The cost curve is called the "S" curve, named for the characteristic shape of the curve that plots the distribution of project costs as a function of time. To illustrate the main issues that can be resolved by charting such a curve, we return our previous example of the pouring of concrete foundations. In Figure 6.2 the project-days in which 10 subtasks associated with pouring the concrete foundations were carried out are "Gantt-charted," indicating the days in which this work was completed. The number in the rightmost column, headed "$K", is the amount spent on each subtask for the project-days shown in the chart’s main body. (For simplicity’s sake, we assume here that every activity cost is rated at $1000 a day.) One of the subtasks was carried out from Day 24 through Day 28, i. e., past the 25-day period (25 workdays at 8 hours per day = 200 hours) originally assigned for completing the pouring of the concrete foundations. This subtask, and another that was undertaken later than planned, have been placed in a second section of the chart, below the main data chart illustrating the completion and budget expenditure on the other subtasks that finished within the originally envisioned 25-day work timeframe.
The (S)-curve is obtained as information from the Gantt chart of Figure 6.2 is graphically represented so as to display project budget expenditure of this set of subtasks as a function of time. In the case of the subtasks completed early, the first curve Figure (6.3) is obtained. In the case of subtasks implemented in the later phases and even past the originally-envisioned 25-day period around which the budget was originally designed, the second curve Figure (6.4) is obtained.
If these data are now taken and placed on the same graph, an envelope appears, bounded above by the curve displaying the data on outlays for the subtasks that finished early and from below by the data on outlays for the subtasks that finished late.
Another example will serve to illustrate cost-control approaches to managing what might happen at the overall level of a project. The following table gives the values of the cost of planning in an engineering project for a period of 12 months. At a point six months into the project, we calculate the position and display the crisis presented in Table (6.6)
From the previous table calculate the cost control parameters after 6 months from start of the project.
Figure 6.3 Cash flow in case of early dates.
Figure 6.4 Cash flow in case of late date.
From these parameters we have tools to evaluate the project every month as follows:
The cost of execution is 300 less than the ACWP in this month, so the work is slow but the cost is acceptable.
The reason for this may be due to late hiring of new laborers.
The work is progressing as planned, but work is still slow. Deal with this situation by letting them work on weekends to achieve the required time schedule.
Figure 6.5 Cash flow envelope
Table 6.6 Cost per month
During this month, the work is close to reaching the plan. Now the time schedule is not the only problem but also the cost increase.
This month the work was done more than it was planned. Now the work is going according to schedule and will be back to a normal mode of work, avoiding work on weekends.
Table 6.7 Parameters calculation
The activity increased slightly more than planned, so we are going with the time schedule.
The work is progressing according to plan after 6 months of project. Work is proceeding according to schedule, but there has been an increase in cost. It is expected that the budget at the end of the project will be about $16,000.