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Questions and Answers
What is the primary objective of cost control in construction?
What is the primary objective of cost control in construction?
Sunk costs are costs that can be recovered in the future.
Sunk costs are costs that can be recovered in the future.
False
What is a cost plan?
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.
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:
Match the following cost control terminology with their definitions:
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What is the purpose of cost research in construction?
What is the purpose of cost research in construction?
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What are the four components of value in the built environment?
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.
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.
The final costing advice may include elements like budget estimating and __________ costs.
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What does approximate estimating aim to provide?
What does approximate estimating aim to provide?
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List the three categories of methods for preparing approximate estimates.
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?
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.
The storey enclosure method has considerable application in practice.
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What is the weighting factor applied to ground floor area?
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.
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:
Match the cost planning methods with their descriptions:
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What adjustment factor is applied to basement floors?
What adjustment factor is applied to basement floors?
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Which of the following is a disadvantage of the storey enclosure method?
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.
-
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.
