Setup and Operation is the collective term for the costs you incur to establish, run and maintain the construction site itself — as opposed to the direct costs of the construction work, i.e. materials and labour hours on the permanent building elements.
In practice, it is “the cost of being on site”: the infrastructure and administration needed to carry out the project, regardless of which specific building elements are being built.
These costs are usually separated into their own group of accounts or production codes (prod. codes), and typically make up 10–15% of the project’s total costs.
What is included
Setup — establishment
Site fencing, gates and securing the area
Site cabins — office and welfare cabins for the workforce
Cranes, hoists and scaffolding used across the whole site, not tied to one specific trade
Temporary roads, temporary power, water and drainage
Signage and logistics on site
Operation — ongoing
Site management and administrative staff
Cleaning and waste management
Power, heating and fuel during the construction period
Ongoing maintenance of the site setup
HSE costs
In short: Setup and Operation is the fixed overhead of running the construction site. It is charged over time, and it is directly sensitive to how long the project lasts.
Why it is followed up differently
Setup and Operation costs are generally not agreed fixed prices, as is often the case with contract work. They are based on consumption over time, and it is the project management itself that must control and follow up consumption on an ongoing basis.
Some costs are still fairly predictable because they are tied to fixed rental costs — for example renting site cabins. But even these depend directly on the final construction time: the longer the construction period, the longer the rental period and the higher the total cost.
Accrual and completing months
To control the costs, you distribute the budget across the months of the project period. This is what is called accrual.
Once a month has ended, you can choose to complete the month. The planned, accrued cost is then replaced by the actual cost incurred for the period.
The Final Forecast is therefore calculated as a combination of:
Actual posted costs in completed periods
Planned, accrued costs in periods not yet completed
Expense items
Costs in Setup and Operation are created as expense items. Each account or prod. code can have one or more, depending on how detailed you want the follow-up to be. If you need to create many at once, see Create multiple expense items at once.
When creating one, you specify:
Prod. code or account — which prod. code or account the expense item belongs to
Type — either Setup and Operation for general operating costs, or Staffing plan (a plan for staffing over time), where you manage staffing by adding multiple resources per expense item
Period — the time span the cost is distributed over. The project period is set by default, but can be adjusted
Name — AIMZ automatically gives the expense item the same name as the production code you select, but you can change it
Ledger accounts (optional) — which ledger accounts should be linked automatically to the expense item. See Automatic invoice matching with ledger accounts
Cost distribution — the cost is distributed per month. You can choose to:
distribute the remaining budget evenly
distribute the existing budget evenly
use AI with text — for example, write «less at the start, and more towards the end»
With the setting «Unique production code for each expense item», you can choose to follow up only one expense item per account or prod. code. This simplifies follow-up, since actual incurred costs can then be linked unambiguously to the right expense item — there is only one option to choose from. The setting is found under Settings in the top right of the Setup and Operation module.
Budget and forecast per expense item
Each expense item has a budget that is held fixed. The accrued cost reflects this budget at project start, but can deviate as reality departs from what was originally planned.
Important: the budgets of all expense items under an account or prod. code should together match the budget for that account.
Each expense item gets its own forecast. The sum of the forecasts for all expense items within one account is accumulated and affects the Final Forecast for the account — and therefore the project’s total Final Forecast.
Note the terminology: we deliberately say «forecast», not «Final Forecast», when talking about a single expense item. This is to avoid confusion with the project’s overall Final Forecast.
Setting: what should drive the Final Forecast?
Under Settings in the top right of the Setup and Operation module, you can choose between two principles:
1. Budget drives the Final Forecast. The Final Forecast is set equal to the original budget for the expense item, regardless of how the cost is actually distributed. Even if you adjust the distribution between months or complete months with deviations, the Final Forecast remains unchanged.
2. Forecast drives the Final Forecast — the default and recommended choice. The Final Forecast follows the forecast for the expense item, i.e. the combination of actual posted costs in completed periods and planned costs in the remaining ones. This gives a more dynamic, up-to-date picture as deviations arise.
This setting is essential to understand, because it determines whether the handling of deviations actually affects the Final Forecast, or whether the Final Forecast stays locked to the original budget.
Note: in the settings, the options may also be labelled «Forecast» and «Highest of budget and forecast». See What is the difference between «Forecast» and «Highest of budget and forecast» for accrued costs?
Rev. budget
Rev. budget = original budget + approved Change Order Client linked to the expense item. Change Order Client are changes towards the client that give the project additional income.
A rev. budget means the project has more money to work with, because extra funds have been added on the income side. The rev. budget is adjusted only by the cost linked to the relevant Change Order Client — not by anything else.
Two deviation concepts
1. Deviation from rev. budget — the difference between the Final Forecast and the rev. budget.
Positive deviation: the Final Forecast is lower than the rev. budget. You are doing better than budgeted, and have money to spare.
Negative deviation: the Final Forecast is higher than the rev. budget. Less profit than originally assumed.
2. Deviation — the accumulated deviation between the accrued cost for a given month and what was actually posted, summed across all completed months.
If you cannot find these columns, you can make them visible by clicking Columns.
Handling deviations when completing a month
When you complete a month, there will almost always be a deviation. It is rare to plan the cost accrual for a month with complete accuracy.
You then need to decide how the deviation should be handled:
Approve the deviation — the Final Forecast changes in line with the difference between planned and actual cost incurred for the month. This requires the «Forecast drives the Final Forecast» setting to be selected.
Distribute the deviation onwards — if you want to smooth out the deviation so it does not directly affect the Final Forecast, it can be spread across upcoming months.
First, enter edit mode:
Distribution can be done manually by entering figures directly in the table, or via predefined options:
Distribute to the next open month
Distribute to the last month
Distribute proportionally across upcoming months
Distribute evenly across upcoming months
Locked cost price estimate
Some companies want to manage Setup and Operation based on a locked cost price estimate, where the estimate is distributed over the project period once, locked, and all later adjustments are made in the Forecast column. The concept is optional and is activated under Settings in the module.
See the separate article for the full procedure: Locked cost price estimate in Setup and Operation.