Question

In managing labour cost overruns, two main approaches can be adopted: tracking actual costs by resources or tracking actual costs by activities. Each method has its own strengths and limitations, particularly when applied to infrastructure projects versus building projects. The choice of system directly impacts the accuracy of identifying losses, productivity, and estimate at completion.

So the open question remains: Which approach do you believe provides the most effective control—tracking by resources or by activities?

SatyajitM001 · Accepted Answer

Dear @samehtalat ,

For us Actual Cost tracking at Activities makes more sense, irrespective of type of projects.

In InEight, as we prepare Budget at Activity level (Cost Items), I think it's better to track it also at the same level.

During project execution period, Resources (Labor, Equipment mainly) may get swap within the resource categories sometimes (ex. additional "equipment" can reduce the efforts of "labor"); or even one particular category (say Equipment) may get replaced by higher capacity/specs of eqpt., within the same activity.

So, tracking at Resource level will be very much complicated. Instead, at Activity level it is very straight forward. Also, as we earn (Earn Value) based on the Activity Qty./Percentage complete, it is better to track Actual Cost also at the same level.

David.Gray · Accepted Answer

@samehtalat this is an interesting question.  My budget for self performed work would be formed based on a combination of resources by activity, the actual costs would be assigned to the activity and this would allow the resources to fluctuate within an activity while monitoring actual cost per unit relative to budget.  However on Buildings projects we don't often break up the subtrade scopes into the level of detail for cost tracking by activity since there isn't productivity risk for us.