TOTAL PROJECT COST

(NON-ENGINEERING)
GENERAL
Probable total cost is a major concern of the client throughout the planning
design, and construction phases of a project. The probable total capital cost, often
use to establish budget for a typical project, is made up of
• Professional engineering costs
• Construction cost
• Legal and land costs
• Owner’s cost including project administration staffing, financing, and other
overhead
• Contingency allowance for unknown

LEGAL, LAND, ADMINISTRATION, STAFFING, AND FINANCIAL COSTS

These cost which audits, the cost of issuing bonds, land cost and interest for
borrowed money during construction, are part of the probable total project cost and
can best be estimated in cooperation with the client because they are usually outside
the knowledge and control of the Civil Engineer.

LAND COST
• The total cost of purchasing a land parcel. Land cost includes the purchase
price, closing costs, commissions, and finance charges

ADMINISTRATION COST
• Also known as overhead costs or fixed costs
• Are the costs which incur on a business or hotel solely from running. These
overhead costs are not directly impacted by manufacturing, production or
sales volume and can therefore be describe as fixed cost.
• Examples are:
o Rent, Utilities, Insurance, Office supplies, Legal Counsel and etc.

STAFFING COST
• It includes salaries and benefits related to payment of personnel.
• These are indirect costs related to payment
Staffing cost means salaries and benefits related to payment of personnel.
In other words, it is the sum of all wages paid to employees of a company or to those
persons involve in a particular project. Including h
Calculation of “Staff costs”
Central Europe Control and Audit Guidelines proposed a method to calculate the
share of costs related to employees working part of their workable time in a project.
The formula used:

𝐺𝑟𝑜𝑠𝑠 𝑠𝑎𝑙𝑎𝑟𝑦 + 𝑠𝑜𝑐𝑖𝑎𝑙 𝑐ℎ𝑎𝑟𝑔𝑒𝑠

𝑥 project worked days/hours
𝑇𝑜𝑡𝑎𝑙 𝑟𝑒𝑎𝑙 𝑤𝑜𝑟𝑘𝑖𝑛𝑔 𝑑𝑎𝑦𝑠/ℎ𝑜𝑢𝑟𝑠

Gross salary + Social charges = costs definitively paid by the beneficiary in the
timeframe of a year, including: salary, costs of sickness
absence and holidays, taxes, employer’s contribution for
national social security schemes, etc.
Total real working days/hours = total time in days/hours worked in the timeframe
of a year, excluding sickness, absence and holidays.
Project worked days/hours = worked time in days/hours for project purposes.
In order to ensure a correct calculation, the formula must be applied on a yearly basis
(Pero di naman kailangan na nakabase sa calendar year depende pa rin kung
kailangan sinimulan yung project).

FINANCIAL COST
• Also known as cost of finances
• This includes the cost, interest and other charges involved in borrowing of
money to build purchase assets.
• This can range from the cost it takes to finance a mortgage on a house, to
finance a car load through bank, or to finance a student loan
• Examples are
o Borrowing from creditors, Loaning origination fees, Interest on money
borrowed
Financing costs are defined as the interest and other costs incurred by the Company
while borrowing funds. They are also known as “Finance Costs” or “borrowing costs.”
Two Different sources:
1. Equity Financing
2. Debt Financing
Equity Financing - it is the process of the sale of an ownership interest to various
investors to raise funds for business objectives.
Types of Investors
• Angel Investors
• Venture Capitalists
• Crowdfunding
• Initial Public Offering

Debt Financing - it is a time-bound activity where the borrower needs to repay the
loan along with the interest at the end of the agreed period. The payments could be
made monthly, or yearly.
• Short Term Financing
> A type of financing that range from 30 days to 18 months.
• Long Term Financing
> A type of financing that extends for more than 18 months.

CONTINGENCY
• A future event or circumstance which is possible but cannot be predicted with
certainty.
• An incidental expense
ALLOWANCE
• The additional time allowed to perform the work over and above the basic time
• Additional benefits provided to the worker for recovery from fatigue & for
relaxation

CONTINGENCY ALLOWANCE
- It is the time allocated during planning for unscheduled events. Technical and
personal disruptions result in changes in the Indirect production costs.
- The contingency allowance is calculated in special contingency time studies,
the results of which yield rates for indirect production cost.
- It is a small allowance of time which may be included in a standard time to
meet legitimate and expected items of work or delays, the precise measurement of
which is uneconomical because of their infrequent or irregular occurrence.
As the project moves forward from the study and report phase, through the
final design phase and finally to construction award, more becomes known about
project details and costs, until at the completion of the project, the final project cost
becomes a known quantity
To provide for intangible costs contingencies should routinely be added to the
basic estimate. It is common practice to add 20% or more to the estimated probable
total project cost at the completion of the study and report phase, reducing this
perhaps 10% at the completion of the final design and perhaps to 5 % when the
construction bids become known. Larger or more complex projects may require
higher contingencies.

SUMMARY
Estimate of the total project cost should be periodically revises by the
engineers as the design moves forward and more information becomes known. The
client is normally responsible for providing estimates of those costs which may lie
outside the Civil Engineer’s knowledge or expertise, such as those in the legal, land,
administration, and financial area,