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Published June 2021, Updated April 2023
Published July 2021, Updated January 2024
Schedule Cost Loading: Tips for 01 32 01 Cost Compliance
So what does this mean for you?
Instead of having a schedule of values and a project schedule as separate tools, they are combined into a cost-loaded project schedule.
This is what the government uses throughout the project to determine earnings for progress payments.
In the sections below, we’re providing insight and tips for the cost-loaded schedule requirements per the standard UFGS 01 32 01.00 10 specification, including:
- Reasonable Cost Loading Without Front Loading
- Cost-Loaded Closeouts
- Cost-Loaded Punch List Correction
- CLIN Balancing
Navigating schedule cost loading for federal projects can be challenging. This article simplifies the process, providing guidance and tips to ensure compliance and optimize project management.
From the contractor’s perspective, the requirements we’re discussing are important because if the schedule isn’t compliant, it can be rejected cause delays in progress payments due to the direct link from the schedule to payment.
From the government’s perspective, these requirements are important because they balance project risk. For both parties, the cost loading requirements also provide a level of flexibility for schedule management.
If your contract includes a requirement similar to the section below (from the standard UFGS 01 32 01.00 10 specification), your project requires the schedule to serve as the basis for progress payments.
Activity costs must be reasonable, and without front-end loading.
Figure 2
Figure 1
Reasonable Cost Loading without Front Loading
If you’re asking - what constitutes “reasonable”? Our recommendation is to distribute costs among work-in-place activities, or those which represent placement, installation, or work performed.
When these activities take place, the government can acquire title to that work through the progress payment process (FAR 52.232-16, FAR 32.503-14).
Avoid front-loading your schedule by ensuring costs are evenly distributed throughout the entire contract period, including costs for commissioning, testing, inspections, and punch list activities.
Cost loading can be reviewed for reasonableness and front-end loading by sorting activities by cost and reviewing the values assigned throughout the project. Take note of activities that have disproportionate amounts, or work-in-place activities that don’t have any costs assigned but should.
The project’s S-Curve can also visually indicate if there is front loading. Schedules with significant costs upfront create a bump earlier in the curve (Figure 1) than if the costs were more evenly distributed (Figure 2).
For O&M manuals, they need to be cost-loaded not less than $20K.
And as described in the section below, payment will be provided once the government approves the submittal, not when the contractor submits.
Cost Loaded Closeout Deliverables
The specs speak specifically to as-built drawings and O&M manuals as cost-loaded closeout deliverables.
As-built drawings need to be cost loaded not less than $35K, or 1% of the present contract value, whichever is greater, up to $200K.
Cost Loaded Punch List Correction
1% of the contract value needs to be assigned to the “Correction of Punch List from Government Pre-Final Inspection” activity. (This is also a Mandatory Task described in the standard specifications).
This requirement balances risk for the government by having these costs designated towards the end of the project and to ensure the punch list correction takes place.
As an upside however for both parties, it also provides a level of flexibility when statusing activities and schedule management as explained in our article here.
The first step to balance CLINs is to create the Standard Activity Coding Structure as explained in our USACE SDEF Explained article and assign the codes to all activities.
Once the CLIN activity codes have been applied, you can group and sort within the scheduling program to assign costs and ensure they add up to the total amount of each CLIN.
If you’re working with a USACE project that uses RMS (USACE’s Resident Management System), CLIN balancing is especially important. RMS will kick back the schedule when you try to upload if it the CLINs aren’t balanced.
For a more detailed step-by-step process on balancing CLINs in a project schedule, see our article here.
CLIN Balancing
A project’s Contract Line Item Numbers, or CLINs, represent a portion and cost of the contract. A portion of the contract could be a service, a product, or a combination of both.
All project CLINs have their own value, and when you add them up, it equals the total contract value.
The requirement below speaks to the total value of all activities coded to a CLIN activity code needing to equal the value of that CLIN – in other words, “balanced”.
Example of a Cost Loaded Schedule
What is a cost loaded schedule?
A cost loaded schedule has costs assigned to activities throughout the project. By assigning these costs, teams can better forecast and monitor project expenses, identify potential budget overruns, and evaluate project progress against the financial plan.
What is the purpose of a cost loaded schedule?
A cost-loaded schedule combines schedule activities and their costs, giving a clear picture of how money is spent over time. This helps teams manage budgets, plan for expenses, and track progress, making project management smoother and more efficient.
What are the benefits of a cost loaded schedule?
Cost loaded schedules offer benefits for managing projects by giving a clearer picture of how resources will be used over time. They also make tracking progress easier especially using S-Curves, so teams can spot issues, risks, and make adjustments as needed.
Are there any specific requirements for cost loading a schedule for a military or federal construction project?
Specific cost loading requirements for military or federal construction project may include limitations on front loading and early activities, required costs for specific close-out documents, required costs for punch list correction, and correct balancing of the contract’s line item numbers (CLINs).
What does an example of a cost loaded schedule look like?
The snapshot below is an example of what a cost loaded schedule looks like. There are budgeted costs assigned to each activity. Since this is a military construction schedule, each activity is also assigned to a project-level activity code that groups the activities by the project’s contract line item number, or CLIN. The total cost of activities coded to each CLIN needs to equal that CLINs value as stated in the contract.
FAQs
Summary
When your contract requires the schedule to serve as the basis for progress payments, instead of having a separate schedule of values and project schedule, they’re combined into a single cost-loaded project schedule.
It’s important the cost-loading requirements are successfully executed in the schedule, so that:
- the contractor doesn’t have issues with schedule acceptance and progress payments,
- the government has balanced risk for costs, and
- both parties have flexibility for schedule management.
This article shared insight and tips for cost-loading schedule requirements per the standard UFGS 01 32 01.00 10 specification, including reasonable costs without front loading, closeouts, punch list correction, and CLIN balancing.
Questions or comments? Reach us at connect@cpm-ss.com.
Thanks for reading.
Related Articles:
New to USACE Schedules? 3 Things to Know
S-Curve from a Construction Schedule (with Examples)
How to Balance CLINs in a MILCON Schedule
P6 Mandatory Requirements
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This blog is for general informational purposes only and is not to be considered an official interpretation or enforcement policy of the UFGS standard specifications. As individual project requirements vary, refer to your specific contract. See our Terms and Conditions and Disclaimer for additional information.
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