Cost plan

Cost Planning, Cost Control
and Cost Analysis
Introduction
 Cost planning and cost control of
buildings is not a new technique,
which has been in use for many
years.
 Costing mean applying prices to
schedule of items of labour and
materials in order to obtain an
approximation of the cost of a
construction project.
 Cost planning and cost control is
not only to determine the probable
cost of a building but to control the
design development throughout the
project, and to provide the client
with value for money.
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and Cost Analysis
Introduction
it can also dictate the nature of
the most important characteristic
of the embryo design, the plan
shape, storey height, type of
finishes and so on.
Time must be spent in the early
stages of design sequence for
cost planning so that careful cost
control by monitoring of
variations can be operated during
construction stage to the
settlement of account to be
effective.
ABM
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and Cost Analysis
Introduction
clients’ requirements for an
accurate forecast of the overall
cost is due to:-
 resources such as land and
materials becoming scarce and
expensive.
 modern buildings becoming more
complex,
 fluctuation in labour and material
cost etc.
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and Cost Analysis
What is Cost Analysis?
 The analysis and presentation of
actual costs to facilitate cost
planning.
 It is a systematic breakdown of cost
data according to the element for
cost so as to facilitate examination.
 A cost analysis is a record of how
the cost has been distributed over
the elements of a building; it
includes a brief description of the
overall nature of the project and
specification notes on the general
level of finishes, and so on.
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and Cost Analysis
What is Cost Planning?
 Method of controlling the cost of a
project, within a predetermined
sum, during the design process and
includes the preparation of the cost
plan as well as the subsequent
stages of cost checking.
 Techniques for arriving a cost plan
or cost limit.
 Cost plan is a statement of the
intended cost to spend on each
element of a proposed building
within a total sum and in relation to
a defined standard of quality.
 The allowances set against each
element are cost targets.
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and Cost Analysis
What is Cost Planning?
 Cost plan is prepared by finding a
cost analysis of a similar project to
the one under consideration, and by
studying how the cost was
allocated in the old project, in order
to prepare an estimate for the new
scheme.
 The cost information cannot be
used directly from the cost analysis,
and some degree of modification
will have to be made.
 These modifications are usually for
differences in
price level
Quantity
Finishes and standards
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and Cost Analysis
What is Cost Control?
Techniques for “protecting” the
cost plan.
Generic term embracing all
methods of controlling the cost of
a building throughout its various
stages from inception to
completion.
Process of cost checking
required the estimated cost of
each element to be checked
against the target set set in the
cost plan.
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and Cost Analysis
The Reasons for Cost Planning
and Cost Control.
To determine the probable cost of
a project development.
To provide a yardstick to control
the design of the development
throughout the project.
To provide the client with value
for money
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and Cost Analysis
The Project Sequence
(based on the RIBA Plan of Work).
 Inception
 Feasibility
 Outline Proposal
 Scheme Design
 Detail Design
 Production
 Information
 Bill of Quantities
 Construction
 Completion
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and Cost Analysis
Phases of Cost Planning.
Inception
At the initial stage, client wishes to
know:
 how much will the idea cost?
 How best might available capital be
spent?
Feasibility
Develop a brief indicating:
 location
 floor areas
 type of accommodation
 nature of the site
 indicative cost etc
Is the project feasible:
 Yes : proceed with the design
 No : review/cancel the project
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and Cost Analysis
Outline Proposal
 Develop the optimum design solution
to satisfy the brief.
 Indicates size, type, location,
number of storeys, plan shape etc.
Scheme Design
 Ensure the overall design is the most
cost effective.
 To establish the final cost plan (limit
of cost)
 indicates dimensioned sketch plans,
elevations, sections, early structural
information, early specification, site
layout etc.
 Preparing brief cost summary/the
elements of cost plan. ss5
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and Cost Analysis
Outline Proposal and Scheme
Design
 The lump sum estimate must not be
split down into the amount of money
it is intended to spend on each
element (See Figure 1).
Figure 1
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Target cost
lump sum estimate of $2,000,000
Cost Target
$600,000
Cost Target
$750,000
Cost Target
$650,000
Elements

and Cost Analysis
Design (Cont’d)
 As the project design develops, the
information available increases and
perhaps changed somewhat.
 After detail design stage the general
layout should not be radically
altered.
 The constituent parts of a cost
analysis are:
 a summary of project, contract and
design/shape information
 a summary of element costs
 an amplified analysis
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and Cost Analysis
Design (Cont’d)
 A brief cost summary, which is a
statement of how the target cost has
been distributed over major groups
of elements, such as:
 useful in providing an outline proposals
stage a broad but accurate cost allocation
over these groups of elements.
 From these elements, the cost plan is
prepared.
 The designer with the Q.S.’s advice on
the cost implications of various alternative
forms of construction, finishes, and so on;
will also examine the alternatives to meet
the client’s requirements.
 It also enable the Q.S. to examine how
the cost is distributed and whether any
element may be overloaded with capital,
and it allows the Q.S. to alter the balance
of cost within the overall target cost.
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and Cost Analysis
Design
 Consider this situation, remembering
all the time that the target cost must
not be altered.
Figure 2
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Target cost
$300,000
Element No. 1
Frame
$150,000
Element No. 2
Roof
$50,000
Element No. 3
Services
$100,000

and Cost Analysis
Design
 After checking against the detail
design, it becomes obvious that
$150,000 for frame is an unrealistic
target and that at least an additional
$15,000 will be required for this
element.
 To prevent the target cost from
increasing to $315,000.
 Compensating reductions must be
made to other elements i.e. it is
found that element 3 or services can
be reduced, it is decided that the
installation to be substituted with a
cheaper alternative.
 Performing this ‘lending and
borrowing’ exercise, the Q.S. runs
the risk of tipping the balance of the
design. ss5
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and Cost Analysis
Design
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Target cost
$300,000
Element No. 1
Frame
$170,000
Element No. 2
Roof
$50,000
Element No. 3
Services
$80,000

and Cost Analysis
Design
 Care must be taken not to overload
one element at the expense of
another.
 It is also argued by some Q.S. that
client would much prefer to pay the
extra $15,000 than to have the
project’s overall standards reduced,
or the balanced design abolished.
 Sometimes, the substitution of a less
expensive alternative should not
necessarily result in a lowering of
standards, or an abolition of the
balanced design.
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and Cost Analysis
Detail Design Stage (Cost
Control)
 cost checks the Architect’s detailed
design against the cost target set (at
outline cost plan)
 to ensure that design does not
exceed the budgetary cost estimate
 During this stage, the Q.S. will
immediately performed cost check
using the approximate quantities on
each elements after being detailed
against the cost target set.
 This is to allow any necessary
redesign or reallocation of cost to be
carried out before the final drawings
are prepared for tender.
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and Cost Analysis
Construction Stage (Cost
Control)
 Cost updates in the form of financial
report provide control over variation
or deviation made to the contract.
 This tool is vital for monitoring
deviations or variations and ensuring
that the design team and client are
kept updated of changes made
without compromising the budget.
 For new requirements, the cost
updates on anticipated final cost will
also provide the client and/or
designer with an updated financial
commitment so that he can decide
whether to proceed or not.
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Cost plan

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