Time and money are two fundamental concepts in construction project management. They are also deeply intertwined. A project that takes longer will also likely cost more than an equivalent faster project. Both the project time-frame and milestones are a critically important input to any construction cost estimate. The project schedule impacts the project estimate by impacting:
Delivery Methodology
Resources
Staging
Procurement Strategy
Recurring Indirect Costs
The Delivery Methodology
The delivery methodology is how we choose to do the works. It broadly encompasses a variety of elements like our resourcing, staging, procurement and construction methodologies. There are an infinite number of ways we can deliver the same project and our delivery methodology covers all the variability in how we choose to do the work.
For example, when building a new bridge, we could choose to use pre-cast concrete beams or steel beams. We could sub-contract out the supply and install of the pre-cast beams or we could manage the install ourselves. We could install the beams using a crawler crane or a mobile crane. There are so many different options available.
To price any scope of works accurately, we first need to understand how the works are going to be completed. This is our delivery methodology. The project schedule will be a key input into developing this delivery methodology and therefore impact our estimate.
Resources
Our resources are our labour, plant and materials that we use to complete the project scope. The quantity of resources needed and per-unit resource costs drives the total resource costs. The project schedule impacts both the quantity of resources needed and per-unit resource costs.
If the project schedule does not have strict linkages and dependencies, then works can be planned by optimising resource usage. We can wait till materials are available, there is clear access and focus on maximising productivity. On the other hand, if the works need to be completed in stages and there is a rush to finish tasks, there will be resource peaks and troughs leading to stand-down and lower productivities.
Similarly, resource peaks and troughs will lead to inefficient use of resources when there is not much work available to do, and require paying overtime rates and hiring in expensive contractors when works need to be accelerated. This will lead to increasing per-unit resource costs.
Ultimately, schedule constraints will change how efficiently we can use our resources impacting our cost estimate.
Staging
Staging, at a high-level, refers to the overall co-ordination of the works. It covers the key work activities to deliver the project and how they are co-ordinated. Staging plans show where different trades are working and when.
For example, while constructing a pedestrian underpass for a new train station, our staging plans showed how trades were accessing site and key vehicle movements. Staging often involves temporary works, like temporary access routes and crane pads.
The project schedule will impact our staging. If we need to complete key activities early, then our staging will be changed. This may require further temporary, non-permanent works that come at a cost.
While building our underpass, we had to rush to get it open to pedestrians to meet a schedule milestone, this meant we could not install and commission the permanent stormwater drainage pumps and had to set up temporary pumps. These temporary pumps needed to be allowed for in our estimate.
Procurement Strategy
The procurement strategy is a sub-set of the delivery methodology. It is the choice to either self-perform or sub-contract a package of works. Self-performing means completing scope using our own labour, plant and materials while sub-contracting is engaging an external company to complete a package of works on our behalf.
The choice to sub-contract or self-perform works hinges on a range of factors. One of these key factors is the timing of the works. It makes sense to self-perform works if we have a steady, continuous flow of work. On the other hand, it makes sense to sub-contract works if we have non-continuous work and a tight schedule.
The choice to sub-contract or self-perform will change the project costs. Sub-contracting is generally more expensive as we need to pay the direct costs of the works plus a sub-contractor's supervision and management costs.
Recurring Indirect Costs
The most direct, and likely biggest, way that the project schedule impacts our estimate is through recurring indirect costs. Recurring indirect costs are the on-going site running costs. These are costs like management staff salaries, site office rental, waste disposal and security guard costs. They are incurred weekly or monthly and therefore, if the project duration is extended these costs will consequently increase.
For example, if we need to pay $1300 per week for the rental of our temporary site offices, if our project duration increases from 20 to 30 weeks then the total rental costs will increase by $13,000.
To properly estimate project indirect costs, it is critical to be able to accurately forecast how long the project will take. Any changes to our project duration and these costs will proportionately change.
Summary
In summary, the project schedule is a key input to any cost estimate. The project schedule changes our delivery methodology, procurement, resources and indirect costs. If we do not have a realistic and accurate project schedule then our project cost estimate will certainly be wrong.
