CPM Cost Loading: still double-entry accounting

Like construction project management, CPM Cost Loading is a science in which the best practitioners have administrative, as well as practical and theoretical skills specific to the industry in which they work. This condition generates some interesting perceptions, all of which point to a lack of consensus as to which schedulers are best suited to which industries, if any, and how well qualified they might be to generate cost loading.

In one corner, as I have said in previous posts, are the certification agencies, from which various non-industry specific certificates are issued to applicants, many of whose industry experience has been, and will be, chiefly confined to desks and text-books. Those with both the industry experience as well as the certifications have the highest expectations. Those with only a certificate to show have the lowest expectation. But then there are crack schedulers, autodidacts (self-taught), and various hybrids in between, who can out-schedule the best of certified schedulers.

In other words, a motivated field mechanic with years’ experience would be a better candidate to train as a scheduler than a rookie with a freshly printed certificate.

What is it that best practice schedulers with little or no book experience utilize to resource cost load their schedules? It depends who you work for. If you work for a subcontractor, optimally you would have experience in that trade. Conversely, a scheduler with little or no experience in a given trade is hard-pressed to resource cost-load his schedules. This is because he lacks the nuts-and-bolts, or assembly and prosecution sequence of operations, that an industry specialized scheduler has, and the estimating prowess to parse quantity take offs into cost loading. On a good day, he has the sense to know what questions need to be answered, and who to ask.

Why would an electrical contractor take-on a scheduler who only had plumbing experience?

We must add this conundrum to the mix when contemplating the dearth of project controls talent in the industry: the electrician would seldom have the luxury of waiting to find a scheduler with electrical background. The same holds true for project managers in other industries: you wouldn’t take a software project manager and assign him to lead a construction project without a considerable internship. In other words, experience seldom translates across industries, and often not even within industries.

One huge advantage industry specific project controls professionals have when preparing resource cost loading is the ability to visualize and interpolate complex assemblies when data is limited or inaccessible.

Schedulers working for general contractors and construction managers have a harder task on their hands because they are frequently the de facto scheduler for all trades that failed or neglected to issue a CPM schedule. This means they should have a minimum of working knowledge of all trades. In the trades in which they are less informed, they will get with the subcontractors, build a timeline with them, and use that schedule as a project control.

But a subcontractor will be reluctant to share all of his resource cost loading data – if he even has it, with a contractor, as these data are proprietary.

That leaves a general contractor or construction managers’ scheduler in the position of resource and cost-loading without the respective contractor’s input. This is, in fact, a deal-breaker for his loaded schedule, unless he is able to disseminate and extrapolate the labor and materials rates from the contractor’s breakouts. Often, this is simply not possible to do accurately, such as in MS Project, and with limited operability in P6, which is the raison d’être for the $1/hr. unit price, divided by duration, which I highlighted in my previous post.

Resource cost loading is tough work. You need one part estimator, one part scheduler, and one part clairvoyant, for all the non-participating parties. It is not unusual for stakeholders and their suppliers, and construction managers to either under-perform, or flat out refuse to participate in the scoping of their project CPM baseline, even when they hold, or withhold, critical information that the scheduler should have.

They’d rather assume the approve/reject position, and leave it at that. This position is quite often nothing more than an obfuscation to mask ignorance of CPM or construction methodology. This bandwidth shortfall is painfully regretted on the back end of a schedule, when contractor-coordinated activities – like OFW (owner-force work) and systems integration, take over the longest-path.

I should think stakeholders would want to be more educated in CPM technology; especially when it serves their best interests, yet I fear pride is their biggest obstacle.

At the end of the day, a CPM cost loading may have cobbled very little indeed from third-parties to patch together his baseline schedule. It is then that he must become resourceful, and insistent that the need for resource and cost loading back-up is exigent, and that in the absence of it the loading will be best-guess. Any scheduler would rather sub-contractors furnished CPM cost loading data with a CPM timeline, but that’s not what sub-contractors do, so we do it for them, if we are able. Stakeholders, in withholding critical OFW and vendor data from the scheduler, do the entire team a disservice. Furthermore, it is impossible to prepare risk simulations without that data.

If it’s untenable to try CPM cost loading owing to a lack of participation, then how can any P3 (public/private partnership)  or IPD (integrated project delivery) ever take-form?

That’s sort of like saying “if you don’t give me the real story, I’m going to have to make one up,” to which many will not object, at least until they notice that their timeline or payment schedule was attenuated as a result of errant cost loading. Not having an accurate CPM cost loading in a schedule is a handicap to any sub-contractor hoping to file a disruption claim, especially a compensable one. Even if it is an in-house schedule, it should include cost loading. After all, that’s best practice, and what makes your loading data bona fide, as opposed to a guess-work.