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COST MANAGEMENT
Cost Planning Concepts
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COST PLANNING
What is Cost Planning?
• Work involved in Controlling the Design of a
Building within the Set Parameters of Cost, Areaand Quality
• Cost Planning is Proactive - Working with PM/DMteam during the Needs Study & Design Phases ofthe Project. It Precedes the issue of that stagedocument
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COST PLAN
What is a Cost Plan?
• A written description of Cost broken in toElements, Levels & Areas, subject to constantupdating and reconciliation as the design evolves
• Cost Plan is NOT an Estimate
• Cost Plan facilitates “ Designing to a Cost ”
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ESTIMATE
What is an Estimate?
• A Cost applicable to a design at a Set FreezePoint
• Different levels of Estimate - Indicative, Budget,Contract
• Usually an Indicative Estimate forms the InitialCost Plan
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ESTIMATION
What is Estimation?
• The actual process of Quantifying and Pricing theEstimate for a Set Design at a particular point intime
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RELATIONSHIP OF COSTPLANNING TO ESTIMATING
• The original Cost Plan can be extracted from an indicativeestimate for a set design at a particular point in time
• The budget and contract estimates should be
confirmation of the Cost Planning that has taken place asthe design has progressed i.e. management cost checks
• Cost Planning requires a working knowledge of alldisciplines, and the ability not to just cost what is on thedrawings - to allow for the real effects when workingdocuments are finalised - ability to see in the future
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USE OF COST PLANNING
1. Control of Cost
2. Early Commitment
3. Client ’s Confidence
4. Advantages for the Design Team
5. Maximise Construction / Design Overlap
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CONTROL OF COST
• The costs and profitability of the project are largelydetermined at the design stage. As the project proceedsfurther in to construction stage, risk of losses remainpresent, but opportunities for cost reduction or profitimprovement diminish.
• Cost Planning enables the PM to observe and control theinteraction of design and cost during the design process,and maintain the overall scheme within the budgetlimitations.
• Cost Planning ensures a direct relationship betweeninitial and final project cost
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ADVANTAGES FOR THE DESIGN TEAM
• Cost Planning provides a basis for “ value ” judgement ofdesign alternatives in a clear and concise form
• Looking at alternatives and checking costs at the earliestpossible stage prior to detail drawings commencing,means less abortive design
• An experienced Cost Planner should be able to questionearly design solutions for inadequacy - savingembarrassment later
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MAXIMISE CONSTRUCTION / DESIGN OVERLAP
• Early Construction Commencement
• Care is required to ensure that the gains in starting early,are not lost in the haste required to complete design
• Where design is just ahead of site requirements, anintense cost checking process is important
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STAGES OF COST PLANNING
• Initial Cost Plan can be produced from a welldefined user needs brief, giving areas and qualityrequirements, prior to any drawing being produced
• Once outline sketch plans, sections & elevations aredrawn, options comparison and elemental checksagainst client budget can take place
Concept to Completion: Cost Plan evolves throughout theduration of project
Qonqests Technical Solutions Pvt. Ltd
Inception/ Appraisal Establishing theneed for the projectFormation of in-
house workgroupIdentification of
Client’srequirements
O pti on App rai sal In itia l C os ti ng
Feasibility/ DesignBrief
Appoint PM &Design Team CDM Co-ordinator
Surveys &exploratory works
Development ofStrategic Brief Feasibility Study
Outline BusinessCase
EstablishCritical
timescales
Concept Design/Outline Proposals
Develop Outlineproposals &
preliminary Design
Preparation of InitialCost Plan & master
programmeRisk Assessments Health & SafetyIssues (CDM)
Set sustainability &Green Targets
Assessment ofProcurement routes
Consultations &
Approvals
Detailproposal/Design
DevelopmentDetailed DesignDevelopment
Room Data collation& documentation
PlanningPermissions
Review programme,risks & procurement
options
Elemental Cost plan,Project Cost Plan &
Budget ConfirmationConsultations &
ApprovalsScheme is
“ Frozen”
Final Proposal/Technical Design
Development ofFinal Proposal
Detailed Room DataSheets
Incorporation ofSpecialist Reqmt, IT,
AV etc.
Review ProcurementStrategy, Cost Plan
& programme
InternalConsultations i.e.security, fire, IT
Sign-off proposal bythe Client
Production
Information
Preparation ofDetailed Co-
ordinateddrawings
Final Confirmation ofmaterials & finishes
CompleteSpecifications,components
drawings, BoQs
Building Warrant Application
Review ProcurementStrategy, Cost Plan
& programme
Review of GreenBldg
TenderDocumentation
Preparation ofTender
DocumentationComplete Pre-tender
EH&S planFinal ProcurementStrategy, Cost Plan
& programme
Tender Action Identification ofpotential contractor Tender ReportContractorsInterviews
Approval of Client toappoint Contractor
MobilisationBuilding contractor
prepares tocommence on site
Main contractorappoints sub-contractors
Onsite Construction Works Monitoring of worksat siteChange ControlManagement
Cost Control Duringworks
Snagging, Testing &Commissioning
Handover of theproject to the Clients
Fit-out &Furnishings
Occupation Removals Occupation Utilization of thebuildingDefects Liability
PeriodSettlement of Final
AccountsPost Contract
Review & ClientFeeback
A
B
C
D
E
FG
H
J
K
L
ConstructionLife Cycle
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Indigenizing RIBA …!Stage Level of Cost Plan
InformationNeeded
Info Neededfrom Remarks for the Information Needed for Cost Plan
ProjectDefinition
Indicative CostPlan
User Brief/VisionDocument
ClientA wri tten statement including need brief, spat ialrequirements, capacity etc. along with a visiondocument or reference benchmark needed
Concept Cost Plan Design Concept Consultants
A concept design with possibly a design brief/ designconsiderations to be furnished along with dimensioneddrawings for plans, elevations, sections etc. & materialchart
SchematicBudgetoryCosting based onElementary BoQ
SchematicDesign Consultants
Complete schematic designs including architectural,structural, MEP drawings, schedule of finishes andmaterial specifications
DesignDevelopment
Tender BoQ DetailedDesigns
ConsultantsAll drawings, specifications and Consultants BoQsrequired as per agreed programme and details.
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PLEASE NOTE:
Cost Planning is of greatest use in Design & Constructionprojects. It is less relevant when we have limited control over
the design (i.e. construction management projects)
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OVERALL PRINCIPLES OF COST PLANNING
1. Logical set out
2. Balancing savings and overruns
3. Project Engineering
4. Rates & Pricing
5. Level of detail
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LOGICAL SET OUT
• The cost plan is a statement of space, quality and cost forthe project, and requires acceptance by the design team
• The dominant factor can vary from project to project
• The cost plan should be set out in a logical way to facilitate
understanding and flexibility in use, therefore it is dividedin to levels, areas and elements/trades as applicable to aparticular project (proprietary software?)
• The initial cost plan should allow for undesigned butnecessary items
• An elemental analysis check with historical data
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BALANCING SAVINGS AND OVERRUNS
• Cost overruns in one area can be balanced by costsavings in another
• If a saving requires a change to the specification tobalance an overrun - agree with the client
• If a saving is generated, and the project team wish toapply this to another project element, i.e. anupgrade to the contractual requirement - agree withsenior management
Cost Planning is NOT an EXACT SCIENCE. It is an overall totalpackage.
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PROJECT ENGINEERING
• Design options evaluation - project engineering skills arerequired - Why not try? Can it be built? Etc.
• Various options should be compared to see which is theOPTIMUM SOLUTION - this is not purely a ?? of price
• It is important when considering different options to takein to account other items that may be effected
• All details should be queried where a complicatedsolution has been proposed. These small details can costus a great deal when we get to actual construction on site.
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RATES & PRICING
• current market rates
• historical estimating / cost planning records
• cost feed back from sites
• local consultants
The cost information used in cost planning would come from,in order of importance
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LEVEL OF DETAIL
1. Project definition stage
2. Concept design stage
3. Schematic plan stage
4. Design Development
5. Final Design
Depends on information and time available
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PROJECT DEFINITION STAGE
• an all-up cost per m2 of gross building area for indicative
budgets only (Note: this is an extremely unreliable basisupon which to start)
• from experience and historical records build up anelemental cost. This should also include parameters forsketch outline - plans and an indication of quality
What is available at this stage?
• Needs Brief
Costing Method?
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CONCEPT DESIGN STAGE
• Build up on a level basis an elemental cost on alternativedesign schemes to assist with the choice
• from experience and historical records build up anelemental cost. This should also include parameters forsketch outline - plans and an indication of quality
What is available at this stage?
• Needs Brief
• Plan outlines
Costing Method?
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SCHEMATIC DESIGN STAGE
• Build quantities taken off in levels and / or areas in anelemental format
What is available at this stage?• Needs Brief
• Schematic Plan, Elevations and Sections
• Schematic Structural Plans
• Outline Finishing Plans
Costing Method?
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DESIGN DEVELOPMENT
• Bulk quantity take-offs to compare design alternatives
• Check all preliminary drawings conform to cost plan parameters
• Check all detailing
What is available at this stage?
• Alternative design options
• Preliminary drawings
• Preliminary specifications, finishes schedule, doorschedules etc.
• Detailing
Costing Method?
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FINAL DESIGN
• Examine to ensure that all corrections have beenincorporated and that there are no last minuteinclusions
What is available at this stage?• All final AFC drawings, specifications etc.
Costing Method?
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Elements of Checking a Bldg EstimateScope v/s Provision (Plot Area/ FAR/ GFA etc.)
Area, Perimeter, Height Statements
Provided Area v/s Needs Brief
Adequacy of Elements/ Trades Items
Abnormal elemental qty variations thru floors
Soffit of slab ~ Ceiling Finishes ~ Floor Finishes ~ GFA
Reinforcement densities ranges
Formwork / Concrete Ratios
Walls/ Façade/ Wall Finishes corresponds to Area/ Perimeter
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Elements of Checking a Bldg EstimateAir, Water (all types), Electricity – Path in/ Path out
Defined P&IDs/ SLDs
Services Provision v/s Need
Risers Lengths ~ Building Heights
Horizontal Reticulation ~ Approx runs on the floor plate
External Services around the building ~ Perimeter statementAir-conditioning tonnage v/s area covered
Fixtures per unit area
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Important Factors
Formulation of Cost Plan based on design information level.
Identification of Cost Parameters and Elements.
Identification of Cost Heads for each Element.
Estimation of Cost Heads based on preliminary concept
drawings and established database of market prices.
Comparison of Alternative Designs on costs.
Identification and estimation of cost for ongoing design
changes.
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QUESTIONS
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