Module 2b Equipment Schedule

SCHOOL OF CIVIL, ENVIRONMENTAL, GEOLOGICAL ENGINEERING
CE168P-2 .
CONSTRUCTION METHODS AND PROJECT

MANAGEMENT
MODULE 2
Prepared By:
Engr. Jeffrey E. Germono, PSM CM
SCHOOL OF CIVIL, ENVIRONMENTAL, AND GEOLOGICAL ENGINEERING

2: CASH PLANNING AND CONTROL

2A: EQUIPMENT CONSTRAINT
MODULE 1
2
2-A2: EQUIPMENT SCHEDULING/CONSTRAINT

The availability of equipment, working hours of machinery, efficiency, and
maintenance requirements are some of examples of equipment constraints.
IMPORTANT REMINDER:
If the equipment requirements fluctuate or go up and down, some equipment

would be idle for some time and if rented for a short period, the rental might
be too high due to fixed expenses for moving in and out of the project.
In handling activities completing for the same resource, it is usually performed

in series rather than the following simple construction case
BENEFITS:
 Always knowing where the tools/equipment are located/dispatched/being

used
 Personnel in charge of them, who requested and where they should be used
 How long will this equipment be used
3
SAMPLE PROBLEM:
The construction of an office building with two separate units is to be undertaken
concurrently and the project is considered finished after completion of the two units.
Listed below are the phases of the construction using equipment:
Unit A Unit B
Construction Phase(s)
(Weeks) (Weeks)
Excavation works for Foundation 4 8
Concreting works for Foundation 5 3
Concreting works for
6 10
Superstructure
Prefab panels erection 4 4
Finishing works 5 7
4
Constraints and proposed solution:

Constraints/Problems encountered:
•Manpower is unlimited
•Only one (1) crane will be available at the project site
•Excavation will be done by clamshell
•Positioning of prefab panels is done by using CRANE
Proposed Solution:
•First, draw the network diagram based on the technical requirements ONLY
•Second, identify the critical path
•Third, propose an alternative considering the constraints listed above.
5
DIAGRAM BASED ON TECHNICAL REQUIREMENTS ONLY
During the planning of the equipment schedule, the longer week is the basis
of the project duration (same as discussed with the previous topics)
Therefore, the project duration is 32 weeks.
The critical path is along UNIT B
6
DIAGRAM BASED ON TECHNICAL REQUIREMENTS ONLY
ALTERNATIVES:
• Excavate A ahead of B, positioning panels A ahead of B (figure 1)
• Excavate A ahead of B, positioning panels B ahead of A (figure 2)
• Excavate B ahead of A, positioning panels A ahead of B (figure 3)
• Excavate B ahead of A, positioning panels B ahead of A (figure 4)
*Figures on next slides
7
ALTERNATIVE A (FIGURE 1)
Excavate A ahead of B, positioning panels A ahead of B
Graphical analysis of Alternative A:
The project duration is 36 weeks, which is 4 weeks longer than 32 weeks computed
when there is no constraint
8
ALTERNATIVE B (FIGURE 2)
Excavate A ahead of B, positioning panels B ahead of A
Graphical analysis of Alternative B:
9
ALTERNATIVE C (FIGURE 3)
Excavate B ahead of A, positioning panels A ahead of B
Graphical analysis of Alternative C:
10
ALTERNATIVE D (FIGURE 4)
Excavate B ahead of A, positioning panels B ahead of A
Graphical analysis of Alternative D:
The project duration is 34 weeks, the shortest duration of all the alternatives.
Therefore, among the choices, Alternative D is the most recommended in the
execution of the work given the constraints in the project/site condition.
11
SUMMARY OF RESULTS (ALTERNATIVES)

ALTERNATIVE PROJECT DURATION (WEEKS) RECOMMENDED
ALTERNATIVE A 36 NO
ALTERNATIVE B 38 NO
ALTERNATIVE C 38 NO
ALTERNATIVE D 34 YES
In the above results and diagram from previous slides, it can be seen that an arbitrary selection of a possible
sequence gives us NO ASSURANCE of a GOOD SCHEDULE.
On the contrary, a complete enumeration of all the possible schedules for MORE COMPLEX PROJECTS is time-
consuming and therefore NOT ADVISABLE.
12
2B: CASH PLANNING AND CONTROL

MODULE 1
17
CASH PLANNING & CONTROL
4M’s in Construction
 Manpower: This refers to the human workforce, including skilled workers, technicians,
engineers, supervisors, and project managers involved in the construction process.
 Machinery: This includes the various types of construction equipment and machinery
used on the site, such as excavators, cranes, bulldozers, loaders, and specialized
tools.
 Materials: This encompasses all the physical materials required for construction,
including raw materials like cement, steel, bricks, wood, aggregates, pipes,
electrical components, and finishing materials.
 Money: This refers to the financial resources required to fund the construction
project, including the costs of labor, materials, machinery, permits, overhead
expenses, and any other financial considerations.
18
What is the CASH FLOW?

 In construction, the term 'cash flow' typically refers to an analysis of
when costs will be incurred and how much they will amount to during
the life of a project.
 Predicting cash flow is important in order to ensure that an
appropriate level of funding is in place and that suitable draw-down
facilities are available.
19

CASH FLOW
Two(2) Types:
1. Client Cash Flow – payments to contractors, consultants
2. Contractor Cash Flow – payment to subcontractors, workers,

equipment, tools, suppliers
20

SAMPLE CASH FLOW
21
IMPORTANCE OF PROPER CASH FLOW

 Maintaining a consistent cash flow is key in ensuring that a project is
successfully executed.
 A reliable metric is required to estimate the cash flowing into the
project and out from the project. This is to ensure that the project
remains fluid, well managed and profitable.
22

1. Cash-In Flow
1.1. Sources of Funds
1.1.1. Capital Investment
1.1.2. Project Revenue
1.1.2.1. Down-payment
1.1.2.2. Progress Billings
1.1.3. Short term/Long term Loans
23

2. Cash-Out Flow
2.1. Operating
2.1.1. Direct materials
2.1.2. Direct Labor
2.1.3. Equipment rental
2.1.4. Project Overhead
2.2. Financing
2.2.1. Loan Payments
2.3. Investing
2.3.1. Purchase of Land
2.3.2. Purchase of Equipment
24
25

 It is easy to track the revenue and cost of a project with the aid of a
cashflow statement. It arms you with needed information during
negotiations to know how to spread payment of bill and how to better
push more for payment of money owed.
 The cashflow statement is simple and easy for project stakeholder to
understand the project financial status.
26

 The cash flow can be either positive or negative. When a cashflow is
negative, it indicates that the project does not have the required
funding to run the project while a positive cashflow shows a project
has money to run and manage itself.
 With a negative cashflow, there is more expenditure than income
while the opposite is the case for a positive cashflow.
 For a sustainable project execution, cashflow must be kept positive at
all time otherwise, money will not be available to fund the project.
 Inability to pay labor wages, purchase of material, payment for
supplies, and day-to-day running of project operations are some of
the consequences of a negative cashflow metric.
27
28
CASH FLOW ANALYSIS

 Deals with the examination of cash inflows and outflows during a
specific period.
 Cash flow analysis is often used for financial reporting purposes. Cash
flow analysis is an important financial activity for a project and entails
listing money flowing into and out of a project.
 Cash flow analysis enables a contractor to project future flows of cash
to determine the necessary budget for a project.
 Cash flow analysis is not concerned with the amount of the cash flow
alone, but also the timing of these cash flows. Most cash flow in the
construction industry is analyzed within monthly time periods.
29
“The only reason that a company fails is because they run out of money”
Sometimes companies fail because they have a product
problem or poor business, but other times it's simply because
of poor cash flow management.
Cash flow in construction is slightly different from cash flow in
many industries. Construction cash flow typically refers to the
analysis of when costs will be incurred and how much those
costs will be over the course of a project.
For companies running construction projects, understanding
cash flow is critical to ensuring the right level of funding is in
place to deliver the whole project or phase of work.
30
CONSTRUCTION CASH FLOW PROBLEMS

1. CONTRACTORS
Contractors can have a hard time with construction cash flow because their outlays
can be huge. Contractors need enough money coming in to pay suppliers and
subcontractors for the day-to-day running of the project.
Contractors must also bid on or get an invitation to tender (invitation to bid) for projects
when they aren't sure of the cash flows on a construction project.
When the main contractor is appointed, there is a concrete payment and cash flow
schedule agreed with the client. From here, the contractor can try to align their
operations with this schedule.
In addition, contractors are also largely responsible for keeping the project on time and
budget, so they simply can't 'afford' to not pay a subcontractor or delay their works
going ahead. There is a lot of pressure on contractor cash flow.
31

2. SUB-CONTRACTORS
Subcontractors often get the shortest end of the stick when it comes to cash flows in construction.
Subcontractors are almost always seeking work from contractors, so they don't have a lot of
bargaining or negotiation power when it comes to cash flow. They are looking to work with and
appease the contractor who can give them a bunch of future work.
Many subcontractors (and other construction parties) struggle with their construction cash
flows. Studies have found that 84% of construction companies report having cash flow problems.
Many of these parties are of course subcontractors, with many of them reporting that they don't
get paid once the project is completed, which is obviously terrible for cash flows. This means the
subcontractor or other party is incurring all of their costs and outlays at the beginning of and
during the project while they only receive the cash inflows once the work is complete.
This means they are running a negative cash flow, and if they are running multiple projects at the
same time, they could be running multiple negative cash flows simultaneously - which drastically
increases the business’s risk.
32

3. SUPPLIERS
Cash flow in construction can also be very problematic for suppliers. As with most suppliers and
manufacturers, the supply chain features many payment and cash flow bottlenecks.
These payment term issues whereby a supplier doesn't get paid until 100 days after delivery or
similar can lead to supplier insolvency, which can then trickle onto contractors and
subcontractors who have paid for materials that can't be fulfilled.
Not to mention the impact that a late or non-delivery of goods and materials can have on a
project in terms of time and costs.
Ensuring that the supply chain is as cash flow positive as possible is the responsibility of all parties in
the construction value chain.
There are some very real and plaguing construction cash flow problems in construction. Many,
many companies report late payments and most of these companies don’t penalize late
payments. This results in more and more late payments and negative cash flows, and the cycle
continues.
33

What is S-CURVE?
 An S-curve is a visual representation of a project's cumulative
development over time in construction.
 The horizontal axis represents time, while the vertical axis shows the
project's progress or performance.
 It enables early detection of possible schedule or cost overruns,
allowing proactive steps to be implemented to keep the project on
track.
 Overall, the S-curve is a useful tool for monitoring and regulating
construction projects, since it provides insights into project
performance, enables better decision-making, and facilitates early
corrective steps when necessary.
34
“The reason for an S-curve being called an 'S-curve' is

because the shape/line of the graph typically resembles an
S shape when plotted.
This is because projects are 'slow to start', ramps up with all

types of activity during the middle part of project delivery,
and slow towards the end as companies are tying up loose
ends and closing things like defects out”
35
HOW IS AN S-CURVE USED IN CONSTRUCTION?

•Project progress against the planned schedule
•Actual costs against budgeted costs
•Costs against progress as a measure of productivity
•Any type of production activity such as the amount of road paved, concrete delivered,
floors added, etc.
NOTE:
Before an s-curve can be created, a project manager (or similar) will create the project
schedule and a detailed timeline of project activities.
After doing this, management can calculate the specific production rates and work
that needs to be done based on this schedule i.e. what needs to be done every day to
deliver the project or asset.
36
What is S-CURVE?
37
PROJECT RESOURCES
CASH FLOW FORECASTING

TODAY’S SCENARIO
 70% of projects are:
 Over budget
 Behind schedule
 52% of all projects finish at 189% of their initial budget
 And some, after huge investments of time and money, are simply
never completed
Source: The Standish Group
39
TODAY’S SCENARIO
 Need for accurate and consistent status information
 Numerous complex (and interrelated) projects
 Projects with many WBS activities
 Virtual offices
 Diverse technology platforms
40
EARNED VALUE MANAGEMENT

 Earned value (EV), also known as earned value management or
earned value analysis, is one technique used by some contractors to
determine the estimated value of the work completed to date (or
earned value) and compare it with the actual cost of the work
completed.
 In construction, EVM can be based on quantities to measure physical
progress, which is done by measuring installed quantities and
comparing them to planned quantities on a period-by-period basis.
41

EARNED VALUE MANAGEMENT
42
EARNED VALUE ANALYSIS

 EVA is an industry-standard way to:
• measure a project’s progress
• forecast its completion date and final cost
• provide schedule and budget variances along the way
 By integrating three measurements, it provides consistent, numerical
indicators with which you can evaluate and compare projects.
 It compares the PLANNED amount of work with what has actually
been COMPLETED, to determine if COST, SCHEDULE, and WORK
ACCOMPLISHED are progressing as planned.
43

Terminologies
 Budgeted Cost of Work Scheduled (BCWS) or Planned value, PV
 Planned cost of the total amount of work scheduled to be performed by
the milestone date.
 Actual Cost of Work Performed (ACWP) or Actual Value, AV
 Cost incurred to accomplish the work that has been done to date.
 Budgeted Cost of Work Performed (BCWP) or Earned Value, EV
 The planned (not actual) cost to complete the work that has been
done.
44

120000
100000
80000
56000 BCWS
60000 BCWP
55000
49000 ACWP
40000
20000
Nov-03
Jul-03
Jan-03
Jun-03
Oct-03
Mar-03
Apr-03
Aug-03
Sep-03
Dec-03
Feb-03
May-03
45

Terminologies
 Schedule Variance, SV
 A comparison of amount of work performed during a given period of
time to what was scheduled to be performed.
 Formula: BCWP – BCWS or EV – PV
 A negative variance means the project is behind schedule.
 Cost Variance, CV
 A comparison of the budgeted cost of work performed with actual cost.
 Formula: BCWP-ACWP or EV – AV
 A negative variance means the project is over budget
46

At Month of June 2003
120000
 Schedule Variance = BCWP – BCWS
100000
PhP 49,000
80000
BCWS
- 55,000 60000
56000
BCWP
55000
SV = - PhP 6,000 40000 49000 ACWP
20000
 Cost Variance = BCWP – ACWP
0
PhP 49,000
Nov-03
Jul-03
Jan-03
Jun-03
Oct-03
Mar-03
Apr-03
Aug-03
Sep-03
Dec-03
Feb-03
May-03
- 56,000
CV = - PhP 7,000
47

Terminologies
 Schedule Performance Index, SPI
 Formula: BCWP / BCWS or EV / PV
 SPI < 1 means project is behind schedule
 Cost Performance Index, CPI
 Formula: BCWP / ACWP or EV / AV
 CPI<1 means project is over budget
 Cost Schedule Index, CSI
 Formula: CPI x SPI
 The further CSI is from 1.0, the less likely project recovery becomes.
48

120000
 Schedule Performance Index
100000
SPI = BCWP / BCWS
80000
BCWS
= 49,000 / 55,000 = 0.891 60000
56000
BCWP
55000
49000 ACWP
40000
 Cost Performance Index
20000
CPI = BCWP / ACWP
0
= 49,000 / 56,000 = 0.875
Nov-03
Jul-03
Jan-03
Jun-03
Oct-03
Mar-03
Apr-03
Aug-03
Sep-03
Dec-03
Feb-03
May-03
49

120000
 Cost Schedule Index
100000
CSI = SPI x CPI
80000
BCWS
= .891 x .875 = 0.780 60000
56000
BCWP
55000
49000 ACWP
40000
20000
Nov-03
Jul-03
Jan-03
Jun-03
Oct-03
Mar-03
Apr-03
Dec-03
Feb-03
May-03
Aug-03
Sep-03
50

Terminologies
 Budget at Completion (BAC)
 Planned total cost of the project or the expected cost at completion
 Estimate at Completion (EAC)
 It represents a revised estimate of the total cost budget based on the
current situation.
 Formula: ACWP + ETC or AC + ETC
 Estimate to Complete (ETC).
 It is the expected cost to ﬁnish all the remaining project work. `
51

At Month of June 2003 Forecast
120000
 Estimate at Completion 10200
100000 0
EAC = ACWP + ETC
80000
BCWS
= 56,000 + ETC 60000
56000
BCWP
55000
49000 ACWP
40000
QUESTION:
20000
HOW ARE WE GOING TO SOLVE FOR THE ETC?
0
Nov-03
Jul-03
Jan-03
Jun-03
Oct-03
Mar-03
Apr-03
Aug-03
Sep-03
Dec-03
Feb-03
May-03
52

120000
 Estimate to Complete 10200
100000 0
[1] For a typical variances, the
80000
observed variances are specific 56000 BCWS
cases of time already spent on the 60000
55000
BCWP
project. 49000 ACWP
40000
However, there is an expectation to 20000
achieve the budgeted performance
for the remaining work. In this 0
Nov-03
Jul-03
Jan-03
Jun-03
Oct-03
Mar-03
Apr-03
Dec-03
Feb-03
May-03
Aug-03
Sep-03
situation, the primary focus should be
on completing the remaining work
within the budgeted values.
53

120000
100000 0
[1] ETC = BAC – BCWP
80000
BCWS
= 102,000 – 49,000 60000
56000
BCWP
55000
= 53,000 40000 49000 ACWP
20000
Nov-03
Jul-03
Jan-03
Jun-03
Oct-03
Mar-03
Apr-03
Aug-03
Sep-03
Dec-03
Feb-03
May-03
54

120000
100000 0
[2] For typical variances indicate that
the current variances are expected 80000
56000 BCWS
to continue. 60000
55000
BCWP
49000 ACWP
During the review, it becomes 40000
evident that the observed variances 20000
are a reality, and the trend will persist.
0
This can be calculated based on the
Nov-03
Jul-03
Jan-03
Jun-03
Oct-03
Mar-03
Apr-03
Dec-03
Feb-03
May-03
Aug-03
Sep-03
Cost Performance Index (CPI) or
Schedule Performance Index (SPI).
55

120000
100000 0
BAC – BCWP
[2] ETC = CPI 80000
56000 BCWS
102,000 – 49,000 60000 BCWP
= 55000
0.875 49000 ACWP
40000
= 60,571.43
[OR] 20000
BAC – BCWP 0
ETC =
Nov-03
Jul-03
Jan-03
Jun-03
SPI
Mar-03
Apr-03
Oct-03
Feb-03
May-03
Aug-03
Sep-03
Dec-03
102,000 – 49,000
=
0.891
= 59,489.80
56

120000
100000 0
[3] In certain cases, when it is
80000
discovered that the initial estimate of 56000 BCWS
the project contained significant 60000
55000
BCWP
errors that cannot be rectified by 49000 ACWP
40000
considering only the current
variances, a re-estimation of the 20000
remaining project duration is 0
necessary.
Nov-03
Jul-03
Jan-03
Jun-03
Mar-03
Apr-03
Oct-03
Feb-03
May-03
Aug-03
Sep-03
Dec-03
It is the most accurate of the three
(3), but it is also the most tedious.
57

120000
 Estimate at Completion 10200
100000 0
EAC = ACWP + ETC
80000
BCWS
[1] = 56,000 + 53,000 60000
56000
BCWP
55000
= 109,000 40000 49000 ACWP
[2] = 56,000 + 60,571.43; using CPI 20000
= 116,571.43 0
Nov-03
Jul-03
Jan-03
Jun-03
Oct-03
Mar-03
Apr-03
Aug-03
Sep-03
Dec-03
Feb-03
May-03
58
EARNED VALUE ANALYSIS 120000
100000

80000
56000 BCWS
60000 BCWP
55000
 Estimate at Completion 49000 ACWP

40000
20000
EAC = ACWP + ETC 0
Nov-03
Jan-03
Jun-03
Jul-03
Mar-03
Apr-03
Oct-03
Feb-03
May-03
Aug-03
Sep-03
Dec-03
[1] = 56,000 + 53,000
= 109,000 140000
120000 116,571
[2] = 56,000 + 60,571.43; using CPI 100000 102000

BCWS
80000
= 116,571.43 60000
BCWP
ACWP
40000
20000
0
03
03
04
3
4
3
03
3
-0
-0
l-0
-0
v-
n-
n-
p-
ar
ar
ay
Ju
No
Ja
Ja
Se
M
M
M
59
SIGNIFICANCE OF EARNED VALUE ANALYSIS

 Schedule Status Reporting
 Cost Status Reporting
 Forecasting
60
REQUIREMENT OF EARNED VALUE

 Proper WBS Design
 Baseline Budget Control Accounts & Schedule
 Work measurement by Control Account
 work-hours, dollars, units, etc.
 Good Project Management Practices
61
SHORTCOMINGS OF EARNED VALUE

 Quantifying/measuring work progress can be difficult.
 The amount of time necessary for data measurement, entry, and

processing might be substantial.
62

Module 2b Equipment Schedule

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Module 2b Equipment Schedule

Uploaded by

Copyright:

Available Formats

SCHOOL OF CIVIL, ENVIRONMENTAL, GEOLOGICAL ENGINEERING

CONSTRUCTION METHODS AND PROJECT

Engr. Jeffrey E. Germono, PSM CM

SCHOOL OF CIVIL, ENVIRONMENTAL, AND GEOLOGICAL ENGINEERING

2: CASH PLANNING AND CONTROL

2-A2: EQUIPMENT SCHEDULING/CONSTRAINT

If the equipment requirements fluctuate or go up and down, some equipment

In handling activities completing for the same resource, it is usually performed

 Always knowing where the tools/equipment are located/dispatched/being

Listed below are the phases of the construction using equipment:

Constraints and proposed solution:

DIAGRAM BASED ON TECHNICAL REQUIREMENTS ONLY

The critical path is along UNIT B

DIAGRAM BASED ON TECHNICAL REQUIREMENTS ONLY

Excavate A ahead of B, positioning panels A ahead of B

Graphical analysis of Alternative A:

Excavate A ahead of B, positioning panels B ahead of A

Graphical analysis of Alternative B:

Excavate B ahead of A, positioning panels A ahead of B

Graphical analysis of Alternative C:

Excavate B ahead of A, positioning panels B ahead of A

Graphical analysis of Alternative D:

SUMMARY OF RESULTS (ALTERNATIVES)

2B: CASH PLANNING AND CONTROL

CASH PLANNING & CONTROL

CASH PLANNING & CONTROL

What is the CASH FLOW?

CASH PLANNING & CONTROL

2. Contractor Cash Flow – payment to subcontractors, workers,

CASH PLANNING & CONTROL

CASH PLANNING & CONTROL

IMPORTANCE OF PROPER CASH FLOW

CASH PLANNING & CONTROL

IMPORTANCE OF PROPER CASH FLOW

CASH PLANNING & CONTROL

CASH PLANNING & CONTROL

IMPORTANCE OF PROPER CASH FLOW

CASH PLANNING & CONTROL

IMPORTANCE OF PROPER CASH FLOW

CASH PLANNING & CONTROL

CASH PLANNING & CONTROL

IMPORTANCE OF PROPER CASH FLOW

CASH PLANNING & CONTROL

CASH FLOW ANALYSIS

CONSTRUCTION CASH FLOW PROBLEMS

CONSTRUCTION CASH FLOW PROBLEMS

CONSTRUCTION CASH FLOW PROBLEMS

CASH PLANNING & CONTROL

“The reason for an S-curve being called an 'S-curve' is

This is because projects are 'slow to start', ramps up with all

HOW IS AN S-CURVE USED IN CONSTRUCTION?

CASH PLANNING & CONTROL

CASH PLANNING & CONTROL

Source: The Standish Group

CASH PLANNING & CONTROL

CASH PLANNING & CONTROL

EARNED VALUE MANAGEMENT

CASH PLANNING & CONTROL

CASH PLANNING & CONTROL

EARNED VALUE ANALYSIS

CASH PLANNING & CONTROL

EARNED VALUE ANALYSIS

CASH PLANNING & CONTROL

EARNED VALUE ANALYSIS