Scheduling - cost

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PROJECT COST SCHEDULEPROJECT COST SCHEDULE• At the beginning of the project a preliminary cost estimates of the

project must be. An estimate (an intelligent quest) noramally take into account time and additional cost required to overcome delays, inefficient workforce and other factors outside the management control.

• Time and money is inter-related.

Costa are divided into 2 categories:1. Fixed costs

Include rentals/hire kos, finance payments, tax etc.

2. Variable costs

Include costs of labour, SOCSO dan EPF, utilities, TNT, bils (Telekom, TNB etc), couriers and transport etc.

Scheduling - cost

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For the purpose of estimating, the above costs are divided into:

• Direct Costs: labour and materials• Overhead Costs and Rates: Indirect cost, facilities, tax and insurance;

– Indirect costs: elauces, purchasing, selling and marketing, administration, travel, entertainment, training and education etc.

– Facilities: hire/rental, building and compound maintanence.– Tax and insurance: National, state and local authority. Workmen

Compensation, all risk, PI etc.

The following example use only the ‘direct cost’.

Scheduling - cost

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Work Activity Cost (RM)

Estimated Time

(Week)Cost/week

(RM)

Design structural steelDesign BuildingDesign mechanical equipmentFabricate and erect structural steelConstruct Phase I buildingDesign electrical equipmentFabricate mechanical equipmentDesign interior itemsProcure interior itemsInstall E and M equipmentConstruct multi purpose buildingProcure interior itemsInstall interior items

40,000.00420,000.00120,000.00220,000.00420,000.0080,000.0090,000.0040,000.0040,000.00

200,000.00450,000.0040,000.00

240,000.00

2136

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10

$ 20,000.0040,000.0020,000.0022,000.0070,000.0020,000.0010,000.0020,000.00

5,714.0033,333.0075,000.0010,000.0024,000.00

Project Design & Build Cost/Time

Scheduling - cost

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Task Name/Time Duration EST EFT Cost Cost/w w1 w2 w3 w4 w5 w6 w7 w8 w9 w10 w11 w12 w13 w14 w15 w16 w17 w18 w19 w20 w21 w22 w23 w24 w25 w26 w27 w28 w292 0 2 40,000 20,000 20000 20000

13 0 13 520,000 40,000 40000 40000 40000 40000 40000 40000 40000 40000 40000 40000 40000 40000 40000

6 0 6 120,000 20,000 20000 20000 20000 20000 20000 20000

10 2 12 220,000 22,000 22000 22000 22000 22000 22000 22000 22000 22000 22000 22000

6 13 19 420,000 70,000 70000 70000 70000 70000 70000 70000

4 6 10 80,000 20,000 20000 20000 20000 20000

9 6 15 90,000 10,000 10000 10000 10000 10000 10000 10000 10000 10000 10000

2 7 9 40,000 20,000 20000 20000

7 11 17 40,000 5,714 5714.2857 5714.2857 5714.2857 5714.2857 5714.2857 5714.2857 5714.2857

6 19 23 200,000 33,333 33333.333 33333.333 33333.333 33333.333 33333.333 33333.333

6 23 29 450,000 75,000 75000 75000 75000 75000 75000 75000

4 8 12 40,000 10,000 10000 10000 10000 10000

10 12 22 240,000 24,000 24000 24000 24000 24000 24000 24000 24000 24000 24000 24000

Toatal cost/week 2,500,000 80000 80000 82000 82000 82000 82000 112000 112000 102000 102000 87714.286 87714.286 149714.29 109714.29 109714.29 99714.286 99714.286 127333.33 57333.333 57333.333 57333.333 57333.333 33333.333 75000 75000 75000 75000 75000 75000Cuu. Cost 80000 160000 242000 324000 406000 488000 600000 712000 814000 916000 1003714.3 1091428.6 1241142.9 1350857.1 1460571.4 1560285.7 1660000 1787333.3 1844666.7 1902000 1959333.3 2016666.7 2050000 2125000 2200000 2275000 2350000 2425000 2500000

Install int. items

Fabricate mech. Equip.

Design Int. items

Procure. Elect. Equip.Install M&E equipmentConstruct Ph-2 building

Procure int. items

Design Elect. Equip.

Design Struct. Steel

Design Building

Design Mech. Equip.Fabricate & erect Str. SteelConstruct Ph_1 building

Scheduling - cost

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Scheduling - cost

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Key:

(a)

50 1510 20 25 30

20

20 20 7533.310

20

20 5.7 24

Week

Design Design

mechanical eq. electrical eq.

120 80

Cost in $(000)

20 x 2 = 40

22 x 3 = 66

40 x 5 = 200

20 x 5 = 100

406

70

Bar Chart Cost ScheduleBar Chart Cost Schedule

Design structural steel

Fabricate and erect structural steel

Design Building

Construct Phase II building

Design mechanical equipment

40

Design electrical

equipment

Procure electrical

equipment

Design interior items

Procure interior items

Install interior items

Install electrical and mechanical

equipment

Construct Phase I building

Fabricate mechanical equipment

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(a) PROJECT COST DISTRIBUTION GRAPH

(b) Project cost profile (S-Curve)

RM(000)

600

100

200

500

300

400

50 10 15 20 25 30

406,000

510,000474,571

511,427

297,9999 300,000

406,000

916,000

1,390,571

1,901,998

2,199,9972,499,997

Scheduling - cost

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S-Curve D&B Project

$0.00

$500,000.00

$1,000,000.00

$1,500,000.00

$2,000,000.00

$2,500,000.00

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Time

Cos

t (R

M)

Cost

Scheduling - cost

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Cost (RM) Days

Cost/Day (RM) ES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29

Frame assyInput frame into assy line 500 1 500 0 500

Insert shaft 600 3 200 1 200 200 200

Insert head unit 300 3 100 26 100 100 100

Gearbox assyInsert Gear No. 2 200 2 100 1 100 100

Insert Gear No. 3 200 1 200 3 200

Insert Gear No. 3 300 2 150 4 150 150

Platen Unit assyInsert bearing 300 3 100 0 100 100 100

Insert washer 100 2 50 3 50 50

Put oil lubrication 500 5 100 5 100 100 100 100 100

PCBA MountingMount PCB components 800 4 200 0 200 200 200 200

Solder dip PCB conmponents 1200 6 200 4 200 200 200 200 200 200

Touch up solder 400 4 100 10 100 100 100 100

Head WeldingInsert thermal head into welding machine400 2 200 14 200 200

Insert FPC into fixture 600 3 200 16 200 200 200

Welding 700 7 100 19 100 100 100 100 100 100 100Total 800 600 600 650 400 450 300 300 300 300 100 100 100 100 200 200 200 200 200 100 100 100 100 100 100 100 100 100 100Acc 800 1400 2000 2650 3050 3500 3800 4100 4400 4700 4800 4900 5000 5100 5300 5500 5700 5900 6100 6200 6300 6400 6500 6600 6700 6800 6900 7000 7100

Scheduling - cost

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20 20 5.714

40 70

0 105 2015 3025

20 22

Week

Design mechanical equipment

6 3EN,20SP

Duration Personnel allocation

(daily)

Key:

EN – Engineer

DE – Designer

AR – Architect

SP – Skilled Personnel

20

40

20 x 2 = 40

22 x 3 = 66

20 x 4 = 80

20 x 1 = 20

20 x 4 = 80

40 x 5 = 200

506

Bar Chart Cost Schedule – Late StartBar Chart Cost Schedule – Late Start

Design structural steel

Fabricate and erect structural steel

Design Building

Construct Phase II building

Design mechanical equipment

Design electrical

equipment

Procure electrical

equipment

Design interior items

Procure interior items

Install interior items

Install electrical and mechanical

equipment

Construct Phase I building

Fabricate mechanical equipment

Scheduling - cost

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100

200

500

400

300

100,000

396,000369,999

415,427

402,571

506,000

600

0

REVISED PROJECT COST DISTRIBUTION GRAPH

Scheduling - cost

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Key:

(a)

50 1510 20 25 30

20

20 20 7533.35.7

10

20 10 24

Week

Design Design

Mechanical eq. electrical eq.

120 80

Cost in $(000)

22 x 2 = 44

40 x3 = 120

70 x 2 = 140

5.7 x 5 = 28.5

402,571

70

Revised Bar Chart Cost ScheduleRevised Bar Chart Cost Schedule

10 x 5 = 50

10 x 2 = 20

Design structural steel

Fabricate and erect structural steel

Design Building

Construct Phase II building

Design mechanical equipment

Design electrical

equipment

Procure electrical

equipment

Design interior items

Procure interior items

Install interior items

Install electrical and mechanical

equipment

Construct Phase I building

Fabricate mechanical equipment

Scheduling - cost

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COST MINIMIZINGCOST MINIMIZINGThis step is to reduce the time required for completing a projects with the fewest added cost. Requires estimation of the following two factors for each

activity:1. Normal cost required for accomplishing the work on a

normal time basis.

2. Additional cost required for accomplishing work on an expedited basis.Procedure :

“cut and try”• Step 1 – Tabulate ‘time and cost’ for each normal activity• Step 2 – Tabulate ‘crash time’ and ‘crash cost’ for each

activity. Added cost is calculated using the following formula:

crash cost – normal costAdded unit cost/unit time = --------------------------------

normal time – crash time

Scheduling - cost

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160

150

140

130

120

110

100

Crash

Cost: $140,000 Time: four weeks

$(000)

Normal

Cost: $120,000 Time: six weeks

1 2 3 4 5 6 7

Time (weeks)

Time/Cost Curve for Accelerating ‘Design Mechanical Equipment’ Activity

Scheduling - cost

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Step 3 – Analyse the network and cost with time reduction with 3-5 kali iteration.

For the D&B project, cost minimisating is carried out as folllows:1. Prepare normal and ‘crashed’ cost schedule (Fig. 1)2. Since crashing also affects the indirect cost, the indirect cost

must be estimated. For this project, say, the indirect cost estimated is RM580,000 for the original time duration of 29 weeks. At the end of the project, the contractor saves say RM20,000 per week.

3. Begin crashing the critical activity which has the lowest additional unit cost first so and so forth.

4. Crash the total duartion by reducing 2 weeks for each iteration: fisrt – 27 weeks, 2nd – 25 weeks, 3rd: 23 weeks and so forth ...

5. The Ist iteration (27 weeks), the best activity to crash is Design Mechanical Equipment with an additional cost of RM10,000/weeks totaling RM20,000 for 2 weeks.

Scheduling - cost

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i-j Work Activity (Details)

NormalEst. Time (Week) Cost

Crash Est. Time Unit Cost (Week) Cost (per week)

1-21-31-4*2-33-74-5*4-64-85-6*6-7*7-118-99-10

Design structural steelDesign BuildingDesign mechanical equipmentFabricate and erect structural steelConstruct Phase I buildingDesign electrical equipmentFabricate mechanical equipmentDesign interior itemsProcure interior itemsInstall E and M equipment*Construct multi purpose buildingProcure interior itemsInstall interior items Overall Total Cost

* Critical Activity

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40,000.00420,000.00120,000.00220,000.00420,000.00

80,000.0090,000.0040,000.0040,000.00

200,000.00450,000.00

40,000.00240,000.00

2,400,000.00

2947536154436

40,000.00

540,000.00140,000.00265,000.00440,000.00

95,000.00114,000.00

55,000.0060,000.00

250,000.00500,000.00

50,000.00320,000.00

0.00 30,000.0010,000.0015,000.0020,000.0015,000.00

8,000.0015,000.0010,000.0025,000.0025,000.0010,000.0020,000.00

Figure 1 – Project D&B: Normal/Crash Cost Data

Scheduling - cost

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2

64

139

96

64

65

43

75

21

43

106

64

22

107

1

2

3 7 11

4 6

5

8 9 10

Design structural steel

Fabricate and erect structural steel

Design BuildingConstruct

Phase I buildingConstruct multi purpose building

Design mechanical equipment

Design electrical

equipment

Procure electrical

equipment

Design interior items Procure interior items

Install interior items

Fabricate mechanical equipment

Install electrical and mechanical

equipment

Building

Structural

Mechanical

Electrical

Architectural

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6. Reanalyse the network

7. Construct the cost schedule and compute the total project cost.

• Continue with 2nd iteration (25 weeks) – crash the activity ‘design electrical equipment’ by 1 week (additional cost RM 15,000) and for this we also need to crash activity ‘fabricate mech. equipment’ by 1 week (add. cost RM 8,000). For the 2nd week its better to speed up the simultenous activity i.e. ‘ construcct phase 1’ and activity ‘instal M&E equipment’. This result in a toatal additional cost of RM 73,000.

• Then, continue with 3rd iteration by crashing another 2 weeksso that the total time becomes 23 weeks. Refering to the network diagram – it can be seen that 5 activities have to be crashed by 1 week each. These activities are:

1. Fabricate and erect structural steel – RM 15,000 (add. cost)

2. Const, phase1 – RM 20,000.

3. Design building – RM 30,000

4. install M&E – RM 25,000

5. Const. multi purpose – RM 25,000

Resulting in a total add. cost of RM 110,000.

Scheduling - cost

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(a)Activity

Time (Week)

Normal Cost

Work Activity No. Node/Details

Reduced Time (Weeks)

Crash Costs

Normal and Crash Costs

2927

25

23

$2,400,0001-4 Design mechanical equipment

4-5 Design electrical equipment4-6 Fabricate mechanical equipment

7-11 Construct Phase II building6-7 Install electrical and mechanical equipment2-3 Fabricate and erect structural steel3-7 Construct multi-purpose building 1-3 Design Building6-7 Install electrical and mechanical equipment7-11 Construct Phase II building

2

11

1

11

11

1

1

$15,0008,000

23,00025,000

25,00015,000

20,00030,00025,000

25,000

$20,000

73,000

110,000

$2,420,000

2,493,000

2,603,000

(b)Project Pathway Estimated Time 29 27 25 231 – 4 – 5 – 6 – 7 – 11 29 27 25 231 – 2 – 3 – 7 – 11 24 24 24 231 – 3 – 7 – 11 25 25 25 211 – 4 – 8 – 9 – 10 22 22 22 22(a) Crash Cost Calculation (b) Project Pathway

Scheduling - cost

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Estimated Project Time Direct Cost Indirect Cost Total Cost(Week) (RM) Normal Debit Total (RM)

29 2,400,000.00 580,000.00 0.00 580,000.00 2,980,000.0027 2,420,000.00 -40,000.00 540,000.00 2,860,000.0025 2,493,000.00 -40,000.00 500,000.00 2,993,000.0023 2,603,000.00 -40,000.00 460,000.00 3,063,000.00

2,000,000

2,200,000

2,400,000

2,600,000

2,800,000

3,000,000

3,200,000

3,400,000

29 27 25 23

Project Time

Proj

ect C

ost

Total CostDirect Cost

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From the above calculation, the minimum project cost is RM 2,860,000 with the optimal project duration of 27 weeks.

This calculation is carried out during the early stages of the project for decision-making purposes.