At the beginning of the project a preliminary cost estimates of the

project must be. An estimate (an intelligent quest) noramally take into
account time and additional cost required to overcome delays,
inefficient workforce and other factors outside the management
control.
Time and money is inter-related.

Scheduling - cost

PROJECT COST SCHEDULE

Costa are divided into 2 categories:

1. Fixed costs
Include rentals/hire kos, finance payments, tax etc.
2.

Variable costs
Include costs of labour, SOCSO dan EPF, utilities, TNT, bils
(Telekom, TNB etc), couriers and transport etc.

Direct Costs: labour and materials

Overhead Costs and Rates: Indirect cost, facilities, tax and insurance;
Indirect costs: elauces, purchasing, selling and marketing,
administration, travel, entertainment, training and education etc.
Facilities: hire/rental, building and compound maintanence.
Tax and insurance: National, state and local authority. Workmen
Compensation, all risk, PI etc.

Scheduling - cost

For the purpose of estimating, the above costs are divided into:

The following example use only the direct cost.

Design structural steel

Design Building
Design mechanical equipment
Fabricate and erect structural steel
Construct Phase I building
Design electrical equipment
Fabricate mechanical equipment
Design interior items
Procure interior items
Install E and M equipment
Construct multi purpose building
Procure interior items
Install interior items

Cost
(RM)
40,000.00
420,000.00
120,000.00
220,000.00
420,000.00
80,000.00
90,000.00
40,000.00
40,000.00
200,000.00
450,000.00
40,000.00
240,000.00

2
13
6
10
6
4
9
2
7
6
6
4
10

Project Design & Build Cost/Time

Cost/week
(RM)

Scheduling - cost

Work Activity

Estimated
Time
(Week)

$ 20,000.00
40,000.00
20,000.00
22,000.00
70,000.00
20,000.00
10,000.00
20,000.00
5,714.00
33,333.00
75,000.00
10,000.00
24,000.00

Scheduling - cost
4

Scheduling - cost
5

Design
structural steel

Scheduling - cost

(a)

Key:

Fabricate and erect

structural steel

20 x 2 = 40
22 x 3 = 66

Design

Design

mechanical eq.

electrical eq.

Construct
Phase I building

20
Design Building

120

40 x 5 = 200
40

20 x 5 = 100

Design
electrical
equipment

20

20

Design interior
items

406
0

Procure
electrical
equipment

Fabricate
mechanical
equipment

33.3

Construct
Phase II building

75

Install interior
items

5.7

10

Install electrical
and mechanical
equipment

10

20
Procure
interior items
20

Cost in $(000)

70

Design
mechanical
equipment

80

24

15
Week

20

Bar Chart Cost Schedule

25

30

600
511,427

510,000

2,499,997

474,571

500

Scheduling - cost

RM(000)

2,199,997

406,000

1,901,998

400
1,390,571

297,9999

300

300,000

200
916,000
100
406,000
0

10

15

(a)

PROJECT COST DISTRIBUTION GRAPH

(b)

Project cost profile (S-Curve)

20

25

30

Scheduling - cost

S-Curve D&B Project

$2,500,000.00

$2,000,000.00

Cost (RM)

$1,500,000.00

Cost
$1,000,000.00

$500,000.00

$0.00
1

10 11

12

13 14 15 16 17 18

19 20 21 22 23

24 25

Time

Scheduling - cost
9

Design mechanical
equipment

20 x 2 = 40

Fabricate and erect

structural steel

Design
structural steel

3EN,20SP

Duration

22 x 3 = 66

20

22

(daily)

Construct
Phase I building

Design Building

40 x 5 = 200
20 x 1 = 20

Design
electrical
equipment

20 x 4 = 80

20

20

20 x 4 = 80

EN Engineer
DE Designer

70

40
Design
mechanical
equipment

Personnel allocation

Scheduling - cost

Key:

Install electrical
and mechanical
equipment

Procure
electrical
equipment

AR Architect
SP Skilled Personnel

Construct
Phase II building

5.714
Fabricate
mechanical
equipment
20

Design interior
items

Procure
interior items

Install interior
items

40

506
0

10

15

20

25

30

Week

Bar Chart Cost Schedule Late Start

10

Scheduling - cost

600

506,000

500

402,571
415,427

400

396,000
369,999
300

200
100,000
100

REVISED PROJECT COST DISTRIBUTION GRAPH

11

Design
structural steel

Scheduling - cost

(a)

Key:

Fabricate and erect

structural steel

22 x 2 = 44
20

Construct
Phase I building

Design Building

40 x3 = 120

Design

Design

Mechanical eq.

electrical eq.

120

80
Cost in $(000)

70 x 2 = 140

Design
mechanical
equipment

Design
electrical
equipment

Procure
electrical
equipment

70

Install electrical
and mechanical
equipment

Construct
Phase II building

5.7 x 5 = 28.5
20

10 x 5 = 50

20

Design interior
items

20

402,571

5.7

33.3

10
Procure
interior items

10 x 2 = 20
0

Fabricate
mechanical
equipment

Install interior
items
24

10

10

75

15
Week

20

Revised Bar Chart Cost Schedule

25

30

12

This step is to reduce the time required for completing a projects

with the fewest added cost.

Scheduling - cost

COST MINIMIZING

Requires estimation of the following two factors for each activity:

1. Normal cost required for accomplishing the work on a normal
time basis.
2. Additional cost required for accomplishing work on an
expedited basis.
Procedure :
cut and try
Step 1 Tabulate time and cost for each normal activity
Step 2 Tabulate crash time and crash cost for each activity.
Added cost is calculated using the following formula:
Added unit cost/unit time

crash cost normal cost

-------------------------------normal time crash time
13

Scheduling - cost

$(000)
160

Crash

150

Cost:
Time:

140

$140,000
four weeks

130

Normal
Cost:
Time:

120

$120,000
six weeks

110

100
1

Time (weeks)

Time/Cost Curve for Accelerating Design Mechanical Equipment

Activity
14

For the D&B project, cost minimisating is carried out as

folllows:

Scheduling - cost

Step 3 Analyse the network and cost with time reduction with 3-5
kali iteration.

1. Prepare normal and crashed cost schedule (Fig. 1)

2. Since crashing also affects the indirect cost, the indirect cost
must be estimated. For this project, say, the indirect cost
estimated is RM580,000 for the original time duration of 29
weeks. At the end of the project, the contractor saves say
RM20,000 per week.
3. Begin crashing the critical activity which has the lowest
additional unit cost first so and so forth.
4. Crash the total duartion by reducing 2 weeks for each
iteration: fisrt 27 weeks, 2nd 25 weeks, 3rd: 23 weeks and
so forth ...
5. The Ist iteration (27 weeks), the best activity to crash is
Design Mechanical Equipment with an additional cost of
RM10,000/weeks totaling RM20,000 for 2 weeks.
15

1-2
1-3
1-4*
2-3
3-7
4-5*
4-6
4-8
5-6*
6-7*
7-11
8-9
9-10

Work Activity (Details)

Design structural steel
Design Building
Design mechanical equipment
Fabricate and erect structural steel
Construct Phase I building
Design electrical equipment
Fabricate mechanical equipment
Design interior items
Procure interior items
Install E and M equipment
*Construct multi purpose building
Procure interior items
Install interior items
Overall Total Cost

2
13
6
10
6
4
9
3
7
6
6
4
10

40,000.00
420,000.00
120,000.00
220,000.00
420,000.00
80,000.00
90,000.00
40,000.00
40,000.00
200,000.00
450,000.00
40,000.00
240,000.00

Crash
Est. Time
(Week)
2
9
4
7
5
3
6
1
5
4
4
3
6

Cost

Unit Cost
(per week)

40,000.00
540,000.00
140,000.00
265,000.00
440,000.00
95,000.00
114,000.00
55,000.00
60,000.00
250,000.00
500,000.00
50,000.00
320,000.00

0.00
30,000.00
10,000.00
15,000.00
20,000.00
15,000.00
8,000.00
15,000.00
10,000.00
25,000.00
25,000.00
10,000.00
20,000.00

Scheduling - cost

i-j

Normal
Est. Time
(Week)
Cost

2,400,000.00

* Critical Activity

Figure 1 Project D&B: Normal/Crash Cost Data

16

Structural

2
2

Building

Mechanical

Electrical

Architectural

Scheduling - cost

Design
structural steel

Fabricate and erect

structural steel
10
7

Design Building
13
9

Design
mechanical
equipment
6
4

Fabricate
mechanical
equipment

9
6
Design
electrical
equipment
4
3
Design interior
items
2
1

Construct
Phase I building
6
5

Construct multi
purpose building
6
4

11

Install electrical
and mechanical
equipment
6
4

Procure
electrical
equipment

7
5
8

Procure interior items

4
3

Install interior
items
10
6

10

17

Reanalyse the network

7.

Construct the cost schedule and compute the total project cost.

Continue with 2nd iteration (25 weeks) crash the activity design electrical
equipment by 1 week (additional cost RM 15,000) and for this we also need to
crash activity fabricate mech. equipment by 1 week (add. cost RM 8,000). For
the 2nd week its better to speed up the simultenous activity i.e. construcct phase
1 and activity instal M&E equipment. This result in a toatal additional cost of
RM 73,000.

Scheduling - cost

6.

Then, continue with 3rd iteration by crashing another 2 weeksso that the total time
becomes 23 weeks. Refering to the network diagram it can be seen that 5
activities have to be crashed by 1 week each. These activities are:
1. Fabricate

and erect structural steel

RM 15,000 (add. cost)

2. Const, phase1 RM 20,000.

3. Design building RM 30,000
4. install M&E RM 25,000
5. Const. multi purpose RM 25,000

Resulting in a total add. cost of RM 110,000.

18

29
27

Normal
Cost

Work Activity
No. Node/Details

Reduced Time
(Weeks)

Crash Costs

Normal and
Crash Costs

$2,400,000

25

23

1-4 Design mechanical equipment

4-5 Design electrical equipment

4-6 Fabricate mechanical equipment

1
1

7-11 Construct Phase II building

6-7 Install electrical and mechanical
equipment
2-3 Fabricate and erect
structural steel
3-7 Construct multi-purpose building
1-3 Design Building
6-7 Install electrical and mechanical
equipment
7-11 Construct Phase II building

$15,000
8,000
23,000
25,000

1
1

25,000
15,000

1
1

20,000
30,000
25,000

$20,000

$2,420,000

73,000

2,493,000

110,000

2,603,000

Scheduling - cost

(a)
Activity
Time
(Week)

25,000
1

(b)
Project Pathway
1 4 5 6 7 11
1 2 3 7 11
1 3 7 11
1 4 8 9 10

(a)

Estimated Time
29 27 25 23
29 27 25 23
24 24 24 23
25 25 25 21
22 22
22
Crash
Cost22Calculation

(b) Project Pathway

19

Scheduling - cost
20

Scheduling - cost

From the above calculation, the minimum project cost is RM

2,860,000 with the optimal project duration of 27 weeks.
This calculation is carried out during the early stages of the
project for decision-making purposes.

21