Article #197 Using Project Management Information System to Digitize Advanced Work Packaging (AWP) Process in EPC Projects: Cost Performance Indices for Construction Work Packages (CWP)

In addition to the many templates, presentations, flowcharts, checklists among others that were developed by the Construction Owners Associate of Canada (COAC) to enable a better understanding of the Advanced Work Packaging (AWP) best practice, the COAC has also identified measures to report the cost, schedule, productivity, safety, quality and predictability performance indices for the different work packages.

The list of recommended cost performance indices for a construction work package (CWP) includes:

  • Work Package Cost Growth (also known as Cost Predictability) = (Actual Cost – Budget Cost) / Budget Cost
  • Work Package Budget Factor (also known as Work Package Budget Factor) = Actual Cost / (Budget Cost + Approved Budget Changes)
  • Work Package Net Variation Over Final Cost = Net Value of All Approved Variations / Budget Cost
  • Cost Per Unit at Completion (also known as Construction Productivity – Cost) = Actual Total Cost / Quantity of Completed Work
  • Cost of Defects Warranty (also known as Work Package Rework Cost Factor) = Cost of Rectifying Defects / Actual Total Cost

For the Cost Per Unit at Completion index, and since a Construction Work Package (CWP) could include multiple work items with different types, quantities, unit of measure, and unit price, it is recommended to identify a single key item per CWP, for example, pipe or concrete, for which the total quantity per CWP will be defined for which this will become the “Quantity of Completed Work” and the actual cost from the different line items will be consolidated for which this will become the “Actual Total Cost”.

Project Management Information System (PMIS) like PMWeb comes ready with all the modules needed to capture the data used to calculate those performance indices ready, out-of-the-box. Those would include the modules of the cost estimate, budget, budget adjustments, commitments, change orders, progress invoices, and timesheets. All those forms use the cost breakdowns structure (CBS) to organize the captured cost data to enable aggregating, consolidating, and reporting the project’s cost data at the CBS levels.

For projects where advanced work packaging (AWP) is in use, the cost breakdown structure will be aligned with the construction work area (CWA) and the Construction Work Packages (CWP) with the option to had a third level of details for Engineering Work Packages (EWP) and Installation Work Packages (IWP) if required.

It should be noted that the cost breakdown structure (CBS) can be further detailed depending on the cost control level that the organization wants to exert on the Construction Work Packages. PMWeb allows defining up to 16 control levels for the Construction Work Packages if needed.

The first PMWeb cost module to be used is the cost estimating module where there is the option to create the estimate using both PMWeb cost database and resources, labor and non-labor, database or import the cost estimate prepared using third-party application into PMWeb.

Assuming that the cost estimate was done in a third-party application for which quantities were extracted from the BIM model or 2D drawings and the used unit cost rates where the contractor’s rates, PMWeb allows mapping the cost estimate MS Excel file into PMWeb cost estimate fields. PMWeb cost estimate allows assigning the cost breakdown structure (CBS) level, WBS level, and project schedule activity to each cost estimate line item.

The attachment tab will be used to attach all documents used in developing the cost estimate which should be uploaded and stored in the relevant folder in the PMWeb document management repository. In addition, links to related PMWeb records as well as imported MS Outlook emails can be added. The same process of attaching relevant documents and linking related records will be repeated for all other cost-related modules used in managing, monitoring, evaluating, and reporting the cost performance indices.

The cost estimate workflow will ensure that the estimate is reviewed and approved by the right project team members before it can be used to create the project budget, invite bids, and award commitments. The workflow will identify all needed steps, the duration for each step, responsibility for each step, actions that can be taken for each step, and the sequence for performing those steps.

PMWeb also allows adding conditions to the workflow steps to incorporate the approval authority levels. Similarly, workflows will be assigned to all other cost modules used in managing, monitoring, evaluating, and reporting the cost performance indices to enforce the needed accountability and transparency.

The approved cost estimate will be used to generate the project budget for which the project cost will be summarized at the pre-defined cost breakdown structure levels being the Construction Work Packages (CWP). Of course, there is also the option of adding the project budget directly and without using the cost estimate module if this is a requirement. Although allows creating multiple versions of the project budget, nevertheless, there could be only a single approved project budget. For each Construction Work Packages (CWP), the budget spending projection will be defined using the start and finish dates of each CWP which be extracted from the imported project schedule and the relevant budget spending curve with the option of adding the spending values manually for each period.

All transfers, additions, and omissions to the approved baseline budget will be captured using the PMWeb Budget Request module. For example, budget adjustments could have zero value when budget amounts are transferred from one cost center to another, for example removing US$ 50,000 from contingency and adding the US$ 50,000 to concrete works. In addition, budget adjustments could result in reducing or increasing the approved budget changes for a Construction Work Package (CWP).

The approved cost estimate will also be the basis for generating the material procurement and construction subcontract packages for which qualified suppliers, subcontractors, and vendors will be invited to provide their best proposals using the PMWeb Online Bidding module. This will enable the organization to compare the received bids with the approved cost estimate value for each package that will be procured. Commitment contracts, which can be also considered as the Procurement Work Packages (PWP), award will be generated from the PMWeb procurement module when it is approved.

PMWeb commitment module will be used to capture the details of all purchase orders and subcontracts for the procured scope of work, that is Procurement Work Packages (PWP). In addition, the commitment module will be used to create internal company commitments for which agreements will be created between the project’s entity and the different company business units that have a role in delivering the project’s scope of work as detailed in the Construction Work Packages (CWP). For the commitment associated with the labor and equipment resources, a unit price commitment will be added to reflect the total labor resource man-days and equipment hours or days needed for the project as overall as well as for each Construction Work Package (CWP). Having all those commitments contracts captured in PMWeb will provide the organization with the needed confidence that the approved baseline budget is accurate and achievable.

It is recommended that the details of each awarded commitment are aligned with Engineering Work Packages (EWP) and Installation Work Packages (IWP) that are part of the project’s Construction Work Packages (CWP). It should also be noted that a single commitment contract can cover more than a single Construction Work Packages (CWP). Should there be a need to have a single commitment contract for each relevant Construction Work Packages (CWP), then the PMWeb Master Commitments module will be used to capture the details on distributing the commitment scope of work to each CWP Commitment.

PMWeb provides two modules that are important for managing changes on each Construction Work Package (CWP). The first is the Potential Change module where all authorized project team members will be required to report any possible event that could result in a change on awarded commitments. For each potential change also known as potential exposure, the project team member needs to provide the reasons for the predicted change and the cost and time impact that this change could cause. Only reviewed and approved potential changes or potential exposures could be used to generate a commitment change order or change event that will adjust the approved baseline budget and awarded commitment. All cost items included in the potential change should be associated with its relevant cost breakdown structure level.

The second change management module is the Change Order module which will be used to capture all pending and approved changes or variations to the awarded commitments. Similar to other change order modules, the PMWeb change order module will capture the cost and time impact of the change. All cost items included in the change should be associated with its relevant cost breakdown structure level.

The actual cost associated with executing the works included in each commitment contract will be captured using the PMWeb Progress Invoice module. On monthly basis, an interim invoice for the completed and approved scope of work will be created. The percent completed for each line item can be added manually or imported from the updated project schedule activity that is associated with the progress invoice line item. The progress invoice module has the option to migrate the approved change orders to each commitment to enable invoicing for the approved additional scope of work.

The different cost data captured in PMWeb modules for budget, budget requests, commitments, online change or potential exposure, change order, and progress invoices actual cost will be stored in PMWeb cost ledger to enable creating, monitoring, evaluating, and reporting on the different cost indices. In addition, PMWeb has other cost modules that could be used in capturing additional cost information that could be needed for reporting the project’s cost performance. These include miscellaneous invoices which will be used to capture actual cost that is not part of a commitment contract, a timesheet module to capture the details, and the actual cost of labor and equipment resources that are not part of a commitment contract actual payments made against approved progress invoices.

In addition, PMWeb allows capturing the details of the contract agreement between the EPC Contractor and the Project Owner to capture the revenue or income from delivering the project. For each income contract, PMWeb also allows capturing change orders, interim progress invoices, and actual payment received against the approved progress invoices. All of this income-related data will be also captured in the PMWeb cost ledger.

The real-time data stored in the cost ledger will enable the organization to display this information in what is known as the cost worksheet where cost data fields can be added and formulas to calculate new measures from the captured cost data can be created. One of PMWeb’s unique options is the ability to define an unlimited number of cost worksheets per project to monitor, evaluate and report the project’s cost performance in the desired format.

Of course, the cost data captured in PMWeb cost modules will also become available to be reported on in tabular and graphical reports as well as dashboards. Those reports and dashboards can be limited to the reported cost data or they can be expanded to cover other data captured in other PMWeb modules used to manage the processes associated with Advanced Work Packaging. For example, a performance dashboard can be created to report cost, schedule, quality, safety, productivity, and predictability performance of each construction work package (CWP) as well as the project overall. The data for those indices will be aggregated from the relevant project management records associated with each CWP such as safety incidents, daily reports, NCR, submittal, issues, risks, punch lists, defects rectification, work inspection requests, etc.

About the Authorfounder

Bassam Samman, PMP, PSP, EVP, GPM is a Senior Project Management Consultant with more than 35-year service record providing project management and controls services to over 100 projects with a total value over the US $5 Billion. Those projects included Commercial, Residential, Education, and Healthcare Buildings and Infrastructure, Entertainment and Shopping Malls, Oil and Gas Plants and Refineries, Telecommunication, and Information Technology projects. He is thoroughly experienced in complete project management including project management control systems, computerized project control software, claims analysis/prevention, risk analysis/management (contingency planning), design, supervision, training, and business development.

Bassam is a frequent speaker on topics relating to Project Management, Strategic Project Management, and Project Management Personal Skills. Over the past 35 years, he has lectured at more than 350 events and courses at different locations in the Middle East, North Africa, Europe, and South America. He has written more than 250 articles on project management and information systems featured in international and regional magazines and newspapers. He is a co-founder of the Project Management Institute- Arabian Gulf Chapter (PMI-AGC) and has served on its board of directors for more than 6 years. He is a certified Project Management Professional (PMP) from the Project Management Institute (PMI), a certified Planning and Scheduling Professional (PSP), and Earned Value Professional (EVP) from the American Association of Cost Engineers (AACE) and Green Project Management (GPM).

Bassam holds a Masters in Engineering Administration (Construction Management) with Faculty Commendation, George Washington University, Washington, D.C., USA, Bachelor in Civil Engineering – Kuwait University, Kuwait and has attended many executive management programs at Harvard Business School, Boston, USA, and London Business School, London, UK.


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