1. Cost Planning & Scheduling CTC-415

2. Bid Estimate Becomes the project budget upon signing of contract Can cost load the schedule –Effective means of cost control –Predict time of cash requirements over course of project

3. Activity Cost Amount expended by contractor on activity –Includes direct and indirect costs Activity value –Amount contractor will receive for completed activity –Includes activity direct overhead, overhead allocation, profit

4. Activity Direct Cost Cost of all components which can be directly traced to activity –Incurred as a direct result of the performance of an activity –Labor –Production equipment –Material and installed equipment –Subcontractors

5. Labor Wage Rate –Does not include fringe benefits, taxes, insurance Labor Burden All payments over the basic wage Varies by trade Includes fringe benefits (paid holidays and vacations, health & life insurance, pension,training) Workman’s comp, Unemployment insurance, FICA

6. Labor Unit Labor Cost –Wage Rate + Labor Burden Total Labor Cost –Unit Labor Cost * hours worked per craftsman

7. Production Equipment Equipment can be owned or leased by contractor Contractor owned equipment –Estimated at internal company rate –Ownership costs Depreciation, interest, taxes, insurance,storage, major overhauls Operating costs – fuel & oil, routine repairs and maintenance

8. Production Equipment Contractor leased equipment –Lease payment is used to determine the equipment cost How much does that machine cost/day? (Initial Cost + depreciation + taxes + insurance + storage +overhauls + O&M)/(expected # of days used over life) Expected days used per year – what percent of year?

9. Production Equipment Mobilization/Demobilization Costs –Transportation –Set-up / breakdown –Testing & certification Costs need to be apportioned to each activity that uses the equipment Cost of equipment that are used on all of project should be put into overhead

10. Materials & Installed Equipment All costs to contractor to –Procure materials –Installing the equipment –Special packing charges –Freight and delivery charges –Taxes and tariffs –Insurance and bonds –Storage and handling –Inspection and testing

11. Subcontractors Usually a contracted amount Activity cost needs to include all subcontractor costs

12. Overhead Allocation Activity Indirect Costs –Project Site Costs Not attributable to any one activity –Home Office costs O&M of construction firm

13. Project Site Costs Include Project Administration -Project manager, General Super, Non- working foremen, clerical support Utilities Equipment & Supplies - Office eqiup & supplies, vehicles, small tools, first aid Services - Engineering, surveying, testing,legal, security, trash disposal Facilities - Storage, sanitary, field office Insurance, Permits & Fees Mobilization /Demobilization – access road, laydown area,dewatering, fences & barricades

14. Home Office costs Salaries & benefits Office rent Insurance Utilities Supplies Equipment rental Furnishings Communications Legal Accounting Vehicles Travel & lodging Advertising Donations Assoc dues

15. Overhead Allocation Allocate Project and Home office overhead to each activity –Can be based on activity cost –Must be a reasonable allocation

16. Profit Allocation Total Revenues – total cost Need to allocate profit to each activity Activity profit + activity cost = activity value Activity value can be used to determine progress payment amounts

17. Assigning Cost & Value 4 levels of cost or value that can be assigned to an activity –Dependent on info needs of project team –Level must be consistent thru project

18. Activity Cost/Value Timing Cost of work in place –Uniform – work in place is completed at a steady rate Reasonable assumption when activity is small in relation to project –Non-uniform – work in place is completed in a non-steady rate

19. Cumulative Cost/Value Determine the ES and LS cumulative costs –Same method used in resource leveling –Find cost envelope – area between ES and LS cum cost curves This becomes target area for work in place

20. Cumulative Cost/Value Use cum cost curves to determine cash flow –Allows contractor to determine when progress payments are needed –Allows contractor to determine the amount of working capital needed to do work Working capital pays bills from progress payment to progress payment