Questions and Answers
What is the primary objective of cost control in construction?
Sunk costs are costs that can be recovered in the future.
False
What is a cost plan?
A strategic document that includes a series of cost estimates at various stages of design development.
Cost analysis is the systematic breakdown of __________ of buildings already planned or built.
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Match the following cost control terminology with their definitions:
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What is the purpose of cost research in construction?
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What are the four components of value in the built environment?
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Value in the construction industry is solely based on its economic cost.
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The final costing advice may include elements like budget estimating and __________ costs.
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What does approximate estimating aim to provide?
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List the three categories of methods for preparing approximate estimates.
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What is the primary advantage of separating floor area for different construction methods?
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The storey enclosure method has considerable application in practice.
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What is the weighting factor applied to ground floor area?
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The total superficial area in square metres is multiplied by a ___ to obtain the estimated cost of the building.
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Match the cost planning methods with their descriptions:
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What adjustment factor is applied to basement floors?
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Which of the following is a disadvantage of the storey enclosure method?
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Study Notes
Cost Control in Construction
- Cost control is essential for maximizing profit and minimizing expenses in the construction industry.
- Management's effectiveness in controlling costs determines organizational success.
- Key objectives include avoiding waste of materials, labor, and equipment and ensuring project delivery within budget.
Importance of Cost Control
- Avoiding sunk costs is crucial; these are past expenses that cannot be recovered.
- Emphasis on monitoring future revenues and costs to prevent unnecessary expenditure.
- Cost overruns can occur from delays, necessitating careful schedule management.
Cost Planning
- A cost plan encompasses all construction and associated costs, forming the basis for budget allocations.
- It aids in resource management and provides targets against which the project's financial progress can be gauged.
Cost Control Terminology
- Budget: An itemized estimate of total project costs.
- Cost Check: Process of comparing anticipated costs against targets during design development.
- Cost Analysis: Breakdown of cost data from past projects for planning future construction.
- Elements: Components of a building with specific functions (e.g., walls, floors, roofs).
- Cost Research: Investigating costs to establish guidelines for future projects, including maintenance and operating costs.
Purpose of Cost Control
- Ensures client expenditure remains within agreed budgets.
- Seeks a balanced design expenditure across project elements.
- Aims to deliver value-for-money projects through careful financial planning.
Cost, Price, and Value
- Cost refers to total expenditure for contractors, while price is what they charge clients.
- Value is often subjective, depending on demand and supply dynamics; it encompasses use value, esteem value, cost value, and exchange value.
Cost Advice by Quantity Surveyors
- Quantity surveyors serve as primary cost advisers throughout the project lifecycle.
- Key responsibilities include providing reliable budget estimates, tendering advice, and analyzing cost implications of design changes.
Preliminary Estimates
- Approximate estimating is conducted at early project stages to forecast costs, enabling clients to understand financial commitments.
- Methods for preparing estimates include measurement of quantities, pricing, and adjustments based on available specifications.
Estimation Methods
- Single Rate Estimating: Uses a single cost method for a project, such as functional unit or cubic capacity.
- Multiple Rate Estimating: Employs varied rates based on different project elements.
- Computer Aided Estimating: Incorporates advanced technology for accurate cost modeling.
Specific Estimation Methods
- Functional Unit/Unit Method: Calculates costs based on the number of units (e.g., beds in a hospital).
- Cubic Method: Estimates based on building volume but is less favored due to less accuracy with quality variations.
- Floor Area/Superficial Method: Measures total floor area to derive unit costs, widely used for initial project estimates.
- Storey Enclosure Method: Involves a detailed analysis of external measurements, allowing for better comparisons but requires more calculations.
Challenges in Estimation
- Estimation accuracy may diminish due to factors like design differences, external work costs, and abnormal conditions.
- Each method has specific advantages and disadvantages to consider during the estimating process, influencing which method to apply based on project needs.### Cost Calculation for Building Floors and Walls
- Additional cost for upper floors is calculated using a weighting factor:
- First floor: 0.15
- Second floor: 0.30
- Third floor: 0.45
- Each additional floor increases the factor by 0.15.
- No weighting factor applies to the area of ceilings measured on the external wall face, regardless of roof type.
- Walls above ground level to eaves are calculated once without weighting.
- Walls below ground (basement) receive a weighting factor of 2.
- Overall objective is to derive a total superficial area in square meters for pricing.
- Total storey-enclosure units are multiplied by a single-price rate from similar past projects.
Summary of Measurement Rules
- Floor basement: factor of 3
- Ground floor: factor of 2
- First floor: factor of 2.15
- Second floor: factor of 2.30
- Third floor: factor of 2.45, increasing by 0.15 for each additional floor.
- Wall basement: factor of 2
- Walls from ground to eave: factor of 1
- Roof measurement is up to the external wall face, ignoring overhangs and roof type distinctions.
Advantages and Disadvantages of Measurement Method
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Advantages:
- Recognizes changes in building shape, size, vertical area, height, and basement.
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Disadvantages:
- Does not automatically account for all quantity adjustments.
- Difficult to assess quality adjustments.
- Measurement outcomes can be ambiguous and confusing for architects and clients.
- Requires more calculations compared to other single-rate methods.
- Rates not readily accessible for this estimation approach, needing extensive time for preparation.
Cost Planning Overview
- Cost planning systematically applies cost criteria during the design process to balance cost, quality, and aesthetic factors.
- Typically involves controlling project costs within a predetermined sum through the preparation of a cost plan and conducting cost checks.
- Utilizes past project cost analyses to maintain tight control over future project's cost estimates.
- Essential for establishing major issues, options, and their cost implications.
Cost Planning Methods
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Elemental Cost Planning:
- Grows in usage and importance.
- Adjusts costs of similar projects based on current material, labor prices, and economic conditions.
- Cost calculations are based on superficial area broken down into elements and sub-elements.
- Comparative Cost Planning: Less detail provided in the text.
Elemental Cost Planning Example
- Total project cost: 48,353,664.00 with related percentages and costs per square meter for elements like preliminaries, substructure, frames, roofs, etc.
- Adjustment factors for the proposed project include:
- Inflation: +10%
- Professional fee: -5%
- Design risk: +15%
- Market conditions: +10%
- Time factor: +10%
- Location: -15%
- Total adjustment impact calculated at 25%.
Cost Plan Preparation Steps
- Determine Gross Floor Area (GFA) using total cost divided by cost/m².
- Assess cumulative impact of adjustment factors.
- Prepare a detailed cost plan reflecting adjusted costs, cost limits, and observed percentages of total costs.
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Description
Test your knowledge on the fundamental aspects of cost control in construction. This quiz covers key concepts like cost plans, sunk costs, and cost analysis, providing a comprehensive overview of effective financial management in building projects. Challenge yourself with matching terminology and understanding the objectives of cost research.
