Cost Planning

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(PRE AND POST CONTRACT)

COST PLANNING1

INTRODUCTION TO COST PLANNING PROCESS CP as a process is difficult to define concisely as

it involves a variety of procedures and techniques used concurrently by the QS or building economics.

Traditional CP will usually follow the conventional outline design, detailed process.

In practical sense, the CP starts with the development of a figure (or cost) to allow client to decide whether the project is feasible.

The feasibility estimate is usually calculated on a unit cost method, refine using the elemental method, component elements and sub-elements.

The elemental method is a system of cost planning and control that enables the cost of a scheme to be monitored during the various stages of design development.

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INTRODUCTION (CONT’D)3

Cost planning is a system that required total coordination of the project form its commencement to completion.

It involved a systematic framework procedure and demand high commitment from the design team to cooperate with the QS to ensure that the objectives in terms of costs, time and quality are achieved.

The cost planning process can be regarded as a means of getting an optimum result that offers the best value for money or saving and is economical.

Without cost planning, an analysis has no scientific basic and thus all estimates are at risk unless proven otherwise and with cost planning errors can be minimized.

OBJECTIVE OF COST PLANNING

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The client receives value of money, not necessarily lower than the initial cost. There must be a balance between quality, usage suitability, initial cost and life cycle costing for the entire span of the element.

A reasonable expenditure between sections of the building by relating the design and the specification to the client’s budget so that more balance design is obtained.

The overall expenditure is within the amount agreed by the client. The tender received should not be higher than the amount agreed by the client.

Integrating cost with time and quality.

PRINCIPLES OF COST PLANNING

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1. There is a standard framework reference available for each identified part of the building(example WBLFF, structural works, etc). The purpose are to enable:

The performance characteristics to be related to each reference.

The cost to be distributed in a balanced way throughout the building.

The analysis of previous projects be classified in the same manner.

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2. The cost planning can be adjusted to design requirement.

3. It allows the costs checked as the design develops with the amount allocated.

4. It allows the designer to take necessary measures or actions before any decision on the final design is made.

5. It takes into account contingencies cost and design reserve.

6. It enables costs to be presented in a logical and orderly way for clients from time to time during the design process.

PRINCIPLES OF COST PLANNING (CONT’D)

ADVANTAGES OF COST PLANNING

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1. The tender value will be either close to or similar to the client’s estimate.

2. Since there is a checking system on the cost, there is possibility that less changes will be made to the BQ. Discussions among designers can be made before the production of the final design. This will definitely save time in making adjustment to any changes to the cost and design.

3. The effectiveness of cost and value for money can be achieved with cost planning process.

ADVANTAGES OF COST PLANNING (CONT’D)

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4. A balanced expenditure distribution may produce a more rationalized design.

5. Cost consideration will be given more attention since the QS is involved in the early stage of the design process.

6. The BQ can be prepared more easily since the QS is already familiar with or skilful in the project and thus has clear understanding of what is to be achieved by a designer.

7. Cost planning provides basic information on cost comparison between different project.

DISADVANTAGES OF COST PLANNING

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1. It requires a lot of preparation at the early stage of the design process.

2. The designers may have some limitation in their work style.

3. The QS need to be equipped with past experience and knowledge pertaining to cost and factors influencing the cost.

4. Both designer and QS are involved with a lot more work at the design stage as compared to when no cost planning is used.

CHARACTERISTICS OF A GOOD COST PLANNING SYSTEM

Ensure that the tender figure is as close as possible to the first estimate, or any likely difference is anticipated and within acceptable range.

Ensure that the funds available for the projects are allocated effectively and economically to the various elements and sub-elements.

Always involve the measurement and pricing of approximate quantities at some stages of the process.

Aim to achieve good value at the desired level of expenditure.

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PHASES OF COST PLANNING Phase 1 : Defining the brief and setting the

budget. Phase 2 : The cost planning and control of the

design process. This phase is critical importance since decisions made at design have a direct impact on the whole life performance.

Phase 3 : The cost control of the procurement and construction stages. Unlike construction, the procurement has changed where decisions are sometimes made prior to design in Phase 1. it is essential that cost planning advice recognizes the impact of procurement decision on design and construction.

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RIBA FRAMEWORK OUTLINE

A framework outlined and produced by the Royal Institution of British Architect (RIBA) has resulted in procedure for architects in preparation and implementation of a development project.

In determining the viability of a development project, it is important that an agreement of all parties in the design team be obtained in designing a framework plan that is appropriate and effective.

There are 12 stages in RIBA as per below :

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COST PLANNING

BRIEFING

SKETCH PLAN

WORKING DRAWINGS

SITE OPERATIONS

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OUTLINE DESIGN PLANS

COST CONTROL (Estimate can occur at any stage of this process)

COST LIMIT

COST PLANCOST CHECKS

COST ANALYSIS

SCHEME DESIGN PLANS

PILOT DETAILS

DETAIL DESIGN DRAWINGS

PRODUCTION INFORMATION DRAWINGS

CONTRACT DRAWINGS

RECORD DRAWING

S

QS TASKS IN COST PLANNING PROCESS

CONFIRMATION OF COST LIMIT

FINAL COST CHECKS

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DESIGN PROCESS TERMINOLOGY

STAGES IN RIBA

Stage A – Inception

A stage where client expresses his intention to build a building and appoints an architect and other consultant. Cost also discussed, but not fixed as it might be change to client’s need.

Stage B – Feasibility

The architect and consultant will study the client’s needs. The client’s financial will be observed in determining the feasibility / profitability of a project. Can be done in 2 method :

a. Client provides cost estimates and consultant’s confirm the estimate.

b. Consultant provides estimates

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STAGES IN RIBA (CONT’D)

Stage C – Outline Proposal

The client’s need is finalized and ready to be implemented. The design, layout and construction method is determined to gain approval from authority. QS will prepare the Outline Cost Plan according to group element to provide guidelines on cost for the team.

Stage D – Scheme Design

All matters pertaining to approval must be obtained at this stage. Sketch drawing will be produced. QS required to prepare Detailed Cost Plan that shows how consultants distribute money to individual elements of a building.

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STAGES IN RIBA (CONT’D)

Stage E – Detailed Design

The complete design is produced. QS will required to carry out Comparative Cost Study on several construction methods, materials and different types of services and coordinates cost distribution in Cost Plan. It must include the costs of management and maintenance of the building.

Stage F – Production Information

Final working drawing are prepared. QS will continue to cost check and advice the architect on the contractual arrangement of the project.

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STAGES IN RIBA (CONT’D)

Stage G – Bills of Quantities

The BQ and related documents will be prepared and QS will prepare the pre-tender estimate.

Stage H – Tender Action

Qualified tenderer are selected. The QS will prepare tender report to determine the most qualified tenderer.

Stage J – Project Planning

The site is handed over to the contractors. The contractor will prepared the work programme to monitor the project.

Stage K – On Site Operation

The contractor’s duty to implement and complete the works.

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STAGES IN RIBA (CONT’D)

Stage L – Completion

Handed over to client. Stage M – Feed Back

Analysis on the overall management, construction and the performance of the project will be done. Used for the future project.

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DESIGN SEQUENCE

PROCESS DUTYMETHOD

USED

1 Inception Cost Planning Cost Range Interpolation

2 Feasibility “ Feasibility Study “

3 Outline Proposals “ Confirm Cost Limit Single Price Estimating

4 Scheme Design “ Cost Plan “

5 Detail Design Cost Control Cost Checking Approximate Estimating

6 Production Information “ Specification -

7 Bills of Quantities “ Bills of Quantities -

8 Tender Action “ Cost AnalysisElemental Breakdown

of Tender

SUMMARY OF COST PLANNING

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