Cost Loaded Programmes

Hi John

Adding costs to level 4 tasks is just too fiddly - it is better done on a spread sheet if it is to be done at all.

S-Curves and EVA are more accurate using modelled resource hours.

Plant costs such as Tower Cranes - Supervisors etc can be added to summary bars at levels 3 and 2 with little difficulty using a costed resource.

In delay analysis I use a cost loaded summary bar to show LAD's.

Best regards

Mike Testro

Cost shall be assignmed at the lowest level to the project model objects: activities, resources, materials, resource assignments.

In this case project cost model will be reliable and dynamic. Cost of management and hired machines and equipment is usually assigned to hammock activities that start from the moment when they were hired to the end of their last use.

Context: $200M rail alignment trench in western north america, vertically integrated contractor

As a new engineer I inherited responsibility for the P3 schedule from the previous new engineer. The schedule was cost loaded at the baseline detail, correlating with an object level of detail. Previous to me and about midway through the project the engineering manager decided to split the schedule into a billing schedule and a work schedule. From that point we updated the work schedule to reflect changes in scope, method, duration, and sequence - without cost. The billing schedule was updated with actual start and finish dates then submitted for progress payments. The reason for the spit is it was introducing numerous errors in the cost loading when the schedule was reforecasted.

Since that experience I have been researching integrated scheduling methods. My opinion is that the Gantt lines of scheduling methods are fundamentally limited to the object level of detail and intutition tells me they have an accuracy of +/- 20% for forecasting cost and time. If you work with subcontractors and they submit a contract schedule then force them to increase resources to meet the contract completion, then you may be more accurate, but then you are not scheduling - you are simply shifting responsibility.

lI agree with Vladimir regarding modeling of rented equipment though it can be complicated when rental depend on weather in use or idle. I also agree with your idea of using materials for expenses such as gasoline when consumed.

Instead of cost loading at a Hammock I would prefer cost loading at the equivalent to a WBS activity as implemented in SureTrak. Sometimes these activities are not related one to another. Say you have 10 buildings, each with their independent concrete pouring activities. Your Plan for Crane rental will be dynamic on activities not related to an overall start and finish. Different horses on the race track any can get out the gate first, any can win the race or be the great looser.

I believe it is good to remind you that resource usage is a different issue. Very often you shall resource load the equipment usage at the activity level so you can model availability on your resource constraining or leveling, this while the rental follows the hammock, or the WBS activity if available.

Note in Spider WBS Summary bars are not activities, and therefore we can have unlimited WBS code dictionaries. I believe we need hammocks as in Spider, more functional than others, based on predecessors only. I still miss the WBS activities but Vladimir knows as soon as he gave me the equivalent to SureTrak WBS activity I will be asking for the SureTrak Topic Activity, an activity whose start precedes all its members start and its finish succeeds all its members finish, an activity that can be driven by predecessors and can drive successors, to me a clear and transparent logic as you shall be able to follow driving path. MSP also has its own version as summary bars can be linked.

That a crane is to be rented during 6 months it does not means you can use it on 100 activities during the same day, maybe it can work on 10 activities on the same day (wow a lot of movements) but not on 100 activities. For this you shall use partial assignment as to know when the resource demand is too much, a hammock will not do it. Same as costs resource availability shall be dynamic or your schedule might be invalidated as well. It is important to control idle resource as they will have substantial cost impact if not done properly.

For my schedules I usually do not find going into much granularity regarding cost model adds much value to a reasonable distribution at a higher level, even if you perform financial constraints modeling available on Spider but not in MSP nor on any Primavera/Oracle scheduling software. I do not mean to say that in some occasions the granularity is relevant.

Regarding resource usage it is different, 99.99%+ I find it must be at individual activity level and less than 0.01% on hammocks. Regarding resource availability I find it must be defined driven by activities 100% instead of defined by fixed time, at home we do not have seasons, it is always summer and rains or shines on alternate weeks, our hiring plan for avoidance of idle time is based on a dynamic need that moves strictly with the activities. 

Peterson,

RE: "it was introducing numerous errors in the cost loading when the schedule was reforecasted"

It might be due to the way P3 handles period performance, if you do not follow the updating of pre-defined financial periods cost distributions that span over one period will be redistributed.

RE: "If you work with subcontractors and they submit a contract schedule then force them to increase resources to meet the contract completion, then you may be more accurate, but then you are not scheduling - you are simply shifting responsibility."

The Contractor is always responsible to the Owner, the Subcontractor is always responsible to the General Contractor, there is no shift in responsibility. If you require them to meet plans you are managing, the initial schedule is just the beginning.

If you want to increase the probabilities of meeting contract completion I suggest always target for early completion in the hope you make it on time. A blow some 10 inches below waist line (ugh!) to many American schedulers that are required to use all available contract time into their schedule or otherwise it would be considered a reduction in contract time. Quite a stupid requirement I have been forced to follow before, that targeting for early completion is good is a concept well known in Europe, not necessarily in the USA. My solution always was to keep two versions of the schedule, one booby trapped for handling claims (sure why not nailing the Owner if he does not allows you to make good plans and force you to have two plans) and the real one that targets for early completion (do not nail yourself).

RE: "intuition tells me they have an accuracy of +/- 20% for forecasting cost and time"

I would say as a general rule schedules are optimistic, if not then Parkinson Law will make them optimistic, plan for early completion always. The great % variation is on time estimates, at times due to poor performance by the Contractor, at times due to poor performance by the Owner that does not provide answers in due time, but mostly due to unforeseen conditions. I would say on general cost estimates have an accuracy of +/- 5%, if a Contractor estimate for fixed contract under competitive bidding. Less than 5% might get them in red and go out of business, more than 5% might make them not to get any competitive bidding job and get out of business as well.

About the SureTrak Topic Activity and WBS Activity I would like to add that an added bonus of this activity type would be that compatibility with MSP and other software shall improve, summary activities will be converted to this activity type instead of a hammock and links to summary activities will be transferred. Also WBS activities shall be converted to this type just without predecessors or successors to external activities. Microsoft users will feel comfortable with Spider if their work from MSP is fully compatible, and who knows perhaps one way for creating the Topic/Group activity or whatever might be similar to MSP by indenting or out-denting selected activities.

Best regards,

Rafael