Podcast
Questions and Answers
The total value of all contracts in a year is used to allocate home-office overhead to individual projects.
The total value of all contracts in a year is used to allocate home-office overhead to individual projects.
True
Accurate estimates of project duration are not essential for overhead allocation.
Accurate estimates of project duration are not essential for overhead allocation.
False
Home-office overhead is always allocated based on the number of worker hours required for a project.
Home-office overhead is always allocated based on the number of worker hours required for a project.
False
The home-office overhead charged to a project is always a fixed percentage of the project value.
The home-office overhead charged to a project is always a fixed percentage of the project value.
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It is not necessary to create a schedule when preparing a project estimate.
It is not necessary to create a schedule when preparing a project estimate.
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More sophisticated allocation methods can be devised that take into account the extent of home office involvement in a project.
More sophisticated allocation methods can be devised that take into account the extent of home office involvement in a project.
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The allocation of home-office overhead begins with an estimate of the project cost.
The allocation of home-office overhead begins with an estimate of the project cost.
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Home-office overhead is allocated equally to all projects undertaken within a year.
Home-office overhead is allocated equally to all projects undertaken within a year.
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The early-start schedule is always ideal for project planning.
The early-start schedule is always ideal for project planning.
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The late-start schedule is more flexible than the early-start schedule.
The late-start schedule is more flexible than the early-start schedule.
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The start times of activities are determined without considering any constraints.
The start times of activities are determined without considering any constraints.
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Contractors never use late-start schedules due to their shortcomings.
Contractors never use late-start schedules due to their shortcomings.
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Staggering deliveries of materials can increase job site congestion.
Staggering deliveries of materials can increase job site congestion.
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The early-start and late-start schedules are not useful for predicting cash flow requirements.
The early-start and late-start schedules are not useful for predicting cash flow requirements.
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The chapter on resource allocation and leveling does not discuss scheduling procedures.
The chapter on resource allocation and leveling does not discuss scheduling procedures.
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The area between the early-start schedule and the late-start schedule represents a fixed amount of money.
The area between the early-start schedule and the late-start schedule represents a fixed amount of money.
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A project manager can completely eliminate the need for rework and inspections in a project.
A project manager can completely eliminate the need for rework and inspections in a project.
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Float is the amount of time added to an activity to ensure its timely completion.
Float is the amount of time added to an activity to ensure its timely completion.
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An early-start schedule is always preferred over a late-start schedule.
An early-start schedule is always preferred over a late-start schedule.
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The sequencing of activities in a project depends only on physical constraints.
The sequencing of activities in a project depends only on physical constraints.
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Resource allocation is not a critical aspect of project planning.
Resource allocation is not a critical aspect of project planning.
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A project manager has no control over the float of an activity in a network.
A project manager has no control over the float of an activity in a network.
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Activity duration analysis is not essential for project planning.
Activity duration analysis is not essential for project planning.
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Construction scheduling is a simple process that does not require any specialized skills or knowledge.
Construction scheduling is a simple process that does not require any specialized skills or knowledge.
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Study Notes
Home Office Overhead
- Home office overhead includes all costs incurred at the home office that cannot be attributed easily to one project.
- The total value of all contracts in a year is used to allocate the home office overhead to each project.
- The allocation of home office overhead begins with a separate estimate of the anticipated cost to maintain the home office at the corporate level.
- Home office overhead can be charged to a project in proportion to the total value of all projects undertaken within the period of 1 year.
Scheduling Issues
- Early-start and late-start schedules can be used to predict cash flow requirements on the project.
- The early-start schedule has a disadvantage in that resources may not be consumed in a uniform fashion on the project.
- The late-start schedule has a disadvantage in that it may not allow for flexibility in the project.
- A compromise between the two types of schedules can provide the ideal solution.
Activity Durations
- Determining activity durations is important, and some judgment must be exercised whenever activity durations are determined.
- The project manager should also try to anticipate some rework and the loss of some time due to inspections.
Scheduling Factors
- Scheduling should satisfy various constraints that may be imposed by the contract or by specific needs of the firm.
- The sequencing of activities depends on a variety of constraints or considerations.
- Other constraints (resource, environmental, management, safety, etc.) are not necessarily used to order the activities.
- Activity start times are established such that the resulting schedule reflects these noted constraints.
Float
- Float is the leeway that is assigned to various activities in a network.
- A project manager can effectively manipulate float to control a project.
- An early-start schedule has obvious advantages in that many activities are not critical.
- In a late-start schedule, all activities are critical and the float of each activity has been reduced to 0.
Resource Allocation and Leveling
- An additional consideration is that of materials delivery and storage.
- Staggering deliveries can reduce job site congestion and simplify coordination efforts on site.
- Delaying large payments for items can reduce cash flow requirements.
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Description
Learn about home office overhead costs and how they are allocated to projects based on total contract value. Understand the process of estimating and charging overhead costs.
