Progress Recording & Cost Optimisation

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Progress Recording,

Cost Optimisation &Acceleration

PRODUCTION ORGANISATION & HUMAN RESOURCE MANAGEMENT

BSc (Hons)

BUILDING CONSTRUCTION MANAGEMENT

11th August 2010


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Planning tools


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Planning tools


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Planning tools


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Monitoring & Controlling Progress

PrepareMaster

Programme

MeasurePerformance

Assess

Deviation

DetermineAction

Compare

actual withplanned

Ahead/Behind

Replan and

implement

Denyer, 1972


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BSc (Hons)


Control of Progress

Control is comparing, at regular intervals, the actual workachieved with that planned

Necessary corrective action can be taken to bring workback on schedule

Use of monthly and weekly meetings are invaluable in

helping control progress work not proceeding as planned can be considered in

detail explanations can be assessed best solutions can be discussed and implemented

Communications on progress can be made with otherparts of the organisation


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Progressing work and

updating information directlyon a network

Progressing activities on a

precedence diagram


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Assigning

target

dates to

activities


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Updating

activities in-

line with

actual

progress


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Network

showing

completed,

started and

remaining

activities


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Controlling Costs

Cost control should enable the cost of each stage, activity or unit to bedetermined and compared with target costs to ascertain any deviations

The timing of cost information is all important and ideally should be done as

work is being carried out

Problems can be identified early and remedial action taken as appropriate

Most project management systems provide for this and enable resources and

resources representing sections of work to be assessed in terms of cost and

income

The collection of cost information may be carried out via time sheets, weekly

summary sheets and the measurement of work completed

Cost control information is also be useful for the estimation of costs on future

projects


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Time/Cost optimisation

A technique used to find the most economical way ofcarrying out a project in terms of time and cost

The cost of a project can be considered a combination of

direct and indirect costs

The variation in duration of critical activities will affect

these cost and the total cost of the project

To accelerate activities is more expensive in terms of

direct costs

As a project duration increases so will the indirect costs

Time/Cost optimisation is concerned with establishingproject duration at minimum cost


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Time/Cost optimisation

The reduction in duration of an activity can be achieved

through increased resources, working overtime or

additional shifts

The reduction in time is termed crashing for which there

will be an associated crash cost

Cost slope for activities can be determined by as follows cost slope = (crash cost - normal cost) / (normal duration -

crash duration)

Critical activities can be accelerated in the order of least

cost slope Direct and indirect costs can be calculated for each project

duration to obtain the optimum cost


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Linear relationship

between time and cost for

an activity

Multi-linear relationship between time

and cost for an activity


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Discrete timeand cost

relationship for

an activity

Non-linear

relationship betweentime and cost for an

activity


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Cost curves to establish the least cost for optimum

project duration


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Activity Duration

(days)

Maximum

Compression

(days)

Normal

Cost

()

Cost

Slope

)

A 20 5 4,700 20

B 54 - 5,485 -

C 11 4 6,536 First 3 days

35 per day

85 per day

thereafter

D 15 5 3,400 First 2 days

40 per day

95 per day

thereafter

E 26 10 3,950 55F Method (1) 20

Method (2) 13

10

3

1,100

1,400

90

150


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Activity Duration

(days)

Maximum

Compression

(days)

Normal

Cost

()

Cost

Slope

)

A 20 5 4,700 20

First Compression

Compress activity A by 5 days = 5 x 20 = 100


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Activity Duration

(days)

Maximum

Compression

(days)

Normal

Cost

()

Cost

Slope

)

C 11 4 6,536 First 3 days

35 per day

85 per day

thereafter

E 26 10 3,950 55

Second Compression

Compress activity C by 3 days = 3 x 35 = 105

Compress activity E by 3 days =3 x 55 = 165

Total 270


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Third Compression

Compress activity D by 2 days2 x 40 = 80

Compress activity E by 2 days

2 x 55 = 110

Total 190

Fourth Compression

Compress activity E by 1 day1 x 55 = 55

Compress activity C by 1 day

1 x 85 = 85

Total 140

Fifth Compression

Compress activity E by 3 days3 x 55 = 165

Compress activity D by 3 days

3 x 95 = 285

Total 450

Sixth Compression

Method (2) selectedCompress activity F by 3 days

3 x 150 = 450


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Compression Compression

cost ()

Normal

Cost ()

Direct

Cost ()

Indirect

Cost ()

Total

Cost ()

Duration

(Days)

Normal None 25,471 25,471 7,080 32,551 59

First

compression

100 25,571 6,480 32,051 54

Second

Compression

270 25,841 6,120 31,961 51

ThirdCompression

190 26,031 5,880 31,911 49

Fourth

Compression

140 26,171 5,760 31,931 48

Fifth

Compression

450 26,621 5,400 32,021 45

Sixth

Compression

450 27,071 5,040 32,111 42

In-direct cost are 120 per day. The optimum cost is 31,911 with a duration of 49 days


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Summary

Progress recording is an essential part ofcontrolling work in order to identify problems

and initiate remedial action

Recording progress can be carried out in

connection with bar charts and networks

Cost optimisation is a technique used to find

the most economic way of carrying out a

project in terms of time and cost


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Activity

The construction of part of a commercial development isrepresented by the activities shown in Table 1.

Activity

Reference Duration

(weeks)

Crash

Duration

(weeks)

Cost

()

Crash

Cost

()

A - B *

A - CA - D

B - C *

B - F

C - E *

D - H

E - H *F - G

G - H

14

625

17

12

14

8

811

13

11

617

15

11

12

7

710

10

7300

910015100

9100

4100

5600

11100

20007600

2300

7600

910019100

11100

4600

6300

12100

23008300

2300

* critical activities


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Activity

The indirect costs associated with the development are 1700 perweek.

1. Using cost optimisation techniques, determine the optimum

duration and cost for the work.

2. Describe three situations where cost optimisation techniques

may be used in practice.

Progress Recording & Cost Optimisation

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