Methodology of Planning the Course of the Cumulative Cost Curve in Construction Projects

Abstract

Appropriate planning and effective monitoring of the execution of construction projects is important with regard to their successful sustainment of implementation. Time and cost are key elements that determine the success or failure of construction projects. The obtaining of a rational S-curve course before the start of a construction project that reflects reality is important for all the participants involved in implementing an investment task. The article proposes an original methodology for planning the course of the cumulative cost curve in construction projects. It uses a method of shaping the S-curve, which is well-known in both literature and practical approaches. On the basis of the authors' own research carried out in a homogeneous research group of hotel facilities, the areas of the curve for the correct planning of costs in construction projects were designated, which determine the boundaries of the predicted costs accumulated over time. The data for the development of the authors' research methodology is the result of the authors' own experience and professional work. The authors carried out Bank Investment Supervision in the years 2006-2019 on behalf of the banks that grant investment loans for non-public contracts. Knowing the total cost and duration of the planned construction project, which were determined on the basis of project documentation, cost estimates, and also their own database regarding planned and completed deadlines and budgets of similar investments, 6th degree polynomials of the real costs of the construction works were determined. This approach enabled the correct planning of costs over time and the determination of planned monthly amounts of construction works to be executed.

Cumulative Cost Spent on Construction Projects of Different Sectors

“…In order to obtain the most reliable and real estimate of the costs and duration of an investment, analyses should be conducted in accordance with the actual progress of the project. This was done by the authors of the article in several hundred technical and financial inspections at construction sites throughout Poland [2,31]. The estimated actual costs and duration are not reliable in the first period of the project, and they only stabilize with greater accuracy in the second period of the investment process.…”

“…Increasing values of the amount of work performed on the construction sites constituted the cumulative cost. This cost, which was designated periodically and consistently by the same authors using the audit approach to measurements, determined the course of the S-curve that corresponds to the monitored and controlled construction investment [2,31,[43][44][45]. Collected, measured and processed data concerning the completed construction investments must be considered reliable, consistent and legible.…”

“…The data obtained for the development of the author's analyses, which are presented in the article, come from 15 years of research conducted by Jarosław Konior, and 4 years of analysis by Mariusz Szóstak, who provide Bank Investment Supervision services on behalf of banks granting investment loans for non-public orders. The results of 536 measurements concern 40 construction investments in Poland in 8 construction sectors [31] -Tab. 1.…”

“…The Earned Value Method involves a comprehensive group of methods that are used to control and monitor the progress of construction projects [30]. The method is based on controlling an investment task by cyclically comparing the actual scope of works performed with their planned time and cost of implementation in accordance with the planned schedule and project budget that were adopted at the beginning of the task [31]. The analysis and evaluation of an investment during its implementation is a complex and advanced technique.…”

Monitoring of Time and Cost Variances of Schedule Using Simple Earned Value Method Indicators

“…This tool, "introduced" to construction sites, has been effectively implemented and disseminated. Managers managing complex construction contracts use key words to assess the progress of their schedules, fully describing planned and actual turnover, budget, and timeliness of implementation [4,5]. These include simple control indicators of the earned value method, used in the strategic assessment of the condition of the project-when monitoring the progress of works using the indicator method [6][7][8][9].…”