TIME-COST ACCOUNTS and TIME-COST LEDGERS 

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Time-Cost Accounts and Time-Cost Ledgers


            Time aspects - such as dates of Start and Finish of all major Project Elements and their financial cost progress -  are extremely important for Project Management in general, and for Cost Engineers in particular. These aspects make the Project Accounting more complex than  the Business Accounting. Besides the dual-entry accounting structures - such as accounts, journals, and ledgers - very similar to those of Business Accounting,  Project Accounting has also special time-cost structures. They are the Time-Cost Accounts and Time-Cost Ledgers that deal with the distribution of costs - FORECAST versus ACTUALS - in the time frame of the Project.

 The days when bookkeeping was done using pen and paper are gone. Today - whether in Business Accounting or in Project Accounting - all bookkeeping is done using computer software. There are many computer programs for Business Accounting, but for Project Accounting there is so far only one (click here); hence, many pictures in our articles refer to TECA.


 Time-Cost Accounts

TIME-COST ACCOUNT represents the mandatory supporting account for its corresponding Project Cost Account. The Time-Cost Account shows the distribution of FORECASTS within the Project Time-Frame, defined by Project Periods. Using the FORECAST value, start and finish dates, and the distribution factors (F1 and F2) furnished by the related Project Cost Account, this distribution is created in each Time-Cost Account already at the project initiation stage. Later, whenever found appropriate by the Cost Engineer, the start and finish dates, and the distribution factors distribution factors - and hence the distribution itself - can be edited. However, the FORECAST value can be edited only via the Forecast Journal Entry. The tabular data presentation, histogram, and S-curve are the integral part of each Time-Cost Account.

Click here for an example of the Time-Cost Account named C011.C - Turbine Building, Unit #2, Interior. Here, the $-FORECAST of $97,640,200 is distributed in the period from 07/01/2005 to 06/30/2007, according to factors F1=1 and F2=-2, with 5% withholding ($4,882,008) assigned to the last Project Period (#26). The related histogram (click here) and the S-Curve (click here) describe the distribution shape.  By selecting different F1 and F2 factors, and then clicking the button GENERATE, the Cost Engineer can change instantly the shape of this Forecast Distribution. Instead of this automatic distribution, the cost figures can be also entered manually, after making click on the button named REVISE MANUALLY.

Time-Cost Accounts are generated automatically (by TECA) at the time of creating the corresponding Project Cost Accounts. The attributes of Project Cost Accounts, such as Start Date, Finish Date, and Forecast Distribution Factors (F1 and F2), define the distribution of $-FORECAST in the corresponding Time-Cost Accounts. The shape of the cost distribution (click here) can be linear, front-shifted, end-shifted, center-shifted, concave shape, or customized. The Cost Engineer defines this shape based on pertinent historical project information as well as on his own professional experience.  At any time, this time-cost distribution can be edited. However, the value of $-FORECAST can be edited only via Forecast Journal entries.


 Time-Cost Ledgers

TIME-COST LEDGERS comprise data of both FORECASTS and ACTUALS, showing distribution of costs in the Project time frame, defined by Project Periods. There the FORECAST data arrive from the Time-Cost Accounts, and the ACTUALS data arrive from posted Entries made in the Expense Journal. The following Time-Cost Ledgers are available:

        There are many LEDGERS in TECA, and they are accessible from the Ledger Menu screen; click here to see the screen picture. The time-cost ledger buttons are gathered in the right block.

Ledger #1 - Forecast versus Actuals, Account Summary

This ledger lists all existing Time-Cost Accounts, where each record shows the total current value of $-FORECASTS versus that of $-ACTUALS for every account. It is a special ledger, because it allows for editing of the forecast distribution shapes of many accounts at once. Hence, it is a very convenient tool for the Cost Engineer for defining and/or editing the Start and Finish Dates, and also shapes of $-Forecast Distributions. The figures and distribution of $-ACTUALS cannot be edited, because these cost figures and the related distributions are automatically supplied by TECA, based on the posted Journal Entries made in the Expense Journal.

Click here for an example of the Ledger #1 screen, entitled Time-Cost Summary Ledger, Forecast v. Actuals. Here, parameters of all Project Cost Accounts are listed, showing also the current values of FORECAST and ACTUALS of each account. By selecting data from the combos adjacent to the white-background editable data fields (Start Date, Finish Date, F1 and F2), and then clicking the button UPDATE , the Cost Engineer can edit at once the $-FORECAST distribution shape of all displayed Time-Cost Accounts.

Ledger #2 - Forecast versus Actuals, Single Accounts

This ledger comprises data of all all Time-Cost Accounts, where any displayed Account shows the current values and time-cost distribution of $-FORECASTS versus $-ACTUALS. On this screen, the cost figures and distribution of both $-FORECAST and $-ACTUALS cannot be edited. Namely, the $-ACTUALS data arrive automatically from posted Journal Entries made in the Expense Journal, and the $-FORECAST data arrive from the Time-Cost Account.

Click here for an example of one of the many screens of the Ledger #2. This screen, entitled C010.C Turbine Building, Unit #2, Structure, shows the time-cost distribution of both $-FORECAST and $-ACTUALS. Well visible are the periodical figures of Forecast versus Actuals, indicating that construction of this Project Object was completed with the delay of three Project Periods (completed on July 1, 2006 instead of October 1, 2005) and with the cost overrun of $3,091,164.  Click here to display the pertinent histogram, and click here to display the S-Curve of this Time-Cost Account.

Ledger #3 - Forecast versus Actuals, by Project Periods

This ledger covers all Project Periods, showing costs of $-FORECASTS versus $-ACTUALS as they occurred in each Project Period. Here, the cost figures of both $-FORECAST and $-ACTUALS cannot be edited. Namely, the $-ACTUALS data arrive automatically from posted Journal Entries made in the Expense Journal, and the $-FORECAST data arrive from the Time-Cost Account.

Click here for an example of one of the many screens of the Ledger #3. This is the Project Period #13, from April 1, 2005 to June 30, 2006. The monetary and percentage overrun and under-run of each Project Object are displayed, pointing out for the overall  financial progress of 38.76% related to this Project Period #13.


Remarks

         Be aware that all data are placed in the Ledgers automatically, by the computer, based on posted Journal entries made in the Forecast Journal and in the Expense Journal, without any need on part of the Cost Engineer to do any data retrieval and calculations

        You may be also aware that the dollar figures of FORECASTS as well as ACTUALS are always approximate figures, based on the engineering judgment. The figures of FORECAST arrive from Project Cost Estimate and subsequent Change Orders, entered via the Forecast Journal. The figures of ACTUALS are obtained from Earned Values and Earned Work figures that are always approximate, based on field reports, procurement reports, and engineering reports. Nevertheless, the comparison of FORECASTS versus ACTUALS allows the Project Cost Engineer - and the whole Project Management - for fair assessment of project financial progress of all Project Objects as well as that of the total Project.

        On the other hand, the dollar figures arriving from the Booking Journal and from the Commitment Journal are always true, as they are based on concrete documents, such as invoices, purchase orders, and bank statements.  The time-cost distribution of these costs - Bookings and Commitments - belongs to D-E Project Accounting, and you will find more on this subject in Article #6, Article #7, and Article #8.        


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