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The following section provides some detailed flow sheets that provide an integrated view of the key functionality in the product.

Material Management Philosophy

This flow sheet describes the integration through the organisational structure and across time. Some projects are more complex than others. digiProjects is designed so that the software does not impose artificial constraints on the user. So there are six time phases defined across the top, but not all of these are required. The six phases are:

  1. Estimate – typically this phase is completed pre-project commencement, and is frequently the data used to generate the bid price for the project. When used the estimate is often imported from a spreadsheet, or similar interface. digiProjects can be used to generate estimates.
  2. Budget – the formal definition of the project cost at inception of the project. It is also sometimes viewed as the contract between the executive management and the project managers.
  3. PBD – Preliminary budget – used as a first cut at the engineering cost / man-hours / quantities. At this point estimates are general, and with recognised tolerance for estimate error. Frequently used to identify items with long engineering / procurement lead times, especially when the project is being “fast-tracked”. Bulk orders are often placed for materials with general usability or long lead times.
  4. SBD – Secondary budget – used in larger projects. It is a revised estimate based on the detailed engineering that has been completed up to a specified point. All the budgets are revised and the result becomes the new project “base-line”. On very large projects this process of re-estimation may be repeated a number of times. It is also used to define the state at a specific level of engineering completion. For example, the CAD models are often reviewed at what is called “80% completion design review”, immediately prior to isometric / construction drawing preparation. Material lists and procurement status would all be reviewed at this point to ensure that there were no significant shortages, or arrangements are made to eliminate surplus materials.
  5. BOM – Bills of Material – used to contain the construction drawings. This is the definitive material requirement for the project, often the result of months of detailed engineering effort. This phase is the baseline for the physical fabrication in the work shops, and / or erection of the equipment / material on the site.
  6. Actual – used to record the actual quantities of equipment / material issued to site / sub-contractors / etc. This step is essential as the wastage generated during fabrication and erection is usually significant. If the wastage is not managed effectively material shortages delay completion, and costs go out of control.


The following flow sheet provides a visual model of how the major system components fit together. We have deliberately not shown the costing integration as the model gets too complex to show in a two dimensional manner. (There is no significance in the size of the blocks, just drawn to fit one another)

 Module Overview


Cost Management Philosophy

The costing system is structured so that changes over time are tracked at multiple levels of detail. The time based structure is shown in the blue boxes, and the detail levels in red.

The time based elements are:

  1. Base or Project Budget – this is generally the agreed budget between the company and project management, and as such is a type of contract – The project management team agrees to deliver the completed work at the total cost in the base budget. Frequently this budget will also be agreed and monitored by the client, especially when the contractual basis with the client is anything other than fixed price / turnkey.
  2. Scope Changes – these are all the changes approved by the project management to the base project cost. In other words, someone made a deliberate decision to add / subtract / change the budget. There are many reasons causing changes to be made to a project budget. Perhaps the most frequent are scope changes – the client requests a change or additional feature to the originally agreed design. To get paid the contractor has to have proof of why the change took place, who authorised it, etc. Inadequate management of change is probably the single most important cause of the all too frequent deteriorating relationships between client and contractor.
  3. Other reasons for scope changes are internal engineering changes, either for sound engineering practice reasons, or to rectify mistakes, omissions, bad estimates, etc. Another major source of change is cost escalation and currency conversion volatility.
  4. Control or Current Budget – once a scope change has been approved the project cost is managed against the adjusted figure. The control budget is used for all reporting and variance calculation purposes. The control budget is the basis of the earned value calculations and reporting,
  5. Forecast to Complete / at Completion – the crucial number in all project engineering is “what will the completed cost be?” This question is answered by calculating the remaining cost still to be committed using EVM principles and adding it to the already committed cost.
  6. Commitment – this is the cumulative value of all purchase orders, time sheets, expense claims, and accounting charges. The placement of an order is crucial in that a commitment has been entered into that will result in actual cost being incurred by the project at some later point.
  7. Actual cost – this is the actual expenditure by the project. Actual payments can take place years after the commitment has been recorded due to retentions, performance bonds, etc.

The detail levels are:

  1. Project – this is the highest standard level of summarisation, although we have been asked occasionally to provide multi-project summaries. Budgets are initially developed in a “top-down” manner using stepwise refinement techniques. Later in the project execution cycle budgets can be revised “bottom-up”.
  2. WBS – Work Breakdown Structure – most projects have some form of breakdown into recognised areas, processes, or arbitrary allocations. digiProjects uses a standard industry terminology of “area, sub-area and unit” to describe this progressively more detailed breakdown.
  3. Work Packages – are the task level at which work is performed. Man-hour budgets are constructed though an iterative process, as man-hours are controlled departmentally but allocated to project tasks. Similarly, people (resources) work on packages and record their hours on time sheets, which are processed according to project (the package belongs to a project) and department (the resource belongs to a department / cost centre).
  4. Commodity – is a method of grouping like items, for example motors, pumps, precipitators, stainless steel fittings, etc. Commodity codes are used throughout digiProjects to help users deal with these like items as groups of data. It is a frequently used reporting sort field. The system uses the generic term “Cost Group” to describe this level of detail.
  5. Resource – the resources are generally groupings of either skills or functions. For example, an instrument engineer is a skill, as is a draughtsman. Lifting (cranes) is a function. Other resources used are materials, expenses, etc. This is the general level of detail at which costs are collected. The system uses the generic term “Cost Account” to describe this level of detail. All reporting is generated by summarising upwards from the Cost Account, ensuring consistent and accurate reports. The other major benefit is reporting flexibility because any summarisation request can be met out of this low level structure.
  6. Periods – time related spreading of Cost Account information. This level is the basis for the generation of “S-Curves” and similar time-based reporting. Budgets, costs and forecasts can be analysed over periods.
  7. Cash flow – once items have been refined done to the period level it is possible to apply cash flow profiles to each item to determine the budget, forecast and actual cash flow “S-Curves”