M&SCA of E. PA - PM/Foreman Training Program - Day 2
Instructor: John Koontz
Morning - Job Cost Control/Managing Project Labor Cost
Afternoon - Project Billings and Maintaining Positive Cash Flow
Morning: Job Cost Control/Managing Project Labor Cost
In this session, the instructor will help attendees to gain an understanding of the job cost control and labor cost trending methods as detailed in the Job Cost Control section of the MCAA Project Manager's Manual. All project managers and foremen must learn to use their job cost control system as a primary management tool to control and cause a positive project outcome rather than simply focusing on cost documentation and cost history. Great project managers and great foremen CONTROL their project cost while their average peers only tend to WATCH project cost. This basic session is geared to new or potential project managers and foremen with little or no experience in job cost control systems and procedures and as a great refresher to more experienced project managers.
The instructor will provide an energetic presentation and discussion, which addresses the following topics and answers the following questions regarding job cost control.
- Review a great job cost control analogy for understanding the project manager and foremans role and responsibilities for job cost control.
- What is job cost control and what is the most important function of a job cost control system?
- Great job cost control is required to have great project documentation.
- How is the mechanical schedule related to the labor cost control system?
- What the different types of profit?
- What are the four primary objectives of job cost control?
- What is target gross profit and how is different from originally estimated profit?
- What are 5 categories of direct job costs and how do they drive project managers focus of cost control?
- What are the responsibilities of a project manager and a foreman regarding accurate project profit and cost forecasting?
- What is sandbagging and fading and how do they occur?
- What are the basics of cost forecasting philosophy regarding showing gains and losses earlier or later? Why is this important to understand and practice?
- How does an accurate or inaccurate profit forecasting effect company management?
- Labor cost is the absolute key to accurate project cost forecasting. Why? How?
- How can labor cost be accurately forecasted?
- What is the relationship between the Project Outcome Influence Curve? and great job cost control?
- The most critical point in job cost control is 15-30% complete. Why?
- The labor cost management system is your early warning system and your scoreboard.
- Review basic labor cost control concepts.
- Review the general rules of thumb for setting up great labor cost control systems.
- Discuss how to determine fairly accurate % complete estimates.
- The importance of managing: your manpower curve and optimum crew size.
- The importance of tracking, forecasting, and managing hourly mixed crew rate.
- The importance of having a great PM/Foreman partnership in managing labor cost.
- What is labor trending and how do you do it well? What is earned value?
- Review labor cost trending methods.
Afternoon: Project Billings and Maintaining Positive Cash Flow
Maintaining positive cash flow is one of the mechanical contractor's greatest challenges. The construction industry's standard billing and payment model is a formula that has the potential to create poor cash flow on almost every project. This session focuses on how the project manager and project foreman, with a great partnership of planning, creativity, excellent project execution, and positive customer relationships can regularly create positive project cash flow on most projects.
In this session, we will review and discuss the following:
- Cash is the lifeblood of the company. Why?
- What is positive cash flow?
- How does positive/negative cash flow affect the company?
- What are the primary causes of cash flow problems?
- Why are GC?s and CM?s less concerned with cash flow than mechanical contractors?
- How does a Project Manager and Project Foreman manage cash flow?
- What is the difference between over-billing and positive cash flow?
- Always bill for the full amount allowable
- Developing a schedule of values
- What is front-end loading and why is it necessary?
- Always manage your cash flow
- What are the keys to achieving and maintaining a positive cash flow position?