INTRODUCTION task based on workhours.

The overall percentage

complete of the project will be established based
Lump-sum or fixed priced projects are becoming on this step. The workhours determined for all
the more prevalent contractual format for engineers
tasks would be summed and time-phased so that an
and constructors to conduct business. The monitor-
accumulative workhour curve can be established
ing and control of costs and schedules for both which is the budget curve. This work can easily
engineering and construction projects of this type be performed using spreadsheet/database programs.
is a major concern for corporate and project manage-
ment. Utilizing a personal computer with spread- Also at this time, the workhours should be cost-
sheet/database and scheduling programs, the project ed and the cost compared to the amount calculated
cost engineer is able to keep management informed for the bid. The variances need to be explained
in a timely and accurate manner. The following to management both on a way and on a workhour bas-
paragraphs will outline an approach to the monitor- is. The differences would be defined as to which
ing of design and construct projects. The transi- are omissions from the original bid and which are
tion from the bid stage, through design and con- the results of scope changes.
struction, will be discussed for each cost segment
of the project. Also, for each segment, the formu- The cost engineer, during this phase, will mon-
lation of management performance indices will be itor the engineering accomplishments and workpower
introduced. These indices will be further discussed expenditures and will then report the results to
in the management report section.
project management.

At set intervals the cost engineer will discuss

ENGINEERING with each lead engineer the status of his work and
then determine the percent complete for each task
Bid Stage based on the achieved milestones. (The cost
engineer should also verify the accomplishments by
For the bid, the engineering/design costs would reviewing the drawing status and the transmittals
have been based on the level of effort for the work of information.)
or on workhours developed by task and by drawing.
The final output would be total time-phased hours The engineering monitoring system must also
and the resulting costs. collect actual spent hours against the monitored
task. This time collection will allow comparisons
Design Phase and performance indices to be calculated between
actuals scheduled and earned for each task, disci-
The identification of all engineering tasks is pline, and for the project. The performance
the start of the design monitoring program. As- indices can then be used by the cost engineer and
signed to each task will be: project management to discern where the problem
areas are for both cost and schedule. Examples of
- workhours the indices are:
- durations
- intermediate milestones with percentage Idc = earned workhours/ actual workhours
completes assigned to each (if applicable) Ids = earned percentage complete of
- start and complete dates engineering/scheduled percentage

The detail level of the tasks can vary depending After the reviews of the project performance are
on the project. For example, a task might be all complete, forecast-to-complete hours and costs
electrical drawings or all one line diagrams or should be developed to compare with the budget
each one line diagram. The tasks can then be put amount.
into a schedule with a weighting assigned to each

1986/-MCETRWNSACTIONS 8.7.1
Design Change Notice Monitoring during the design phase.

Throughout the engineering phase, the cost The pending changes include all changes to the
engineer must keep a log of all changes to the contract that have not been committed, including
proposal design. These changes can result from escalation allowances, known client changes, and
omissions in the base bid, proposed changes to the design advancements.
scope of work developed by value engineering
studies, or by client requests. The changes once The variances between the budget and forecast,
approved will then show up as deviations in the if great enough, should be explained by the use of
project management reports or as changes to the a design change notice report (which is discussed
budget amount. Design change notice monitoring in a later paragraph). The monitoring index
will be discussed later in the management section. which would compare the budget and current is:

Iec = Budget $/Forecast $ and/or Actual $

CONSTRUCTION
Materials
Cost Monitoring
Materials include all commodity type bulk-bought
The monitoring of construction costs in a de- items. They can be prepurchased or bought during
sign/construct project has two stages. The first the construction phase. The establishment of a
would be to compare the bid with the design phase monitoring system consists of a system for tracking
advancements, procurements and changes. The second. both quantities and the price of materials. The
occurs during construction when the actual quanti- document for monitoring materials during the design
ties, workhours, and costs are compared to the phase would be similar to that of equipment and
status at the end of the design phase and to the would contain the following detail for each item:
budget. The basis of comparison changes from the
bid amount to the total estimated at the end of the 0 System and description
design phase, although it still has to.be compared 0 Budget amount (including authorized
to the contract total. (The contract amount can changes)
be different than the amount estimated at the end Committed amount
of design.) Forecast total (includes committed plus
pending changes or current design status)
The next few sections will deal with the Variance between budget and forecast
establishment of documents that can be used to amount
monitor the construction cost of:
The detail that would be monitored can vary.
0 Equipment For example, electrical materials can be total
' Materials and temporary construction electrical, or total wire and cable, or each size
facilities and equipment or type of wire and cable. For each selected
' Craft labor commodity, both the quantity and the delivered cost
o Field management of each must be tracked.
O Change Orders
For the bid, some items would have been quanti-
Equipment
fied based on drawings or preliminary designs and
others would have been estimated as an allowance.
The equipment that will be prepurchased by the
This lump sum should be listed on the table rather
use of an engineering specification is discussed in
than guessing quantities.
this section.

During the time of the preparation of the bid, During design, as systems are completed, bills
quotations will have been obtained from vendors for of material will be developed for purchasing
this equipment. These prices with the necessary purposes. From these lists, commodities can be
additions for escalation, contingencies, and compared both for quantities and estimated for
omissions would be the budget amount for each item. costs. When the purchase orders are placed, the
A table would be developed to monitor each purchase actual costs can then be compared to the est,imated
order. Included for each order would be: amounts. Also the overall costs of the item can be
tracked based on the quantity installed. Table 1
" shows the detail of a material monitoring report.
Purchase order no. and description
' Budget amount (including authorized As shown, costs are compared from the bid, through
changes) design and construction by the use of columns for
' Committed amount budget/bid, current forecast, and installed quan-
0 tities and costs. The index of comparison between
Forecast total (includes committed
plus pending changes) the budget cost and current would be:
' Variance between budget and forecast
amount Imc = Budget $/Forecast $ and Actual $

The committed amount is the total of the Craft Labor

purchase order and all subsequent approved change
orders. The purchase order is usually issued Bid estimates can be based on either a level of

8.7.2 1986AACETRANSACTlONS
TABLE 1: MATERIAL COSTS COMPARISONS
BUDGET
BUDGET AMOUUT APPROVED SCOPE CHARGES REV I SED BUDGE1 AUOUPT
IlEtl OUAUTITV COSIS WJAUl IIV COSTS OUAUTIIV COSlS
(Al (81 (Cl (01 (E:AtC) lF:B+Dl
----e-s-____________ ____________ ________---- ____________ ________---- ______-___-_ _________---
UMIT 5
tlEtlRiCA;
t71rt A cable-if 30,900 63,000 36,810 22,340 61.670 105,340
Cable tray-11 1,100 2l.IlO 0 1.100 11,510
Condolt-If 1,200 5,790 254 I.200 6,644
nltc rtr!N-I, 1 15.800 15,661 1 29,461

lUSTfiUMEl1 6 Cl15
Ttiblng-if 13,100 34,800 1,500 1,920 14,600 37.720
fllsc cquto.-ls I 62,300 0 29,372 1 91,672
TOTAL lt4SlR A CltS 91,100 32,292 119,392
TOTAL ElECTRlCAt 124,100 36,235 162,355 ~
__COtlIJIlf.lE#lS A#Dt!EI FORECAST
PURCHASED COSlS KMOWN CHAUGES COUllTtlEUIS CHAUGES OF OUEARUI
COSlS OUA#l I IV COSTS COSTS COSTS COSTS IUlJDERRU#l
(HI (1) (II (K:H*Ji (11 itl:KOrF*Ll lil-H-F)
---------- ---------_-- ---------__- ------------ ____________ __________ ___________ ___________

135.066 (12,250l ~17.856) 115,228 0 115,228 9,166

19,510 19,510 1.000 20,510 l1,0001
8,340 8,340 3,200 11,540 5,496
25,000 25,000 3.000 28,000 11.461)
185,936 (17,858) 168,076 7,200 175,278 12.923

26,000 26,000 6,000 34,000 (3,720)

71,034 11,034 7,000 70.034 (13,638)
97,034 0 97,034 r5,ooo 112.034 (11,358)

effort of the craft labor or productivity units would be reviewed and redefined as necessary. The
using a quantity of material. Once again there can labor of the tasks would occur similarly to the
be different levels of detail to develop the esti- bid but will be in more detail. The resulting
mate. The level of effort can be determined for craft labor loading would then be costed on a time-
the entire project or for various tasks within the phased basis and compared to the current budget.
scope of the work and then summed to calculate the The results of the comparison between the current
entire job. Productivity units can also be for forecast and the budget reveal to management the
various levels of detail based on the information problem areas so corrective action can be taken if
available. The labor is then costed and included possible. This revised craftloading would be the
in the bid. The prevailing wages would be used basis of the planning for the construction period.
to cost the labor with the necessary adders for (The indirect facilities would be based on these
travel, benefits, insurance and taxes. Allowances totals.) For productivity unit estimates, review
for escalation must also be included. There are of the quantities and assumptions for the units
two facets of craft labor that will have to be must occur and revised workhours determined. The
monitored during the project: craft hours and resulting workhours will be compared to the budget.
wage rates.
During construction, craft labor hours need to
During the design phase, variances to the craft be tracked by task in order to compare actuals with
labor estimate are tracked by design change notices scheduled and earned. A tracking report similar to
which may or may not be additive to budget amount Table 2 would be used to monitor actual hour expen-
but are added to the forecast total. A table can ditures and productivity against each task. The
be developed which would contain the following budget amount shown is the craft hours from the cur-
items: rent budget allocated for each task. The earned-
to-date figure would be the result of multiplying
- Budget amount (including all changes) the budget total by the actual percentage complete
- Forecast at completion total of the task. The scheduled complete workhours are
- Variance amount similar but are based on the scheduled percentage
complete times the budget workhours. The perfor-
Near the end of the design phase and prior to mance indices would compare earned with actual and
the start of construction, the schedule and tasks scheduled with actual. The report could be relist-

4986AACETRAfflSACTIONS 8.7.3
TABLE 2: MONITORING OF ACTUAL HOUR EXPENDITURE AND PRODUCTIVITY AGAINST EACH TASK

_________#UDCf,____ ____ _ ____+AR#_____ ..__.JC,,[DDL[D _____ _ -_-_ .-.. AC,uA,--------- --P~RiOR,lA6C~__

AK1 Clwl 8111 MAN YHR x HAN % MAN YIN YHR tAANl tARW/

no OEScA1rll0n CODE CODE OUARI HOURS U/C COUP1 OUAUl HOURS COUP1 OUAWI HOURS OUANI HOURS u/c AClUAl SIHEO
_____ _____.___.__________----..---. ._____ ___ .____ ____ _.____.__ ____. ________ _____ ..L..- _.----- ----. ---_-- ._____. _.____ _____.- .._..__- _----_. -._____

10010 AFCCIVE 6UHLOAO PUlvERlZfR PIS FOR 9102 450 1901 110
13011 REClIVE ; UIILOAD PULV.FARlA FOR 9 10 I 150 7601 120
1001: RECEIVE 6 UNLOAD PULVEAIZER PIS FOR 9101 450 1101 240
10013 RECFIVI 6 UllOAD PUlVER1ZIA PlS FOR 6101 450 1601 160
1QOlQ RECEIVE 6 UNLOAD PULV.PAAIS FOR I ID I 450 1591 120
10015 RECtIVt (UNLOAD PUlV. PARIS FOR 1 10 I 450 1101 1)Q
IJQZI RECEIVE 6 UXLDAD PA FAN PARIS 450 1101 20
10022 UN1010 PA FAN YOIOR 450 2101 IO
10Ql0 ASStUBlE SPRIYS FilLIfS 550 1902 I10
10015 ASSEYBLE SPRING FRAMES 550 1102 I20
IO936 ASSLY5lt PYRllES HOPPER 6 CAIE VAlVtS 550 1102 110
10031 ASStlBlt PIRIlE NOPPLRS i CAIE VAlVtS 550 I902 119
10040 ASStYBlf PA FAN INlFl HOUSINGS 06 SHAFF 550 2402 I60
IQ045 ASStlBIE P& FAJI IIlFF HDUSJIGS ON SHAFF 550 2501 160
___ __._.___ _ ___ __.______ ___.____- _.._._ __.___
IO SUB 10111 0 0
___ .___._._. ___ _________ --._-.--- _.--.- . ..___

11100 DRAIN 011 550 II90 20

11110 REYOVE SFRvICE PIPlAG 650 1190 60
lllll REMOVE COAl PIPING 650 1190 60
11111 REMOVE LUBE 011 COOLlR AND ?UYP 150 1190 60,
650 1IQb 10

ed by area or by craft to show performance by Construction Management

zraft and by area. These comparisons and the re-
sulting performance indices show to the cost en- For the bid, the field staff is usually
gineer and construction manager the cost status of estimated as a level of effort, that is to have a
the project and areas of concern for corrective staff of non-manuals assigned at the site for
action. varying lengths of time. Monitoring of the field
staff would entail comparing the projected staff
The craft rates used in the bid would be com- loading.against the actual loading of the staff
pared against the current to ascertain what cost over time. Also the expended costs need to be
differential, if any, would be attributable to the compared. Items which could cause the variance in
wages. the cost include overtime costs, relocation and
subsistence costs, and wage rates.
Temporary Construction Indirects

The construction indirects include:

Construction Change Orders
' Temporary facilities such as trailers
’ Utilities and services During the construction phase, a listing of all
o Tools, consumables, and equipment variances to the bid scope must be maintained. The
variances must be defined as to which result of an
These items would have been estimated during the omission from the bid and therefore not reimburs-
bidding stage as either a percentage of the direct able, and which result from differing site condi-
labor cost or time phased as a level of need. They tions or are owner changes and are therefore
can be purchased, leased, or rented. reimbursable. The listing would keep management
informed of the changes. (See management reports.)
After the craft labor loading estimate is
complete and the construction plan is final (prior Schedule Monitoring
to construction), these items should be reviewed or
re-estimated as necessary. Briefly described in this section will he an
approach to monitoring the construction progress.
During the construction phase, the major This subject has been in the past and will be in
purchases can be compared to the hid amount as can the future the central focus of other papers.
the major rentals or leases for the equipment. The
remainder of the purchases and rentals can be During the hidding stage, a preliminary plan
assumed to be time-phased throughout the life of and schedule would have been developed upon which
the project based on the percentage complete of the the hid would he based. The schedule could have
project. The management index would be: been a milestone schedule of varying detail or a
bar chart which lists the major tasks of the
Iic = Budget $/Forecast and Actual $ project.

6.7.4 1986AACETRANSACTlONS
During the design phase, the schedule detail MANAGEMENT REPORTS
can be increased. More information will be
developed on the commodity quantities and the During the life of the project, corporate man-
entire scope of the project so that level of agement must be kept aware of the status of the
detail and confidence of the plan and project. The report should describe to management
schedule can increase. the problem areas , potential cost and schedule
variances, and recovery plans. Through use of the
At the conclusion of the design phase (prior indices developed in each section, management can
to construction), a revised plan and schedule be concisely shown the status of the project with a
should be developed to reflect the current scope table and a chart which would include the following
of the project. The schedule can be a detailed already discussed indices:
CPM chart, a milestone schedule or a bar chart
listing the tasks. showing durations, and per- " Idc - Compares earned engineering workhours
centages complete.for each. with actual
”
Ids - Compares earned engineering percent
Also at this time the labor loading of the complete with scheduled
tasks should occur. This forecasting will allow a 0 Iec - Compares equipment budget costs with
comparison to be developed to the bid and to ac- forecast/actual costs
tuals during construction. It will also aid in 0 Imc - Compares material budget costs with
the planning of support facilities for the crafts. forecast/actual costs
o Ilc - Compares the craft labor budget with
During construction, the schedule should be up- the forecast/actual
dated at set intervals which can be daily, weekly, o UC - Similar to Imc but for construction
etc. The tasks or activities listed on the sched- indirects
ule need to be weighted. This weighting can be o Isc - Compares for construction the
based on the estimated workhours to complete the percentage complete of earned versus
task, durations, or costs. The percentage com- scheduled
plete of each task can be determined and a weighted
percent can be calculated. The weighted percents An index which would represent the entire
would be summed for the entire project to deter- project is:
mine an overall complete of the project. For each
task, the actual and scheduled completeness must ^ _
" IPC - Compares the budget cost for the
be compared. Areas of concern should be noted and
recovery plans established as necessary. The project with the forecast and actual
scheduled versus actual comparison can be shown amount
as a management index:
Table 3 is an example of the index report.
Isc = Z Actual/% Scheduled

TABLE 3: PERFOWANCE TREND REPORT

MANHOURS TO DATE DOLLARS TO DATE __lNDlCES* WTD.

ITEM EARNED SCHD ACTUAL BUDGET EARNED AClUAL PHOUUC I COST PERF. AVG. TOTAL
_--________ __________-________-_ _______ -____ _______ _______ ---- _____ ____ _____
(8 x 1000)
ENGINEERING 63.67% 62.lG% 01.24% 1165 1171 122 1 0.995: 0.954 0.949 6.2% 0.059

CONST MGT 2.00% 1.60% 1.90% 17 I4 16 1.214 1.063 I.290 8.9% 0.115

EOU I PMENT n/e n/e n/a 3065 NA 2990 n/e 1 .032 1 032 17.3% 0.176

MATFRIALS n/e n/a n/a 2699 NA 2769 n/a 0.975 0.975 14.1% 0.137

CRAFT LABOR n/a n/s n/s 6067 NA 6144 n/a 0.991 0.991 47.3% 0.469

CONST IND n/.9 n/e n/a 1017 NA 1024 n/a 0.993 0.993 6.2% 0.062

TOTAL 1.020

ENGINEER SCHEDULE INDEX = 1.016 (Ise)

CONSTR. SCHEDULE INDEX = l.lll (ISCI

n INDICES CALCULATIONS:
PRODUCT. (PRODUCTIVITY) = EARNED MANHRSl ACTUAL MANHRS
COST (ENGINEERING) = EARNED DOLLARS/ ACTUAL DOLLARS
COST (CONSTRUCTION ITEMS) = BUDGET DOLLARS/ACTUAL DOLLARS (FORECAST)
ENGINEERING SCHEDULE INDEX = EARNED %I SCHEDULED %
PERF. (PERFORMANCE) = PRODUCT. JNDEX n COST INDEX

1986WACETRWNSWCTIONS 8.7.5
A summary cost table should also be included as material and equipment escalation rate would be
part of the management report. Table 4 is an tracked utilizing indices from a source such as
example of the document. Included as part of the the Producer Price Index published by the Bureau
report would be: of Labor Statistics. The base index would be the
date of the present day of the bid. Craft labor
Current budget amount could be tracked using the prevailing wage rates
Committed amount in the area. The local unions could be requested
Forecast/actual cost of committed,items to supply this information. The escalation
Budget for committed items increase would be calculated for each segment and
Forecast/actual cost 'of all items then based on the weighted value, determined for
Variance to the budget from forecast/actual the project.

Another section of the management report would

be a listing of all change orders in a log. The SUMMARY
changes woud result from both the engineering and
construction phases as discussed earlier. The log The approach to monitoring fixed price design/
would include pending, accepted, and disapproved construct will vary from project to project
orders whose cost responsibility could be either depending on scope of the work, the overall project
the client's or in-house. For each change, the schedule, the confidence level in the project, etc.
following information should be listed in the log: The author has tried to outline a general approach
to the monitoring of such projects. What tables,
0 Change order number figures, and reports that are finally utilized on
Q Concise description of the change the project would be left up to the discretion of
' Whose cost responsibility the project cost engineer.
" Cost of change (both engineering and
construction)
0 Schedule impact
' Status of change

At set intervals, this listing should be pre-

sented to project management for their concurrence,
The log presents a listing of potential changes
that may or may not have been realized.

An optional part of the management report would

be to monitor the actual versus estimated RonaldG. Stillman. PE CCE
escalation rate for the project. This report United Engineers k Constructors Inc.
would be necessary if the project would take 23 Inverness Way East
several years to completeti The bid would be' Englewood, CO 80112
divided into cost segments such as electrical
material, mechanical equipment, mechanical
materials, indirect material and equipment, craft
labor, etc. Based on costs, the weighted value
of each cost segment would be determined. The

TABLE 4: SUMMARY COST REPORT IS OF 11t22in5

PROJECTED TOT9L
Tcl?*L BUDGET FOR BVPiE7 EXPEND’TURES ALLOW =DR FlNAi COSTS C”RREN7 OVEF4VN
BUDGET COMM. i TEMS NOT COMM. 6 CDMM’TMTS CliAN;ES FOR CDMM~TMTS FORECAST (LINDEFRUN)
DESCRIPTION
(Al (81 (C-A-6) (D) (El (F=D-E! (01 tH=G-C,
________________________________________________~_~-~~----------------------------~~------~--~__~__________________________~

ENGlNEERlNG
BASE s1.40c.000 L1.325.000 s1.450.500 l5C.500
FEE 130.000 98.000 130.000 0
________-_-- ____:___.z___ _____________________-__ __________ --__--______ ____________ __________--

s1.530.000 s.0 11.423.000 r6 10 11.580.500 l50.500

TOTAL. ENGR ‘0

CONSTRUCTION
CONS, MOT 18?6.000 662.254 162.25. s850.000 1626.000)
1.305 6@1 43.819 1.227.161 22.000 1 .249.16‘ 1.266.161 (61 ,339)
EOU I PMENT 1.349.500
MATERIALS 1.266.000 I.013 22r 274.779 925.291 90.000 l.Of5.29f 1.316.918 26.919

CRAFT LABOR 3.700.000 3.700.000 16.664 16.664 3.7t1.300 11.300

CONST INDIR. 510.000 9.S.000 412.000 52.315 52.315 481.?00 (28.300)
TAX 6 FINAN. 290.000 60.000 230.000 0 300.000 10.000
___-__--_- __________ _ _ _ _ _ _ _ _ _ _ ___-__---- _________ -__--__--_I __________ _______---

SU67OTAL a6.013.500 12.476.902 14.660.596 12.263.665 s112.000 12.395.665 S7.946.060 lS65.4201

RISK 6 PROFIT 670.000 670.000 0 670.000 0

INCENTIVE FE’6 250.000 250.000 0 250.000 0
____________ __________-_ ________^___--__--____
TOTAL, CONSTR. 66.933.500 12.476.902 65.560.596 $2.263.665 s112.000 t2.39i.665 S6.866.060 lS65.420)
-___-__--___ _-_______-__ ____________ __________ __-_________ __L____-----

TOTAL. PROJECT 110.463.500 S2.176.902 t5.580.598 13.706.665 61~2.000 t2.395.685 110.446.560 (614.920)

6.7.6 1986AACETRANSACTlONS