SCHOOL OF CIVIL, ENVIRONMENTAL, GEOLOGICAL ENGINEERING

CE168P-2 .

CONSTRUCTION METHODS AND PROJECT

MANAGEMENT
MODULE 3

Prepared By:

Engr. Jeffrey E. Germono, PSM CM

SCHOOL OF CIVIL, ENVIRONMENTAL, AND GEOLOGICAL ENGINEERING

SCHOOL OF CIVIL, ENVIRONMENTAL, GEOLOGICAL ENGINEERING

3: COST CONTROL AND ANALYSIS OF CONSTRUCTION PROJECT

MANAGEMENT SOFTWARE
3A: COST CONTROL
3A-1: QUALITY ASSURANCE AND CONTROL
3A-2: PROJECT CLOSE-OUT
3B: PROJECT MANAGEMENT SOFTWARE
- MS PROJECT FEATURES AND CAPABILITIES
- ANALYSIS OF CONSTRUCTION

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3A: COST CONTROL

3A-1: QUALITY ASSURANCE AND CONTROL
3A-2: PROJECT CLOSE-OUT

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PROJECT COST CONTROL

Tracking how a project's spending varies from baseline expectations throughout the
project's life and creating corrective plans if necessary. The project manager is usually
responsible for the project's cost controls, including operating monitoring software and
investigating any cost differences.

Cost controls are important because they can help keep a project within its budget,
which is an important element of a successful project. Cost controls make it possible for
the earlier cost management steps to be effective and accurate throughout the
project.

When a company consistently completes projects under budget, it can earn a larger
profit, build its brand and reputation for trustworthiness, and budget for future projects
more accurately.

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INVOLVEMENT OF EVM IN COST CONTROL

EARNED VALUE MANAGEMENT is NOT PART of the Cost Control Process. The EVM Process
uses terms such as PLANNED VALUE and EARNED VALUE for PROJECT MONITORING AND
PROJECT PROGRESS AND STATUS not for CONTROLLING THE ACTUAL COSTS.

COST CONTROL involves the ACTUAL COST and BUDGETED COST

Moreover,

EVM is a project performance measurement technique that converts progress into

money to measure it

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INVOLVEMENT OF EVM IN COST CONTROL

EVM COST CONTROL
Terms Term
Explanation/Remarks Term Used Explanation/Remarks
Used
Regardless of the
Planned Works,
The value of the Planned
PLANNED PLANNED Planned Cost is the
PLANNED MONEY Works by its market prices or
VALUE COST MONEY should be
BOQ Rates
SPENT in the
accomplished work
The value of the Executed
The Actual Cost the
EARNED Works by its market prices or ACTUAL
ACTUAL MONEY company paid to
VALUE BOQ Rates COST
execute the work

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TYPES OF COSTS
DIRECT COST:
-Amount of money spent directly to complete the work
such as:

• MATERIALS
DIRECT • LABOR
COST (DC) • EQUIPMENT
COSTS
INDIRECT INDIRECT COST:
-Amount of money spent to support completion of work
COST (IC) such as:

• Head Office Rental

• Salaries
• Site Securities
• Etc.

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TYPES OF COSTS
VARIABLE COST:
-Cost change according to work size such as:

• MATERIALS
• LABOR
VARIABLE • EQUIPMENT
COST (VC)
COSTS
FIXED FIXED COST:
- costs to a business that stay the same regardless of
COST (FC) how the business is performing completion of work such
as:

• Office utility bills

• Property Taxes
• Employee Benefits and Healthcare, etc…

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ADDITIONAL TERMINOLOGIES IN COST CONTROL

PROFITS Income minus the actual costs
Profit margin Ratio of profits to income
Determines the estimated Annual/Monthly costs and income for a
Cash flow analysis
project and the resulting Annual/Monthly Cash Flow
The total direct and indirect costs planned to be incurred in
Planned Cost
accomplishing work on an activity during a given period
ACWP, is the total direct and indirect costs incurred in
Actual Cost
accomplishing work on an activity during a given period
Project expected costs are more than Planned Costs;
Above/Over Budget
Actual Costs > Planned Cost
Project expected costs are less than Planned Costs;
Below/Under Budget
Actual Costs < Planned Cost
Project expected costs are equal to Planned Costs;
Within the Budget
Actual Costs = Planned Cost

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PROJECT COST CONTROL vs PROJECT COST MANAGEMENT

• Scope: Project cost management describes a long-term process for handling a
project's budget and finances throughout the whole project and includes cost
control, while cost control is the specific process of evaluating and adjusting
expenses while the project is progressing.
• Time period: Project cost management begins with the planning phase and
continues throughout the project, while project cost control happens only after the
project has begun.
• Requirements: To complete project cost management, a project manager
researches many elements of the project including labor and equipment costs,
scope, requirements and the details of each step of the process. To complete
project cost control, a project manager needs the project's budget and projected
costs as well as current data from ongoing project expenses and enough
understanding of the project to understand why costs differ from projections.

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STEPS IN PROJECT COST CONTROL

1. Measure differences from the baseline budget
First, the project manager understands the baseline budget expectations by reviewing the
original budget and any departmental or stage breakdowns. Then, they implement tracking
procedures to see how the project's spending compares to the projected costs, and if it is
different, they measure how great the difference is. Tools like specialized software and
spreadsheets can help project managers with this tracking process. It's important that the project
manager make sure their information is as accurate as possible in this stage so that cost forecasts
are accurate in the next step.

2. Forecast final costs

Once the project manager understands the differences from the original budget, they use this
information to project what the project's final cost will be if spending continues along current
lines. If the project was over budget in a stage that is now complete, the project manager
calculates any costs added during that time or later delays that event may cause. If the project
is over budget for a process that is still going on, the project manager calculates how much
more over budget that ongoing process will add to final costs.

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STEPS IN PROJECT COST CONTROL

3. Determine possible corrective actions
Once the project manager has all this information, they can look at their plan for the project and
see what potential corrective actions could bring the project back within budget specifications.
Depending on the project, this may involve adjusting the schedule, the staffing or the project
timeline to reduce costs.

4. Implement and evaluate corrective actions

Next, the project manager implements these corrective actions by negotiating with teammates,
vendors or contractors. They may also communicate with the client to explain the changes and
the reasoning behind them. The project manager then uses the new data and the budget
tracking practices to evaluate whether the corrective actions were effective. If not, the project
manager creates and implements new corrective actions until they get the desired results.

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3A: COST CONTROL

3A-1: QUALITY ASSURANCE AND CONTROL
3A-2: PROJECT CLOSE-OUT

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DIFFERENCE BETWEEN ASSURANCE AND CONTROL

Quality assurance can be defined as "part of quality management focused on providing

confidence that quality requirements will be fulfilled." The confidence provided by quality
assurance is twofold—internally to management and externally to clients, government agencies,
regulators, certifiers, and third parties.

An alternate definition is "all the planned and systematic activities implemented within the
quality system that can be demonstrated to provide confidence that a product or service will
fulfill requirements for quality.“

Quality control can be defined as "part of quality management focused on fulfilling quality
requirements." While quality assurance relates to how a process is performed or how a product is
made, quality control is more the inspection aspect of quality management. An alternate
definition is "the operational techniques and activities used to fulfill requirements for quality."

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DIFFERENCE BETWEEN ASSURANCE AND CONTROL

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INSPECTION AND AUDIT

Inspection is the process of measuring, examining, and testing to gauge one or more
characteristics of a product or service and the comparison of these with specified requirements
to determine conformity. Products, processes, and other results can be inspected to ensure that
the object coming off a production line, or the service being provided is correct and meets
specifications.

Auditing is part of the quality assurance function. It is important to ensure quality because it
compares actual conditions with requirements and reports those results to management.

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QUALITY MANAGEMENT PLAN (QMP)

A quality management plan is a document that helps the project manager and the project
team execute quality management and quality assurance actions. In the context of project
management, quality is fulfilling the project requirements and meeting the client’s needs.

An overall project plan will include a quality management plan, which describes the activities
you will apply throughout the project’s life cycle to meet its quality objectives. You also describe
these activities (and the resources you need to put them into action) in the quality management
plan.

Clients expect consistency, and by having a plan in place to maintain quality production for
whatever product or service you’re manufacturing, you can consistently meet their quality
expectations.

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INCLUSIONS IN QUALITY MANAGEMENT PLAN (QMP)

•Project Deliverables & Project Processes - The key project deliverables and processes are
subject to quality review.

•Client Satisfaction - criteria describe when each deliverable is complete and acceptable as
defined by the client

•Quality Control Activities - monitor and verify that the project deliverables meet defined quality
standards.

•Process Quality Standards - “measures” used to determine if project work processes are being
followed.

•Quality Assurance Activities - monitor and verify that the processes used to manage and create
the deliverables are followed and are effective.

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BASIC METHODOLOGY IN QUALITY MANAGEMENT PLAN (QMP)

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QUALITY MANAGEMENT PLAN (QMP) DEVELOPMENT

•Identify the client’s Quality Objectives. Help clients express quality expectations in objective, quantitative
terms.

•Identify professional standards, including legal, environmental, economic, code, life safety, and health.

•Balance the needs and expectations of clients and stakeholders with cost, schedule, and professional
standards. Evaluate the costs and benefits of selected quality objectives and the processes to be used to
achieve objectives.

•Develop an effective plan and processes, including quality assurance and quality control procedures, to
achieve objectives. Consider risk/hazard factors and the complexity of the project and adapt processes to
provide the requisite level of quality. Document any project variations from the local QMP requirements in the
risk management plan.

•Develop performance measure thresholds to ensure agreement on the definition of success relative to
Quality Objectives.

•Ensure client endorsement of all quality objectives included in the Quality Management Plan

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3A: COST CONTROL

3A-1: QUALITY ASSURANCE AND CONTROL
3A-2: PROJECT CLOSE-OUT

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CONSTRUCTION PROJECT CLOSE-OUT

1. Collect Necessary Documents
Construction projects should follow a plan to adhere to budget, schedule, and scope as much
as possible. A construction punch list, or a checklist for a given project, keeps track of ongoing
tasks so contractors and managers know the status of each action item. This list will help you
determine if you should address any loose ends before looping in the client to review.

In addition to a punch list, you might need the following documents and more:

•Design approvals
•Requests for information
•Certificates for any inspections
•Certificate of Occupancy
•Certificate of Substantial Completion
•Pay submittals for contractors

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CONSTRUCTION PROJECT CLOSE-OUT

2. Review Change Orders and Modifications
Change orders are modification requests submitted by a party working on the construction
project in response to a delay or new addition. Note these requests in writing immediately so that
keeping track of them is easy. When it comes time to wrap up, review all change orders to
confirm their completion or indicate why they may remain incomplete.

3. Ensure Order Specifications Are Met

Before turning over your project to its new owner, you should conduct walkthroughs to vet
construction by testing systems, and specifications that may have been ordered by the client.
Project specs should be noted at the start of a project so that this step is a quality assurance
check as opposed to a wild goose chase.
This step is when you’ll verify for the last time that the building has an effective safety plan and
that residential codes were upheld during construction. If the project you’re closing
incorporates BIM (Building Information Modeling) into building operations, this digital replica can
guide you on a detailed walkthrough to guarantee that you don’t miss any items on the
checklist.

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CONSTRUCTION PROJECT CLOSE-OUT

4. Present to the Client
Once you make sure that your deliverables meet client expectations, it’s time for you to deliver
the goods. This step hinges on the client’s pre-established understanding of project goals and
timelines. If your project is running over budget, don’t stress. Just be sure to document all
instances where estimates were inaccurate, and keep change orders together to note the cost
of new project additions that altered the project scope.

5. Address All Client Feedback

It’s likely that your project has a requirement for client sign-off, satisfaction or approval in order to
move forward with closeout. Your walkthrough presentation should be thorough and address all
client requests, but more may come up during this time. Use your prepared documents to
answer any questions about scope or completion, and note any final requests along with a
timeline for completion of those requests.

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CONSTRUCTION PROJECT CLOSE-OUT

6. Close Any Open Contracts
Client approval is a green light to move ahead with finalizing the closeout process. Once you
know that work is complete, close remaining contracts so payment can begin. If you build a
relationship with any subcontractors on a particular project, complete their contracts quickly to
let them know you have their best interests in mind. This will also show your client that you’re
efficient, prepared and ready to tackle another project.

7. Gather Project Takeaways for Future Learning

After wrapping things up with your client, reflect on the successes and failures of this recent
project. These learnings will be valuable to you and your company in the future, particularly if
you take on a similar project.
Archive your project lessons the same way you planned your project: take care to organize each
step so it’s easy to find. Include a summary at the beginning that details special circumstances
you might forget when referring back to this project. A project archive will help you avoid
closeout mistakes in the future.

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CONSTRUCTION PROJECT CLOSE-OUT: MANAGEMENT MISTAKES

1. Too Much Internal Process Friction
Process friction was the number one snag that delayed closeout according to contractors
surveyed by Emerson. If your employees don’t have sufficient mastery of the tools they use, or if
redundant processes are slowing down business, it could be time to reassess daily functions.

•Solution: Audit your project operations. Interview your employees to see if they identify any
process snags worth addressing. Work together with your team to streamline project flow and
avoid treating closeout as an afterthought.

2. Project Variable Overload

As much as 30% of original data from design and construction was lost by project completion in
the same Emerson survey. This means there is too much information to manage or the
information is disorganized, and neither is ideal for smooth project closeout.

•Solution: Get organized at the outset of a project. Have defined plans for the start and close of
each phase and document project changes in organized files.

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CONSTRUCTION PROJECT CLOSE-OUT: MANAGEMENT MISTAKES

3. Staff Shortages Driving Workload Upward

The construction industry continues to suffer from a labor shortage. Fewer employees mean
fewer people to do the jobs demanded by a proper project closeout. It also means fewer
people to oversee the organization during the process, so assets may end up misplaced or
discarded. This is especially common for change orders or scope changes that come late during
a project.

•Solution: Recruiting skilled workers is challenging but not impossible. While you look to bring on
new team members, emphasize organization as a priority and enact steps to achieve it, like
monthly file audits until all projects are organized.
These mistakes are easy to point out because they’re prevalent. The construction labor shortage
is an industry-wide problem that leads to variable overload. Meanwhile, internal friction builds
while attention focuses elsewhere rather than on speeding up process flows.

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HELPFUL LINKS
Project Cost Management and the Process of
COST CONTROL in Construction Projects
Construction Punch List Template (Excel)|
TeamGantt

•MDC BuildPlus
QMP REFERENCES
•DMCI Homes Checklists

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