UNIVERSITI TEKNOLOGI MARA

QSM 556 Construction Economics II

QSM 556

AIM HIGH!

UNIVERSITI TEKNOLOGI MARA

QSM 556 Construction Economics II

QSM 556

By end of this class, you should:

Understand the importance of Cost data
The usage of Cost Data

The sources of Cost Data

Introduction
Why is it important? - At initial stage to reflect the

probable cost of the proposed project to the client and

throughout the various stages of design and
construction.
In a NUTSHELL: For forecasting and control activity.

Where can I get cost data? - Generally, QS consultants,

ISM, PWD, the Statistics Department and CIDB have

ample cost data which are kept systematically.
Which cost information should we use and where it comes
from is important!
QSM 556 Construction Economics II

 ...the planning and design phase of a building project

deserves more abundant resources and closer

attention because in this phase we simultaneously
encounter the greatest possibilities for influencing the
total project cost and the lowest expenditures
associated with the project.
Building Cost Planning for the Design Team, by Jim Smith & David Jaggar

QSM 556 Construction Economics II

How cost planning influence cost?

QSM 556 Construction Economics II

Plant &
Equipment

Plant Hiring
rates?

Labour

Wages per
day?

Material

CementRM?/50kg

Overhead

5-10% of
total cost

Components
of Cost

QSM 556 Construction Economics II

UNIVERSITI TEKNOLOGI MARA

QSM 556

Purpose?
Approximate estimate cost of the proposed project

Balance the cost in the estimate to assure money is

spent based on the clients preferences.

As a basis for preparing schedule of rates for the

purpose of variations of work, contractors claim and

final account.

QSM 556 Construction Economics II

Uses of Cost Data

Predict
Cost
Make cost
comparison

To?

Balance the
cost
Analyse the
cost trend
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a. Prediction of
cost
Prediction of total
cost of construction
based on data
available and the
suitability of the data

ALERT! Data must be

an updated set of
data- historical data
must be adjusted for
current analysis.

Schedule
of rates

Cost/m2

BQ from
prev.
project

Current predicted Cost

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b. To make
comparison
of cost
Not merely to
obtain the actual
but to make the best
comparison on
alternative
item/element that
have similar
functions/different
in design.

Pitched Roof vs. Flat Roof?

Brickwall vs. Curtain Wall

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c. Balancing of cost
Cost per element or
small units can be used
to conduct cost check.

Can be used in
estimation
to
distribute cost based
on clients needs.

Total cost
for Roof?

Total
cost for
ceiling?

QSM 556 Construction Economics II

Cost per/m2
of upper
floor?

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d. Analysis of cost trend

The element of cost of a
building changes
through time.
By using cost data, the
trend of future changes
can be forecast to
accommodate client
financial status. (i.e the
hikes of materials price
or wages for labour)

Construction
Start- 2007

Construction
stopfinancially
incapable

Construction
of a Stadium

2008- Steel
price increased

Why QS need readily available cost

data??
From Start of
Project

To prepare an estimate or budget

design stages
Estimates tender for tendering purposes
Negotiate variation prices during the
preparation of final account
Calculate and settle off the contractors claims
Adjust valuation of profit & loss
Manage maintenance & repair
Calculate the life cycle cost or cost in use

During Construction

Plan outline and detailed costs during the

Post construction
& for future
project

1. Technical data
Published in Journal &

Magazines (Building related)

Information on- price of
materials, labour wages, hirepurchase of plant.
ISM- The Malaysian Surveyor
magazine [ECA, etc]
Advantage: more frequent up-to-date
information, applicable locally.
Disadvantage: not much space (articles
etc) therefore less details of cost
information

2. Price books
In UK-Published annually- but not

yet available in Malaysia.

Some priced books can be referred to.
i.e. Spons Asia Pacific Construction
Costs Handbook- contains price
information for the Asia Pacific
countries including Malaysia
Advantages: Organized &
Comprehensive set of cost data
Disadvantages: Need to be updated by
users periodically due to changes of
market conditions, location etc

Spons Asia Pacific Construction Costs

Handbook, 2000 (3rd Ed.)
Labour Types

Wages for 8
hours/day(RM)

Total number of
working hours per
year

Mason/Bricklayer

80.00

2304

Carpenter

80.00

2304

Plumber

80.00

2304

Electrician

80.00

2304

Semi-skilled labour

35.00

2304

Unskilled labour

30.00

2304

Plant operator

80.00

2304
Per month

Foreman

2,600.00

2304

Clerk-of-work

1,800.00

2304

3.Information services
Building Cost

Information Services
(BCIS) under RICS.
Published price books
AND Online data base
for users in UK:
http://www.bcis.co.uk

4. Tender/Contract Doc & BQ

MAIN SOURCES used by QS

Preferable at all times than published information

thus knowledge on site condition, market prices,

labour condition is required prior to the use of
information.

In forms of: Schedule of rates, overall costs, basic rate of

materials, labour, plant, contract period, and DL period.

ALERT! Different contract usually consist of different

rates-thus-must inspect the factors that influence the
differences. (i.e.- location, size, market condition,
tendered &contract period)

Why BQs rates differ?

Location

Urban Vs
Rural?

Accessibility

Front/Back
loading

Capital first

Variations
later

Errors

Many items
to priced

Very
common

Inaccurate
data

Time
pressure

Historical Vs
Updated

Site
techniques

High out put

Machinery?

Special
techniques

Supply of
Material

Own
product

Sub-to
supplier

Factors?

5. Government Publications
In Malaysia-Government

is the main client in the

construction industrythus has its own
production of cost data
and R&D
JKR (PWD), Department

of Statistics (DSM),
CIDB.

Cost Data available online

http://www.statistics.gov.my (go to free
Download tab)

http://www.cidb.gov.my (under Resources>Construction Resource Centre)

http://www.jkr.gov.my (under Info ContrakJadual Kadar Harga)

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Conclusion:
Do you understand the importance of Cost data?

Very important during design stage, especially to

influence the cost, to do approximate costing, and
What are the purposes and how to use Cost Data?
What are the sources of Cost Data?

Discussion:
What are the main source of cost data for quantity

surveyors, and why precautionary steps must be taken

when using this source?

Past years exams Q:

Some of the factors which may influence the cost data
obtained from Bills of Quantities are:
i. Size of project
ii. Method of tendering
iii. Construction period
iv. Site location
v. Government policy
Discuss and give appropriate situations how each of the
factors affect the rates entered by contractors during
tendering exercise.