ANDRES BONIFACIO COLLEGE

SCHOOL OF ENGINEERING
College Park, Dipolog City

Notes on CES 422

Construction Cost Engineering (CEM B)
1:00 PM – 2:30 PM MW

COST PLANNING

KISKIS, BABY JANE

LOOC, CLAIRE JANE
LORA, KAYE
MAMBUAY, MARIAM
MUIT, KENT LEO
PAGE, NEIL RICCI
PAISONES, SHAYNNE SYDNEY
PALACA, BREYJETH JOY

ENGR. KENT JUV L. GALLEPOSO

INSTRUCTOR

AY 2023 – 2024
Cost Planning
Cost planning involves estimating, budgeting, and controlling the costs associated
with a project from inception to completion. It aims to ensure that resources are
effectively allocated to achieve project objectives within the approved budget.

Here are the key steps involved in the cost-planning process:

1. Project Scope and Objectives: Clearly define the scope and objectives of the
construction project. This includes identifying the deliverables, understanding the project
requirements, and determining the desired outcomes.

2. Cost Estimation: Conduct a detailed analysis of the project scope to estimate the
costs associated with various activities and resources required. This may involve
reviewing construction plans, drawings, and specifications, and obtaining cost data from
similar projects.

3. Cost Breakdown Structure: Create a cost breakdown structure (CBS) that

categorizes the project costs into hierarchical levels. This allows for a better
understanding and organization of costs related to different project elements, such as
labor, materials, equipment, permits, overheads, contingencies, etc.

4. Cost Allocation: Allocate the estimated costs to the identified project elements
based on the cost breakdown structure. This involves assigning costs to specific tasks,
work packages, or activities within the project.

5. Budgeting: Develop a comprehensive project budget based on the estimated costs

and the allocated amounts. The budget sets the overall financial framework for the
project and serves as a guideline for cost control throughout the project lifecycle.

6. Value Engineering: Identify opportunities to optimize costs without compromising the

project's quality or objectives. Value engineering involves analyzing alternatives,
exploring cost-saving measures, and making informed decisions to maximize value
while minimizing expenses.
7. Cost Control: Implement effective cost control measures to monitor and manage
project costs during construction. This includes tracking actual expenditures, comparing
them to the budget, identifying cost variances, and taking corrective actions as needed.

8. Regular Reporting: Maintain regular reporting mechanisms to keep stakeholders

informed about the project's financial status. This includes providing cost reports,
forecasts, and updates on any significant cost changes or deviations from the budget.

By following these steps, cost planning helps ensure that construction projects are
financially viable, well-managed, and completed within the allocated budget. It enables
project managers to make informed decisions, control expenses, and mitigate financial
risks throughout the construction process.

Types of Schedules
The Checklist
Checklists, often called "to-do lists," are widely used for short-term planning,
typically spanning a few days. Their purpose is to ensure all steps in a process are
completed, and they're effective for prompting detailed thinking. They're easy to track as
tasks are checked off upon completion and don't require special skills or equipment.
While they're not always time-based, they can be combined with calendars for
longer periods. More sophisticated versions can be made using tools like Microsoft
Excel. However, checklists have limitations, such as their inability to show the
interdependence of activities, making it difficult to assess the impact of delays on the
schedule.
The Bar Chart
One of the most common types of schedule in the construction industry is the bar
chart.The bar chart uses a graphic representation of the project plan. It is traditionally
developed with a chronological listing of tasks along the left side in columnar format.
Along the top row is time in days, weeks, or months. Tasks are shown in their entirety,
and each task is a highlighted bar from the start to the finish of the task.
 A. Flowchart- Project Scheduling

Scheduling in project management is the listing of activities, deliverables, and

milestones within a project. A schedule usually includes a planned start and finish date,
duration, and resources assigned to each activity.

Important Project Management Scheduling Terms

Here are a few key terms and definitions related to project scheduling:
○ Duration: How Long A Task Or Project Will Take.
○ Critical Path: The Sequence Of Tasks, And Their Durations, That Must Happen
To Get The Project Done.
○ Milestones: The Date Of Which A Goal Or Specific Outcome Is Reached.
○ Lead Time: How Long An Item Or Deliverable Will Take To Get.
○ Predecessor: A Task That Must Be Completed Before Another Can Begin.
○ Successor: A Task That Must Come After Another Task Is Complete.

Basics Of Project Scheduling: Create A Schedule Using CPM

When drafting a schedule for a project, it’s important to follow specific steps in order to
take all of the information into consideration. Below are the steps necessary to draft a
project schedule using the CPM.
1. Identify Fixed Variables & Restrictions
Necessary completion dates, weather restrictions, testing requirements, limited
resources & other limiting factors will dictate the parameters for which the schedule
must fit within. Below is a table of some fixed variables and restrictions for our house
construction example:
 2. Identify & Quantify Long Lead Items
Certain tasks will have a Long Lead Time associated with them. This is the time it
takes to order & receive a physical item, or the time it takes to complete a process or
service. Certain building materials take a long time to get in-hand, as does a complex
design from a professional. Here are just a few long lead items in our hypothetical home
construction example:

3. Identify The Order Of Events aka

‘Sequence’ Using A Flowchart
Which tasks must be finished before
others can begin? A simple example is
building a house – the roof can’t be built
before the walls! The walls can’t be built
before there’s a foundation. Items must come
together in a certain sequence, regardless of
time. Here (right side) is a sample project
schedule flow chart used to develop a
sequence of events:
 4. Prioritize Tasks Using
Predecessors & Successors
As said above, certain tasks
cannot begin until others end. The
task that must happen BEFORE
another is called a Predecessor,
whereas a task that must happen
AFTER another is called a
Successor. Below is a table of tasks
from our house construction
example, along with their various
predecessors and successors:

5. Identify The Tasks On The ‘Critical

Path’
The Critical Path contains the key
project steps that must happen in a
particular order. Other non-critical items can
be adjusted accordingly; they can happen
independent of these critical path steps. The
critical path items and the time they take are
the backbone of a project schedule. The
project’s time from beginning to end is
almost always the time between the first
critical path item starting, and the final
critical path task ending. In our house
construction example, we’ve highlighted the
steps we've decided to call the critical path
items:
 6. Calculate The Duration Of The
Critical Path Items
A key factor in scheduling is
obviously time. A project’s duration – the
time it takes – is almost always the
duration of the critical path. Assigning a
duration to each critical path item after
considering all restrictions & fixed
variables is the most crucial step to
calculating a project’s completion time.
Here is a basic example of critical path
items in our house schedule , which
totals to the approximate total project
duration. These are for example
purposes only!

7. Identify Milestones In The Schedule

Milestones are dates when a specific goal or outcome has been reached. A
milestone can be the completion of a task on the critical path, or a date involved with a
specific restriction or fixed variable (step 1). By making sure that each milestone is
reached, a project manager is keeping the entire project on track.

8. Factor In Possible Overlap On The Project Schedule

Sometimes, the timeline of critical path tasks can be consolidated to shrink the
overall schedule duration. This is often done by breaking these tasks into smaller tasks
and figuring out which of them could start while the main task’s predecessor is still
going.

9. Fit In The Non-Critical Path Items

The less critical items can now be scheduled around the critical ones. If a task
can happen within a range of dates but takes a lot less time than given, this task has a
float associated with it. If a one month window of time is available for a task that takes
one week, then the task has a few weeks of float to play with.
 B. Flowchart-Material Cost Scheduling
Material Cost Scheduling (MCS) is a process that involves planning, organizing,
and controlling the costs associated with materials required for a project. It includes the
estimation, procurement, and allocation of materials, as well as tracking and controlling
the associated costs throughout the project lifecycle.

Importance of Material Cost Scheduling

Effective MCS can help organizations ensure that materials are available when
needed, reduce material waste, lower costs, and improve project profitability. By
scheduling material costs, organizations can also better manage their cash flow and
reduce the risk of cost overruns.

Flowchart for Material Cost Scheduling

1. Estimate Material Costs: The first step in MCS is to estimate the costs associated
with the materials required for the project. This involves identifying the materials
needed, estimating their quantities, and determining their unit costs. The estimates can
be based on historical data, market prices, or supplier quotes.
2. Procure Materials: Once the material costs have been estimated, the next step is to
procure the materials. This involves identifying potential suppliers, negotiating prices,
and placing orders. The procurement process should be managed to ensure that
materials are delivered on time and within budget.
3. Schedule Material Deliveries: After procuring the materials, the next step is to
schedule their deliveries. This involves coordinating with suppliers to ensure that
materials are delivered when needed and in the correct quantities. The schedule should
be regularly updated to reflect any changes in the project timeline or material
requirements.
4. Track Material Usage: As the project progresses, it is important to track the usage of
materials to ensure that they are being used efficiently and effectively. This involves
monitoring the quantity of materials consumed, identifying any wastage or
discrepancies, and adjusting the schedule accordingly.
5. Control Material Costs: The final step in MCS is to control material costs. This
involves monitoring actual costs against estimated costs, identifying any variances, and
taking corrective action as necessary. It also involves tracking material costs throughout
the project lifecycle and reporting on them regularly to stakeholders
 C. Flowchart-Manpower Scheduling
Manpower scheduling is the process by which the daily manpower level for each
craft or skill is selected to complete the work in the most efficient (orderly, economical,
safe) manner. Manpower should be scheduled so as to avoid interruptions of productive
time, repeated staffing up and de-staffing (hiring/firing of workers), repeated movement
of workers from one end of the unit/plant to the other, creating a work logjam or peak
demands for equipment (such as cranes, trucks, etc.) or loading the work area with
more men than it can adequately and/or safely hold (workspace density saturation).

D. Flowchart-Subcon Cost Scheduling

Subcontractor cost scheduling involves estimating and scheduling work systematically
to ensure accurate cost accounting. It is crucial for subcontractors to be aware of
planned mobilizations and document them in the schedule. The nature of subcontractor
scheduling changes with "Multi-prime Contracts," where subcontractors have a direct
contract with the Owner, requiring coordination through a Master schedule with Project
Milestones. Subcontractors focus on Free Float rather than Total Float, which is more
critical for General Contractors (GCs). Resource constraints, crew-oriented work, and
proper resource planning are key for efficient scheduling. Subcontractors should use
CPM schedules, consider resource loading, and manage delays effectively by logically
relating activities. Effective scheduling minimizes lost profits due to improper crew
scheduling, poor supervision, and lack of coordination
Process flowchart
The following flowchart describes the process involved in Subcontractor Management,
including the pre-award and post-award phases.

Pre-award phase
1. The prime contractor identifies an opportunity for which they can bid.
2. The prime contractor or an opportunity manager begins planning and estimating
the budget for that opportunity. Part of this forecasting is determining whether or
not they have the resources or if they need subcontractors who can provide them
with employees with the correct skill set and security requirements.
3. If the prime contractor decides they need subcontractors, they then submit a
request for quotes (RFQ) to the subcontractor.
4. The subcontractor sends the RFQ to a number of vendors, and those vendors
send their quotes to the subcontractor.
5. The subcontractor sends vendor quotes to the prime contractor.
6. The prime subcontractor makes a partner decision based on the vendor quotes.
7. The prime contractor puts a budget, makes a bid, and, if everything falls into
place, wins the bid and is awarded the opportunity.
Post-award phase
The post-award phase involves using applications in Costpoint and Time &
Expense. Some of these applications are available only if the company is licensed for
Subcontractor Management. The Subcontractor Management module and applications
in the Projects domain, for example, are not displayed unless the company is licensed
for Subcontractor Management. In the post-award phase, the following steps are
performed:
1. The prime contractor initiates and sets up a project for the awarded contract in
Costpoint.
2. The prime contractor sends a requisition to the vendor who they decided to
partner with.
3. The prime contractor sets up a purchase order, which is their legal agreement
with the subcontractor. During the time that the purchase order is being
negotiated, there will be maintenance and onboarding of resources. Here, they
determine or make changes to the number of resources requested, the number
of hours needed to accomplish the project, the hourly rate of resources, the
general and project labor categories associated with the resources, and specific
security requirements that need to be established for the particular project.
4. After the PO has been finalized and resources entered in Costpoint, the prime
contractor creates work assignments. These work assignments help the prime
contractor determine who can charge against the subcontractor agreement
purchase order, how much they can charge, what they can charge, and when
they can charge.
5. The prime contractor approves the work assignments.
6. The work assignments are now ready to be charged in Time & Expense. These
will not be exported to but will be visible in Time & Expense in order for the
subcontractor resources to charge labor/expenses.
7. The prime contractor and the subcontractor approve the labor and expenses
charged in Time & Expense.
8. The prime contractor exports the approved labor/expenses to Costpoint.
9. The prime contractor generates a subcontractor invoice based on labor/expenses
from Time & Expense.
10. The invoice is approved by the prime contractor and the subcontractor (if
subcontractor approval is required).
11. Once the subcontractor invoice is approved, it becomes a purchase order
voucher, which then goes through the normal purchase order approval process.
12. After the purchase order voucher is approved and posted, it is billed to the prime
contractor's customer.
E. Flowchart-Equipment Cost Scheduling

Equipment scheduling, on the other hand, refers to the process of planning and
coordinating the use of equipment on a construction project. This involves determining
the type and quantity of equipment needed, determining the most efficient sequence of
equipment use, and scheduling equipment availability to meet project deadlines.
Equipment scheduling helps project managers to ensure that equipment is used in the
most efficient and effective manner, and to minimize equipment downtime and idling.

Equipment Schedule
The general contractor's project superintendent will need to closely track all
construction equipment that is on the jobsite. There are several construction
management tools they will utilize to accomplish this. On the jobsite, the construction
team may utilize a simple Microsoft Excel spreadsheet as an equipment log or
equipment schedule that lists each piece of equipment, its source, cost code, arrival
date, departure date, and potentially any comments associated with operation and
maintenance. The equipment schedule from the case study is shown in Table 14.2. The
superintendent's daily job diary is also a good resource for recording equipment arrival,
use, and departure as discussed here.
Tower Crane Schedules
Each contractor on a project feels they have priority and free use of a tower crane
(TC) if a general contractor provides one for the project. This is not the case. The GC's
project superintendent will schedule the crane's use by giving priority to (A) critical path
activities, (B) delivery trucks that are blocking the road or material storage impeding
productivity, (C) safety issues, and (D) GC direct work tasks will take precedence over
subcontractor tasks. It is not uncommon for subcontractors to schedule their picks after
normal working hours or on Saturday and will be responsible for the overtime costs of
the operator and rigger and potential additional rent of the crane. The superintendent
will prepare a simple spreadsheet schedule for TC use and present it at the Monday
morning foreman's meeting. These are all valuable schedule communication tools. It
would behoove a subcontractor to review TC accessibility rules before submitting a bid
to a GC or signing a subcontract agreement.
References
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