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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, Area
and Quality
Cost Planning is Proactive - Working with PM/DM
team during the Needs Study & Design Phases of
the Project. It Precedes the issue of that stage
document

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COST PLAN
What is a Cost Plan?
A written description of Cost broken in to
Elements, Levels & Areas, subject to constant
updating 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 Freeze
Point
Different levels of Estimate - Indicative, Budget,
Contract
Usually an Indicative Estimate forms the Initial
Cost Plan

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ESTIMATION
What is Estimation?

The actual process of Quantifying and Pricing the

Estimate for a Set Design at a particular point in
time

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RELATIONSHIP OF COST
PLANNING TO ESTIMATING
The original Cost Plan can be extracted from an indicative
estimate 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 as
the design has progressed i.e. management cost checks
Cost Planning requires a working knowledge of all
disciplines, and the ability not to just cost what is on the
drawings - to allow for the real effects when working
documents are finalised - ability to see in the future

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USE OF COST PLANNING

1. Control of Cost
2. Early Commitment
3. Clients 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 largely
determined at the design stage. As the project proceeds
further in to construction stage, risk of losses remain
present, but opportunities for cost reduction or profit
improvement diminish.
Cost Planning enables the PM to observe and control the
interaction of design and cost during the design process,
and maintain the overall scheme within the budget
limitations.
Cost Planning ensures a direct relationship between
initial and final project cost
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ADVANTAGES FOR THE DESIGN TEAM

Cost Planning provides a basis for value judgement of
design alternatives in a clear and concise form
Looking at alternatives and checking costs at the earliest
possible stage prior to detail drawings commencing,
means less abortive design
An experienced Cost Planner should be able to question
early design solutions for inadequacy - saving
embarrassment 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, an
intense cost checking process is important

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STAGES OF COST PLANNING

Concept to Completion: Cost Plan evolves throughout the
duration of project
Initial Cost Plan can be produced from a well
defined user needs brief, giving areas and quality
requirements, prior to any drawing being produced
Once outline sketch plans, sections & elevations are
drawn, options comparison and elemental checks
against client budget can take place

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Inception/ Appraisal

Establishing the
need for the project

Formation of inhouse workgroup

Identification of
Clients
requirements

Option Appraisal

Initial Costing

Feasibility/ Design
Brief

Appoint PM &
Design Team

CDM Co-ordinator

Surveys &
exploratory works

Development of
Strategic Brief

Feasibility Study

Outline Business
Case

Establish
Critical
timescales

Concept Design/
Outline Proposals

Develop Outline
proposals &
preliminary Design

Preparation of Initial
Cost Plan & master
programme

Risk Assessments

Health & Safety

Issues (CDM)

Set sustainability &

Green Targets

Assessment of
Procurement routes

Consultation
s&
Approvals

Detail
proposal/Design
Development

Detailed Design
Development

Room Data collation

& documentation

Planning
Permissions

Review programme,
risks & procurement
options

Elemental Cost plan,

Project Cost Plan &
Budget Confirmation

Consultations &
Approvals

Scheme is
Frozen

Final Proposal/
Technical Design

Development of
Final Proposal

Detailed Room Data

Sheets

Incorporation of
Specialist Reqmt, IT,
AV etc.

Review Procurement
Strategy, Cost Plan
& programme

Internal
Consultations i.e.
security, fire, IT

Sign-off proposal by
the Client

Production
Information

Preparation of
Detailed Coordinated drawings

Final Confirmation of
materials & finishes

Complete
Specifications,
components
drawings, BoQs

Building Warrant
Application

Review Procurement
Strategy, Cost Plan
& programme

Review of Green
Bldg

Tender
Documentation

Preparation of
Tender
Documentation

Complete Pre-tender
EH&S plan

Final Procurement
Strategy, Cost Plan
& programme

Tender Action

Identification of
potential contractor

Tender Report

Contractors
Interviews

Approval of Client to
appoint Contractor

Mobilisation

Building contractor
prepares to
commence on site

Main contractor
appoints subcontractors

Onsite

Construction Works

Monitoring of works
at site

Change Control
Management

Cost Control During

works

Snagging, Testing &

Commissioning

Handover of the
project to the Clients

Occupation

Removals

Occupation

Utilization of the
building

Defects Liability
Period

Settlement of Final
Accounts

Post Contract
Review & Client
Feeback

Construction
Life Cycle
Fit-out &
Furnishings

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Indigenizing RIBA!
Stage

Project
Definition

Concept

Schematic

Level of Cost Plan

Information Info Needed

Needed
from

Indicative Cost
Plan

User Brief/
Vision
Document

Cost Plan

Design Concept Consultants

Budgetory
Schematic
Costing based on
Design
Elementary BoQ

Design
Tender BoQ
Development

Detailed
Designs

Client

Remarks for the Information Needed for Cost Plan

A written statement including need brief, spatial

requirements, capacity etc. along with a vision
document or reference benchmark needed

A concept design with possibly a design brief/ design

considerations to be furnished along with dimensioned
drawings for plans, elevations, sections etc. & material
chart

Complete schematic designs including architectural,

Consultants structural, MEP drawings, schedule of finishes and
material specifications

Consultants

All drawings, specifications and Consultants BoQs

required as per agreed programme and details.
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PLEASE NOTE:
Cost Planning is of greatest use in Design & Construction
projects. It is less relevant when we have limited control over
the design (i.e. construction management projects)

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6/24/2013

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 for
the 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 divided
in to levels, areas and elements/trades as applicable to a
particular project (proprietary software?)
The initial cost plan should allow for undesigned but
necessary items
An elemental analysis check with historical data

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BALANCING SAVINGS AND OVERRUNS

Cost Planning is NOT an EXACT SCIENCE. It is an overall total
package.
Cost overruns in one area can be balanced by cost
savings in another
If a saving requires a change to the specification to
balance an overrun - agree with the client
If a saving is generated, and the project team wish to
apply this to another project element, i.e. an
upgrade to the contractual requirement - agree with
senior management
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PROJECT ENGINEERING
Design options evaluation - project engineering skills are
required - Why not try? Can it be built? Etc.
Various options should be compared to see which is the
OPTIMUM SOLUTION - this is not purely a ?? of price
It is important when considering different options to take
in to account other items that may be effected
All details should be queried where a complicated
solution has been proposed. These small details can cost
us a great deal when we get to actual construction on site.

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6/24/2013

RATES & PRICING

The cost information used in cost planning would come from,
in order of importance
current market rates
historical estimating / cost planning records
cost feed back from sites
local consultants

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LEVEL OF DETAIL
Depends on information and time available
1. Project definition stage
2. Concept design stage
3. Schematic plan stage
4. Design Development
5. Final Design

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PROJECT DEFINITION STAGE

What is available at this stage?
Needs Brief
Costing Method?
an all-up cost per m2 of gross building area for indicative
budgets only (Note: this is an extremely unreliable basis
upon which to start)
from experience and historical records build up an
elemental cost. This should also include parameters for
sketch outline - plans and an indication of quality
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CONCEPT DESIGN STAGE

What is available at this stage?
Needs Brief
Plan outlines
Costing Method?
Build up on a level basis an elemental cost on alternative
design schemes to assist with the choice
from experience and historical records build up an
elemental cost. This should also include parameters for
sketch outline - plans and an indication of quality
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SCHEMATIC DESIGN STAGE

What is available at this stage?
Needs Brief
Schematic Plan, Elevations and Sections
Schematic Structural Plans
Outline Finishing Plans
Costing Method?
Build quantities taken off in levels and / or areas in an
elemental format
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DESIGN DEVELOPMENT
What is available at this stage?
Alternative design options
Preliminary drawings
Preliminary specifications, finishes schedule, door
schedules etc.
Detailing

Costing Method?
Bulk quantity take-offs to compare design alternatives
Check all preliminary drawings conform to cost plan parameters
Check all detailing

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FINAL DESIGN
What is available at this stage?
All final AFC drawings, specifications etc.

Costing Method?
Examine to ensure that all corrections have been
incorporated and that there are no last minute
inclusions

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Elements of Checking a Bldg Estimate

Scope 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/ Faade/ Wall Finishes corresponds to Area/ Perimeter
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Elements of Checking a Bldg Estimate

Air, 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 statement
Air-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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