21.2 Translating Schedule Change into Cost Impact
Key Takeaways
- Blueprint task 5.C (estimate how schedule changes translate into cost impacts) and 2.N (support time compression cost analysis) require a cost engineer to put a defensible number on time.
- Schedule change produces three cost consequences — time-related cost, disruption, and escalation — plus liquidated damages and acceleration cost as commercial consequences.
- Prolongation cost is calculated on the period of culpable critical delay, not the whole extended duration, and delay that only consumes float carries no prolongation entitlement.
- Time compression options should be sequenced re-sequence first, added resource second, sustained overtime last, and every resource-based option must be priced with its congestion or productivity-decay effect.
- The measured mile is the strongest disruption method because it benchmarks the project's own undisrupted productivity, which is why contemporaneous productivity records are decisive.
21.2 Translating Schedule Change into Cost Impact
Blueprint task 5.C is "estimate how schedule changes translate into cost impacts." Task 2.N adds "support time compression cost analysis." Together they describe the single most valuable thing a cost engineer does at the cost-schedule interface: putting a defensible number on time.
1. The Three Cost Consequences of Schedule Change
| Consequence | Mechanism | Typical magnitude |
|---|---|---|
| Time-related cost | Extended duration keeps time-dependent resources on site | Predictable and calculable |
| Disruption | Changed sequence degrades productivity on unchanged work | Large, variable, hard to prove |
| Escalation | Work pushed into a later period costs more | Calculable from the index |
Plus two commercial consequences: liquidated damages for late completion, and acceleration cost if the delay is to be recovered.
2. Time-Related Cost
Time-related (or "prolongation") cost is the daily or weekly burn of resources that exist because the project is running, not because a specific activity is being performed.
| Included | Excluded |
|---|---|
| Site management and supervision staff | Direct craft labour on work packages |
| Site facilities, offices, accommodation | Permanent materials |
| Long-term plant and equipment hire | Activity-specific plant |
| Site services: power, water, security, waste | Subcontract lump sums |
| Insurance and bonding, where duration-based | Design fees, unless duration-based |
| Small tools and consumables | — |
Worked prolongation calculation. A project is delayed 6 weeks by a late-issued permit. Time-related costs run at:
| Item | Weekly cost |
|---|---|
| Site staff (14 people, loaded) | $63,000 |
| Site establishment and services | $18,500 |
| Tower crane and hoist hire | $22,000 |
| Insurance and bonding (duration-based portion) | $4,500 |
| Total time-related cost | $108,000 / week |
Prolongation cost = 6 weeks x $108,000 = $648,000.
Now add escalation. If $9,000,000 of remaining work shifts six weeks later and escalation runs at 4.2% per annum, the escalation impact is approximately $9,000,000 x 0.042 x (6/52) = $43,600.
Total identified impact: $691,600, before any disruption claim. That figure is defensible because every component is traceable to a rate and a duration.
[!IMPORTANT] Prolongation is calculated on the period of delay, not the whole project. The standard error is to apply the weekly rate to the total extended duration rather than to the period of culpable delay, or to claim it for a delay that consumed float without moving the completion date. Time-related cost is recoverable when the delay is critical and the entitlement exists.
3. Float and the Cost of Delay
Float is the buffer between a schedule change and a cost impact, and the distinction drives the answer to most exam scenarios.
| Situation | Cost consequence |
|---|---|
| Delay to an activity with sufficient total float | No prolongation; float consumed; risk exposure rises |
| Delay to an activity on the critical path | Full time-related cost plus escalation, plus LDs if completion moves |
| Delay consuming all remaining float | Activity becomes critical; further delay is fully costed |
| Concurrent delays from both parties | Entitlement is contested; typically time without money |
The second row is why float ownership is a commercial question. Contracts that state float is a shared project resource, or that it belongs to the party who first needs it, produce different outcomes from contracts that are silent.
4. Time Compression Cost Analysis (Task 2.N)
When the delay must be recovered, the analysis is the crashing calculation from Section 9.1, applied commercially.
Worked compression decision. A project is 6 weeks late against a contract date carrying $40,000 per week in liquidated damages. Time-related cost is $108,000 per week. Three recovery options:
| Option | Weeks recovered | Direct cost of the option | Time-related saving | LD avoided | Net effect |
|---|---|---|---|---|---|
| A: Re-sequence (no added resource) | 2 | $35,000 | $216,000 | $80,000 | +$261,000 |
| B: Add a second erection crew | 4 | $520,000 | $432,000 | $160,000 | +$72,000 |
| C: 6-day weeks, all trades, 8 weeks | 5 | $890,000 | $540,000 | $200,000 | −$150,000 |
Options A and B are net beneficial; C is not. But the table is incomplete in an important way: option C's direct cost should also carry a productivity decay allowance for sustained overtime, and option B's should carry a congestion allowance for the added crew. Including those effects widens the gap further, and a compression analysis that omits them systematically overstates the benefit of resource-based acceleration.
[!TIP] Sequence the options, do not choose one. Re-sequencing is almost always the first move because it is cheap and carries no productivity penalty. Added resource is second. Sustained overtime is last, because its cost rises while its effectiveness falls the longer it runs. A recovery plan that opens with a six-day roster has usually skipped the cheaper options.
5. Disruption
Disruption is lost productivity on work that was not itself changed. It is the largest and least provable of the three consequences.
| Measurement approach | Basis | Strength |
|---|---|---|
| Measured mile | Compare productivity in an undisrupted period against the disrupted period on the same work | Strongest, when a clean period exists |
| Earned value comparison | Compare productivity factor before and after the disrupting event | Good when records support it |
| Industry study factors | Published efficiency-loss factors for overtime, stacking, congestion | Weakest; a fallback, not a first choice |
Measured mile example. Pipe erection achieved 0.72 hours per diameter-inch in the undisrupted period. After 34 change orders, it ran at 0.94 hours per diameter-inch across 41,000 diameter-inches at $71 per hour.
Lost hours = (0.94 − 0.72) x 41,000 = 9,020 hours. Disruption cost = 9,020 x $71 = $640,420.
The method is persuasive precisely because it uses the project's own achieved productivity as the benchmark rather than an external study — which is why the contemporaneous productivity records described in Section 17.4 matter so much.
A project is delayed six weeks by a late-issued permit on the critical path. Time-related costs are site staff $63,000, site establishment and services $18,500, crane and hoist hire $22,000, and duration-based insurance and bonding $4,500 — all per week. Separately, $9,000,000 of remaining work shifts six weeks later, with escalation at 4.2% per annum. What is the identified impact before any disruption claim?
A project is six weeks late against a contract carrying $45,000 per week in liquidated damages, with time-related cost of $108,000 per week. A re-sequencing plan would recover 2 weeks at a direct cost of $35,000. A six-day-week roster across all trades for eight weeks would recover 5 weeks at a direct cost of $890,000. Which analysis is correct?
A contractor claims disruption after 34 change orders. Pipe erection achieved 0.72 hours per diameter-inch in the pre-change period and 0.94 hours per diameter-inch across 41,000 diameter-inches afterward, at $71 per hour. Which method is being used, why is it preferred, and what is the calculated amount?