First International Conference on Construction In Developing Countries (ICCIDCI) Advancing and Integrating Construction Education, Research & Practice

August 4-5, 2008, Karachi,, Pakistan

Integrated Time and Cost Management System for Project Monitoring, Evaluation and Control
Edem O. P. Akpan Professor, University of Uyo, Uyo, Akwa Ibom State, Nigeria eopakpan@yahoo.com Ifeoma V. Ihim MSc Student, Federal University of Technology, Owerri, Imo State, Nigeria Achimba C. Ogbonna Senior Lecturer, Federal University of Technology, Owerri, Imo State, Nigeria Charles N. Ononuju PhD Student, Dept. of Building, Imo State University, Owerri, Imo State, Nigeria

Abstract
This study presents an integrated time and cost management system for project monitoring, an essential ingredient for project evaluation and control as improper project monitoring normally leads to time and cost overruns and sometimes project abandonment. Project monitoring essentially entails matching cost with time during project implementation. However, there is no clear method of marrying the two as different methodologies are always employed to deal with these two parameters. An implementation plan using network scheduling technique is presented on time-phased graphs (Gantt charts), one on top of the other, the top displaying the actual durations and costs of individual activities during the project implementation stage while the one below shows the budgeted costs and durations of these activities and by extension the cumulative costs over a period. A vertical line passing through the two graphs is drawn at certain intervals or milestones to monitor any variation as to time and cost, and deductions as to the performance of the model is carried out using two UNDP-sponsored borehole projects in Abia State of Nigeria based on Earned Value Analysis (EVA), a methodology used in developing Primavera Software package. Even though the EVA model seems to give impressive results in terms of cost at certain milestones, it lacks the potential of identifying those activities having those costs. This is where the beauty of the proposed model lies, matching time with cost with all the associated activities. The model has helped to curtail the incidence of time and cost overruns and has also proved invaluable in project cash flow forecasting and monitoring, project cost evaluation and project control in general.

Key words
Network scheduling, Gantt chart, activity-based-costing, earned value analysis, BOQ.

1. Introduction
Project management in general anchors on time and cost and it may be improper to deal exclusively with one without the other, yet no comprehensive methodology has been designed to deal with this twin

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problem. Project implementation has rightly been seen by Bobrowski(1989) as a cycle made up of planning, monitoring and controlling. If project management must succeed according to him, these three components must be based on the same or at least compatible frameworks or tools of management. This cannot be said to be the case with most projects in which activity/work planning and monitoring are usually done using either the traditional bar/Gantt chart or network scheduling technique while the cost associated with this plan, that is financial monitoring, control and payment are carried out using Bill of Quantities (BOQ). The importance of cost and timing in project management cannot be overemphasized. There appears to be no better summary than the one given by a renowned jurist, Lord Dening as quoted by Knowles (2004) that cash flow is the life-blood of the construction industry. He noted that it is important to quantify both the total and minimum capital needs of a project, as the clients major concern is often a matter of timing of need and use, since project funds are usually allocated in advance. There must therefore be a schedule to determine the overall cash flow and timing over the entire project duration, as an abrupt sudden demand of cash will lead to undesirable consequences. It was in the course of finding an appropriate solution to the above complex problem that led to the birth of modern scheduling technique, which resulted in the invention of the Gantt chart. It was not long the chart fell into disrepute due to its inability to easily display the relationship and nature of interdependencies between project activities. It is also difficult as was then to effectively identify and isolate those activities generally referred to as critical activities that uniquely control and influence the project duration. The search for a better tool later led to the emergence of Critical Path Method (CPM) and Program Evaluation and Review Technique (PERT) between 1958 and 1959 and according to Suhanic (2001), these techniques are logically elegant and analytically powerful but they are visual disasters. Due to this shortcoming, practitioners and researchers went back to the old system. Efforts at incorporating the advantages of the two systems have been encouraged although the wrong approach has sometimes been undertaken by converting the Gantt chart into PERT/CPM chart whereas the reverse could have been more appropriate. This later version is adopted by Primavera Project Planner (P3) Software Version 5.0 (1991) but the exercise concentrates on integrating the activities of cost and schedule on one chart. This approach has a lot of limitations as it lends itself more to cost to the disadvantage of schedule especially during the implementation stage. Another shortcoming is its failure to bring the existing methodologies constrained resource network scheduling, bills of quantities (BOQ), etc into its ambit to serve the needs of practitioners and researchers. This is what the present study intends to achieve. 1.1 Earned Value Analysis (EVA) Over the years, earned value analysis (EVA) has been employed to achieve the above objective but from observations and practice, this model is rather unsatisfactory. Earned value analysis formally came into existence in 1967 when the US Department of Defense (DoD) established the Cost/Schedule Control Systems Criteria (C/SCSC) to standardize contractor requirements for reporting cost and schedule performance on major contracts. A basic tenet of C/SCSC is the concept of Earned Value Management. Earned Value Management is a methodology for determining cost and schedule performance of a project by comparing the planned work with accomplished work in terms of monetary value assigned to the work. Earned value analysis then became the industry standard method of measuring a projects progress at any point in time, forecasting its completion date and final cost, and analyzing variances in the schedule and budget as the project proceeds. It compares the planned amount of work with what has actually been completed, to determine if the cost, schedule and work accomplished are progressing in accordance with the plan. In a nutshell, earned value analysis is a method of showing the progress of a project by comparing the actual result of each activity within the project against the plan (budget and schedule). Using this data, the earned value creates indicators that show whether or not the project/task is on schedule and whether or not it is meeting the cost plan. As the work is completed, it is considered

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earned. Earned value is therefore the missing link between cost reporting and cost control. This depends on the existence of a sound framework according to Lock (1996). This last stage is what seems to be lacking when one looks closely at the methods of approach where cost information is used to determine the schedule performance index (SPI) and schedule variance (SV) using a common graph at time, t. These according to Payne et al (1999) are given as: Schedule performance index (SPI) = (BCWP/BCWS) -----------------(1) Schedule variance (SV) = ((BCWP BCWS)/BCWS) * 100% ----------------(2) and Cost performance index (CPI) = (ACWP/BCWP) ---------------------(3) Cost Variance (CV) = ((ACWP BCWP)/BCWP * 100% ---------------------(4) where ACWP is the actual cost of work performed BCWP is the budgeted cost of work performed BCWS is the budgeted cost of work scheduled and the above information according to this methodology could further be used to forecast the eventual cost of the project and its duration thus: Cf = Cs (1 CV) ------------------------------------(5) Tf = Ts (1 SV) -------------------------------------(6) where Cs and Cf are scheduled and forecasted projected costs and Ts and Tf are scheduled and forecasted project completion times respectively. However, PMBoK Guide Exposure Draft (PMI Standard Committee, 1994) adopts the reverse for BCWP and ACWP in respect of Cost Performance Index (CPI) and Cost Variance (CV). These are: CPI = BCWP/ACWP and CV = (BCWP ACWP)/BCWP A negative schedule variance calculated at a given point in time means that the project is behind schedule while a negative cost variance means the project is over budget. The reverse is the case with those of Payne et al (1999). It should also be noted that time has no intrinsic value if it is not related to the number of resources (labour and other transforming inputs) and/or efficiency in which it is based on. Time as such is stochastic (Akpan et al (2007)) and has direct bearing on cost even though these two elements are sometimes assumed to be deterministic for the purpose of tendering and project planning and control. It is therefore illogical to use cost to determine schedule in any form. It was in the light of this anomaly of using cost to determine the schedule variance and schedule performance index that prompted Ibbs and Kwaks (1998) to look at the problem once again and in the course of their research came out with two indices for the above, CI (Cost Index) and SI (Schedule Index) in evaluating project schedule performance. They are given as: Cost Index (CI) = (Actual Project Cost)/ Original Budget --------------------(7) Schedule Index (SI) = (Actual Project Duration)/Original Project Duration ---(8) Equations (7) and (8) however look at the global picture and one may have a problem evaluating the progress at certain intervals. To appreciate the problem of the Earned Value Analysis methodology, we have a look at a small project designated as AB-947, a bungalow to be precise which was awarded by the Federal University of Technology, Owerri at a cost of N10,000,000.00 with a contract period of five months. At the end of the 3rd month, the different costs were as shown in Table 1. Periodical costs are the sum of all the costs charged to the project within each period. These costs include purchased materials, labour, special charges, office expenses and allocated overhead costs. The different costs of EV analysis are:ACWP = N 4,000,000 BAC (total budgeted project cost) = N 10,000,000 BCWP = N5,000,000

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BCWS = N 6,000,000 From the above, the CPI = 0.80 (or 1.25 using PMI model) which signifies a good result. CV (Cost Variance) = -20% (or 20% according to PMI) indicating a good result too. SPI = 0.8333 which is less than 1 indicating a bad result and the SV (Schedule variance) of -20% indicating a bad schedule performance also. From these results, one could conclude that the contractor was performing well in terms of the cost but actually behind schedule by 20%. What a mixed result! In most project situations especially in this part of the world, the concern has always been focused on cost in the form of bills of quantities without necessarily stating how long each work package in the bill is going to be accomplished. This has given rise probably to rather unsatisfactory schedule performance as shown above. It must also be noted that the BCWP is just an estimate based on how far it is assumed the work has been accomplished so also the BCWS, in this case 60% of the project duration (3months out of 5).

Table 1: ACWP of Project AB-947 Performance Details 1 Project Administration Periodical Costs 400,000 Cumulative Cost 400,000 Design Periodical Costs 1,100,000 Cumulative Cost 1,100,000 Drafting Periodical Costs Cumulative Cost Structural Works Periodical Costs Cumulative Cost Roofing/Cladding & Ceiling Periodical Costs Cumulative Cost Electrical & Mechanical Periodical Costs Cumulative Cost Painting & Decoration Periodical Costs Cumulative Cost Certificate & Delivery Periodical Costs Cumulative Cost Total Periodical Cost Cumulative Cost 1,500,000 1,500,000 2 300,000 700,000 1,200,000 2,300,000 Periods 3 200,000 900,000 200,000 2,500,000 300,000 300,000 300,000 300,000 Totals 4 5

900,000

2,500,000

300,000

300,000

1,500,000 3,000,000

1,000,000 4,000,000

4,000,000

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2. Activity-based-costing
Using the above model to forecast the project completion time or future date before completion and the associated cost may be very misleading as a magnitude of a non-uniform cash flow (depending on the amount of work occasioned by a number of activities at different levels of project execution) varies from time to time and this is bound to affect the values of BCWP, BCWS and ACWP at different points too. In short, these values depend on the network configuration or the work plan. The use of activity-based-costing (ABC) approach complemented with time-phased graphs may offer some relief to resolving the problems as cost and schedule variance for a project may or may not reflect the actual cost and schedule position of the project. Some activities may be completed ahead of schedule or out of sequence, giving false indication of the project wellbeing. First of all, cost associated with each activity has to be ascertained based on activity-based-costing (ABC) approach, which basically adopts the bills of quantities format. All relevant resources (people and machinery) and materials (purchased components) and raw materials are assigned a cost per unit and they are tracked through the operations in order to create the end product. In the end, all the costs are summed at each level of product structure or subassembly, which may likely be at each node. It is assumed that the cost of an activity is consumed equally throughout the duration of such an activity. If this assumption is followed then the cost and duration of an activity could be represented, as one horizontal line on the Gantt chart after the project duration might have been determined using the network scheduling technique. By so doing, the cost is tied to the schedule, which makes it possible for one to ascertain the cost of the project (both planned and actual) at any point in time. If the project is carried out using the critical path methodology, a third graph based on the latest starting time could be incorporated to find out if the project completion time would be met if some activities are behind schedule which might have been started on the basis of their earliest starting times. In the case of constrained-resource situation, more resources could be deployed (which entails extra cost) to buy time to meet the due date (see Akpan(1997)). Where the project duration is determined using the critical path methodology and the highest resource peak of each resource are taken as the maximum resource requirement, then one can utilize the time trade/cost trade-off model (see Akpan (2001)) to accomplish the task at minimum cost. Even with all these scenarios, it would be very simple to carry out the analysis of variance of the different resource inputs to determine whether it is that of price or usage with respect to cost or efficiency/inefficiency on the part of the transforming inputs (labour and equipment) in the case of the schedule.

3. Integrated time and cost model

The methodology follows the basic network scheduling model and the computation of critical path and other parameters shown in Table 2 such as the Earliest starting time (EST), Earliest finishing time (EFT), Latest starting time (LST), Latest finishing time (LFT) are as illustrated in Akpan (2001). For the work presented here, the Activity-on-Arc (A on A) convention is followed which adopts floats. Float is the difference between the path length and the project duration or to be more precise, the spare time along the path. However, there is no restriction using slack, a term very much identified with Activity-on-Node (A on N) which is sometimes used interchangeably as float. The activities are coded for identification purposes. During the implementation stage, as each activity is carried out, a horizontal bar is drawn to indicate the extent of completion and this continues until the activity in question is fully executed. To monitor the extent of work done at any point in time and any deviation, which may arise, a vertical line is drawn to pass through the two graphs. 3.1 Case studies using the model The concept was used in the analysis of two borehole projects sponsored by United Nations Development Programme (UNDP) in Ikwuano Local Government area of Abia State in Nigeria, one (X) in Umuokigbo

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which started implementation in June, 2002 and the other (Y) at Inyila in September, 2002. As would later be noticed, there were a lot of improvements in the second project after a lot of experience gained from the first and also the methodology used. The bills of quantities for the two projects were divided into four sections, A, B, C, and D comprising of drilling, construction of pump/generator house, pump installation and construction of overhead tank. The cost of each of the twenty-six activities that make up the network is shown in Table 2 with their durations. Those figures with negative values represent unfavourable variances (i.e. higher expenditure than budgeted for) while the positive ones represent favourable variances. The network diagram is presented in Fig. 1. Table 2: United Nations Development Programme Assisted Borehole Projects in Abia State, Nigeria Put in Table 3 here

Put in Fig. 1 here

Fig.1: Network diagram for Projects X and Y (Planned estimate)

The first project was implemented and monitored using EVA methodology, which has given an impressive result at T32 in terms of cost. The CPI and CV at this point are:CPI = 0.9557 or 95.57% (i.e. 1301414/1361718) and CV = 0.04429 or 4.43% (i.e. ((1361718 1301414)/1361718) Although these results appear to be satisfactory but what these indices have not stated are the activities, which ought to have been carried out at this time according to the plan. This may pose some problems in future. At this point, activities B19 and C20 are yet to be carried out and this contributed to the cost being lower than the budgeted.

Put in Fig.2 here

Fig.2: Gantt Chart for Actual Project Performance (Top) with the Planned Project Performance (bottom) for Project X.

The schedule variance and schedule performance index are unfavourable at this point in time. For proper analysis, this project was subjected to the concept outlined above. When the project was displayed in the form of network before transforming it into Bar/Gantt chart for the purpose of clarity during implementation, the project as a whole was not behind schedule. It is recommended that the monitoring of the project should be more frequent towards its termination point in order to keep cost down and also deliver the project within schedule. At T35, the CPI = 1.2241 or 122.41% (i.e. 1777014/1451718) and CV = .1830576 or 18.31% ((1451718 1777014)/1777014) These two indices are rather unsatisfactory three days after an impressive result. One should have expected the EVA model to predict this unfavourable result as this was what it was meant to accomplish but what a disappointment! From the records, certain justifications were given as to the unfavourable outcome, which include among others; that the price of labour and materials increased substantially during the period of implementation. This is difficult to believe when one looks at Project Y executed and

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monitored using the new model immediately after the completion of Project X in the same locality. Before carrying out this analysis, the five-day interval of actual expenditure for Project Y is summarized in Table 3. This is used alongside the budgeted cost to draw inferences at different milestones similar to what we have in Fig. 2. Table 3: Cost of Project Y at different time intervals Interval 5 10 15 20 25 30 35 40 Cost (N) 62120.02 154660.70 263864.30 365231.00 107249.10 406650.00 94500.00 155390.00 Cumulative integer) (N) Cost (nearest

62120 216781 480645 845876 953125 1359775 1454275 1609665

Judging from the actual cost of N1364275 as against the planned cost of N1361718 at T32, only a slight difference of N2557 (unfavourable variance) is noticed. This had to do with monitoring the budget hand in hand with the activities, which this approach has afforded. This is also applicable to another period, T35 where the actual cost is N1454215 as against the planned cost of N1451718, a difference of N2497 (unfavourable variance).

4. Discussion
The proposed model has some similarity with that of Ibbs and Kwaks (1998) with respect to cost. Instead of looking at the cost at the end of the project, the Cost Index (CI) can be ascertained at ant point in time by comparing the actual cost with the budgeted similar to what we have in our model. It could be noticed that CI would continue to change from one point to the other and one should therefore be cautious when using the CI for predictive purposes even under the EVA methodology. The reason for this variation is mainly due to network configuration as the expenditure is not uniform throughout the entire project duration. The issue of schedule performance index and schedule variance seems to be built on the assumption that all activities must start at their expected times (i.e. earliest starting times). An activity having float could take advantage of it without experiencing any schedule variance with respect to the project duration. The analysis of variance on activity basis is simple to undertake with this approach rather than subjecting the project to the whole exercise with the likelihood of one losing sight of closely monitoring similar activities in future projects. The concept outlined above is mainly concerned with the earned value which is quite different from expenditure incurred in the course of the project which may entail buying and paying for materials in bulk for future use. This equally applies to plants and equipment. The period of occurrence (i.e. payment) is very important which may occur at certain nodes of the network. This aspect of the exercise is very useful for project financial planning and control as improper funding could have disastrous consequences on the project. The same approach should be adopted but attention should be shifted to when the payment is made.

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5: Conclusion
Activity duration and resources vis--vis cost (i.e. as a measure of their usage) are so interwoven in such a way that the former may be meaningless without the later so also their timing. This has been made possible by the use of network scheduling technique complemented with the Gantt chart. Without this integration, project success would be a mirage. Concentrating mainly on cost for the realization of the project as expounded by EVA model would always lead to a wrong conclusion. With the above concept, one is able to know what is incurred at any point in time and the components of such costs. The work also brings into limelight the importance of floats in the realization of the project duration, which seems to be hidden in the EVA model with its unrealistic schedule variance and schedule performance index. Finally the model could equally be used for project cash flow forecasting and monitoring which is bound to curtail the incidence of improper funding with its adverse effect on project performance.

References
Akpan, E. O. P., Ogbonna, A. C. and Ononuju, C. N. (2007). Project Success: Matters Arising. Advances in Science and Technology Vol.1, No.1, pp. 40-50 Akpan, E. O. P. (2001). Time/cost trade-off computation using implicit elimination procedure. Technical Transactions of the Journal of the Nigerian Institution of Production Engineers Vol. 6, No.2, pp. 101-117. Akpan, E. O. P. (1997).Optimum resource determination for project scheduling. Journal of Production Planning & Control Vol. 8, No. 5, pp. 462- 468. Bobrowski, P. M. (1989). Project Management control problems: An information systems focus. Journal of Project Management Institute (June edition), pp. 2. Ibbs, C. and Kwak, Y. H. (1998). Benchmarking Project Management Organizations. Project Management Network, February edition, pp. 49-53. Knowles, R. J. (2004). Cash is king. The Quantity Surveyor, Vol.46, No.5, pp.15-16. Lock, D. (2000), Project Management (7th Edition).Gower Press Publishing Ltd, Hampshire, England Payne, A. C., Chelsom, J. V.and Reavill, L. R. P (1999). Management for Engineers, John Wiley & Sons, Chichester, England. Primavera Project Planner (P3) Software Version 5.0 (1991); Primavera Systems, Bala Cynwyd, PA. Suhanic, G. (2001). Computer-Aided Project Management, Oxford University Press, New York.

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T32
A1 A2 A3 A4 B13 D21 A6 B14 A5

Activities

D22 A7 B 15 A8 B16 A9 B17 A10 B1 8 A 11 A12 B19 C 20 D26 5

81 091
A1 A2 A3

D23

D24 D 25

10
28 7799

15
55 9532

20
859328

25
11996 64

30

35
1777014

Time
40
19 33904

127851 4

130141 4

A4 B13 D21 A6 B14

A5

Activities

D22 A7 B15 D23 A8 B16 A9 B17 A10 B18 A11 A 12 B19 C20 5
59887

D24 D25

D26 25
954668

10
215824

15
48 1638

20
839886

30
135721 8

35
145171 8

40
1588548

Time

Fig. 2: Gantt chart for Actual Project Performance (Top ) with the Planned Project Perfor man ce (Bottom) for Project X

1361718

19

Table 2: United Nations Development Programme Assisted Borehole Projects in Abia State, Nigeria
S/N Job Description
Code

Activity Path 1-2 2-3 2-4 2-5 2-6 2-7 3-4 4-20 5-8 6-9 7-10 8-11 9-12 10-13 11-14 12-15 13-16 14-17 15-18 16-23 17-19 18-21 19-20 20-21 21-22 21-23 22-23 23-24
Duration

Start and Finish Times (Days)

EST EFT LST LFT

Floats
TF FF

Critical

Budgeted

Path

Actual Cost (N) X 2190 10000 12244 4000 17800 150000 8000 44500 26800 495780 6500 139500 22500 217000 34600 10000 6000 10000 160000 3000 21000 40000 30000 6000 381100 75390 1933904 Y 1800 10000 12244 4000 17800 96471 4000 44500 26800 255960 6500 139500 22500 217000 34600 10000 9600 5000 160000 3000 21000 20000 25000 6000 381000 75390 1609665

Cost (N) 1515 10000 12244 4000 10428 96471 4000 44500 26800 255960 6500 139500 22500 217000 34600 10000 9600 5000 160000 3000 21000 20000 30000 6000 381100 56830 1588548

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Total

Clearing of site Geographical Survey Access Road & Structures Mud pits and channels Foundation for pump/generator house Foundation for O/h tank Dummy Transportation of materials Drilling Block work and lintel Erection of tank Logging Roofing Ladders and Platforms Casing Windows and doors Water level indicators Gravel packing Plastering Galvanization and bitumen Grouting Electrical & wiring installation Clearing & well development Pumping test Painting Supply & pump installation Dummy Pipe connection & leakage test

A1 A2 A3 A4 B13 D21 A5 A6 B14 D22 A7 B15 D23 A8 B16 D24 A9 B17 D25 A10 B18 A11 A12 B19 C20 D26

3 3 7 3 3 5 0 4 10 4 14 1 4 10 2 4 2 1 3 2 1 5 2 2 2 2 0 4

0 3 3 3 3 3 6 10 6 6 8 16 10 22 17 14 32 19 18 34 20 21 21 23 26 26 28 36

3 6 10 6 6 8 6 14 16 10 22 17 14 32 19 18 34 20 21 36 21 26 23 25 28 28 28 40

0 25 21 12 11 3 28 28 15 14 8 25 18 22 26 22 32 28 26 34 29 29 30 32 34 34 36 36

3 28 28 15 14 8 28 32 25 18 22 26 22 32 28 26 34 29 29 36 30 34 32 34 36 36 36 40

0 22 18 9 8 0 22 18 9 8 0 9 8 0 9 8 0 9 8 0 9 8 9 9 8 8 8 0

0 0 0 0 0 0 4 9 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 8 8 0

Variation in Cost (N) X Y -675 -285

-7372 -53529 - 4000

-7372

Actual Duration X Y 3 3 3 3 10 7 3 3 5 4 5 8 13 5 14 1 5 10 2 5 2 1 4 2 1 5 4 3 4 3 4 40 5 5 10 4 14 1 4 10 2 4 2 1 3 2 1 5 2 2 2 2 4 40

-239820

3600 -5000

-20000 5000 1100 -18560 -345356 -18560 -20117

20

3 4

22

A5
4

A2

B1
5 A6 10 A7 8 1 11 A8 2 14 A9 1
A1 0

A1 3

A4 3

17

19

A11

20

A1 2 2

A3 7

21

23

B13 3
6 B14 4 9 B15 4 12 B16 4 15 B17 3 18

D26 4

24

B 18 5

D21

5 D2 2

D22 14

10

D23 10

13

D24 2

16

Fig. 1: Network Diagram for Projects X and Y (Planned Estimate)

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