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Costs against the client, general contractor costs, subcontractor costs, actual costs RRS feed

  • Question

  • Hello everyone!

    Lately I have been focusing on cost tracking and trying to find a correct way to set up a construction project for a general contractor. There are 4 types of costs:

    A. Costs that are defined in the contract with the client. These are the largest costs;

    B. General contractor budget costs. These are "A" costs reduced by some percentage in order to earn money for the company. The budget costs are given by the companies CEO;

    C. Subcontractor costs or subcontractor budget costs. These are "B" costs reduced by some amount and stated in the contract with the subcontractor. In worst case scenarios they might be larger than "A" costs in case of estimator's mistake or unpredictable price increase; 

    D. Actual costs. These are the actual costs that appear during the project. Normally they should be equal with the "C" costs, but some times when there is undiscovered amount of work to do, they can get higher;

    Question: What would be the best way to set up project properly, so it was possible to track all these costs and generate cash flow report pivot tables in Excel? How should a general contractor in a construction field organize project costs in MSP? I would also greatly appreciate anyone who works in general contractor company in construction field to share ones experience.

     

    EDIT:

    After every month a subcontractor submits a % of every task it has done to general contractor. Basing on this document general contractor pays for the tasks and so forth until all the contract tasks are done and all the contract money is paid.

    After every month a general contractor submits a % of every task it has done (basically it is the same % which is submitted by the subcontractor) to the client and client pays the same way as general contractor paid for subcontractor.

    To monitor this in MSP I would have to have 1 extra field in task usage table for "Actual A costs", because the built in "Actual costs" would be used for "Actual C costs". Unfortunately I did not find a way to add one extra field.

     

    Kind regards,

    Raivis


    • Edited by R-aivis Saturday, October 22, 2011 5:11 PM To provide more precise and more detailed information
    Saturday, October 22, 2011 4:46 PM

Answers

  • I agree with Julie, and don't see how two MSP files would help.

     

    ...that being said, you could always repurpose one of the spare Baseline fields to manage Subcontractor work.  For instance, allocate Baseline10 to the sub, and them manually edit the numbers as you see fit.  Maybe set the cost for the sub, save to Baseline 10, and then change the cost back to the GC cost....or some combination of that.


    Andrew Lavinsky [MVP] Blog: http://azlav.umtblog.com Twitter: @alavinsky
    • Marked as answer by R-aivis Tuesday, October 25, 2011 6:53 PM
    Saturday, October 22, 2011 9:08 PM
    Moderator
  • Raivis,

    First, I want to highlight Julie's key point in her response: "It is not, however, a cost accounting tool."  Some users think that this is what Project does and to a certain extent it will, but not to the extent you require.

    Second, after 30+ years working in the construction field and using MS Project for most of that time, I can tell you that several factors will dictate how much detail you need to apply within the tool.  This will include how much project scheduling time you have built into the budget, what type of cost information you have available, how accurate this info is, and probably most important - what you do with the outcome.

    Third, with the ability to export information from MS Project into other software such as Excel, you should be able to extract the information from the project file easily without doing it twice (developing a spreadsheet from scratch.)

    Fourth, there is a "Budget" (cost, work) field in MS Project but these are Project level fields, usually used for comparison and roll-up calcs.  When I've had subcontractor costs in the past, my litmus test has been, "Will I be tracking the actual work hours of the contractor?"  If no, then I have added these costs in the Fixed Cost field of the task or tasks those costs are associated with (always making sure to add notes on the task with fixed costs and what makes up that figure.)  If the answer is yes, then I have asked for a project schedule from the subs with costs included.  This "sub-project" was simply added to my master schedule.

    Fifth, actual costs are fairly easy to enter into Project and compare to the baseline.  If you have additional work to do, the normal procedure is to add that work to the schedule, update the baseline, then track its progress.

    Finally, unless there is a business process in place (which it sounds as if there may be one) I am not certain why your "A" costs are not included in your project.  Perhaps, there are costs that are not associated with the project (general management, overhead and profit)?

    Regards,


    Gregg D. Richie, PMP, MCTS; Author, Microsoft Project 2010, Microsoft Official Academic Course Series
    • Marked as answer by R-aivis Tuesday, October 25, 2011 6:53 PM
    Saturday, October 22, 2011 9:41 PM
  • Hello Raivis,

    I'm afraid you are destined to be disappointed in Project in attempting to do all of this.  Project is a very good project scheduling product with capabilities to review timelines, variance against timelines, resource demand and supply as well as some cost data.  It is not, however, a cost accounting tool.

    I personally suggest you use a tool like Excel in conjunction with MS Project to develop your cost models.  Pick ONE cost to track in Project (I suggest going with the subcontractor and % complete information).

    Then use that data to drive the variances against your contract cost with the client, the "A" costs.

    You can add additional cost fields (Cost1-Cost10) however, as you have discovered, they do not calculate in the time-scaled (Task Usage) view.  You can create custom formulas to subtract Cost1 from Cost2 -- but not on a time-scaled (weekly, monthly) basis.

    I hope this helps.

    Julie

    • Marked as answer by R-aivis Tuesday, October 25, 2011 6:53 PM
    Saturday, October 22, 2011 8:29 PM
    Moderator

All replies

  • Hello Raivis,

    I'm afraid you are destined to be disappointed in Project in attempting to do all of this.  Project is a very good project scheduling product with capabilities to review timelines, variance against timelines, resource demand and supply as well as some cost data.  It is not, however, a cost accounting tool.

    I personally suggest you use a tool like Excel in conjunction with MS Project to develop your cost models.  Pick ONE cost to track in Project (I suggest going with the subcontractor and % complete information).

    Then use that data to drive the variances against your contract cost with the client, the "A" costs.

    You can add additional cost fields (Cost1-Cost10) however, as you have discovered, they do not calculate in the time-scaled (Task Usage) view.  You can create custom formulas to subtract Cost1 from Cost2 -- but not on a time-scaled (weekly, monthly) basis.

    I hope this helps.

    Julie

    • Marked as answer by R-aivis Tuesday, October 25, 2011 6:53 PM
    Saturday, October 22, 2011 8:29 PM
    Moderator
  • Hi,

    Thank you for an answer. Maybe in this case the solution might be to create two MSP files, one for client and second one for subcontractor. 

    Saturday, October 22, 2011 8:33 PM
  • I agree with Julie, and don't see how two MSP files would help.

     

    ...that being said, you could always repurpose one of the spare Baseline fields to manage Subcontractor work.  For instance, allocate Baseline10 to the sub, and them manually edit the numbers as you see fit.  Maybe set the cost for the sub, save to Baseline 10, and then change the cost back to the GC cost....or some combination of that.


    Andrew Lavinsky [MVP] Blog: http://azlav.umtblog.com Twitter: @alavinsky
    • Marked as answer by R-aivis Tuesday, October 25, 2011 6:53 PM
    Saturday, October 22, 2011 9:08 PM
    Moderator
  • You're welcome.  Like Andrew, I don't believe two files would help at all.  You cannot compare one project file's costs to another.  It certainly would make sense if you had to turn over a project file to the client -- but I would simply have a copy where I set all resources costs to zero and then shipped to the client.  Simply make that change to your working copy as needed and send it along.

    Julie

    Saturday, October 22, 2011 9:16 PM
    Moderator
  • Raivis,

    First, I want to highlight Julie's key point in her response: "It is not, however, a cost accounting tool."  Some users think that this is what Project does and to a certain extent it will, but not to the extent you require.

    Second, after 30+ years working in the construction field and using MS Project for most of that time, I can tell you that several factors will dictate how much detail you need to apply within the tool.  This will include how much project scheduling time you have built into the budget, what type of cost information you have available, how accurate this info is, and probably most important - what you do with the outcome.

    Third, with the ability to export information from MS Project into other software such as Excel, you should be able to extract the information from the project file easily without doing it twice (developing a spreadsheet from scratch.)

    Fourth, there is a "Budget" (cost, work) field in MS Project but these are Project level fields, usually used for comparison and roll-up calcs.  When I've had subcontractor costs in the past, my litmus test has been, "Will I be tracking the actual work hours of the contractor?"  If no, then I have added these costs in the Fixed Cost field of the task or tasks those costs are associated with (always making sure to add notes on the task with fixed costs and what makes up that figure.)  If the answer is yes, then I have asked for a project schedule from the subs with costs included.  This "sub-project" was simply added to my master schedule.

    Fifth, actual costs are fairly easy to enter into Project and compare to the baseline.  If you have additional work to do, the normal procedure is to add that work to the schedule, update the baseline, then track its progress.

    Finally, unless there is a business process in place (which it sounds as if there may be one) I am not certain why your "A" costs are not included in your project.  Perhaps, there are costs that are not associated with the project (general management, overhead and profit)?

    Regards,


    Gregg D. Richie, PMP, MCTS; Author, Microsoft Project 2010, Microsoft Official Academic Course Series
    • Marked as answer by R-aivis Tuesday, October 25, 2011 6:53 PM
    Saturday, October 22, 2011 9:41 PM
  • Dear colleaques!

    Thank you for all the answers! The information here has given me some fresh ideas how I could manage my problems!

     

    Kind regards,

    Raivis

    Tuesday, October 25, 2011 6:55 PM