Methods of Calculating Various Construction Costs Essay

Cost Surveies

2015

1.0 Introduction

In the building industry pre contract, cost panning and cost controlling has a immense function and has a positive impact. Each budget puting techniques has its ain characteristics, advantages and disadvantages. In a building undertaking to measure any point, the life rhythm cost computations are really of import to place the cost effectivity. Most of the capital investings of the clients are being saved from 10-15 % by following Life Cycle Costing and Value Management, where these two procedures helps to cut down the unneeded cost of the undertaking. The RIBA work program of ( 2007 ) or the latest RIBA work program of ( 2013 ) shows the cost planning procedure up to the stamp phase of the undertaking, which helps the client to understand what is undertaken at each stage/task. This study explains the method of ciphering the mark elemental unit cost, the characteristics of the budget scene techniques, life rhythm cost computations and cost planning procedure.

The Target Elemental Unit Cost for External Walls

Analysis informations

Elemental unit rate: Rs 1500/m­­2

Elemental unit measure: 4000m2

Cost index: 260

Location factor: 0.95

Cost Plan

Elemental unit measure: 4900m2

Cost index: 275

Location factor: 1.01

Quality: Since there is a higher glazing specification, the cost will be

increased by Rs 180/m2

  1. Measure Adjustment

( 4900/4000 ) ten 1500 = 1837.5

  1. Time Adjustment

( 275/260 ) x 1837.5=1943.5

  1. Location Adjustment

( 1.01/0.95 ) x 1943.5 = 2066.25

  1. Quality Adjustment

2066.25 + 180 = 2246.25

New mark unit cost = 2246.25

2.1 Cost Planning

Most of the building undertakings costs are usually gauge before any work induction. Private and public client ‘s wants to cognize the elaborate disbursals of a undertaking, and their duty-bound budgetary duty, before the top to bottom undertaking lineation work has been finished. The cost planning is done during the rating and planning phase of a undertaking. There are different cost planning methods in the building industry, two of the cost planning methods are explained bellow with their characteristics, advantages and disadvantages. ( Hartman, n.d )

  1. Unit of measurement Method

The unit method is besides called as the cost per functional unit method. In application, the unit method is one of the simplest and coarsest. The unit method includes the use of a individual functional unit that serves as a multiplier. ( Jim Smith, 2007 ) Verifiable information from yesteryear, comparative building undertakings is utilised to piece a cost theoretical account of building cost for one new unit. To finish the undertaking this unit is multiplied by the necessary figure of units by suited cost per functional unit, which will gives an overall cost estimation. For an illustration, the functional unit could be expressed as net useable floor country of houses, offices, mills, infirmaries etc, or as a figure of units of adjustment such as seats in school, abode per individual etc. ( Hartman, n.d )

Estimate= ( Standard units of adjustment ) ten ( Cost/unit )

Advantages of Unit Method

  • The design group is provided a convenient and cost adjustment counsel ‘s at an early stage of the design procedure that about matches the betterment of informations in the design brief.
  • Decision on the kind and grade of functional infinite in the preliminary undertaking design is reflected in the more precise disbursals that this scheme brings to these exercisings.
  • This method gives the opportunity to the cost contrivers to stop up all the more closely involved in design pick doing amid the early important phases when the form, grade and manifestation of the undertaking are still liquid.
  • This method advances more outstanding interaction and combination with the client and between members of the design squad. ( Jim Smith, 2007 )

Disadvantagesof Unit Method

  • This method requires more clip and information ( escalated in the betterment phases ) .
  • It obliges a solid duty from the client organic structure, the design squad members and the cost contrivers to garner analyze and present information in a suited construction for future undertakings. Such duty must be justified where the client organic structure is involved in a changeless and steady plan of edifice undertakings.
  1. Floor Area or Superficial Method

The Floor Area or Superficial Method is similar to the unit method and uses as a lone rate method ( cost per square metre ) of measuring to calculate the cost of the edifice. The floor country method is a standout amongst the most good known methods for measuring and is usually utilised during the early stages of a undertaking. By demand, the technique must be utilized when the floor country of the edifice can be surveyed or measured sanely exactly from drawings ; irrespective of the fact that merely in a layout construction. It is a basic method where the Ground Floor Area ( GFA ) of the edifice in square metres is multiplied by a suited rate per square metre. : ( Jim Smith, 2007 )

Estimate= ( Area of each floors ) x ( Cost per m2)

Advantages of Floor Area or Superficial Method

  • The unit of appraisal ( Ground Floor Area ) is largely of import to all the parties, peculiarly the client and the interior decorator.
  • The cost information, which is largely distributed, is communicated in cost per square metre.
  • Estimates are arranged quickly and are basic, nevertheless be careful with the scheme ‘s congenital effortlessness. ( Jim Smith, 2007 )
  • The preciseness is contingent after picking a rate from a undertaking with comparable characteristics.

Disadvantages of Floor Area or Superficial Method

  • Adjustments are hard to be made to the estimation for contrasts plan form, height floor ‘s, status of the site, building schemes, measure and quality.
  • On a sensible note, faithfully look into whether the estimation computation is for constructions merely.
  • The bulk of the distributed edifice value books demonstrate whether they incorporate amounts for important service installings, for illustration, air-conditioning lifts and fire confidence. ( Ashworth, 2010 ) Separate and excess allowances on a regular basis must be made for things considered to be over the normal or expressed criterion and for work beyond the outer face of the edifice ( or within 3.0 m of it ) . Such things avoided from the cost per square metre Ground Floor Area may forbid external landscape gardening, exceeding earthworks, external services and foundation. ( Cartlidge, 2012 )

2.2 Life Cycle Costing

Premise

  • Discount rate – 10 %
  • Life span of the edifice – 50 old ages

System A

Boiler = Rs. 250,000.00

Pipe work and units = Rs 60,000.00

Insulations = Rs. 12,000.00

Entire=Rs. 322,000.00

Recuring cost

Equation for repeating cost

Pv = Ao x [ ( 1+d )N– 1 ]

vitamin D ( 1+d )N

Annual fixs = 3000 x ( 1 + 0.1 )50– 1

( 0.1 ) ten ( 1+0.1 )50

=Rs. 29,744.44

Replacement ( Every 20 old ages )

Equation for one clip cost

Pv = At x [ 1 ]

( 1+d )N

20Thursdaytwelvemonth Pv = 40000 x [ 1 ]

( 1+0.1 )20

= Rs. 5945.75

40ThursdayyearPv = 40000 ten [ 1 ]

( 1+0.1 )40

= Rs. 883.80

Entire replacing cost=Rs. 6,829.55

Premise:since the life span of the edifice is 50 old ages at that place is no any replacing on the 50Thursdaytwelvemonth.

Overhaul ( Every 5 old ages )

5ThursdayyearPv = 20000 ten [ 1 ]

( 1+0.1 )5

= Rs. 12,418.43

10Thursdaytwelvemonth Pv = 20000 x [ 1 ]

( 1+0.1 )10

= Rs. 7,710.87

15Thursdaytwelvemonth Pv = 20000 x [ 1 ]

( 1+0.1 )15

= Rs. 4,787.84

20ThursdayyearPv = 20000 ten [ 1 ]

( 1+0.1 )20

= Rs. 2,972.87

25Thursdaytwelvemonth Pv = 20000 x [ 1 ]

( 1+0.1 )25

= Rs. 1,845.92

30ThursdayyearPv = 20000 ten [ 1 ]

( 1+0.1 )30

= Rs. 1,146.17

35Thursdaytwelvemonth Pv = 20000 x [ 1 ]

( 1+0.1 )35

= Rs. 711.68

40ThursdayyearPv = 20000 ten [ 1 ]

( 1+0.1 )40

= Rs. 441.90

45Thursdaytwelvemonth Pv = 20000 x [ 1 ]

( 1+0.1 )45

= Rs. 274.38

Entire inspection and repair cost=Rs. 32,310.06

Premise:since the life span of the edifice is 50 old ages at that place is no demand of inspection and repair to the fiftieth twelvemonth.

Fuel per annum

Pv = 60,000 x ( 1+0.1 )50– 1

0.1x ( 1+0.1 )50

=Rs. 594,888.87

There for the entire life rhythm cost for system A is = 322,000.00+29,744.44+ 6,829.55

+32,310.06+ 594,888.87

=Rs. 985,772.92

System B

Boiler = Rs. 275,000.00

Pipe work and units = Rs 54,000.00

Insulations = Rs. 35,000.00

Entire=Rs. 364,000.00

Recuring cost

Equation for repeating cost

Pv = Ao x [ ( 1+d )N– 1 ]

vitamin D ( 1+d )N

Annual fixs = 2800 x ( 1 + 0.1 )50– 1

( 0.1 ) ten ( 1+0.1 )50

=Rs. 27,761.48

Replacement ( Every 30 old ages )

Equation for one clip cost

Pv = At x [ 1 ]

( 1+d )N

30Thursdaytwelvemonth Pv = 32000 x [ 1 ]

( 1+0.1 )30

= Rs. 1833.87

Entire replacing cost=Rs. 1833.87

Premise:since the life span of the edifice is 50 old ages at that place is no any replacing on the 50Thursdaytwelvemonth.

Overhaul ( Every 5 old ages )

5ThursdayyearPv = 20000 ten [ 1 ]

( 1+0.1 )5

= Rs. 12,418.43

10Thursdaytwelvemonth Pv = 20000 x [ 1 ]

( 1+0.1 )10

= Rs. 7,710.87

15Thursdaytwelvemonth Pv = 20000 x [ 1 ]

( 1+0.1 )15

= Rs. 4,787.84

20ThursdayyearPv = 20000 ten [ 1 ]

( 1+0.1 )20

= Rs. 2,972.87

25Thursdaytwelvemonth Pv = 20000 x [ 1 ]

( 1+0.1 )25

= Rs. 1,845.92

30ThursdayyearPv = 20000 ten [ 1 ]

( 1+0.1 )30

= Rs. 1,146.17

35Thursdaytwelvemonth Pv = 20000 x [ 1 ]

( 1+0.1 )35

= Rs. 711.68

40ThursdayyearPv = 20000 ten [ 1 ]

( 1+0.1 )40

= Rs. 441.90

45Thursdaytwelvemonth Pv= 20000 x [ 1 ]

( 1+0.1 )45

= Rs. 274.38

Entire inspection and repair cost =Rs. 32,310.06

Premise:since the life span of the edifice is 50 old ages at that place is no demand of inspection and repair to the fiftieth twelvemonth.

Fuel per annum

Pv = 48,000 x ( 1+0.1 )50– 1

0.1x ( 1+0.1 )50

=Rs. 475,911.10

There for the entire life rhythm cost for system B is = 475,911.10+32,310.06

+1833.87+27,761.48+364,000.00

=Rs. 901,816.51

As per the life rhythm cost computation system B is cost effectual more than the system A. at that place for system B has a low life rhythm cost.

2.3 Cost Planning Process up to Tender Phase

A. Appraisal

The client demands and chief aims are analysing and measure those possibilities in this assessment phase and the client’s demand feasibleness assessment analysing in this phase. RIBA ( 2007 )

  • Preparations of preliminary
  • Collect information and information provided by the client
  • Agreement of audience with governments
  • Analyzing of economic viability of the undertaking topographic point and do certain the client budget
  • Check the suitableness of building with a design direction regulations and ordinances.
  • Appraisal of procurance method
  • See sing suited adviser

B. Developed Brief

Develop impermanent plants begin with a development of initial statement and it conforming by the client side. ( Potts, 2008 ) The peculiar undertaking organisational construction, procurement method, undertaking work process and constrains to be engaged for a proposed undertaking. RIBA ( 2007 )

  • Management of an organisation
  • Obtain and undertake studies sing undertaking
  • Check and analyses the services handiness
  • Gather more informations supplied by the client of the undertaking.
  • Make a list related to authority’s audiences
  • Initiate the of import design reappraisal
  • Develop the feasibleness direction studies

C. Concept

The farther information agreements through the implement of advancement brief for the construct phase. The construct design prepare with peculiar edifice construction and services. RIBA ( 2007 )

  • Good disposal
  • Prepare material research and make the outline specification sing undertaking.
  • Fix the initial architectural design and measurings.
  • Fix the structural and services designs.
  • Considerations about conveyance and entree issues, ( Ashworth, 2010 )
  • Fix the initial cost planning for the peculiar undertaking
  • Form co-ordination and checking
  • Fix the outline appropriate study
  • Create an application for permission of lineation planning
  • Get an blessing from the client

D. Design Development

The construct is developing in this phase with structural and edifice services and besides specifications updating in this phase. Design brief have to finish in design development phase. RIBA ( 2007 )

  • Form the design development
  • Start to fix the structural, architectural, landscape, services and interior designs.
  • Analysis of cost program
  • Form co-ordination and checking
  • Fix the outline appropriate study. ( Seeley, 1996 )

E. Technical Design

Fix the proficient design’s specification and those should be sufficient to the each and every elements of the undertaking. RIBA ( 2007 )

  • Administration
  • Collect sufficient informations which supplied by the undertaking client
  • Architectural design alteration and updates
  • Modify and update the landscape and structural designs
  • Fix the preliminary agreement base on the contract direction
  • Procure inside and service designs
  • Undertake the cost checking, proficient reappraisal and co- ordination and checking. ( Keith Potts, 2014 )

F. Production Information

The sufficient inside informations information are fixing for the application and building for statutory blessings in the production information phase. ( Lau, 2006 ) This each and every information is fixing harmonizing to the edifice contract. Specialists are doing reappraisal and supply the information in this phase. RIBA ( 2007 )

  • Administration
  • Preparation of contract papers and stamp collect the stamp information
  • Preparations of agendas of rates and measures of measures
  • Fix the architectural, structural technology, landscaping undertaking information ( pulling or specifications )
  • Undertake co-ordination and checking
  • Undertaking inside informations appraisal

G. Tender Documentation

The sufficient inside informations are roll uping for prepare a stamp certification it should be obtain for the undertaking. RIBA ( 2007 )

  • Make the Architectural and chief structural technology – stamp certification
  • procure Services technology – stamp certification
  • Prepare stamp lists – chief contract
  • See destruction and enabling plants contracts. ( Cartlidge, 2012 )

H. Tender Action

Identify the possible contractors and specializers for the undertaking. In this phase stamp obtaining and appraising, entry of recommendations to the client. RIBA ( 2007 )

  • Administration
  • Convene pre-tender meetings
  • Answer inquiries ( from tenderers )
  • Apply agree process for gap of stamps ( Paranamana, n.d )

The followers are the cost planning procedure with advantages and disadvantages of cost planning.

  • There should be a frame of mention ( cost bound )
  • A realistic first estimation is established,
  • Planing how the estimations could be spread among the edifice elements, ( Jim Smith, 2007 )
  • There should be a method of look intoing ( cost mark )
  • The cost mark which were established ab initio must be detected and measured the discrepancy in concurrence with all the design squad members by the cost contrivers,
  • Remedial actions should be taken if there is any discrepancy between the entire amount of the cost mark and the overall cost bound, ( Jim Smith, 2007 )
  • There should be a agency of remedial action ( cost cheque )
  • When the cost overproduction is known the remedial actions must be taken quirkily and ideally,
  • The remedial actions help to guarantee that the outgo of the undertaking is within the undertaking cost bound, the tabular array 1.1 shows the cost checking and classs of action required.

Table 1.1, Cost checking and classs of action. ( Beginning: ( Jim Smith, 2007 ) )

The figure 1.1 shows the cost planning procedure.

Figure 1.1, The procedure cost planning. ( Beginning: ( Jim Smith, 2007 ) )

Advantages of Cost Planning:

  • The clients estimations will be similar or closer to the value of the stamp,
  • A more logical design will be produced by a balance distribution of the outgo, ( Jim Smith, 2007 )
  • A basic information on comparing of cost between different undertaking will be provided through the cost planning,
  • Due to the engagement of the Quantity Surveyor at the early phase of the design procedure a more attending will be given to the cost consideration,
  • Through the cost planning procedure the success for cost and value for money can be achieved,
  • The Bill of Measures could be prepared easy,
  • Fewer alterations will be made to the Bill of Quantities since there is there is a look intoing system on the cost etc. ( Ashworth, 2010 )

Disadvantages of Cost Planning:

  • There will be some restrictions on the on the job manner for the interior decorator or the Architect,
  • At the early phase of the design procedure it requires a immense readying,
  • Compared to when no cost planning is utilized the interior decorators and the Quantity Surveyors are involved in a batch more work/task.
  • The Quantity Surveyors should hold a good cognition and experience affecting to the cost and the factors act uponing the cost.

The sum-up of Cost Planning is shown in figure 1.2

Figure 1.2, The Summary of Cost Planning ( Beginning: ( Cost Planning, 2010 ) )

2.4 Decision

In a undertaking, the client has to ab initio concentrate in the life rhythm cost of the points and in value direction, and besides to concern the pre-contract cost planning and commanding with regard to RIBA program of work.

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