Cost Control

Hi Stuart,



I believe the project management penalties counts for all, and in retrospect I think it is 15% for late reporting,and could be increased in the event of false reoprting. It is something I am trying to follow up, but it might be that youcan change it project specific, depending on criticality, which is a great idea.

Andrew, I totally agree with your point of view.



By this way the project can be completed expeditiously without disputes

Stuart,



Maybe that should be extended to all parties - Client, Main Contractor and Sub Contractors.



If all parties performed in supplying information to one another alot of projects would benefit greatly.

Hi Stuart,



This is interesting, in terms of the NEC you can deduct 10% of the contractors certificate of payment if he does not provide you with the right information, planning wise. The reason for this is that project management fees are paid, and as such cand be deducted, for instance if a monthly report is not on time, the percentage increases. It is a carrot, to get the correct results.

Bill,

I have recently seen a couple of Subcontracts in the Middle East which penalise the Subcontractor at the rate of $100/day for every day that he fails to provide a deliverable, such as Progress Report, Baseline and updated schedules, drawings for approval/review, QA plans etc...

$100 a day doesn’t sound a lot, but if the Subcontractor is late with his deliverables on a number of fronts, it soon adds up!!



Cheers,



Stuart



www.rosmartin.com

Hi Andrew,

I am having a fight about democracy, and at the same time the NEC, make up your mind where you stand and understand where you are going

Hi Andrew,



It is your job to enforce the NEC, as it is the contract. I had a contractor this morning who disagreed, and said it was out of his scope, which I disproved in a matter of seconds, and they accepted the SI. As a planner you have to accept some responsibility, and be pro-active and sort the shit out.

Philip,



I totally agree and support the NEC in trying to make people pro-active. Even that though, when it’s written down for all to see in the contract, doesn’t always have the desired effect.



In the majority I would say most people don’t go on a contract these days (as in the past) looking for claims but for a thousand and one reasons they keep cropping up.

Hi Andrew,



Dependant on the contract, you may deduct a percentage of the payment for things such as late documentation, reporting et al, this is quite clear in NEC contracts, and the purpose is to avoid disputes and claims, therefore you have early warnings, and compensation events, and as such the NEC clears the way to proper project management, and also forces people, whether the client/PM/in between PM/Contractors to become pro-active and get the job done with the minimum involvement of legal eagles, thus making pro-activeness the responsibility of all parties.



The question is simple, are we there to get the job done, or to do claims? If you resolve the issues as you go along, then they are resolved ie no claims will arise, and there will be no work for the "clever legal eagle planners".

Bill,



Got to admit I haven’t seen a contract where a financial penalty is levied for daily sheets but have worked on some where other pieces of paperwork not being delivered attract some form of non payment. A very large (apparently the biggest) American Contractor springs to mind who builds alot of power stations.

Philip,



It can be the lack of records that sinks a claim - no records, no proof, no claim.

Phillip,



Such a nice refined and excellent reply keep it going like this plsssss...



sunil

Hi Andrew/Bill,



The purpose of daily Diries/reports, is very clear. They are there to protect the contractor and if they are signed and agreed on a daily basis are probably the most effective tool in any dispute. Disputes normally arise when the correct paperwork is not in place, and this result in claims. This is meat for the so-called claims experts who then use the lack of evidence or agreement as theit basis for claims. The NEC is quite clear on these issues, and early warnings and compensation events are a matter of course, and unfortunately robs the thieves (The so-called claims experts).

As for Cost control, it falls within the ambit of planning, whether you have a cost engineer on site or not. Any planner with a minimal amount of experience should be able to handle this. Obviously depends on the size of the project, but as I understood the initial thread, the project was to small to afford both a planner and cost engineer.

Bill,



Often something of a financial nature will induce the contractor to submit them regularly!

Hi Sunil



It does work provided Time keepers, Foremen, Site Engineers understand and properly utilize coding structure for assigning respective codes and above all Project Manager support you.



But first thing first, a proper and developed Coding Structure in the Company which integrates Estimation Deptt, Commercial/Control Deptt and Finacial Deptt.



But in the region where you are working its hard to implement because most of the "muhandis" do not understand the need of Cost Control.



Cheers

How Accurate and consistent has the cost reporting been by a Planner with relation to Labour. which is quite difficult to track on a daily basis.

Does it work ???



Sunil

Hi Ett AACEI Membership is not for free.



Cheers

Ernie,



A good way to learn more about project cost control is to become a member of AACE International. Membership is free and you can take courses on line to become a cost engineer. They also recommend books on cost engineering.



Check out their webiste at: www.aacei.org

Good day Mohammed



I tend to disagree with you.



Cost Engineer is much bigger than cost reporting.



a Cost Engineer should be able to do the following

1) Estimating (Incl Monte Carlo etc)

2) Define the Budget

3) Value Engineering

4) Risk

5) Set up the Budgets

6) Monitor Budget vs Commitement vs AFC

7) Escalation

8) ROI / IRR

9) System

10) Foreign exchange



The above is just a part what cost engineering is about



So it is more than Seting up Budgets & Monitor





Cheers

HI,



I HAVE SOME EXPERIENCE ABOUT COST CONTROL AS I HAVE WORKED SPECIFICALLY AS A COST CONTROL ENGINEER IN PAST.



COST CONTROL CAN BE DONE ONLY WHEN YOU HAVE A BUDGET. OTHERWISE IT IS COST REPORTING.



BUDGET IS MODIFIED FORM OF THE ESTIMATE.



YOU HAVE TO GET THE PROPER ESTIMATE DATA FIRST FROM THE ESTIMATOR.



I HAVE USED CCS SOFTWARE WWW.CCSSA.COM TO SETUP COST MANAGEMENT SYSTEM



YOU CAN GET TIPS IN PMBOK AND THE ARTICLES PUBLISHED BY AACE WWW.AACEI.ORG





CHEERS



MUNEER

Hi,



I agree with Jaco & Daya that a cost engineer is neccessary to carryout the requirement, what if the companies are not in a position to allocate a full time cost engineer to do such requirement, does this responcibiliy to be taken up by the planner or QS, this curious question is floated to answer my management as they beileve it is the job of the Planner.



Any realtime experinece in this regard is solicited.



Cheers!!!!!



Waseem

I addition to that ensure that every supervisor has somebody to record and fill in the costing paperwork, as well as a data capturer for the cost control clerk. This will definitely help to control the costs.

In addition with Cost Engineer, a Cost clerk must be available at site to park actual quantity, plant/labour working hours etc into right cost code..........

The Correct method is to employ a cost engineer.