{"id":104252,"date":"2024-01-25T12:00:14","date_gmt":"2024-01-25T17:00:14","guid":{"rendered":"https:\/\/sjcivil.com\/?p=104252"},"modified":"2024-02-12T05:02:17","modified_gmt":"2024-02-12T10:02:17","slug":"daily-cost-and-the-what-if","status":"publish","type":"post","link":"https:\/\/sjcivil.com\/daily-cost-and-the-what-if\/","title":{"rendered":"Daily Cost and the What-If"},"content":{"rendered":"<p style=\"text-align: justify;\"><b>Executive Summary. <\/b><span style=\"font-weight: 400;\">\u00a0Paramount to cost control is a superintendent\u2019s and project manager\u2019s ability to know cost in real time.\u00a0 Knowing the daily cost of an operation and how to run \u201cwhat-if\u201d scenarios can protect a budget.\u00a0 Below are some basics to draw upon.<\/span><\/p>\n<p><iframe title=\"Spotify Embed: Daily Cost and the What-If\" style=\"border-radius: 12px\" width=\"100%\" height=\"152\" frameborder=\"0\" allowfullscreen allow=\"autoplay; clipboard-write; encrypted-media; fullscreen; picture-in-picture\" loading=\"lazy\" src=\"https:\/\/open.spotify.com\/embed\/episode\/7z45ZKpPALOyfKfbzDrH1v?si=YKKSeAnYSDCJVBpPECtXnw&#038;utm_source=oembed\"><\/iframe><\/p>\n<p style=\"text-align: justify;\"><b>What makes a construction budget?\u00a0 <\/b><span style=\"font-weight: 400;\">A construction budget is made of up a handful of cost types; however, the most important cost types in production analysis work are labor and equipment.\u00a0 And each of these resources on a crew have a dollar value per hour.\u00a0 Adding up the cost per hour for each person and each piece of equipment results in the daily cost.\u00a0 The daily cost divided by the quantity earned in a day gives you the daily unit cost.<\/span><\/p>\n<p style=\"text-align: justify;\"><b>Budgeted (or estimated) cost versus actual cost.\u00a0 <\/b><span style=\"font-weight: 400;\">There is a large difference between the definition of budgeted cost and actual cost.\u00a0 The estimator, prior to winning the job, will estimate the crew make-up, the production of the crew, resulting in the total cost of a particular task.\u00a0 This is called the <\/span><i><span style=\"font-weight: 400;\">estimate<\/span><\/i><span style=\"font-weight: 400;\">.\u00a0 The <\/span><i><span style=\"font-weight: 400;\">actual<\/span><\/i><span style=\"font-weight: 400;\"> cost is what it actually takes to do in the field.\u00a0<\/span><\/p>\n<p style=\"text-align: justify;\"><b>Give me an example \u2013 start with the budget.\u00a0 <\/b><span style=\"font-weight: 400;\">For example, if we have 1,000 LF (lineal feet) of 18\u201d pipe to put in the ground, the estimator may have calculated a production rate of 100 LF\/WD (lineal feet per work day) with a crew<\/span><span style=\"font-weight: 400;\"> that costs $5,600\/work day.\u00a0 That is a unit cost of $56.00\/LF.\u00a0\u00a0<\/span><\/p>\n<p><b>Now show me the what-if.<\/b><span style=\"font-weight: 400;\">\u00a0 Well, when the superintendent gets to the job, (s)he may say \u201cwhat if I can get more footage with an additional person on the crew\u201d\u2026.or \u201cwhat if I can get more footage in a day with an additional person on the crew <\/span><i><span style=\"font-weight: 400;\">and<\/span><\/i><span style=\"font-weight: 400;\"> a bigger excavator than the estimate shows\u2026\u201d\u00a0 These two what-if scenarios are shown on the next page.<\/span><\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-medium wp-image-104253 aligncenter\" src=\"https:\/\/sjcivil.com\/wp-content\/uploads\/2024\/01\/excavator-john-min-300x225.jpg\" alt=\"\" width=\"300\" height=\"225\" \/><\/p>\n<p style=\"text-align: justify;\"><b>How do I know which what-if to use?<\/b><span style=\"font-weight: 400;\">\u00a0 If you look at the spreadsheet on the next page, there are two what-if scenarios run:\u00a0 a 6-man crew and a 6-man crew with a larger excavator.\u00a0 If you look to the far right, the budget gain or loss is shown.\u00a0 That ought to be a good indicator.\u00a0\u00a0<\/span><\/p>\n<p style=\"text-align: justify;\"><b>How do I do this in real life without a fancy spreadsheet?<\/b><span style=\"font-weight: 400;\"> The table of data you see at your left looks complicated and like something a superintendent usually can\u2019t, or doesn\u2019t want to, do.\u00a0 Everything in this spreadsheet can be done with a pen, a $5 Casio calculator, and a legal pad.\u00a0 Get your estimator or project manager to get the average $\/manhour for your crew folks, plus the $\/hour for each of the pieces of equipment.\u00a0 And using 8 hours\/day for your work day and picking a production rate, the math gets pretty easy.\u00a0 It may look intimidating at first, but once you do it you\u2019ll feel empowered and in control of your job.\u00a0 You\u2019ll also be able to calculate real time costs on your job.\u00a0\u00a0<\/span><\/p>\n<p style=\"text-align: justify;\"><b>My story.<\/b><span style=\"font-weight: 400;\">\u00a0 They make software to do this function or you can create this spreadsheet yourself.\u00a0 Like anything new, you have to put in the time to learn this new procedure and you have to keep doing it \u2013 you have to make it a habit.\u00a0 I\u2019ve done this a lot on just production rates (no dollars, just MH\/LF).\u00a0 I would walk out in field, count the guys, and see how much footage they had by lunch:\u00a0 5 guys working from 7am to 12pm is 25 manhours.\u00a0 And they got 100 LF in the ground by lunch:\u00a0 25 MH \/ 100 LF = 0.25 MH\/LF.\u00a0 When I look in the estimate if we have the pipe going in at 0.20 MH\/LF, we\u2019re in trouble.\u00a0 If we estimated it at 0.35 MH\/LF, we\u2019re beating budget!\u00a0 The point here is that this can be a back of the napkin calculation on production like I just showed you, and once you figure the cost of your crew is, say, $7,000\/day, you can easily do a back of the napkin unit cost in seconds from your pickup truck.\u00a0 Work safe!<\/span><\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-medium wp-image-104254 aligncenter\" src=\"https:\/\/sjcivil.com\/wp-content\/uploads\/2024\/01\/exc-pexels-paul-h-7910056-300x200.jpg\" alt=\"\" width=\"300\" height=\"200\" \/><\/p>\n<p>&nbsp;<\/p>\n<div class=\"su-button-center\"><a href=\"https:\/\/sjcivil.com\/wp-content\/uploads\/2024\/01\/2024.01.20-Daily-Cost-and-the-What-If.pdf\" class=\"su-button su-button-style-flat\" style=\"color:#FFFFFF;background-color:#293a57;border-color:#212f46;border-radius:12px;-moz-border-radius:12px;-webkit-border-radius:12px\" target=\"_blank\" rel=\"noopener noreferrer\"><span style=\"color:#FFFFFF;padding:0px 30px;font-size:22px;line-height:44px;border-color:#6a768a;border-radius:12px;-moz-border-radius:12px;-webkit-border-radius:12px;text-shadow:none;-moz-text-shadow:none;-webkit-text-shadow:none\"> Download The PDF<\/span><\/a><\/div>\n<span class=\"et_bloom_bottom_trigger\"><\/span>","protected":false},"excerpt":{"rendered":"<p>Executive Summary. \u00a0Paramount to cost control is a superintendent\u2019s and project manager\u2019s ability to know cost in real time.\u00a0 Knowing the daily cost of an operation and how to run \u201cwhat-if\u201d scenarios can protect a budget.\u00a0 Below are some basics to draw upon. What makes a construction budget?\u00a0 A construction budget is made of up [&hellip;]<\/p>\n","protected":false},"author":4,"featured_media":104253,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","iawp_total_views":43,"footnotes":""},"categories":[192],"tags":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v22.5 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Daily Cost and the What-If<\/title>\n<meta name=\"description\" content=\"Paramount to cost control is a superintendent\u2019s and project manager\u2019s ability to know cost in real time.\u00a0 Knowing the daily cost\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/sjcivil.com\/daily-cost-and-the-what-if\/\" \/>\n<meta property=\"og:locale\" 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