Cost Planning Overview - Australian Manual 2022

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Questions and Answers

What is the primary purpose of Cost Planning?

To establish, regulate, and reconcile project cost (correct)

To determine the final construction timeline

To provide a detailed budget for construction

To validate client needs against design requirements

Which stage of the Cost Planning process is based on the client's brief?

Stage B - Based on Outline Proposals

Stage A - Based on the Client’s Brief (correct)

Stage D - Based on 'Complete' Documentation

Stage C - Based on Sketch Designs

What does Brief Stage Cost (BSC) represent?

An indicative cost for feasibility and planning (correct)

A detailed quote for construction

A legally binding contract amount

An accurate estimate of total project costs

At which stage is the accuracy of the estimate expected to be highest?

Stage D - Based on 'Complete' Documentation Signup and view all the answers

How should the Brief Stage Cost (BSC) be treated during planning?

As a guide for feasibility and planning purposes only Signup and view all the answers

Which stage involves the lowest level of information?

Stage A - Based on the Client’s Brief Signup and view all the answers

What is NOT a component of the Cost Planning process?

Regulating project quality standards Signup and view all the answers

What characterizes Stage C of the Cost Planning process?

It is based on sketch designs. Signup and view all the answers

What is the primary purpose of Stage A in cost planning?

To establish an indicative cost based on available information. Signup and view all the answers

Which of the following is NOT considered in Stage A's cost estimation?

Timelines for project completion Signup and view all the answers

What must be clearly identified in the costings during Stage A?

Any items of uncertainty related to risk. Signup and view all the answers

What type of estimates are generated during Stage B of cost planning?

Preliminary estimates based on outline proposals. Signup and view all the answers

The cost estimation during Stage A is primarily based on which type of documents?

Client's briefs and available sketches. Signup and view all the answers

Which element is NOT mentioned as part of the basis for Stage A's indicative cost?

Structural engineering details. Signup and view all the answers

What does Stage B's preliminary estimate typically include?

Several outline proposals prepared by the Architect. Signup and view all the answers

What aspect is crucial to be separately identified in costings during Stage A?

Escalation costs from preparation to tender date. Signup and view all the answers

What is the primary challenge faced by specialist engineering contractors when tendering for projects?

Insufficient design details and specifications Signup and view all the answers

What impact has the increase in the number of specialist contractors had on cost planning?

It has lessened unusual deviations from historical data. Signup and view all the answers

According to the content, what is crucial for successful cost planning in engineering services?

Close consultation among different professionals involved in the project Signup and view all the answers

What future trend is anticipated regarding the percentage of building services costs?

They will increase with the sophistication of building technologies. Signup and view all the answers

What is one of the roles of a specialist M&E Cost Planner as indicated in the content?

To facilitate strong working relationships among key project participants Signup and view all the answers

What is the primary use of historical data by the QS/Cost Planner before detailed engineering design begins?

To establish a realistic budget Signup and view all the answers

What might require a QS/Cost Planner to consider a wide range of alternative systems?

The need to keep costs within budget Signup and view all the answers

Which of the following is NOT typically a part of a QS/Cost Planner's role in pricing engineering services?

Creating initial engineering designs Signup and view all the answers

What issue can arise when engineering services consultants are brought late into projects?

They may be reluctant to commit to details Signup and view all the answers

What is one limitation of the fee structures typically used by service consultants?

They don't generally support detailed cost management Signup and view all the answers

Why might a QS/Cost Planner share area measurements with a Services Engineer?

To assist in their cost estimations Signup and view all the answers

What is a common problem associated with obtaining a lump sum for engineering services in tenders?

It leads to inadequate feedback for cost analysis Signup and view all the answers

Which estimation method involves using costs based on functional areas?

Functional unit or functional area cost Signup and view all the answers

What is the first component of escalation when preparing a Cost Plan?

Escalation from the date that the Cost Plan is based on to the date of the new Cost Plan Signup and view all the answers

Which factor is crucial in keeping a cost plan up-to-date?

Using cost indices from the same source Signup and view all the answers

What is applied after calculating the increase or decrease in costs?

Locality index Signup and view all the answers

Which of the following describes the second component of escalation?

Escalation from the date of the new Cost Plan to the start of construction Signup and view all the answers

What does applying to the cost entail after adjusting for locality?

Incorporating adjustments for regional cost variances Signup and view all the answers

What is a key consideration when comprehensive details are unavailable for preliminaries?

They are uniformly allocated to Building and External Works. Signup and view all the answers

What allows for a more accurate assessment of preliminaries when details are available?

Knowledge of the true scope and timeframes. Signup and view all the answers

Which of the following is an example of a preliminary item?

Portable offices. Signup and view all the answers

When determining preliminaries, what might a Cost Planner apply differently for Building Work compared to External Works?

The markup percentage. Signup and view all the answers

What common method is used to express an allowance when comprehensive details are not available?

Cost per m2 of Gross Floor Area (GFA). Signup and view all the answers

Which of the following items would NOT typically fall under preliminaries?

Material purchases. Signup and view all the answers

What is indicated by the need to keep up with developments in pricing preliminaries?

Evolving market conditions impacting costs. Signup and view all the answers

Why is it important for a Cost Planner to understand the form of contract when assessing preliminaries?

It impacts the level of detail required in the assessment. Signup and view all the answers

Study Notes

Cost Planning Definition

Cost Planning is a systematic application of Cost Management to the design process between brief and stage cost, with the aim to estimate and reconcile the project cost.
This is from the Australian Cost Management Manual Volume 1 (2022).

Cost Planning Stages

There are four stages in the cost planning process.
Stage A: Based on the client's brief
Stage B: Based on outline proposals
Stage C: Based on sketch designs
Stage D: Based on complete documentation

Brief Stage Cost (BSC)

BSC is a first cost indication for the client, based on an outline statement of needs.
It serves as a guide for feasibility and planning, not as an estimate.
It's tied to pre-construction cost management stage A.
It is not a cost plan.

Stage A - Brief Stage Cost (Indicative Cost)

Information used includes client's brief, drawings (if available), sketches, and any other relevant information.
Details include building type, functional area, space requirements, quality of building (e.g., premium, A grade, 5 or 6 star), location (e.g. CBD, city fringe, suburban, country), and purpose (e.g., investment, owner-occupier).

Stage B - Outline Proposal Cost (Preliminary Estimate)

This stage uses outline proposals from architects.
Information considered includes project size, type, location, plan shape, wall-to-floor ratio, and area efficiency.
A specific proposal is selected as a basis for the following stage.

Stage C - Sketch Design Cost (Limit of Cost Estimate)

Stage C uses sketch designs.
This stage provides site layout, contours, paths, landscaping, services, and other details.
It details final dimensioned sketch plans, elevations, sections, structural sketches, schedules, specifications, and building services design.

Stage C - Sketch Design Cost (continued)

Ensures optimum cost solutions are available for the design team.
This stage includes cost advice on differing construction methods/materials, elemental basis, and element cost identification (e.g., quantities, types of doors, different floor finishes).

Stage D - Tender Document Cost Plan (Tender Estimate)

Based on final working drawings and specifications.
Checks costs at each element level.
Variances are compared with stage C cost plans via reconciliation statements.
Aim to keep the design within the agreed cost limit.

Problems in Cost Planning

Engineering consultants might be brought in late and reluctant to commit early to detail.
Small design changes can disproportionately affect engineering service design and cost.
Service consultants are designers not cost managers.
The approach to tendering engineering services by lump sum with inadequate breakdown might lack feedback for cost analysis.

Problems in Cost Planning (continued)

Rapid technological change leads to newer products and frequent changes in standard fittings/equipment, lacking price information.
Specialist contractors commonly tender on drawings and specifications and not on detailed equipment/fixture details.
Specialist sub-contractors are limited, which can make market for specialty work volatile, and market competition is limited with potential deviation from historical data.

Escalation Calculations

There are three parts to determining escalation.
Escalation from the cost calculation date to the new plan date.
Escalation from the new plan date to construction start.
Escalation from construction start to completion.

Maintaining an Up-to-date Cost Plan

Use consistent cost indexing from the same source.
Compare base date indices with current and future date indices for the relevant location.
Calculate any increase or decrease.
Apply the locality index, and apply to the cost.

Pricing Building Services

Engineering advice is obtained from related disciplines.
In practice, relevant engineering disciplines are not often appointed or selected until late in stage C.
Cost planners use their knowledge and historical data to determine the costs of these elements.

Pricing Engineering Services

QS/cost planners can use historical data before engineering design commences to ascertain a realistic budget.
Data can include square metre, functional area, treated area, per fitting/outlet cost, and bill-of-quantities if available.

Pricing Preliminaries

Preliminaries might be split between building and external works/services and put into the relevant section.
Costs can be expressed as a cost per square metre of gross floor area (GFA).
Cost allocations might use percentages for building work and external works, but the percentages need to be clearly defined.
When comprehesive details are available a more accurate assessment of preliminaries can be made.

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Description

Explore the fundamental concepts of Cost Planning as outlined in the Australian Cost Management Manual Volume 1 (2022). This quiz covers definitions, stages of cost planning, and the specifics of Brief Stage Cost (BSC) within the cost management framework. Test your knowledge on cost management processes and their application in project design.