BUILDING

ECONOMICS
Assignment
Ayesha Mahmood
Roll no.: 031651015
Submitted to: Ma’am Sana Aleem
CASE STUDY:
An 8 kanal house is under construction at one of the main localities of the city. The project has
three stakeholders.

1- Client

2- Architecture &Interior design firm

3-Architectural consultants

The construction project is undergoing a shifting of civil works contractor A with an interiors
contractor B. For a smooth shifting the Architectural consultants have to vet that the site is ready
to be handed over to the interior firm and their contractor B for further proceedings. As the civil
phase of the project is now over, the interior contractor B will begin plastering the walls first.
However when the interior contractor B checked the alignment of walls, there were major
discrepancies on site. The interior contractor B had only quoted for 0.75 inch thick plaster.
However due to misalignments of walls, they have submitted an invoice for 1.75 inch thick
plaster works. This has disturbed the overall budget by an additional sum of 10 lakhs.

The party that is responsible for this additional sum of money is contractor A under which all the
civil work was done. They are responsible for every error occurred in the construction from
foundation to grey structure. Contractor B is has nothing to do with the error.

COST CONTROL
Cost control is the practice of identifying and reducing business expenses to increase profits, and
it starts with the budgeting process. Cost control is an important factor in maintaining and
growing profitability. The main objective of cost control of a project is to gain the maximum
profit within the designated period within the budget and to monitor and control actual
expenditure against the estimated project budget.

DEPRECIATION FACTOR
Deprecitation is defined as the loss in value of an asset with passage of time. In general sense it
means getting consumed, decayed, damaged, obliterated or worn out. Boardly speaking it
represents a loss caused by factors like decay, wear, and tear, actions of elements of nature,
insufficiency or inadequacy, obsolescence, damages in art and fashion, changes in demands etc.

Construction projects are many times, intricate and demanding. The majority of these projects
significantly do not meet their pre-established cost & schedule goals. At times, an owner may
question the importance or the need for an estimator. However, proper estimating methodologies
and an experienced team can provide the owner with mitigated risk and a more realistic project
budget. The estimating process allows for the owner, design team and general contractor be
better prepared for the overall project flow and an ability to manage and mitigate risk throughout
the design and construction process. The estimating process is a powerful tool that provides
identification and management of project cost. This process is likely one which owners will
demand from their general contractors.