Early in my career, I was taught the project schedule was to be cost loaded and used for invoicing, as well as tracking the project’s progress. (This is strictly concerned with the invoice between the GC and the owner. Not the contractor’s internal actual cost, earned value, and GC vs subcontract cost…)
Over the years, mentors have suggested costs for invoicing be added to the project baseline schedule and then exported to a separate spreadsheet for update invoicing purposes. (This would be accomplished by applying the update Physical % Complete to the baseline budget cost value…..) Simple construction scheduling and management.
I was taught to run the cost this period, previous total cost and actual total cost to-date from the schedule program. This is a commonly used and straightforward method of creating the “Application for Payment” or invoice for each update period. (In my perfect world, this update is updated progress only. No resequencing for OOS correction work or recovery of lost time has been completed. That is done next and is the basis for any EVM metrics we want to look at). I prefer a two-step update process for construction scheduling and update management.
As I understand it, the argument for disassociating cost from the schedule update is this.
It is tempting for the contractor to look at the cost this period and cost to-date and feel pressured to adjust the percent complete to line up with their actual costs, not the physical percent complete. Valid concern, we don’t want to invoice less than we are payout out for work. It is also tempting for the owner or owner’s rep to look at the remaining cost and feel pressured to adjust the percent complete to allow what they think the remaining cost to complete should be. Valid concern, we want enough cost remaining to finish the work.
The general idea is that by keeping the costs separate from the activity percent complete update, we would get a more accurate progress to date. Since we know that best practice is to adjust the remaining duration based on the plan to complete the remaining work, we will be over or under our planned production rate. (EVM enters here, but that’s another story.) Taking the more accurate percent complete and applying it to the budgeted cost from the baseline schedule on the separate spreadsheet sheet would provide the values we need for the invoice.
Simple construction scheduling and update management.
This is based on the people doing the actual update of progress not having access to the budgeted cost or any other cost information. They only look at physical percent complete and planned remaining duration.
I find this idea interesting and I’m curious what other contractors and schedulers are doing and think of this concept. It’s not new, but I have not seen much discussion about it.
I’d love to hear what you think!
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Paul Epperson CCM, PMP, PSP, PMI-SP