Costing in Primaver P3

Shareef

The following link can provide you with some insight into earned value.

Earned Value, Clear and Simple

I consider Earned Value a waste of time, not worth the effort. Lately I have seen some support from authors that share the same view as to how much CMP is being abused.

Earned Value = 50% job costing
-does not take into account production units
-unit cost is intuitive, earned value terms are not
-contractors are interested in unit costs, a value meaningful to them
-earned value is basic budgeting in a foreign language
-it is insane doing job costing with CPM software
-true job costing must be integrated into accounting
-accounting software should not be determined by a CPM

Are you willing to expose your costs to others that will have access to your schedule?

Payment breakdown items are not equivalent to Work Breakdown as applied to CPM schedules; consequently it is uncomfortable to pretend using Work Breakdown as a basis for Payment Applications. For example as a Payment Breakdown Item you might have 20 different lighting fixtures to be installed in a hundred rooms in different ratios, how can you spread this into a Work Breakdown Structure? As a result you have to keep apart your Work Breakdown Structure from your Payment Application Breakdown, these can be cost resources/codes for this purpose only, keep separate cost codes for cost tracking.

If you are required to model Job Costing, Earned Value, Payment Breakdown and WBS you better keep them separate. It will still be a mess, but a bit less of it.

P3 Apex sample project is a good start for you to explore some Costing functions within P3.

Best regards,
Rafael

Shareef

The following is a paper I prepared as an introduction to Job Costing as we do it at home. Unfortunately less than 50% of our contractors do perform formal Job Costing.

Job Costing for Construction

Those that do not keep a formal Job Costing System at times keep track for a few relevant activities, the problem is not all costs are accounted for the activities being tracked. A formal Job Costing system accounts every for expense to the lowest monetary fraction, for US dollar it is a cent or 1/100 of the dollar.

Those that do not keep a formal Job Costing System never know where exactly they are making money and where they are losing money. Because they do not keep track of unit costs, their estimates are based either on a few tracked activities or in estimates based on a mental exercise to predict costs. This I call “mental masturbation” but seem like they enjoy it.

Best regards,
Rafael

Shareef / Rafael

I agreed that costing is important part of Project Management. "BUT" if you mix the cost and time together, you might not got what you wanted all the time. I should say you will either lost your time plan or cost plan if you try to marry the two together.

I suggest to have the both item semi-integrated, reason being, WBS and CBS did not always have a perfect match.

One need to linked with the other but at a higher level.

If
L1 is the Senior Management Report Level
L2 is the Project Manager Level
L3 is the Planner Level

Then the best is to integrate the L2 schedule with your cost structure / plan

HTH

Regards

Alex

Alex

I agree a 100% with you.

Best regards,
Rafael