Cost Control Process for Construction

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.

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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

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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

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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

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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

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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
2.10 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

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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"

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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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• 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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"SState of AArt"
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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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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"

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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
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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

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13/144


/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

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15/144

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16/144


/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


/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

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d Equipm
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t
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estimate t
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19/144

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20/144

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21/144

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22/144

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pter 2
er it is det
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as of work
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mmary. All
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m a
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for
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ork and
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23/144

Cha
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Table 2-3
pter 2
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terial, lab
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roach to c
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n your con
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referred to
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and
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aid
24/144


/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


/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
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roach to c
/4519
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28/144

Cha pter 2 "Propo
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e 2-6 Form
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/4520
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29/144

Cha pter 2 "Propo
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ure 2-7 Fo
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/4521
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30/144

Cha pter 2 "Propo
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31/144

Cha pter 2 "Propo
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32/144


/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


/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
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finis
elem
act
Alo
of d
Pro
the
term
pter 2
ere are so
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mental tas
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ng with a
detail is an
ject scope
appropria
ms of reso
"Propo
ome impor
ties is hie
cific projec
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which dur
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n invaluab
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ate work p
ources and
Figur
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rtant featu
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ct delivera
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lowest lev
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d schedule
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roach to c
/4526
ures to not
moving fr
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budget fig
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aking the
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by includ
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of
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minating
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35/144

Cha
2.1.2
It is
use
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to u
the
use
Con
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tha
Pro
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2.1- Ty
s importan
ed in proje
nerate the
use the W
identifica
ed that sho
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ormation a
yer. It is u
t is going
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atively eas
mately int
ilitates cos
ovides a ba
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ganization
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ablishes, i
porting rela
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"Propo
pes of W
nt to recog
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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
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to the stru
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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
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kdown str
ompleting
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for the va
Example o
Figure
roach to c
/4527
Breakdo
there are
we have b
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fective. Ot
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2-11
construct
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t must be
would conf
ther break
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s. A produ
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known as
requireme
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model of
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her types o
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fuse the e
kdown stru
:
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that have
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s, sub deliv
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mponents,
ctual cost
e 2.11
OBS, the
ents of the
of an OBS
responsib
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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
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e project a
is that it
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at are invo
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ntrol"

owns
only to
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orting
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36/144

Cha
invo
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Pro
pro
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pter 2
olves a se
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egrated wi
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"Propo
ries of pha
ented WB
nted WBS
ves over tim
ith the ove
while the
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example o
osed appr
ases or ta
BS is more
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me. In gen
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Figure 2
roach to c
/4528
sks, such
e appropri
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neral, a pr
ct, becaus
based WBS
dition, a h
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-12
construct
as in an in
ate. Unlike
n of major
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se the task
S is most u
hybrid stru
t- and pro
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model of
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r tasks in s
ented WBS
ks can be
useful for
cture that
cess-base
shown in F
f cost con
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sequence a
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delineated
accumulat
t involves
ed structur
Figure 2.1
ntrol"

WBS, a
as the
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ting
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res can
3
37/144

Cha
In t
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oth
Bill
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of a
pter 2
the presen
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Figure 2-
osed appr
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-13
roach to c
/4529
onment, w
oth types
ally depen
rmation sy
ultimately
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ucts produ
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construct
with its pro
(product
nds on the
ystem and
, how use
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ierarchy
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and proce
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how it int
ful it is as
ponents are
assemblies
f cost con
of compu
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r project,
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terized
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its
with the
ng aid.
d in the
er level
38/144


/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


/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


/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


/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"

43/144


/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).
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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


/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
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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


/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 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


/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 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 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


/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


/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


/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
l
63/144

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

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

Chapter 3
Table (3-6) Mo
material
" the a
/4213
nthly Repo
distributio
applicatio
ort about
ns
on steps && methodds "

66/144

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

Cost Control Process for Construction

Cost Control Process for Construction

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