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Level 1 H Cost Control
Level 1 H Cost Control
The project budget continuously evolves until project completion. The project budget reflects
the actual scope at the site and the actual quantities from construction issued drawings and a
standard productivity rate. The project budget will always include change orders and extra work
orders in terms of changed quantities and costs. These terms are important because the
productivity and labor cost reports should reflect the project budget. Therefore, the project
budget should reflect the actual quantities placed and a standard unit rate for each work activity.
This is considered the project budget. The project budget should be compared to the estimate but
this comparison should only be made in the Project Cost Summary Report. This report compares
the actual and projected quantities, workhours and costs for the project to the estimated costs.
This reports the current status and the latest forecast of profit or loss by cost codes.
The budgeted quantities should reflect the actual project being built, therefore, these quantities
should be calculated by someone in the office capable of determining the quantities for each
work item from the construction issued drawings. These budgeted quantity takeoffs should be
tabulated in enough detail for each work item that the field can easily identify the quantity. The
quantity tabulation form should identify the take off by drawing numbers, revision numbers, area
numbers, equipment item numbers, system numbers and elevation. These quantity tabulation
sheets are sent to the field and they are used to show work completed.
There are three basic Cost Control Reports. They are the Earned Workhour Report, the Labor
Cost Report and the Project Cost Summary Report. The purpose of the reports is to compare
actual expenditures to the budgeted costs by the cost code established by the company and
organized into a Work Breakdown Structure.
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The Earned Workhour Report is used to compare the actual workhours expended to the budgeted
workhours and project the final workhours for each activity. The following discussion describes
each column of the Earned Workhour Report and the procedure used to arrive at the answer.
2. Activity Description. The cost code and description are from the contractor’s master code
of accounts and all projects within the construction firm are assigned the same cost code
with its respective activity description. The Activity Description in the example is Wall
Forms 12".
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QUANTITIES
3. Budgeted quantities are calculated from the plans and they reflect the actual quantities
that must be placed. The Budgeted Quantity is found in the Estimate Ledger and it is
4. Weekly quantities are the accumulated quantities that have been placed during the week.
The Weekly Quantity is found in the Inplace Quantity Report and for the example it is
5. To Date quantities are an accumulation of all previous weekly quantities. The Current
Weekly Quantities are added to the To Date Quantity to arrive at the current To Date
quantity placed. The To Date Quantity is found in the Inplace Quantity Report and for the
example it is
6. Unit is the unit of measure used for that cost code. The Unit of measure in the example is
SFCA which is an abbreviation for Square Feet of Contact Area..
8. To Date Workhours isare an accumulation of all previous weekly workhours. The Current
Weekly Workhours are added to the To Date Workhours to arrive at the current To Date
Workhours expended. The To Date Workhours is
The current week of 9 workhours plus the previous workhours from the Detail
Cost Ledger which is 15 workhours = 24 whr To Date.
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EARNED WORKHOURS
9. Earned Workhours in this column are the total workhours earned to date using the
budgeted workhour unit rate and the quantities placed To Date. The earned workhours
are calculated by multiplying the To Date Quantities times the Budgeted Workhour/Unit.
The Earned Workhours in the example are earned at the Budgeted unit Rate which is 192
Whr/1120 SF = .171 Whr/SF. Therefore, the total workhours earned is calculated as
10. Budgeted Workhours are the total workhours estimated to perform this activity. The
Budgeted Workhours are found in the Estimate Ledger and is 192 Whr.
UNIT WORKHOURS
11. Budgeted Unit Workhour Rate is expressed in Whr per unit (Whr/Uint). The budgeted
standard rate is established company wide for each activity. The budgeted unit rate is
calculated by taking the total Budgeted Workhours and dividing by the Budgeted
Quantities. The Budgeted Workhours per unit rate in the example is
12. Weekly Unit Workhour Rate is expressed in Whr per unit (Whr/Uint). The weekly unit
rate is calculated by taking the Weekly Expended Workhours and dividing by the Weekly
Quantities placed. The Weekly Workhour per unit rate in the example is:
13. To Date Unit Workhour Rate expressed in Whr per unit (Whr/Uint). The To date unit rate
is calculated by taking the To Date Expended Workhours and dividing by the To Date Quantities
placed. The To Date Workhour per unit rate in the example is
PERCENTAGE these percentages are used to compare the total Earned to the Budgeted..
14. Earned Percentage is calculated by taking the total Earned Workhours and dividing by
the total Budgeted Workhours. The Earned Percentage in the example is 21 Whr /192
Whr = 10.9%
15. Expended Percentage is calculated by taking the total Expended Workhours and dividing
by the total Budgeted Workhours. The Expended Percentage in the example is 24 whr To
Date expended/192 Whr Budgeted = 12.5%.
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PROJECTED WORKHOURS
16. Projected at Completion Workhours is a forecast of the total Workhours to be spent when
the estimated quantity is 100% complete. Using the Straight Line projection method, the
projected workhours at completion is calculated by multiplying the to Date Workhour
Unit Rate times the Total Budgeted Quantities. The Workhours Projected at Completion
in the example is:
1120 SF x .19 Whr/SFCA = 213 Whr. (Three decimals .194 Whr/SF = 217 Whr.)
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035300 W all Forms 1120 60 124 SF 9 24 21 192 .17 .15 .19 10.9 12.5 213 (21)
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Previous To D ate
Cost Code Description Unit M T W T F W eek Total
Total
Total
Cp /3 3 8.00 24.00
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Cost Code D escription Q uantity U nit W orkhours Labor Cost M aterial Cost Equipm ent Subcontract Total
035300 W all Forms 12" 1120 Sf 192 W hr 3595.00 904.00 300.00 207.00 5006.00
Cost Code D ate D escription Ref Q uantity W orkhours Labor Cost M aterial Cost Equipm ent Subs Cost Total Cost
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3. Budgeted quantities are calculated from the plans and they reflect the actual quantities
that must be placed. The Budgeted Quantity is found in the Estimate Ledger and for the
example it is 1120 Square Feet of Contact Area..
4. Weekly quantities are the accumulated quantities that have been placed during the week.
The Weekly Quantity is found in the Inplace Quantity Report and for the example it is 60
Square Feet of Contact Area..
5. To Date quantities are an accumulation of all previous weekly quantities. The Current
Weekly Quantities are added to the To Date Quantity to arrive at the current To Date
quantity placed. The To Date Quantity is found in the Inplace Quantity Report and for the
example it is 60 for Week + 64 (Previous Weeks) = 124 Square Feet of Contact Area..
6. Unit is the unit of measure used for that cost code which is SFCA.
8. To Date Expended Labor Costs are an accumulation of all previous weekly labor costs.
The Current Weekly Labor Costs from the Weekly Labor Distribution are added to the To
Date Labor Costs from the Detail Cost Ledger to arrive at the Current To Date Labor
Cost. In the example, it is the $73.75 for the Week plus $105.45 from the Detail Cost
Ledger = $179.00.
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BUDGETED COST
9. Total Budgeted Costs are obtained from the Estimate Ledger. This figure is the original
estimated labor cost plus or minus all approved contract change orders. The Total
Budgeted Cost in the Estimate Ledger from the labor column is $3,595.00
UNIT COSTS
10. Budgeted Unit Costs are calculated by taking the total estimated labor costs and dividing
by the Budgeted Quantities. The unit costs are always expressed in LABOR COSTS per
unit ($L/unit). The Budgeted Labor Cost per unit in the example is:
11. Weekly Unit Costs are calculated by taking the Weekly Expended Labor Costs and
dividing by the Weekly Quantities placed. The example Weekly Labor Cost per unit is:
12. To Date Unit Costs are calculated by taking To Date Expended Labor Costs and dividing
by the To Date Quantities placed. The To Date Labor Cost per unit in the example is:
14. Projected Gain or (Loss) is calculated by subtracting the Projected Labor Cost at
Completion from the Total Budgeted cost and showing the net result. A (LOSS) is shown
in parentheses. If the Project Labor Cost at Completion is greater than the Total Budgeted
Cost, you will show a (LOSS) in this column. If the Projected Labor Cost at Completion
is less than the Total Budgeted Cost, you will show a GAIN in this column. The Project
Labor Cost Gain or (Loss) is:
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Estimate Inplace Inplace Qty Labor Labor Dist. Estimate $3595 $74 $179 [ [
Ledger Qty Current Dist. Current Ledger 1120Sf 60 Sf 124 Sf [ [
Current Week Current Week [ [
Week + Week + [ [
Previous Detail [ [
Qty Qty's $73.75 Cost $ [ [
60+64 $73.75 [ [
+ [ [
105.45 [ [
[ [
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2. Activity Description. The activity description associated with the cost code of 035316 is
Wall Forms - 12".
3. Item. This Column summarizes the Budget, Actual Costs and Projected costs for each
cost code by the following items.
CODE ITEM
Quantity
Workhours
Labor
Material
Equipment
Subs
Sub Total Costs
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6. Revised Budget is the Accumulative total for the actual project budget. The revised
budget is calculated by adding the Original Budgeted to the Scope Changes and showing
the net increase or decrease in the Revised Budget column. The Revised Budget in the
example is:
720 SFCA Original Budget + 400 SFCA Scope changes = 1120 SFCA
8. Expended To Date. This column reflects the quantities, workhours and cost
classifications are an accumulation of previous period items expended. The Period
items are added to the to Date Figure from the Previous report to arrive at the Current
Expended To Date figure in this report. The To Date-Expended Column in the example
indicates that:
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9. Committed Costs are shown separately from the To Date Expended costs to indicate that
the contractor is contractually required to pay for an item but it has not actually been
paid for yet. This column is used to put cost items that you have contracted for such as
subcontracts and purchase orders immediately into the ledger system. The accounting
system usually only reflects actual expended costs, therefore, to obtain the Expended
Total Cost when the contract is 100% paid for it is placed into this column first. The
Committed Costs in the Example are:
10. Expended Total column is calculated by adding the Expended To Date Column to the
Committed Costs column for each item. The Expended Totals in the example are:
Expended
Total
124 SFCA
24 W hr
$179
$1,141
$421
$220
$1,961
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In the second month, the Expended To Date Costs would be $100,000 in the second month and
$250,000 would be placed into the Committed Cost column and the Committed Cost would be
added to the Expended To Date Costs of $100,000. Therefore, the Expended Total Cost column
would still be $350,000.
Transaction Expended Committed Expended
Date To Date Cost Total Cost
The purchase orders, subcontracts and rental Equipment are recorded into the detail cost ledger
as committed costs at the time they are written.
Using the Straight Line Projection Method and projecting the At Completion
(Forecast) number by multiplying the To Date Unit Cost ($/unit) times the Total
Budgeted Quantities.
Using the Expended Total Column and projecting the Expended Total column as
the projected at completion number.
Using the Revised Budget Column and projecting the Revised Budget as the
projected at completion number.
The Current Projection in the example was made based upon the following
methods.
Current Projection Method
Projection
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12. Projected Gain or (Loss) is calculated by subtracting the Current Projection from the
total Revised Budget and showing the net result: a gain or a (loss) shown in parentheses.
If the Projected Labor Cost at Completion is greater than the Total Revised Budgeted
Cost, you will show a (loss) in this column. If the Projected Labor Cost at Completion is
less than the total Revised Budgeted Cost, you will show a gain in this column.
Revised Budget Current Projection Gain/(Loss)
The completed Project Cost Summary Report is shown on the following page.
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Sub Total Costs $2710 $2296 $5006 $1500 $461 $1961 $3395 +1611
REVISED ESTIMATE 5006 MINUS CURRENT PROJECTION $ 3395 EQUALS PROJECTED GAIN(LOSS) BUDGET +1611
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The Work Breakdown Structure (WBS) or the Master Code of Accounts should be developed by
the contractor for use on all projects throughout the company. The master Work Breakdown
Structure is a set of cost codes arranged into a hierarchy of recognizable categories used to
compare all estimated and actual costs on a project. The work breakdown structure is the key
element in a job cost control system. This portion of the cost control system is commonly
overlooked and little or no attention has been paid to its importance. For a control system to be
efficient, the work breakdown structure must follow a logical sequence of events and provide a
hierarchy of management reports designed to meet the information requirements at different
levels of management. The work breakdown structure is intended to provide a common basis
for integrating accounting, cost control, scheduling and estimating information. Flexibility must
be designed into the work breakdown structure to encompass all types of construction and it has
the capability of segregating costs for the client's capital cost records.
An approach commonly used to develop a code of accounts is to arrange the construction items
into the same categories and logical sequence the estimator uses when developing a quantity
takeoff and cost estimate. These categories are called a "hierarchy" and they are used to provide
management with reports that can be summarized at different levels. A typical Code of
Accounts requires a minimum of seven digits to work effectively. The components of a typical
code of accounts are shown below.
2 03 1 3 3 0
Size
Type of Operations
Tube & Coupler
Operations - Placing Scaffolding
1 _ _ _ Allocable Items or
2 _ _ _ Type of Work of Work Locations
Major Discipline or Division - Concrete Foundations
Cost Classification - Materials, Permanent
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Using the Earned Workhour Report information provided, Answer the following questions.
1. What is the Budgeted Unit Workhours in Whr per Unit for the Column Forms?
A. 0.045
B. 0.171
C. 0.241
D. 5.838
2. What is the Weekly Unit Workhours in Whr per Unit for the Column Forms?
A. 0.007
B. 0.195
C. 4.919
D. 5.118
3. What is the To Date Unit Workhours in Whr per Unit for the Column Forms?
A. 0.011
B. 0.241
C. 3.821
D. 4.148
4. What are the Total Earned Workhours for the Column Forms?
A. 19
B. 27
C. 465
D. 2387
5. What is the Total Projected Workhours at Completion for the Column Forms?
A. 27
B. 104
C. 602
D. 2472
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6. What is the projected gain or loss in Workhours for the Column Forms?
A. (174)
B. 325
C. 1897
D. 2396
Using the Labor Cost Report attached, answer the following questions.
7. What is the Budgeted Labor Unit Cost in Dollars per unit for the Concrete Footings?
A. 0.047
B. 21.45
C. 137.25
D. 256.00
8. What is the Week Labor Unit Cost in Dollars per unit for the Concrete Footings?
A. 0.70
B. 1.43
C. 3.14
D. 14.60
9. What is the To Date Labor Unit Cost in Dollars per unit for the Concrete Footings?
A. 0.32
B. 3.14
C. 20.12
D. 5125.00
10. What is the Total Projected Labor costs at Completion for the Concrete Footings?
A. 81.41
B. 803.84
C. 5150.72
D. 10615.00
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11. What is the projected gain or loss in Labor Dollars for the Concrete Footings?
A. (1.20)
B. (4685.00)
C. 338.00
D. 5452.46
Using the Project Cost Summary Report attached and the Forecast information below, answer
the following questions.
12. What is current projection for the quantities in Vertical Lineal Feet (VLF)?
A. 680
B. 5300
C. 5980
D. 6700
A. 78
B. 473
C. 618
D. 686
14. What is the current projection for the labor costs at completion?
A. 11,960
B. 13557
C. 14917
D. 16817
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15. What is the current projection for the material costs at completion?
A. 7080
B. 33470
C. 40550
D. 45225
16. What is the current projection for the Equipment costs at completion?
A. 1400
B. 14640
C. 16040
D. 16960
17. What is the current projection for the subcontract costs at completion?
A. 0
B. 7000
C. 14000
D. 21000
A. 29957
B. 70170
C. 76470
D. 85080
A. 0
B. 67
C. (134)
D. (218)
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A. (1900)
B. 1900
C. 2957
D. 13557
A. 0
B. 4675
C. 7080
D. 11755
A. (6363)
B. (9843)
C. 7975
D. 14589
23. The estimated cost of a project if built today is $4,000,000 and the costs are expected to
rise 3.5 percent for the next 5 years. What will be the estimated cost if the project is
built five years from now?
A. $4,700,000
B. $4,750,745
C. 17,936,133
D. 24,213,779
24. The budget calls for 40,000 Lineal Feet of lumber and the labor is budgeted at $26,000.
The work completed to date is 8,000 Lineal Feet of lumber and the labor cost is $6,000.
What is the projected total labor cost savings or labor cost overrun at completion?
A. $2,000 savings.
B. $4,000 savings.
C. $4,000 overrun.
D. $10,000 savings.
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CODE ITEM ORIGINAL SCOPE REVISED EXPENDED COMMITTED TOTAL CURRENT PROJECTED
ESTIMATE CHANGE ESTIMATE EXPEND PROJECTION GAIN (LOSS)
WEEK TO
DATE
035600 PILES
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