Simple Lump Sum Cost Loading in Primavera P6
Developing the basic Primavera P6 schedule with activities and logic is only the first step in creating a useful project schedule. Without some method of measuring actual progress against planned progress, the schedule doesn’t add the potential value it could if manhours, units, or cost are assigned to activities. We can track the progress of any or all of these to provide the data necessary to create planned curves and histograms, performance metrics for Schedule Variance SV, Schedule Performance Index SPI, At Completion Values, and other helpful performance metrics.
For this article, I will focus on simple Lump Sum (LS) cost loading. Personally, I see this required / used more than any other unit of measure. Keep in mind that LS cost loading is not nearly as accurate as using estimated manhours and unit cost for developing the cost values for each activity.
I will also assume a fully developed schedule, (complete scope of work, activities, logic, calendars, and all settings correct…).
- “Duration Type” set to “Fixed Duration and Units”.
- “Percent Complete” type set to “Physical”.
- Project level Calculation “Resource Assignments” set to “Subtract Actual from At Completion”
When developing a project schedule which requires “Cost Loading”, I prefer to develop a group of project labor resources with one resource per trade or subcontract.
I then set the unit and cost up to allow lump sum cost loading by unit. I do this by:
- Going to the Resources window and creating a parent resource for the project.
- I then add the appropriate labor resource per trade/subcontractor under this parent resource.
- I then set each resource type to “Labor”. (you can create one “Labor” resource and copy/paste and rename once you have set up all the settings on one resource…).
- I go to the “Details” tab and verify the Default Units / Time” to 8h/d. I also make sure “Auto Compute Actuals and “Calculate cost from units” are selected.
- I then go to the “Units & Prices” tab and verify the “Max Units / Time is set to 8h/d and set the “Price / Unit” to $1.00/h.
(These are the same settings the USACE requires for import / export with their QCS/RMS process).
That takes care of setting up the resources for simple lump sum cost loading. I then select each activity I plan to assign a budgeted cost to and assign the appropriate Labor Resource.
Then I assign the cost value by entering the cost value as the Budgeted Units value.
I verify the “Total Budgeted Cost”, “Remaining Total Cost”, and “At Completion Total Cost” values are correct.
Once I have all the activities to be cost loaded completed with the appropriate labor resource and the lump sum cost value, I can create a baseline project cost curve in Primavera P6 or export time phased cost data for use in another program like MS Excel. We can then measure each progress update for cost metrics.
*Remember, this easy lump sum cost loading does not report accurate manhour or material or equipment values.
For construction projects, I prefer to base the cost progress on the physical percent complete values for actual work in place. While not perfect, this is a reasonable approach for most construction projects. Other industries may approach this differently….
Basically, we use the cost as a tool to measure our actual earned cost against our planned cost per period. Many owners are comfortable with this method as the work in place aligns with the earned cost for each activity. However, this method does not allow the contractor to measure actual cost against earned cost. This method only provides for a cost basis for measuring schedule progress, typically used by the owner.
Plan your schedule….
Paul Epperson CCM, PMP, PSP, PMI-SP
Paul has extensive experience as a Construction Manager. Over time, he became convinced that there is a critical shortage of skilled planning and scheduling professionals in our industry. In 2009, he backed away from his work as a Construction Manager and began focusing on planning and scheduling. He now serves our industry as a subject matter expert in this area.