sks, such e appropri completion neral, a pr ct, becaus based WBS dition, a h th product ss-oriented -12 construct as in an in ate. Unlike n of major rocess-orie se the task S is most u hybrid stru t- and pro d WBS is s model of nformation e a produc r tasks in s ented WBS ks can be useful for cture that cess-base shown in F f cost con n systems ct-based W sequence a S can be b delineated accumulat t involves ed structur Figure 2.1 ntrol"     WBS, a as the better d to the ting a res can 3 37/144
  • 51. Cha  In t pro be pur oth Bill BOM of a pter 2 the presen oject mana used. How rpose, the er organiz l of mate M in a hier assembly a "Propo nt-day pro agement s wever, the organizat zational un rial (BOM rarchical w are shown Figure 2- osed appr oject enviro ystems, b choice re tion’s infor nits, and, M). The va way. Produ n as a ‘‘goe -13 roach to c /4529  onment, w oth types ally depen rmation sy ultimately arious prod ucts produ es into’’ hi construct with its pro (product nds on the ystem and , how use duct comp uced, suba ierarchy model of oliferation and proce e particula how it int ful it is as ponents are assemblies f cost con of compu ess) of WB r project, terfaces w a plannin e included s, and lowe ntrol"     terized S can its with the ng aid. d in the er level 38/144
  • 52. Chapter 2  "Proposed approach to construct model of cost control"   /4530    2.1.2.2 Work Breakdown Structure Development Before any Work Breakdown Structure can be produced, it is essential that careful thought is given to the number and size of networks required. Not only is it desirable to limit the size of network, so we should be considered in relation to the following aspects: 1. The geographical location of the various portions of the project. 2. The size and complexity of each Project. 3. The process or work being carried out in the Project when the plant is complete. 4. The engineering disciplines required during the design and construction stage 5. The erection procedures. 6. The stages at which individual Project or systems have to be completed. 7. The site organization envisaged. 8. Any design or procurement priorities. So Constructing a WBS is a group effort. The responsibility for the top three levels usually lies with the project manager, who typically works with other managers to develop the major deliverables found there. At the lower levels, however, input into the details should come from that Responsible for the day-to-day work. In addition to the project team, each person responsible for a specific work package must be consulted. There are no universal standards as to the number of levels to use in a WBS. This is typically dictated by the complexity of the project, and the number and nature of the activities. Most have three or four levels at a minimum, although more may be needed if there are significantly more sub deliverables and work packages. As a rule, the greater the number of work packages, the greater the amount of time, effort, and cost incurred in developing the WBS. However, the increased number of packages also significantly enhances the accuracy of project status monitoring and reporting. On the other hand, larger but fewer work packages reduce the cost of WBS development, but the accuracy of project status monitoring and reporting suffers. In most practical situations, a compromise on the number and size of work packages is struck. The most important levels in the WBS development process are the top few levels, which represent the project and associated major deliverables, and the lowest levels, which represent the work activities that are to be scheduled and resourced. 39/144
  • 53. Chapter 2  "Proposed approach to construct model of cost control"   /4531    Typically, the intermediate levels are an aggregation of the lower-level activities, and serve as the mechanism for reporting. The intermediate levels can also be used to set up cost accounts through which cost and budgetary information can be gathered and monitored. A WBS should be constructed by separating the total work, in a hierarchical framework, into discrete and logical sub elements that reflect completeness, compatibility, and linkage to the project’s end item. This hierarchical structure facilitates the aggregation of budget and actual costs incurred into larger cost accounts. In this way, the total value of the work at one level is an aggregation of all the work completed one level below, which enables project work and cost performance to be monitored. The WBS should also reflect all of the project requisites, as well as functional requirements, and should incorporate both recurring and nonrecurring costs. In a WBS, the lowest level consists of tasks of short duration that have a discrete start and end point. Because they consume resources, costs are often reported at this work package level. Work packages serve as control point mechanisms for monitoring and reporting performance, in terms of whether associated tasks were completed according to specifications, on time, and within budget. The responsibility for completing work Packages should be assigned to the appropriate organizational units and individuals, and the resulting WBS should reflect the reporting requirements of the organization. We can develop a WBS by one of two methods: • Top-down approach begins with the total work required to produce the project’s end product. This is successively broken down, First into major work blocks and then into more detailed work package levels until a required level of detail has been achieved. • Bottom-up approach begins with a comprehensive list of all the activities or tasks required to complete the project. Then it moves up, in a hierarchical format, first to work packages, then to cost accounts, and so on, until the top level represents the total work to be performed. It is highly unlikely that the first version of the WBS will be the last. More often than not, it will undergo frequent revisions in response to Feedback that works must be broken into more detailed tasks. Clearly, only individuals who have a thorough knowledge of the work to be performed can conduct the appropriate level of detailed breakdown. In addition, it is impossible to establish estimates of task duration, resource requirements, and the network of precedence relationships among activities without complete agreement on details at the lowest level. 40/144
  • 54. Chapter 2  "Proposed approach to construct model of cost control"   /4532    2.1.3- Cost Codes Once the budget, WBS is confirmed, each activity in the budget is assigned a cost code. Cost codes are used to track all items of work contributing to the overall project Costs. That includes material, labor, equipment, subcontracts, and overhead. All job information regarding cost is tracked via these cost codes as shown in Figure 2.14 Every item on a material invoice, every man-hour logged on a time card, and every subcontractor payment are assigned a cost code and recorded. These codes are used to compare actual job costs with the estimated job costs throughout the construction process. These cost codes usually start with the original CSI reference number associated with the activity, and then for further detail another number is assigned that represents the type of cost. For example: Activity Code • Material 1 • Self-performed labor 2 • Subcontracted labor 3 • Equipment 4 • Job site overhead 5 So, if I were the job superintendent tracking building insulation cost on a project, I would assign the following cost codes to the invoices that came across my desk: Item Cost Code (CSI Number — Type of Cost) • Material invoice 07 21 00-1 • Subcontractor bill 07 21 00-2 • Equipment rental 07 21 00-3 Larger contractors will also assign a year and job number to the cost code. For example, assuming that the previous project was a large contractor’s 14th job of this year, the material invoice might be coded as follows: • Year project started: 2010 • Project no.: 14 • CSI division: 07 21 00 • Type of cost: 1 (material) • Cost code: 2010 14 07 21 00-1 41/144
  • 55. Chapter 2  "Proposed approach to construct model of cost control"   /4533    Smaller contractors might simply identify each of the invoices by the client name along with the cost code. Smith 07 21 00-1 the point is to make the codes as user-friendly as possible while still providing the level of detail needed to properly analyze the project costs. Each invoice amount would be recorded according to the cost code assigned to it by the superintendent. Material costs, labor costs, and equipment costs could be tracked separately, or you could combine them into a single work package total. Either way, you could compare the actual cost to do the building insulation with the budgeted amount and note any discrepancies. All invoices and subcontractor billings are eventually transferred to the contractor’s cost accounting department. The accounting department also tracks the project according to the cost codes and submits reports identifying total material, labor, subcontract, equipment, and overhead costs incurred on the job. The project manager uses these and other reports to monitor the project performance from a big-picture perspective. Spot Check the Cost Coding It’s not uncommon for a vendor to list more than one cost code item on a single invoice. For example, the same invoice could have materials that fall under three different divisions — let’s say lumber (Work packages 6), mortar (Work packages 4), and rebar (Work packages 3). When this happens, it is important to make sure that someone is taking the time to separate the material costs according to their respective Codes as shown in Figure 2.14. Unfortunately, people get lax, and they start lumping all of the material under one code. This, of course, taints the accuracy of the information, which results in faulty reporting. As a construction manager, I was always vigilant about doing random checks on job tickets just to make sure everything was being properly coded. It was part of my management systems quality assurance program. 42/144
  • 56. Cha  Figur pter 2 re 2-14 Figu "Propo ure 2-14 osed apprroach to c /4534  construct model off cost conntrol"     43/144
  • 57. Chapter 2  "Proposed approach to construct model of cost control"   /4535    2.1.4- Depreciation Depreciation is a necessary function in financial management, because without Depreciation the irregularities in the fundamental financial reports of a company would vary considerably and make it difficult to compare one year or one quarter to the next. This is because large investments in assets do not occur on a regular basis. If the total cost of an investment were reflected in the financial time period in which it occurred, the effect on net profits would be considerable in this period, and then the net profit would rise significantly in the next period. What is done with depreciation? The cost of the new asset is spread out over the life of the asset. This allows the company to claim some of the cost each year rather than the total cost of the asset all at one time. • Straight Line Depreciation Straight line depreciation is the depreciation method that allows an equal amount of depreciation to be taken each year. The amount of depreciation is determined by subtracting the salvage value of the asset at the end of its useful life from the purchase price of the asset. The remaining value is called the book value. The book value is divided by the number of years, and this amount is expensed from the asset each year. For example, a company buys a large machine for $1 million. The purchase is made with cash. In the accounts for this transaction, the cash account is reduced by $1 million, and the machine account is increased by the amount of $1 million. There is no effect on the liabilities or owner’s equity side of the accounting equation and it remains balanced. The cost of this machine must eventually be recognized. The machine has a useful life of ten years and is worth $100,000 at the end of its useful life in terms of scrap value or the ability to sell the machine to someone else. This means that the value of the machine that must be depreciated is $900,000. Since the life of the machine is ten years, the value depreciated each year is $90,000. This is known as straight line depreciation (table 2-5). 44/144
  • 58. Cha  Acc dep The red am is t mu This paid the Be yea acc dou T pter 2 • Accele celerated d preciated f e reason fo uced in a ount. In a he same a ch earlier s means t d in the ea taxes wil cause of t ars allow u celerated d uble declin Table 2-5 "Propo erated De depreciatio from the a or this is t given yea ccelerated as in straig in the use hat more arly part o l be highe the presen us to use t depreciatio ning balanc osed appr epreciatio on method assets to b to reduce t r, the amo d deprecia ght line de eful life of equipmen of the usef r than in s nt value of hat money on are com ces. roach to c /4536  on ds are use be applied the net pro ount of tax tion meth epreciation the asset. nt expense ful life of t straight lin f the mone y in the pr mmonly us construct d to allow earlier in ofit after t x that a co ods the to n, but the . e is recogn he asset p ne depreci ey, taxes t resent Yea sed: sum o model of the expen the useful taxes (NO ompany pa otal amoun time that nized and l purchased ation. that are de ars. Two ty of the yea f cost con nses that l life of the PAT). If N ays is less nt of depre it is taken ower taxe . In later y eferred to ypes of rs’ digits a ntrol"     are e asset. OPAT is s by this eciation n is es are years later and 45/144
  • 59. Cha  The fina acc the 6, f The hig yea num low divi Lik the me sta dep rem rea yea T pter 2 • Sum o ere is no s ancial reas counting p years of t for a ten Y e amount o hest digit ar the last mber is the wer year’s iding 9 by • Doubl ke the sum double de thod for a ndard acco preciable v maining de ched. With ars is much Table 2-6 Table 2-7 "Propo of the Yea cientific ba son for usi ractice. Th the useful Year usefu of depreci year and year’s dig en multipl digit is use 55. Each le Declini m of the ye eclining ba cceleratin ounting pr value of th epreciable h this met h higher t osed appr ars’ Digits asis for th ng this ca he calculat life of the l life, the t ation in th dividing th git is used, ied by the ed. In the year the n ing Balan ears’ digits alance calc g the depr ractice. Th he item. Th value of t thod the a han in the roach to c /4537  ts. e sum of t lculation e tion is mad e equipme total is 55 he first yea his by the , making t e book val second ye numerator ces s deprecia culation ei reciation o he percent he next ye he item, a mount tak e later yea construct the Years’ except tha de by tota nt. Thus, ar is deter sum of th the calcula ue. In the ear the de r declines tion, there ither. It is of equipme t of deprec ear’s depre and so on ken as dep rs (table 2 model of ’ digits me at it has be aling the d as can be rmined by he years’ d ation 10 di remaining epreciation by one ye e is no scie , however ent and ha ciation is t eciation is until the s preciation 2-7). f cost con ethod. The ecome a s igits repre seen in ta taking the digits. In th ivided by 5 g years, th n is calcula ear. entific bas r, a consist as become taken on th taken on salvage va in the ear ntrol"     re is no tandard esenting able 2- e he first 55. This he next ated by sis for tent e a he the alue is rly 46/144
  • 60. Chapter 2  "Proposed approach to construct model of cost control"   /4538    2.2- Construct model template –Excel-Format 2.2.1- WBS template sheet 2.2.1.1- WBS sheet template consist: The sheet consist of a group of column which we will fill it with date which we will knowing later the kind of date but first we will know the format of data but before illustrate the sheet format we must know the difference between budget & price Budget: it consist of dry cost only the direct cost of item Price: it consist of direct cost, percentage of in direct cost & over head 1- The first set will consist of WBS code according to BOQ 2- The second set will consist of item description and unit of measure 3- Third set it will consist of rate the budget rate (direct cost) & price rate 4- it will the Quantities column that is: • Contract Quantity which we sign our contract about this Quantity • Actual Quantity it describe the situation of our quantity if it is above or below the contract quantities • Invoice Quantity it describe the quantity we take from the client • Provision Quantity it describe we are execute but it doesn't add to the invoice quantity 5- it will the Budget / price column that is • Contract Amount it describe the amount of money according to Price this by multiply the contract rate with contract quantity • Budget Amount it describe the amount of money according to budget this by multiply the budget rate with contract quantity • budget Forecast Amount it describe the amount of money according to budget after change of quantity this by multiply the budget rate with Actual Quantity • budget Allowance Amount it describe the amount of money according to budget but for invoice quantity this by multiply the budget rate with Invoice Quantity and Provision Quantity • invoice Amount it describe the amount of money according to Price but for invoice quantity this by multiply the Price rate with Invoice Quantity and Provision Quantity 47/144
  • 61. 2.2. Ta Cha  1.2- WBS ble (2-8) W pter 2 S sheet te WBS shee "Propo emplate et forms osed appr forms: a roach to c /4539  as shown construct in table model of (2-8) f cost conntrol"     48/144
  • 62. Chapter 2  "Proposed approach to construct model of cost control"   /4540    2.2.2- Expenses template sheet 2.2.2.1- Expenses sheet template consist: Expenses sheet it contain with every pent we spend on the project which consist of two major item 1- Direct Expenses which are • first set of column it describe the codes which we used with direct expenses • The second ser will consist of item description and unit of measure • the third set of columns it describe the monthly expenses (unit, cost) • that last set is the cumulative cost , units 2- indirect Expenses which are • first set of column it describe the codes which we used with direct expenses • The second ser will consist of item description and unit of measure • the third set of columns it describe the monthly expenses (unit, cost) • That last set is the cumulative cost , units 49/144
  • 63. Cha  2.2.2 pter 2 2.2- Expe • Direct "Propo enses sh Expenses Table ( osed appr eet temp sheet form (2-9) Dire roach to c /4541  plate for ms ct Expens construct rms: as s es sheet f model of hown in ta forms f cost con ble (2-9), ntrol"     (2-10) 50/144
  • 64. Cha  pter 2 • Indirec T "Propo ct Expense Table (2-10 osed appr es sheet te 0) indirect roach to c /4542  emplate fo t Expenses construct orms s sheet for model of rms f cost conntrol"     51/144
  • 65. Chapter 2  "Proposed approach to construct model of cost control"   /4543    2.2.3- Storage template sheet 2.2.3.1- Storage template sheet consist: 1- material storage • first set of column it describe the codes which we used with material • The second ser will consist of item description and unit of measure • the third set of columns it describe the amount of material that will deduct or increase about expenses sheet (unit, cost) this material that doesn't include in work 2- Subcontractors reserve • first set of column it describe the codes which we used with material • The second ser will consist of item description and unit of measure • the third set of columns it describe the amount of work that will deduct or increase about expenses sheet (unit, cost) but to Subcontractors 52/144
  • 66. Cha  2.2.3 pter 2 3.2- Stor "Propo age tem Table (2- osed appr plate sh -11) Stora roach to c /4544  eet form age sheet construct ms: as sho forms model of own in table f cost con e (2-11) ntrol"     53/144
  • 67. Chapter  3  " the application steps & methods "   3- the application steps & methods
  • 68. Chapter 3  " the application steps & methods "   /421    3- The application steps & methods 3.1-Collect Actual Cost data Once project work begins, the project manager systematically collects status information according to the methods and frequency previously determined. When status information is collected, the project manager compares it with the schedule, budgets, and scope identified in the project plan to determine the variances. So before the project begins, the project manager should consult with the project team, the customer, and the client to determine the information needs, data collection methods, and frequency of data collection.     3.1.1- Sources of information At the heart of every project control system are information and a good reporting process. Successful construction management and project control depend on sound information, which comes from actual project performance data. This data originates in the field and is reported on a daily, weekly, and monthly basis. The following are some of the sources of information used to track job performance and feedback into the project control system: 1. Job logs 2. Diaries 3. Daily field reports 4. Time cards 5. Visual Records 6. Correspondence 7. Subcontractor billing statements However, this information serves two critical functions: It is used to detect variances between the actual cost, time, and productivity performance and the planned estimate and schedule. It is used to develop the historical estimating databases and productivity factors used on future projects. Let’s take a look at some of these mechanisms now. 1. Job Logs Logs are used to track a number of regular activities occurring on the job site. • Transmittal logs track the dates and addressees of all transmittals as well as the actual information being transmitted, such as shop drawings; product cut sheets, samples, or some other submittal. 54/144
  • 69. Chapter 3  " the application steps & methods "   /422    • Delivery logs help keep up with all of the material and equipment deliveries that are made to the site. The log contains the date of the delivery and the material received, and it notes any problems with the order and the actions taken. • RFI logs track all requests for information submitted to the project participants and their responses. The date the RFI was sent and the date that the response was received are also noted in the log. 2. Diaries Every member of the project team, but especially the superintendent, should be encouraged to keep a project diary. The diary is used to track all of the day’s events in a summarized fashion and in the individual’s own words. Diaries are used to note daily work activities, conversations, observations, and any other information worth recording. It is important that each member of the team keeps their own diary, because different people will have different interactions and conversations throughout the day. The diaries provide a reliable historic record and can become very important when disagreements or discrepancies arise on the job. Handwritten diaries are often permissible in courts as evidence of actual events and conversations. 3. Daily Field Reports In addition to the informal project diaries, most construction companies require that a more formal record be kept. These field reports are intended to simplify the capture of some fundamental information needed to track job progress and confirm that various project requirements are being met the following are the types of information recorded: • The name of the individual making the report • The date, project name, and location • A brief description of the day’s activities • The temperature and general weather conditions • The contractor’s own work forces on the job • The subcontractors’ personnel on the job site • Materials or equipment delivered • Equipment used on the job • Visitors to the job site • Other notable events Daily reports are often summarized into weekly or monthly reports that are distributed to upper management within the company. These reports make up some of the data used to analyze project performance and make adjustments to the overall project plan. 55/144
  • 70. Cha 4. T If t gre labo ma ext The to c esp car ma On eac wor car for The labo sup asp pur the tea pter 3  Time card he popula eatest risk or records nagers in remely va e time card calculate w pecially if y ds provide nager to t large proj ch trade or rkers reco ds are com accuracy e informat or report, perintende pects of th rpose of th m with bu m keep th ds r adage “T to the con s is one of the field. aluable to t ds provide wages and you are on e the fund track and m jects, time r labor gro rd their ho mpleted, t before bei ion gather typically p ent. The re e work. La he report i udgeted la he project Time is mo nstruction the most The data t the constr e the payro d distribute ne of the w amental in monitor pr e cards are oup workin ours on a hey should ing sent to red from t prepared b eport track abor is cat s to summ bor costs. on target Table (3-1) " the a /423  oney” hold schedule important that they ruction com oll clerk w e paycheck workers ex nformation roductivity e usually f ng on the j weekly tim d be revie o the payr he time ca by the sup ks labor ho tegorized a marize cum This infor for meeti Time Cards applicatio ds true, th and budge t functions collect by mpany. with all of t ks which i xpecting a n needed b y and labo filled out b job. If it is me card. I ewed and c roll clerk s ards is use perintende ours and d and tracke mulative la rmation he ng its cost s on steps & en labor r et Keepin s of constr way of tim the inform s pretty im check. In by the con or expendit by supervis s a small j n either in checked by ee table ( ed to creat ent or assis dollars spe ed by cost abor costs elps the m t and sche & method represents ng accurate ruction me cards i ation need mportant, addition, nstruction tures. sory perso ob, the in nstance, o y the supe 3-1). te a week stant ent on vari t codes, th and comp manageme edule goals ds "     s the e s ded time onnel for dividual nce the erintenden ly ous he pare nt s. nt 56/144
  • 71. Cha 5. V You cert rec con writ 6. C Eve par arc sup gro the incl pter 3  Visual Re u’ve heard tainly the ording wo nstruction tten repor Correspon ery day, nu rticipants. hitects, en ppliers, tes oups. All of duration lude the fo • Submi • Payme • Punch • Chang • Reques • Letters • Emails • Faxes cords the expre case in co rk progres methods, rts. ndence umerous c Emails, le ngineers, o sting organ f the corre of the pro ollowing: ttals ent reques lists e orders sts for info s s ession “A p onstruction ss on the j highlight communic etters, and owner rep nizations, espondenc oject. The sts ormation " the a /424  picture is w n. There a job site. P and captu ations are d faxes fly s, building governme ce must be types of d applicatio worth a th re many r rogress ph ure problem e generate back and g officials, ent agenci e field and ocuments on steps & housand w reasons fo hotos help m areas, a d among t forth amo subcontra es, and co recorded s that mus & method words.” Thi r visually p documen and supple the projec ong the actors, ma ommunity througho st be saved ds "     is is nt ement ct aterial ut d 57/144
  • 72. Chapter 3  " the application steps & methods "   /425    3.1.2- Data Required From Procurement Department   1. Requirements • Log every 15 days with all material imported to each project log contain (material item ,code of material , supplier name , unit of price & quantity of PO) • List of material that finished its finance benefits to double check on the data from finance department. • The procurement team shall record every material item in this log and attached with statement. • The sub contractor contract shall be review by control team and soft copy of the contract shall be send to our team. 2. Flow chart It describe the process between Procurement team and other department as shown in figure (3-1) 58/144
  • 73.   Cha 3. For We we pter 3  rms will descr shown in ribe differe table (3-2 Figure ent form re 2), (3-3), (   e (3-1) data " the a /426  equired fr (3-4) a flow betw applicatio om Procur ween Procu on steps & rement De rement tea & method epartment am and othe ds "     as er   59/144
  • 74. Chapter 3  Taable (3-2) L " the a /427  Log of mate applicatio erial import on steps & ted & methodds "       60/144
  • 75.     Chapter 3  Taable (3-3) Q " the a /428  Quotations applicatio s Compariso on steps & on Sheet & methodds "       61/144
  • 76. Chapter 3  Table (3--4) Recomm for Quo " the a /429  mended Su otations list applicatio bcontracto t on steps & ors & methodds "       62/144
  • 77. Cha 3.1.3- 1. Req   • d a • T   2. Ste   • H i. ii. iii. iv. v. • O i. ii. iii. • T i. ii. pter 3  - Data R quiremen deliver per asset in pr The import eps of wo How we en Record th The man The stora after chec The stora manger The accou material d Out of mat The sign The place The purp The roll of Get daily The accou must invo Require nts  riodic repo roject and tant of thi ork nter the m he importe on the ga age man re ck of exist age make unt take t daily ,wee terial from of the For e will take ose of tak site accou report fro unt make olve the co Figure (3 ed From ort from th date of in s report to material to ed materia ate sign off eceive the t the sign material c he informa ekly month m the stora rman or en it ken materi unt om the sto every 15 ode of ma -2) step of " the a /4210  m Storag he storage n and out t o specify t the projec al on the e f the bill o e material of entranc card and ta ation and hly age ngineer al orage abou day repor terial the enter mate applicatio ges e team con the value o the accura ct see figu entrance g or receiving and take c ce gate ake the ap make the ut in/out m t about in amount of erial to the on steps & ntain the c of bill if it ate losses o ure (3-2) ate g balance copy of th pproval fro report of material /out mate f money fr project & method code of ma exist. of materia e bill or PO om the pro received erial the re rom the b ds "     aterial , all al O oject eport ill l 63/144
  • 78. Cha iii. iv. 3. Flo It d sho   pter 3  The acco received The repor raises to   ow chart   describe th own in figu   ount make and purpo rt will rais control m he process ure (3-3)  e every 15 ose of usag es to the anger s between Figure " the a /4211  day repor ge. project ma Storage t (3-3) data o applicatio rt about o anger then eam and o a flow betw other depar on steps & ut materia n after app other depa ween Storag rtment & method al the plac proval will artment as ge team and ds "     ce of l s d   64/144
  • 79.   Cha 4. For We sho pter 3  rms will descr own in tab ribe differe le (3-5), ( Table ent form re (3-6), (3-7 e (3-5) Mon m " the a /4212  equired fr 7) nthly Repor movement applicatio om Storag rt about sto on steps & ge Departm ore & method ment as w ds "     we   65/144
  • 80. Chapter 3  Table (3-6) Mo material " the a /4213  nthly Repo distributio applicatio ort about ns on steps && methodds "       66/144
  • 81. Chapter 3  Table mate e (3-7) Mon erial distribu " the a /4214  nthly Repor utions and applicatio rt about location on steps && methodds "       67/144