#12 Project Schedule Cash flow predictions

Cost estimates for labor, materials and equipment without an overhead and profit component represent direct costs for on site construction activity.



Overhead cost estimates represent off-site indirect costs including home office management of the project, cost line of credit or borrowing, insurance, training, safety programs...



The ratio of construction activity direct costs between labor, materials and equipment will vary by type of activity, using NCCE we can view cost ratios;



-site grading can be accomplished with large equipment and a relatively few workers per piece of equipment and minimal material costs



-asphalt paving requires a large cash outlay for materials, use of large pieces of equipment and a relatively large number of workers per piece of equipment, but the material cost dominates



-layout work is skilled labor intensive with no accounting for equipment costs, it is possible to provide cost for stakes and reference points but they represent a relatively minimal cost for the task



For the purposes of creating cash flow predictions we will group labor, equipment and material into a single cost value.



The payment voucher reports this value plus overhead and profit as "completed and stored to date". The payment received by the GC from the owner is this value less retainage less received to date.



Assuming the project delivery each voucher period is a perfect match to the project schedule, in reality some tasks will have problems that produce delays and some items may have been scheduled with excess pessimism.

Assuming cash outflow cost are experienced simultaneous with task activity.

Cash outflow from the GC for "direct costs" on-site cost items may be due at differing times;

Labor;

-payroll each week

Materials;

-pay when ordered

-pay before delivery

-pay when received

-30 day payment

Components;

-pay in advance for shop drawings

-pay deposit for fabrication

-pay before delivery scheduled

-30 day payment

Equipment;

-portion of lease and maintenance cost applied to task

-rental payment in advance

-portion of equipment loan and maintenance applied to task

As we noted from a previous assignment comparing labor, materials and equipment costs with duration of project a single material group "asphalt" may have a disproportionate impact on cash outlay.

The objective of the scheduling exercise is to provide the GC's team with information on optimal resource allocation. The MS Project software provides for the opportunity to test differing scenarios.

The object of the cost estimating and schedule of values exercises in conjunction with scheduling provide the GC's team with information on allocation of cash resources and advance information on borrowing or line of credit needs.

Final assignment due Sunday August 9 not later than midnight;

Introduce a change order for wood light poles assume approved for voucher period #2
Revise schedule of values, MS Project Schedule and multi line graph.

For the purpose of the exercise delete the entire metal pole assembly and replace with the wood pole assembly.

Discuss how this change impacts the GC and the Owner.