A Home Office Engineering Curve

Figure 7-9 illustrates cumulative planned and actual profiles of a home office manhour rate. This rate represents total home office costs divided by total manhours. Significant deviation of actual to planned can indicate a potential overrun. Rate overruns can occur because of a different mix of salary levels, unantici-

Figure 7-8. Trend Curves.

■»CU. 1*4.

ShMNo.

OVERALL PROJECT COMMITMENT CURVE Historical Standard AND INDIVIDUAL EPC CURVES

Standard Epc Curves

30 40 50 80 70

Percent of Project Time NOTE: The specific commitment trend curve(s) for individual project _should be the budgetted $ against time._

30 40 50 80 70

Percent of Project Time NOTE: The specific commitment trend curve(s) for individual project _should be the budgetted $ against time._

JAMES BENT ASSOCIATES, INC. CONSULTANTSIN PROJECT MANAGEMENT AND PROJECT CONTROL

pated increases in salary levels, changes in benefits and burdens, overruns in service and expense budgets, premium costs for overtime, or the assignment of higher priced personnel than planned.

This example shows an estimated rate of $20 with tracking curves starting at $23-$26, dropping to $17-$18,and finishingat the estimated level. It reflects high-salaried personnel at the start of the project (department managers, project management, process engineers) followed by a lower-priced drafting operation with higher-salaried engineers returning at the end for punchlist work and plant start-up/commissioning.

The planned curve can be developed from historical experience and/or by evaluating rate curves for each major section, category, or engineering discipline and then adding them together on a weighted manhour basis.

b) Construction Labor Curve

Figure 7-10 shows cumulative planned and actual profiles of direct labor manhour rate. This rate represents total labor costs divided by total direct manhours. The monthly status can be tabulated as shown.

Significant deviation of actual versus planned values can indicate a potential overrun. Rate overruns can occur because of different craft mixes, union contract changes, governmental regulation changes, and premium costs for overtime and shift work.

In this example, the planned and actual curves track reasonably closely for the first six months. Abrupt changes in a cumulative profile do not generally occur when the job is well advanced as there is too much weight of past performance to allow instant or abrupt change.

A turndown can indicate release of higher paid crafts, escalation lower than anticipated, or failure by trade unions to achieve pay demands.

The following curve characteristics are typical of a process-type plant project:

• Low at first due to low skill civil workers (laborers)

• Increasing to peak due to highly paid equipment operators, millwrights, pipe fitters and electricians

• Then a slight turndown due to lower paid insulators and painters.

Project Management for Engineering and Construction Figure 7-9. Overall Home Office Man-Hour Rate Curve.

OVERALL HOME OFFICE MAN-HOUR RATE CURVE

1 2 3 4 5 6 7 8 9 10 11 i'2 13 14 15 16 17 18 19 20 21 22 23 y I 1979 I 1980 1

MONTHS

Figure 7-10. Construction Labor Curve.

proj job

rt no.

LABOR RATE CONTROL CURVE

repo date

cost per hour '

note : craft rate includes fringes AND benefits

- contract , 1 tehuination

L UNION agreement planned f increase actual | I

I

schedule

currency—

-

per«»

poboo flatt

clu. hats

budget ratî

REMARKS

MATERIAL COMMITMENT CURVE

Figure 7-11 illustrates a typical commitment curve for bulk materials and equipment. This curve tracks actual cumulative material commitments relative to a planned profile. This curve will only indicate a trend of total commitment. A significant trend at this stage is an underrun or overrun of actual commitments versus individual control estimate budgets.

The bulk material and equipment commitment curve can be used for two purposes:

a) As a graphical, overall forecasting tool b) As a rough check on the procurement progress, assuming the planned curve reflects the current schedule. Significant deviations of actual versus planned values can provide a trend for cost deviation. It may be required that separate curves be drawn for equipment, bulk materials, and supply and erect subcontracts for the project control of large projects.

ENGINEERING AND CONSTRUCTION TREND CURVES

a) Purpose

The major purpose of trend curves is to track actual performance/experience against a planned or anticipated base. The effectiveness of this technique depends on the quality of the "measuring base," or plan. Any resulting trend deviation can then be analyzed and the "result" can then be forecasted or trended. Curves provide a much better analytical tool than does a tabulation or report of numbers. The following are typical examples of monetary and manhour expenditure curves.

b) Home Office Cost Expenditure Curve

Figure 7-12 shows planned and actual expenditure curves of home office costs. Planned curves are developed by judgment and historical experience and can be compiled from profiles of more detailed elements. It is possible on large projects that individual curves might be used to track non-manhour related expenses, such as computer, reproduction, communication and travel-relocation costs.

Figure 7-11. Material Commitment Curves.

EQUIPMENT COST CURVES

project JOB HO.

REVISED

jbuoget_ forecast -

COMMITMENT

jbuoget_ forecast -

COMMITMENT

mechanical completion

tim f

(PROJECT DURATION*

tim f

(PROJECT DURATION*

Figure 7-12. Home Office Cost Expenditure Curve.

HOWE OFFICE COSTS

project JOB HO. (Wit no,

OATC

control bucget

forecast

projection i

\

; j-

CURRENT BUDGET

' __

t / y /

/

y\

V/

f actual

t / t g t / //

1974

1975

1976

1977

1979

This example shows the actual expenditure curve consistently underrunning the planned until the end of 1976 where it continues straight on instead of commencing to run down. A trend was discernible in mid-1976, and, in fact, a forecasted overrun had been made in the third quarter of 1975. A further overrun was made in the first quarter of 1977 due to failure of the curve to commence a rundown.

c) Engineering Manhour Control

Figure 7-13 shows typical examples of manhour tracking curves. It should be emphasized that this technique does not really control effort or measure performance, but indicates a trend and plots a possible outcome.

This example shows an overrun in process design (completed), shows an overrun in the civil plan as of the reporting period, and is on target with piping design, but with a different profile. The overall cumulative report is an overrun. Projecting forward at a rundown profile similar to the plan will give a forecasted overrun at completion.

Target curves of anticipated manhour expenditure could be developed for other significant engineering sections. A typical split might be as follows:

Process

2) Civil and structural design

3) Equipment and mechanical

4) Piping

5) Electrical

6) Instrumentation

Historical experience can assist in developing good expenditure curves. However, evaluation will depend on the skill and experience of the cost engineer. In practice, especially on large, complex projects, manhour overruns might be due to recycling of engineering, caused by design error or owner changes.

d) Indirect Labor Manhour Curves

As indirect labor budgets are often poorly estimated, tracking curves should be considered for major indirect categories. Figure 7-14 shows a typical indirect manhour tracking curve. Manhours and manhour costs could be tracked separately. A separate curve for average hourly rate could be drawn, or alternatively, the hourly rate can be entered on the manhour chart as per this exhibit. The monthly status is tabulated as shown, and forecasts are shown. Forecasted manhours multiplied by the anticipated hourly rate will give forecasted costs.

As is often the case, this example shows a significant man-hour overrun. The overrun started in month 10 and further

Figure 7-13. Engineer Manhour Expenditure Curves.

Project Management Made Easy

Project Management Made Easy

What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.

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