Module 3: Cost Controls & Budget Tracking
PM for HVAC — Intern Academy
Instructor: S.F. Johnson | Duration: 60–90 minutes
Build a defensible budget baseline, track costs with clear codes, forecast early, and protect margin with tight change control. This module gives you a practical, repeatable framework for weekly cost meetings and month-end reporting.
📘 Learning Objectives
- Create a budget baseline mapped to cost codes and the Schedule of Values (SOV).
- Track commitments, accruals, and actuals; separate labor hours from dollars.
- Use EV (CPI/SPI), cost-to-complete, and EAC methods to forecast finish cost.
- Run a disciplined change process for scope gaps, allowances, and alternates.
- Publish a clean monthly WIP with cash-flow forecast and risk notes.
- Baseline: Freeze the awarded estimate by cost code (e.g., 23-07 Duct, 23-21 Piping, 23-72 Equipment, 23-09 Controls, 01-Gen Conditions).
- SOV: Align SOV divisions to your code rollups. Don’t mix labor/material across unrelated scopes.
- Buckets: Labor (hrs & $), Material, Subcontract, Equipment/Crane, Freight/Tax, OH, Contingency (held by PM).
| Cost Code | Desc | Budget $ | Budget Hrs | Committed $ | Actual $ (to date) |
|---|---|---|---|---|---|
| 23-07-101 | Duct & Fittings | $180,000 | 2,100 | $95,400 | $41,250 |
| 23-72-210 | RTUs & Curbs | $260,000 | 180 | $248,300 | $0 |
| 23-09-330 | Controls (DDC) | $95,000 | 520 | $0 | $12,480 |
Tip: Track commitments (POs/subcontracts) separately from actuals and use accruals to capture received-not-invoiced at month end.
- Weekly: update commitments, hours, and progress %; refresh ETC by code.
- Run EV: CPI (cost), SPI (schedule) at project and major-code level.
- Trend log: risks, pending COs, buyout variance, productivity flags.
- Month-end: accrue receipts; issue AIA billing (G702/703) & WIP.
- Forecast: EAC per code using CPI/ETC; refresh cash-flow curve.
- Review: PM + Superintendent signoff; note corrective actions.
- EV (Earned Value) = BAC × Physical % Complete
- PV (Planned Value) = BAC × Planned %
- CPI = EV ÷ AC | SPI = EV ÷ PV
- EAC (CPI) = BAC ÷ CPI • ETC = EAC − AC
- TCPI = (BAC − EV) ÷ (BAC − AC) → efficiency needed to hit BAC
- Keep a CO log with cost, status, margin, and schedule impact; submit early, update often.
- Track allowances with current balance; move variances to COs when scope solidifies.
- Hold PM contingency centrally; release via internal transfer with notes.
| CO # | Description | Cost | Margin | Sell | Status |
|---|---|---|---|---|---|
| CO-02 | Add VFD on AHU-2 | $5,600 | 18% | $6,829 | Submitted |
- AIA G702/703 progress billing: percent complete per SOV line, minus retainage.
- Cash flow: forecast monthly billings vs vendor payables; protect working capital.
- Close the month with accruals (received not yet invoiced) to avoid shock next cycle.
🧰 Cost Control Mini Tools
📈 EV Snapshot & Forecast
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👷 Labor Productivity Monitor
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💵 Cash-Flow Planner
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🧾 CO Margin Builder
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- Budget baseline locked; changes documented via internal transfer or CO.
- Every code shows: Budget, Commit, Actual, ETC, EAC, variance.
- Labor tracked in hours and dollars; weekly productivity reviewed with Super.
- Pending COs aged > 14 days escalated; allowance balances reported.
- Month-end accruals posted; WIP ties to GL and AIA billing.
🧠 Quiz Yourself
When you finish this module, take the Module 3 Quiz on ConstructIQ.