5. • Investigative procedures to detect variance of actual costs from budgeted costs.
• Diagnostic procedures to ascertain the cause(s) of variance.
• Corrective procedures to effect realignment between actual and budgeted costs.
• Tracking costs with Earned Value Management (EVM).
• Assisting management in decision-making.
6. Note: This won’t give clear picture without EV report
PROJECT BUDGET - SUMMARY REPORT
Project: Sample Project Start 05.09.2011
Project No.: A Finish 28/03/2013
Programme: 20
DLP: 12
ITEM
DESCRIPTION A. BUDGET B. COST TO DATE
C. FORECAST
COST TO
COMPLETE
D. ANTICIPATED
COST AT
COMPLETION
(C+B)
E. ANTICIPATED PROFIT
(1a+1b-9D)
1
a. Contract Value 87,219,371.75
b. Project Variation Orders -
c. Unagreed Claims/Variations 2,863,710.43
Total Revised Project Value 90,083,082.18
2 Budgeted Cost of Works
3 Materials 62,488,695 6,828,953 46,171,047 53,000,000
4 Labour 11,697,994 2,402,311 9,295,683 11,697,994
5 Preliminaries - Staff 5,213,791 5,963,149 2,000,000 7,963,149
6 Preliminaries - Site Overheads 1,327,511 2,281,430 1,000,000 3,281,430
7 Contingency/DLP Maintance 370,933 0 370,933 370,933
8 Head Office Overheads 3,488,775 7,313,465 1,000,000 8,313,465
9 Total Cost of Works 84,587,700 24,789,308 59,837,663 84,626,971 2,592,400.73 3%
* Note: 1. Further buying gain on the Materials Cost has been assumed to ensure Project Profit
2. The exceeding of the staff allowance on site is due to design delays. An EOT has been submitted to recover the
costs.
7. A cost management plan is a document that describes how the
organization will manage cost variances on the project.
A percentage of total project costs are often Preliminaries, labor,
material costs, so project managers must develop and track
estimates for Prelims, labor & material.
Chances of exceeding preliminaries budget are very high as most
of the projects won’t complete in estimated time.
Always Labour budget & obtaining budgeted productivity will be
a major challenge for any project.
Material possible buying gains & risks involved like any
specification errors, etc.
8. Basic tools and techniques for cost estimates:
Analogous or top-down estimates: Use the actual cost of a
previous, similar project as the basis for estimating the cost
of the current project.
Bottom-up estimates: Involve estimating individual work
items or activities and summing them to get a project total.
Parametric modeling: Uses project characteristics
(parameters) in a mathematical model to estimate project
costs.
Computerized tools: Tools, such as spreadsheets and
project management software, that can make working with
different cost estimates and cost estimation tools easier.
9. Cost budgeting involves allocating the project cost estimate
to individual work items over time.
The WBS is a required input for the cost budgeting process
because it defines the work items.
Important goal is to produce a cost baseline:
A time-phased budget that project managers use to
measure and monitor cost performance.
10. • Project cost control includes:
• Monitoring cost performance.
• Ensuring that only appropriate project changes are
included in a revised cost baseline.
• Informing project stakeholders of authorized changes to
the project that will affect costs.
Note: Many organizations around the globe have problems with cost
control.
11. • EVM is a project performance measurement technique that
integrates scope, time, and cost data.
• Given a baseline (original plan plus approved changes), you
can determine how well the project is meeting its goals.
• You must enter actual information periodically to use EVM.
• More and more organizations around the world are using
EVM to help control project costs.
12. • The planned value (PV), formerly called the budgeted cost of work
scheduled (BCWS), also called the budget, is that portion of the approved
total cost estimate planned to be spent on an activity during a given
period.
• Actual cost (AC), formerly called actual cost of work performed (ACWP),
is the total of direct and indirect costs incurred in accomplishing work on
an activity during a given period.
• The earned value (EV), formerly called the budgeted cost of work
performed (BCWP), is an estimate of the value of the physical work
actually completed.
• EV is based on the original planned costs for the project or activity and
the rate at which the team is completing work on the project or activity to
date.
13. • Material is core of profits.
• Receive budgets from estimation.
• Re measure all quantities after award & monitor there on.
• Order should be placed based on re measured quantity and
monitored to avoid excess ordering of material which in turn
result in cost saving
• Buying gains / alternatives / value engineering.
• Possible maximum with local market experienced people.
14. Many organizations collect and control an entire suite of
projects or investments as one set of interrelated activities
in a portfolio.
Project portfolio management has five levels:
• Put all your projects in one database.
• Prioritize the projects in your database.
• Divide your projects into two or three budgets based on type of
investment.
• Automate the repository.
• Apply modern portfolio theory, including risk-return tools that
map project risk on a curve.
21. • Develop Prelims management plan & monitor regularly
• Allow budget for project delays.
• External delays can not be avoided.
• Mobilize upon work load not as per baseline.
• Try to keep mix with Juniors & Seniors.
• Possible drafting outsource, or
• Establish centralize drafting
• Keep minimum draftsmen at site.
• Manage lean time with minimum resource.
• Strong Engineering team for effective completion
• EOT claim may not be a successful in many cases which acts as a
negotiation tool to avoid any LDs.
22. Effect on Cash Flow With and Without Preliminaries in BOQ
-
20,000,000
40,000,000
60,000,000
80,000,000
100,000,000
120,000,000
CF without Preliminaries
CF with Preliminaries
Note: This will support for a positive cash flow
23.
24. Decide: Internal Resource or External Resource, or subcontract Packages
1032
0
50
100
150
200
250
300
350
400
450
500
550
600
650
700
750
800
0
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
AVGMen
26 Months - Planned Monthly Average Men
30 Months- Planned Average Monthly Men
Actual Monthly Average Men
26 Months-Cumulative Planned Monthly Average Men
32 Months-Cumulative Planned Average Men
Cumulative Actual Monthly Average Men
27. 40% work done 60% Remaining work
PMI
Total Projected Manhours for 160 villas+Var+PMI = (570,720+73,430) = 644,150
Manhours consumed till date (40% Workdone) = 701,400
Required Manhours to complete 60% work
+ Var+PMI = 359,554
Projected Manhours for 40% WD
+Var+PMI = 284,596
Loss of Manhours till date = 416,804
Manhours loss at completion
(Expected 75% efficiency for remaining works) = (416,804 + 89,888) = 506,692
PMI
Un productive 25% =89,888
Required Manhours to complete 60% works (WP) incl.
unproductive hrs= (359,554 + 89,888) = 449,442
Same way to forecast ETC, EAC Preliminaries & Material cost
28. Item Description
Ductman &
Plumber
Pipe Fitter Electrician Helper Remarks
Case-1
Item Company Operatives Monthly Monthly Monthly Monthly Total
1 Approx Requirement 250 100 250 200 800
2 Monthly Salary (10 hrs working) 2,668.8 3,089.1 2,858.9 2,158.5
2 Cost / month SSL own manpower 667,208 308,908 714,729 431,700 2,122,546
3 Approx for one year 8,006,500 3,706,900 8,576,750 5,180,400 25,470,550
Case-2
Item Labour Supply Operatives Monthly Monthly Monthly Monthly Total
1 Approx Requirement 250 100 250 200 800
2 Monthly Salary (10 hrs working) 3,542.5 4,205.0 3,633.8 3,080.0
3 Mobilization Charges (1000/head) 1- time 250,000 100,000 250,000 200,000 800,000
4 Cost / month (includ short term mob. Fee) 1,135,625 520,500 1,158,438 816,000 3,630,563
5 Approx for one year 10,877,500 5,146,000 11,151,250 7,592,000 34,766,750
A Varience / month (1,508,017)
B Varience / Year (for couple of projects) (9,296,200)
Note : Company need minimum own resource to address new projects.
Supervision must be company own to maintain the Quality.
Own manpower is looking lucrative. But getting required
productivity is a challenging for the team.
Over time increases Variance will increase.
Break even point: 221 company Operatives can be Idle for one year to match with Supply 800 operatives.
29. Tower
Earned Value Actual Spent Variance
Supply Labour Supply Labour AED.
S-1 80,972.02 507,304.00 (426,331.98)
S-2 69,956.48 438,288.00 (368,331.52)
150,928.51 945,592.00 (794,663.49)
EV up to Dec end AC Up to Dec End
Better to award subcontractor packages to avoid cost overruns
30. XXX Project Earned Value summary Date: 15-Jan-13
Activity Responsibility
Material
Availability
Workdone
(approx)
Budget
Hours
Earned
Value
Actual Hrs
Spent
Installed Qty.
till date
Unit Productivity Remarks
HVAC
Basements, Podiums,Riser,Corridore (%)
Ducting SSL yes 30% 43,351 12,883 39,601 3,194 M2
3.0739
Chilled Water pipe work SSL yes 40% 31,309 10,744 30,847 2,480 M 2.8711
FCU installation SSL yes 30% 15,781 3,613 2,831 40 Nos 0.7836
Appartments AGTC
Ducting AGTC no 5% 80,510 4,040
8,044
2,129 M2
2.2337
Chilled Water pipe work AGTC yes 20% 58,146 3,211 800 M -
FCU installation AGTC yes 25% 29,306 1,773 46 Nos -
PLUMBING
Sleeves fixing SSL yes 70% 15,819 11,887 32,100 2.7004
Drainage piping SSL yes 35% 22,667 17,675 30,070 7,500 m 1.7013
water supply piping SSL yes 35% 17,903 11,226 23,388 3,500 m 2.0834
water heater installation SSL yes 60% 1,929 333 3,341 11 Nos 10.0335
Drainage piping AGTC yes 20% 42,095 3,500
8,044
1,492 m 1.7191
water supply piping AGTC yes 20% 33,248 2,252 1,324 m -
water heater installation AGTC yes 5% 5,000 265 25 Nos -
FIRE FIGHTING
NAFFCO yes 24% 117,330 24,921 29,928 1.2009
ELECTRICAL
Slab Conduit SSL yes 70% 20,611 13,630 40,665 206,898 m 2.9835
Slab Conduit Silverstar 2,642 49,775 m 18.8399
Tray/Trunking SSL yes 22% 20,239 15,787 21,708 5,709 m 1.3750
Power / Lighting Wiring SSL yes 20% 27,350 5,382 18,876 120,300 m 3.5073
Fire alarm / Emergency cabling SSL yes 100% 1,829 1,829 1,829 1.0000
G.I back box fixing SSL yes 20% 41,743 2,935 6,157 6,988 Nos 2.0979
G.I back box fixing Silverstar 6,399 8,000 Nos 1.2502
KELTECH
Fire alarm / Emergency cabling Keltech yes 20% 27,568 7,316 4,064 20,000 m 0.5555
ELV
ELV cables Honeywell Not available
0 12,947 1 1 1.0000
Miscelleneous
Driver,Office boy SSL - 17,026
TOTAL= 666,681 164,244 376,296 2.2911
31.
32. Budget - AED AED 36,850,059.00 Total Ordered Value 34,407,086.00
Budget Awarded To Date - AED AED 34,407,086.00 Total Gain/Loss 159,233 .00
Balance of Budget - AED AED 2,442,973.00 Percentage Gain/(Loss) 0.46%
Sub No. Work Description
Sub Contractor
/Supplier
Net Budget Sublet Cost
Transferred to
Risk Management
Gain/(Loss) Comments
1 Orders Placed To Dated
DSC 001 CHILLERS X 5,090,004.00 5,155,379.00 0.00 (65,375.00)
DSC 002 AHU / FAHU Y 4,252,599.00 4,130,000.00 0.00 122,599 .00
DSC 003 FCU / FANS Z 2,161,799.00 2,089,880.00 0.00 71,919 .00
DSC 004 CHW PUMPS A 1,713,522.00 2,075,941.00 0.00 (362,419.00)
DSC 006 DOMESTIC PUMPS B 623,685.00 628,870.00 0.00 (5,185.00)
DSC 007 DUCTING & ACCESSORIES CHT 414,315.00 0.00 0.00 414,315 .00
DSC 009 CHW PIPES & ACCESSORIES K 322,348.00 333,232.00 0.00 (10,884.00)
DSC 014 CLADDING - GRC L 111,186.00 110,000.00 0.00 1,186 .00
DSC 016 GRP LINING M 73,150.00 62,000.00 0.00 11,150 .00
DSC 023 CABLES N 15,987.00 5,385.00 0.00 10,602 .00
DSC 026 TRAY & TRUNKING I 1,010,520.00 1,005,200.00 0.00 5,320 .00
DSC 027 ELV S 1,008,750.00 1,000,000.00 0.00 8,750 .00
DSC 028 SIGNAGE & STICKKERING G 5,640.00 27,900.00 0.00 (22,260.00)
DSC 029 GENERATOR, ats H 2,004,998.00 2,025,483.00 0.00 (20,485.00)
DSC 032 BUSBAR R 12,165,066.00 12,165,066.00 0.00 0 .00
DSC 033 MDBS, DBS L 3,592,750.00 3,592,750.00 0.00 0 .00
TOTAL ( A ) 34,566,319.00 34,407,086.00 0 .00 159,233 .00
2 Orders to be Placed
DSC 005 FIRE FIGHTING 952,566.00
DSC 008 DAMPERS 382,664.00
DSC 010 VALVES 197,685.00
DSC 011 SWITCH, SOCKETS 196,820.00
DSC 012 DIFFUSERS 132,167.00
DSC 013 DRAINAGE ACCESSORIES 121,790.00
DSC 015 FLOORING - FLOOR COATING 77,835.00
DSC 017 CORIAN TOPS 56,972.00
DSC 018 DOORS - METAL 35,344.00
DSC 019 FABRICATION AND ERECTION - STEEL 32,127.00
DSC 020 MIRRORS 25,650.00
DSC 021 SOFT LANDSCAPING - ALLOWANCE 22,683.00
TOTAL ( B ) 2,283,740.00 0.00 0.00 0.00
3 Variations Placed :
TOTAL ( C ) 0.00 0.00 0.00 0.00
4 Variations to be Placed :
TOTAL ( D ) 0.00 0.00 0 .00 0 .00
5 Budget Transfers
TOTAL ( E ) 0.00 0.00 -
GRAND TOTAL ( A+B+C+D+E ) 36,850,059.00 34,407,086.00 0.00 159,233.00
33.
34. • All overheads to be absorbed by the projects.
• Monitor costs regularly with revenues .
• Break even analysis will give direct focus on issue.
• Distribution based on the following:-
• Based on project value.Based on project value.Based on project value.Based on project value.
• Based on billing value.Based on billing value.Based on billing value.Based on billing value.
• Based on duration of the project.Based on duration of the project.Based on duration of the project.Based on duration of the project.
• Based on combination ofBased on combination ofBased on combination ofBased on combination of two or more.two or more.two or more.two or more.
37. • Performance / Projections
• Cash flow with projections
• EV report
• Engineering status
• Procurement Management with ERP
• Manage Inventory / Store
• Resource management between internal projects
• Manage Transport
• Manage Camps
• Cost variances & any other concerns.
38. • Authority
• Infrastructure
• Coordination between all the departments
• ERP software
• Organization Interest
• Providing Awareness & Training to Staff
39.
40. • Trainees/Juniors are most cost effective.
• Distribute with different projects.
• Majority of departments to be filled for cost effective.
• They are hard workers to build their career.
• Struggle for growing fast, which will be an added value to us.
• Improves productivity with less cost.
• Majority of the works are routine which can be easily get it
done with trainees/juniors.
• This is a proven technique with major organizations.
41. • MEP Engineering is a major challenging.
• Centralized engineering department is preferable.
• Value Engineering shall be applied.
• Engineering submissions /approvals shall be obtained at the
earliest in the project cycle which is basis for all projections.
• Effective activity sequencing shall be planned.
• All material submittals shall be centralized to optimize
resource, as they are experts in the field knows the pulse of
the consultant, etc.
• Budgets shall be known to key personnel managing the
Project.
42. • Centralized procurement with ERP software to manage the system
• Managing store / Inventory with cost.
• Inventory shall be linked across all projects with centralized control.
• Support to Accounts for payments and forecasts.
43. • Spreadsheets are a common tool for, cost estimating, cost
budgeting, cost control and resource planning.
• ERP Software.
• Primavera Project management software has many cost-related
features, especially enterprise PM software.
44. • Project cost management is traditionally a weak area in MEP
projects, and project managers must work to improve their
ability to deliver projects within approved budgets.
• Main processes include:
• Cost estimating
• Cost budgeting & Monitoring
• Cost control Techniques (Value Engineering; Material sourcing,
Schedule & Resource Planning)