How ALICE Calculates Cost

With ALICE, project teams can rapidly explore the impact of different scenarios on project duration and cost. In this article you will learn about the different types of cost that can be calculated in ALICE and how to use the cost calculation features to make data-driven decisions about your projects.

In this article you will learn about:

  • How costs are calculated
  • Direct, Indirect (Overhead) and Idle cost in ALICE
  • How to analyze cost in ALICE

Cost Calculations in ALICE

Every schedule in ALICE will show a total cost figure, which is the sum of three components: Direct Cost, Indirect (Overhead) Cost, and Idle Cost.

  • Direct Costs reflect equipment, labor and materials directly utilized in the schedule [details]
  • Indirect (Overhead) Costs are costs that are incurred based on the duration of the project, and not tied to any specific construction activity [details]
  • Idle Cost is the cost of having a resource (crew or equipment) on-site waiting for work. Idle cost can be optionally omitted from the total cost calculation. [details]

Direct Cost Calculation Details

Direct Cost for Labor and Equipment

For Labor and Equipment, Direct Cost is calculated as: 

  • Direct Cost = Hourly Cost x Hours Used Productively

Where Hourly Cost is the cost per hour of the resource and Hours Used Productively are the hours spent doing work rather than waiting (time spent waiting is calculated as Idle cost).

Direct Cost For Material

For Consumable Material

Direct Cost is incurred at the start of every activity that requires this material.

No Cost is incurred at the start or end of any activity that supplies this material.

For Reusable Material

Direct Cost is incurred equal to the cost of a single resource multiplied by the number actually used by tasks that “require” the resource only.

Example:

  • if on days 1,2,3,4,5,6 the utilization is 0,3,2,0,2,4, then the costs incurred will be 0,3,0,0,0,1 (assuming the unit cost is 1) on the respective days.
  • That is because on day 2 you will buy 3 units that you can reuse on days 3,4,5 but on day 6 you need 4 units and you had already bought 3, so you need to buy one more.
  • No Cost is incurred by tasks that supply that resource.

Indirect (Overhead) Cost Calculation Details

Individual indirect Cost

For each indirect cost, the flat daily rate is multiplied by the total calendar day duration of the project to calculate the individual indirect cost. For example, an indirect cost with a $1,000 daily rate on a project with a duration of 500 days will have a total indirect cost of $500,000.

Total indirect cost

The sum of all individual indirect costs.

Learn more about working with Indirect Cost in ALICE.

Idle Cost Calculation Details

Idle cost is the cost of having a resource (crew or equipment) on-site waiting for work. Idle cost can be a useful way to measure the efficiency of a schedule. However, some users prefer to omit Idle cost from their cost calculations because it does not reflect an actual cost in the same way that Direct and Indirect costs do. 

Idle cost calculations can be disabled for each crew or piece equipment from the resources tab by toggling the Idle cost slider.

It’s important to note that the resource is considered on site the moment it is first needed, and considered off site right after completing the last activity it is needed for.

The easiest way to visualize this is through the graphic below:

mceclip9.png

So the formula for idle cost becomes:

  • Idle Cost = (Time on Site - Time Spent Working Productively) x Hourly Cost

Idle Cost for Crews vs Equipment

Since Crews only spend their working days on-site, but equipment stays there overnight, we need to make the differentiation when calculating Time on Site.

  • For Crews, Time on Site only considers the working hours within a Crew’s calendar.
  • For Equipment, Time on Site is 24 hours & 7 days a week cumulative.

Therefore it is very common to have a high idle cost for Equipment even when the schedule is efficient. This is because crews may only be working (and using the equipment) for 8 hours every 24.

 

Analyzing Cost Data in ALICE

Costs can be viewed from the explore page by clicking on a schedule dot and selecting "Cost Breakdown". A summary of total costs and a more detailed breakdown of costs by category is automatically calculated. Hover over any of the"i" icons for more details about the calculation.



When comparing two schedules, ALICE will represent the cost differences between the two schedules, summed up and also broken out by cost categories:




Cost can also be viewed from the Analyze page within the analytics section.

 

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