Benefits and Trade-Offs of Cost Loading a Primavera P6 Schedule from a Fixed-Bid Contract

okay so let's talk about the benefits of cost learning in the schedule I'm going to talk about them from both perspectives the perspective of the owner and the perspective of the contractor let's start with the owner the owners often the one that requests a cost loaded schedule they want to see earned value they want to scrutinize and understand how their money is being spent they want to make sure it's being spent fiscally responsible they want to forecast their cash flow in the payments to the contractor the contractor typically because I've been of work with quite a few contractors over the years typically this is not an endeavor we want to engage in we're reluctant to cost load our schedules but if we do we can also track our in value we can also better plan our cost outlays okay we have expenses that we're not showing to the owner and if we know basically how our money's coming in through a console that's scheduled we can better plan our expenses as well we can forecast our cash flow our income coming in and basically better manage our cash flow based on project performance and that last one is really the key here it's about when work starts getting delayed or there's changes that cash flow is gonna change from the initial baseline that was approved as the baseline and that's what we want that's the real advantage here is being able to forecast as the changes to the project occur what my cash flow is going to be remember we're talking about a fixed bid so all of my costs are fixed and they don't vary with duration of the project so if I'm late then I'm still getting paid the same amount as whether I'm not late or I'm on time okay there's some trade-offs I want you to be aware I've thought about these quite hard there's pros and cons to and mainly this is from the contractors person you know it's it's mostly prose from the owners perspective to have a cost loaded schedule but from the contractor there's some pros and cons so pros we do get a time phase budget I put accurate star there because it's only as accurate as as you you can make it by your inputs okay accurate forecasting along with the schedule accurate cash flows and then just more or less like I said the ability to be proactive in managing our costs because we have them all they're changing as the schedule changes let's talk about the other side the cons why are we reluctant to do this well there's a couple of reasons it takes work it takes effort to cost a little schedule my experience that we're going to talk about today is consul Dean you know very sighs a very reasonably sized project two thousand lines I didn't make it any more than two thousand lines because the bigger they get the harder they are to manage from all aspects so it does take effort to put costs in to manage those costs it takes effort to maintain it takes effort for changes to look at a change request and change a schedule from from not just a not just the time aspect but also from the cost aspect now also some stuff doesn't work in p6 you can't put all of your costs in there okay just like p6 is not a timesheets tool don't put all of your hours in there and try to track every down to every minute it's not sophisticated enough my example here and I'll talk about this more later is interest you can put interest charges in p6 it just doesn't do it it's not accountant it's not an accounting tool it's not an invoicing tool either but you can put your big general costs in there okay one of the other cons here is sharing the schedule that has costs on it require some extra transparency and most contractors like to keep things pretty close to their chest and they have good reason to I'm not judging them but this definitely went once you put your costs in there means working at a different level of transparency and comfort talking about costs and having people scrutinize all of that stuff okay I'm gonna tell you how I cost loaded a schedule and this and this is based on a very recent experience as a scheduler working for a contractor [Music]

Channel: Plan Academy Inc.

Views: 589

Rating: 5 out of 5

Keywords: cost-loading, primavera p6, P6 Schedule, Cost load p6 schedule, how to cost-load a schedule, how to cost load, Plan Academy, Project Controls, Michael Lepage, P6 help, online training, p6 training

Id: TiQVn19ft1M

Length: 5min 11sec (311 seconds)

Published: Tue Jun 09 2020