Cost Monitoring & EoT

Transcription

1 Cost Monitoring & EoT

2 MONITOR YOUR PROGRESS TRACKING CURVES Planned vs Actual

3 How your project performance is monitored by the Engineer Earned Value Analysis (EVA) evaluates project s cost performance by:» comparing planned value of work against earned value of work accomplished; and» comparing this earned value against actual costs incurred

4 EARNED VALUE CRITERIA Uses three criteria Planned Value (PV) (or BCWS) = what is planned to be done Earned Value (EV) (or BCWP) = budget of work actually done Actual Cost (AC) (or ACWP) = what was paid for work done End of the project PV = EV = Budget at Completion (BAC)

5 EXAMPLE Project of one month has budget of 10,000. End of month, 8,000 of work completed. Actual cost to complete this work is 8,500. PV = what is planned to be done (10,000) EV = budget of work actually done (8000) AC = what was paid for work done (8,500)

6 COST VARIANCE Cost variance is difference between budget and actual costs Cost variance (CV) = EV - AC (+ve means actual is less than budgeted) Cost Performance Index (CPI) = EV / AC (>1 means actual is less than budgeted) Example: CV = 8,000-8,500 = ie. cost overrun, CPI = 8,000 / 8,500 = 0.94 ie. cost overrun

7 SCHEDULE VARIANCE Schedule variance is difference between budget for work achieved and work planned Schedule variance (SV) = EV - PV (+ve means actual is more than scheduled) Schedule Performance Index (SPI) = EV / PV (+ve means actual is more than budgeted) Example: SV = 8,000-10,000 = ie. time overrun, SPI = 8,000 / 10,000 = 0.80 ie. time overrun

8 Relationship between PV, EV, AC, SV and CV

9 FORECASTING FINAL COST Estimate at Completion (EAC) EAC = Cost to-date + estimate to complete 2 kinds of cost overruns:» Current overrun (ie. cost variance)» Overrun at completion (ie. shown by EAC). See diagram.

10 Current overrun Overrun at completion

11 END OF PROJECT EV = PV CV = final overrun

12 FORECASTING FINAL COST EAC = AC + (BAC EV) CPI (CPI = Cumulative Cost Performance Index to date) Details» the remainder of work to be done (BAC-EV),» is adjusted by cost performance (CPI)» and the result added to the actual cost to date (AC) Example (CPI = 8,000 / 8,500 = 0.94) EAC = 8,500 + (10,000 - $8,000) = 10,

13 Example EV Cost Variance Analysis WP1 EV - AC = 8,000-8,000 = 0 WP 2: EV - AC = 9,600-9,000 = WP 3: EV - AC = 19,200-22,000 = - 2,800 Project: EV- AC = 36,800-39,000 = - 2,200» WP1 on budget,» WP2 under budget» WP3 is over budget.» Project over budget

14 Example EV Schedule Variance Analysis WP1: EV - PV = 8,000-8,000 = 0 WP2: EV - PV = 9,600-12,000 = - 2,400 WP3: EV - PV = 19,200-18,000 = +1,200 Project: EV - PV = ,000 = - 1,200» WP1 on schedule» WP2 behind schedule» WP3 ahead of schedule» Project behind schedule

15 COST REPORTS Typical cost report: Cost Code Item Budget $ Complet e % Earned value Actual cost Variance % Variance $ Estimate cost to complet e Estimate cost at completi on 100 General % Site work % Concrete % Masonry % Metals TOTAL

16 Clause 8 Commencement, Delays and Suspension The Date for Possession and the Date for Practical Completion are stated in the Annexure to the Contract Conditions. Cl 8.3 Programme Program is a contract document 28 days after notice to commence Contractor shall not w/o reasonable cause depart from program 16

17 Clause Delay Damages Failure of the Contractor to complete on time may give the Engineer the entitlement to deduct delay damages against the Contractor. A genuine pre-estimate of the actual loss likely to be suffered as result of the breach by the Contractor. If the delay is caused by the Client (or his reps/agents) the Contractor will be entitled to an extension of time and loss & expenses, subject to the provisions under the contract. 17

18 Time at large If the contractor cannot complete the works in time for reasons beyond its control and there is no extension of time granted, that means there is no longer a contractually agreed date for completion. Time is said to be at large. 18

19 Time at large Consequences of time at large are: there is no date from which delay damages can run & therefore client cannot deduct delay damages any more Contractor only obligated to complete the works in a reasonable time it will be difficult for a client to prove works weren t completed in a reasonable time Therefore, EoT clauses are included in construction contracts for the benefit of the Client 19

20 Clause EoT Therefore, if the EoT provision is to stay alive, the Engineer must fix a new postponed date for completion in the event of a Client caused delay. Therefore, the Engineer must be empowered by the contract conditions to grant EoT. (e.g. site possession) 20

21 Clause EoT Claim Notice of delay - the contractor can claim EoT within 28 days when he should have become aware of the causation occurring. It must be as a result of a qualifying cause of delay as per Clause 8.4 (a)-(e) and

22 Reasons for Extension of Time Two categories of reasons or qualifying causes:- 1. Client caused 2. Neutral events beyond control of both parties 22

23 Difficulties in Assessing EoTs Concurrent Delays Programming Float 23

24 Examples: Concurrent Delays Late provision of information by Engineer causes 5 days of delay. During this period, contractor causes 4 days of delay due to non-availability of workmen. Who should be responsible for how much delay? How much compensation should contractor get for delay damages? Client caused delay Contractor caused delay 24

25 Concurrent Delays When both non-qualifying and qualifying causes of delay overlap, Engineer apportions the delay to works according to the respective causes contribution. 25

26 Concurrent Delays 2. Client caused delay overlaps with a neutral delaying event Simple example: An owner-caused delay of 5 days overlaps with a neutral even on the 3 rd day 26

27 The issue of float - Prolongation Prolongation is defined as a critical delay which results when the time necessary for a critical activity is prolonged.

28 Prolongation Claim Prolongation claim is that which a contractor would make when the time necessary to complete a critical activity becomes longer than that originally planned owing to the event giving rise to the critical delay.

29 Prolongation Claim (Cont.) The delayed activity must be critical and must start and finish on a pre-determined scheduled day with no float time or flexibility. The delay should also have been caused due to circumstances beyond the contractor s control.

30 Example Delay Events Delay in possession of site Industrial conditions Inclement weather Delay in information/design Latent conditions Delay in client supplied materials

31 Delay in Possession of Site Activity Jan Feb Mar Apr May June July Aug Set Oct Nov Dec Site clearance Excavation for foundations Work up to DPC Columns Beams External walls Roof structure Roof covering Roof plumbing Doors & windows Plumbing & drainage HVAC Electrical work Infill walls External finishes Landscaping & external drainage

32 Industrial Conditions - Bricklayers on Strike in April Activity Jan Feb Mar Apr May June July Aug Set Oct Nov Dec Site clearance Excavation for foundations Work up to DPC Columns Beams External walls Roof structure Roof covering Roof plumbing Doors & windows Plumbing & drainage HVAC Electrical work Infill walls External finishes Landscaping & external drainage

33 Inclement Weather During June Activity Jan Feb Mar Apr May June July Aug Set Oct Nov Dec Site clearance Excavation for foundations Work up to DPC Columns Beams External walls Roof structure Roof covering Roof plumbing Doors & windows Plumbing & drainage HVAC Electrical work Infill walls External finishes Landscaping & external drainage

34 Delay in Provision of HVAC Drawings Activity Jan Feb Mar Apr May June July Aug Set Oct Nov Dec Site clearance Excavation for foundations Work up to DPC Columns Beams External walls Roof structure Roof covering Roof plumbing Doors & windows Plumbing & drainage HVAC Electrical work Infill walls External finishes Landscaping & external drainage

35 Latent Conditions During Excavations Activity Jan Feb Mar Apr May June July Aug Set Oct Nov Dec Site clearance Excavation for foundations Work up to DPC Columns Beams External walls Roof structure Roof covering Roof plumbing Doors & windows Plumbing & drainage HVAC Electrical work Infill walls External finishes Landscaping & external drainage

36 Delay in Client Supplied Materials for External Finishes Activity Jan Feb Mar Apr May June July Aug Set Oct Nov Dec Site clearance Excavation for foundations Work up to DPC Columns Beams External walls Roof structure Roof covering Roof plumbing Doors & windows Plumbing & drainage HVAC Electrical work Infill walls External finishes Landscaping & external drainage

37 Extension of time & payment for loss and expense A contractor may be entitled under the provisions of the contract to extension of time, but the grant of an extension of time in respect of such delays does not necessarily entitle him to additional payment for loss and expense.

38 Link between Extension of time & payment for loss and expense The loss lies where it falls Reimbursable extensions Employers fault Non-reimbursable extensions Neutral events

39 Delay in Possession of Site Employers Fault, Reimbursable Extension Activity Jan Feb Mar Apr May June July Aug Set Oct Nov Dec Site clearance Excavation for foundations Work up to DPC Columns Beams External walls Roof structure Roof covering Roof plumbing Doors & windows Plumbing & drainage HVAC Electrical work Infill walls External finishes Landscaping & external drainage

40 Inclement Weather Neutral Event, Non-reimbursable Extension Activity Jan Feb Mar Apr May June July Aug Set Oct Nov Dec Site clearance Excavation for foundations Work up to DPC Columns Beams External walls Roof structure Roof covering Roof plumbing Doors & windows Plumbing & drainage HVAC Electrical work Infill walls External finishes Landscaping & external drainage

41 Latent Conditions Neutral Event, Non-reimbursable Extension Activity Jan Feb Mar Apr May June July Aug Set Oct Nov Dec Site clearance Excavation for foundations Work up to DPC Columns Beams External walls Roof structure Roof covering Roof plumbing Doors & windows Plumbing & drainage HVAC Electrical work Infill walls External finishes Landscaping & external drainage

42 Delay in Client Supplied Materials Employers Fault, Reimbursable Extension Activity Jan Feb Mar Apr May June July Aug Set Oct Nov Dec Site clearance Excavation for foundations Work up to DPC Columns Beams External walls Roof structure Roof covering Roof plumbing Doors & windows Plumbing & drainage HVAC Electrical work Infill walls External finishes Landscaping & external drainage

43 Financial Loss The Contractor will suffer financial cost as a result of delay by Client. This will include: Site overhead cost Head office overhead 43

44 On-site & off-site overheads On site (e.g.) supervision utility Insurance, etc (project based) Off site (e.g.) Office staff salaries rents Office equipment (apply to all projects) 44

45 Prolongation cost On-Site Costs Need to provide proof/assess on-site costs eg, extended preliminaries Total time related items X period of delay Contract Period Note: Contractor must show it has mitigated loss by standing down any s/cs and reallocating employees not needed in delay period 45

46 Cost of Preliminaries Requires examination of each item: Some time related charges Some fixed charges Some with elements of both fixed and time

47 Exercise Differentiate the following preliminaries between Time related and fixed Description Compliance with acts and regulations Temporary access, hoardings, protective barriers, screens, sign boards Scaffolding Time Related Fixed (Beginning) X Fixed (End) X Combined X Protection of exposed excavated surfaces Site office, other site buildings, storage space, labourers accommodation Provision of bulk bins and dumping of debris and waste Water, temporary lighting and power, telephone Protection of existing services, protection of the works Site staff Insurances and fees Performance bond X X X X X X X Safety Traffic control and road safety Plant and machinery Security and watching Testing and test facilities, samples, photographs Inspection of sewers and checking for levels, open up for inspection Housekeeping, cleaning up and reinstatement of works on completion X X X X X X

48 Example Description Cost ($) Insurance 225,000 Bonds & guarantees 35,000 Temporary Hoardings 25,000 Site office & maintenance 80,000 Site signboard 4,000 Site security 144,000 Plant for groundwork 40,000 Supervisory staff 240,000 Cleaning & handover 7,000 TOTAL 800,000

49 Example Description Cost ($) Category Insurance 225,000 Time Bonds & guarantees 35,000 Fixed Temporary Hoardings 25,000 Fixed Site office & maintenance 80,000 Combined Site signboard 4,000 Fixed Site security 144,000 Time Plant for groundwork 40,000 Time Supervisory staff 240,000 Time Cleaning & handover 7,000 Fixed TOTAL 800,000

50 Distribution of Total Preliminaries Total Jan Feb Mar Apr May June July Aug Sep Oct Nov Dec Insurance 225, , Bonds & guarantees 35,000 35,000 Temporary Hoardings 25,000 20,000 5,000 Site office & maintenance 80,000 25,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 Site signboard 4,000 3,000 1,000 Site security 144,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 Plant for groundwork 40,000 20,000 20,000 Supervisory staff 240,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 Cleaning & handover 7,000 10,000

51 Distribution of Time Related Preliminaries Total Jan Feb Mar Apr May June July Aug Sep Oct Nov Dec Insurance 225, , Site office & maintenance 60,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 Site security 144,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 Plant for groundwork 40,000 20,000 20,000 Supervisory staff 240,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 TOTAL 709,000 75,750 75,750 55,750 55,750 55,750 55,750 55,750 55,750 55,750 55,750 55,750 55,750

52 Delay in Possession of Site 20 days delay in possession of site Activity Jan Feb Mar Apr May June July Aug Set Oct Nov Dec Site clearance Excavation for foundations Work up to DPC Columns Beams External walls Roof structure Roof covering Roof plumbing Doors & windows Plumbing & drainage HVAC Electrical work Infill walls External finishes Landscaping & external drainage Total Jan Feb Mar Apr May June July Aug Sep Oct Nov Dec Insurance 225, , Site office & maintenance 60,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 Site security 144,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 Plant for groundwork 40,000 20,000 20,000 Supervisory staff 240,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 TOTAL 709,000 75,750 75,750 55,750 55,750 55,750 55,750 55,750 55,750 55,750 55,750 55,750 55,750 Contractors entitlement = (75750/30)x20 = $ 50,500

53 Delay in Client Supplied Materials 40 days delay in client supplied materials Activity Jan Feb Mar Apr May June July Aug Set Oct Nov Dec Site clearance Excavation for foundations Work up to DPC Columns Beams External walls Roof structure Roof covering Roof plumbing Doors & windows Plumbing & drainage HVAC Electrical work Infill walls External finishes Total Jan Feb Mar Apr May June July Aug Sep Oct Nov Dec Landscaping & external drainage surance 225, , e office & maintenance 60,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 e security 144,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 nt for groundwork 40,000 20,000 20,000 pervisory staff 240,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 TAL 709,000 75,750 75,750 55,750 55,750 55,750 55,750 55,750 55,750 55,750 55,750 55,750 55,750 Entitlement = (55750/30)x40 = $ 74,333

54 Off-Site or Head Office Overheads Formulas, eg. Hudson Formula Head office OH(%) x Contract sum x Period of delay Contract period 54

55 Prolongation Costs Loss of Profit Could claim that delay has prevented earning profit on another job Very difficult to prove: Was there another project to go to What profit %age could have been earned in market Did the delay really prevent the contractor from starting other projects? 55

56 Global Claims Sometimes lots of small events on contract cumulatively cause a delay, but do not individually cause a delay Therefore, cannot quantify exact delay caused by each one of these events So, Contractor ends up putting in a global claim, stating that all these events together caused delay and expense 56

57 Compensation for Concurrent Delays A single cause of delay presence no problem when dealing with prolongation claims. In practice many delays occur at the same time. Some delays will qualify additional payments, whilst others such as adverse weather may qualify only for an extension of time. Culpable delay by the contractor will not normally qualify for additional payment. In assessing the concurrent delay, dominant delay principles could be a deciding factor.

58 Dominant Delay Principle Non-recoverable in critical path, Qualifying recoverable in non-critical, no reimbursement. Recoverable in critical path, non-recoverable is non-critical, reimbursement permitted. Qualifying recoverable delay occur first, followed by nonqualifying delay (both delays on the same parallel critical paths), reimbursement should be permitted. Non-recoverable delay occur first, followed by qualifying recoverable delay (both delays on the same parallel critical paths), reimbursement doubtful.

59 Non-recoverable in critical path, Qualifying recoverable non-critical Activity Jan Feb Mar Apr May June July Aug Set Oct Nov Dec Site clearance Excavation for foundations Work up to DPC Columns Beams External walls Roof structure Roof covering Roof plumbing Doors & windows Plumbing & drainage HVAC Electrical work Infill walls External finishes Landscaping & external drainage Non-recoverable Qualifying recoverable No reimbursement

60 Recoverable in critical path, Nonrecoverable non-critical Activity Jan Feb Mar Apr May June July Aug Set Oct Nov Dec Site clearance Excavation for foundations Work up to DPC Columns Beams External walls Roof structure Roof covering Roof plumbing Doors & windows Plumbing & drainage HVAC Electrical work Infill walls External finishes Landscaping & external drainage Qualifying recoverable Non-recoverable Reimbursement Permitted

61 End of session Questions?