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u s t
COST STUDIES
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OVERVIEW di
f a ra
ht :
g
Sr Fara Diva Mustapa, CQS (PhD),FRISM, MRICS

r i
Department of Quantity Surveying
y
co p
Faculty of Built Environment & Surveying
Universiti Teknologi Malaysia
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 21st Century Curriculum
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Emphasize Core Subjects
Technical Core & Technical Optional
Future Ready Quantity Surveying Graduates

u s t
4m
• Meas urement/ • Cons truction
ICT Literacy

va
1
Cons truction technology/ Buil
Meas urement/ Quanti Constr ding
Quantification
etc. ties/M uction
technology/ Civil
& Engineering
Computer Literacy, Building
easure Techno technology etc.
Information Modelling (BIM)

i
ment logy
Profess Constr
ional uction ready

d
Practic Econo
• Profes s ional e mics • Building

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practice/ Quantity Economics / Cons tr
Surveying practice uction Economics
etc. etc.

2 5
Life Skills

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21st Century Content

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Leadership, Ethics, Accountability,
Fluid & Organic, Transformative

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Adaptability

g ht
3 6
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21st Century Assessments Learning and Thinking Skills

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Critical-thinking , problem-solving skills,
High –order thinking, high level of communications

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bloom’s taxonomy, Alternative
assessments – Authentic, Performance-

o
based, Challenged-Based

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Key elements of 21st Century Learning
 21st Century Modes
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The paradigm shift in Teaching and Learning

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Pedagogy Andragogy Heutagogy

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co p Teacher-Led Learning Self-Directed Learning Self-Determined Learning/Learner - Centred Learning
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A little intro on the subject…
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 Course Overview

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Introduction to
Cost Indices
u s t
Cost Planning &

m
Course Studies Cost Control

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ra
Cost

a
Life Cycle

f
Management & Cost Model

:
Costings

t
Value for Money

r i g h
o p y Design
Cost Data

c
Economics

copyright: faradivamustapa
 ▪  Course Code: SBEC 2463

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▪  Course Name: Cost Studies

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▪  Synopsis: The course covers the general aspects of building

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economics: design economics and factors influencing
construction costs; types of cost information such as cost

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data, cost model, cost index, cost analysis; the principles of

i
cost planning and cost control; and life cycle costing in

d
construction projects.

f a ra
At the end of the course, students should be able to identify

t :
factors that influence construction costs, apply the principles

h
of design economics, determine relevant cost information in

y r i g
the estimation of construction costs, understand the
principles of cost planning and cost control procedures, and

co p life cycle costing to the different design and construction

phases. The course also provides the environment to develop
students’ communication skills and the ability to work
effectively as a team member to achieve mutual objectives.
 Learning Outcomes:

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t
① Identify the factors influencing building and
construction costs
u s
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② Apply the principles of design economics to practical
design exercises
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③ Determine the different types of construction cost

i g h
data and indices to be used in the costing process

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o p y
④ Apply the principles of cost planning and cost control

c to simple design exercises.

⑤ Appreciate the principle of life cycle costing to

different design and construction phases.
 GRADING

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No. Assessments
diPLO %
1. Test

f a ra KW 20

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2. Tutorial KW 5
3.

r i g h
Coursework AP 20

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4. Peer Assessment AP 5

co p 5. Final examination AP
Total
50
100
 Lecture outline:

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• Introduction to Cost Studies:

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• Introduction to the philosophy and theories of cost
studies
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• The importance of cost management; aspects of cost

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studies, aims and importance of cost studies

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 To summarise…

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How do you plan to buy your 1st
s
car?
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 Similarly, upon deciding a construction project…

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Some considerations need to be carefully
thought.
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Cost implications of client’s

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requirements for their projects
 Client’s Requirements

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s t
The success of any construction project can
u
v a m
be measured against several different
criteria.

a d i
r
Performance
Time
Cost
t : f a
r i g h
p y
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 The need to understand this

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Cost Time Quality/Performance

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Duration of

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Budget Appearance
design

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Construction
Estimate Quality

a
date

t : f
h
Completion

g
Tender Function

i
date

p yr Final

o
Hand over Durability

c
Account

Defect
LCC Maintenance
Period
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copyright: faradivamustapa
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 To avoid this

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 Due to

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 The needs to understand

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And explain to the clients where their money go…
COST : HIERARCHICAL STRUCTURE
TENDER SUM TOTAL COST

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SUPERSTRUCTURE

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SUBSTRUCTURE FINISHING SIMPLIFIED ANALYSIS

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UPPER

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FLOORS FRAME ROOF AMPLIFIED ANALYSIS

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Columns Beams QUANTITY FACTORS

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Reinforcement Concrete Formwork MEASURED WORKS

co p Plant Labour

Supervisor Craftmen
Material

Labourer
ITEM ANALYSIS

LABOUR ALL-IN RATES

Basic Rate LABOUR BASIC RATE

 Cost Management: an overview

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 Definition of cost management

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u
Cost management is concerned with the
s t
m
process of planning and controlling the budget

i va
of a project or business. It includes activities

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such as planning, estimating, budgeting,

a
financing, funding, managing, and controlling

t : f
costs so that the project can be completed

g h
within the approved budget.

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 What is cost management?

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Design: The process of producing the required
model of a building
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Cost: The amount of money that the client

t : f a
expects to hand over to a builder, usually during
and on completion of the building.

r i g h
Management: The responsibility for ensuring that

o p y
the functions of planning, control and feedback

c are successfully brought about in terms of design,

cost, time and quality
 COST MANAGEMENT AT PRE AND
POST CONTRACT

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 Points to ponder

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 PRE-CONTRACT cost management concept map

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Brief
Outline
Proposal
s
Sketch Plan

u t
Tender
Documentation

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di
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Cost Target Cost Checking

t : f a Cost Target

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Cost checking

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Determine Confirm

r i
Budget

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Budget/Cost

p
Cost Target Cost Checking

co Cost Target Cost Checking

 Basic approaches to design management

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Designing : fa ra
ht Costing a
y r ig
to a Cost design
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 Designing to a cost

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Client Design team

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establishes cost develops design

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limit/budget within budget

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Design within

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Yes?
budget

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No? Back to
design board
 Costing a design

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Design to suit Design form
client

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basis of initial Affordable?

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requirements costing

t : f
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No? Back to

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Yes? Proceed

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drawing board

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 So, how to manage project costs?

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 COST STUDIES
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u st
building and other structures.a m
▪  Understanding and application of costs to
v
a d i Some of the

f a
resources are used to r
aims is to ensure that scarce and limited
best advantage.

h t :
y r
within i g
▪  It led to the
the
needs to control project costs
stipulated budget.

co p
 COST STUDIES (cont’d)
Break ing down th e t o tal cost of buildings

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 COST STUDIES (cont’d)
Break ing down th e t o tal cost of buildings

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wit h th e f ollowing objectives:

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To re v eal t h e d is t r ibut ion of c osts be twe e n th e various of

va
t h e bu ilding

di
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To r e late t he most of any single pa r t or e le ment t o it s importanc e as a
necessar y pa r t of t h e whole build ing

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To comp a r e t h e c osts of t h e same pa r t or e le me n t in d if f e r e n t

h
buildings

y r i g
To conside r wh e th e r c osts could have been apportione d t o
se c u re a b e t t e r bu ilding

co p To ensur e a prope r balanc e of quan tit y and qualit y wit h in

t h e appropriate c ost limit

To obtain and use c ost data in planning f u tur e buildings

 Design Cost Management pa
s t a
mu
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Management | The

ra d
Cost | The amount
of money that the
responsibility for
ensuring that the

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Design |

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The process of
client expects to functions of

h
hand over to a planning, control &

i g
producing the

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builder usually feedback are

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required model of during and on successfully

co p a building completion of the

building/facility
brought about in
terms of design,
cost, time & quality
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 Cost estimating Overview

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A technique to forecast the possible costs
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incurred for a certain building or construction

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project via a systematic calculation employing

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certain methods. The cost estimate to be

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prepared is part of the cost planning process,
f
t :
that is the controlling of the project cost at the

h
g
design stage before any drawings are embarked

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upon.
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▪  To limit the client’s expenditure to within the
amount agreed.
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▪  Tender Sum = Final Account

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▪  To achieve a balanced design expenditure
f
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between the various elements of the

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buildings.

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▪  To provide the client with a value-for-money
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co p project. Consideration of total-cost
approach.
 COST CONTROL PRINCIPLES

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Principle 1 - Reference
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Principle 2 – Method of

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Checking
t : a
i g h
r Principle 3 - Remedial
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 COST CONTROL PRINCIPLES

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▪  Principle One – there must be a frame of reference

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or set of conditions which must be adhered to. t
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▪  Consists of two stages;

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▪  i. Establishing a realistic first estimate – accurate,

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reliable and realistic.

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▪  ii. Planning how this estimate should be spent among the

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parts of the building – involves splitting the cost limit into
a number of smaller cost limits, according to elements.

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 COST CONTROL PRINCIPLES
(CONT’D)
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▪  Principle Two – there must be a method of t
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checking or a feedback system. By having the

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process of detecting and measuring the

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departures from targets and thereby checks the

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estimate is being spent as originally established.

t : f
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▪  Principle Three – there must be a remedial actions.

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Remedial action/s may mean re-designing the
element, changing the specifications or seeking

co p alternative solutions. Actions taken should ensures

that expenditure is contained within the amount
agreed between the client and design team.
 Cost planning process

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Preliminary Estimate

t : f a Preliminary cost plan

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Cost checking

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 Preliminary estimate

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s
Establishment of realistic estimate
u t
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No drawings of any substance prepared

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Pricing information provided by way of
di
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estimates can be ASSUMED only to GUIDE

t : f a
PRICES from similar past projects
Possible estimating techniques – single-price

i
method
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o p y
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 Preliminary cost plan
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u s t
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Correctly be described as an elemental estimate.
Used as cost target

ra d
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Modification of preliminary estimate due to

t : f
architect’s preliminary investigation of the works

r i g h
and elementary design and drawings

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Once sketch design completed and approved by

co pclient, sums (costs) are allocated based on various

elements.
 Preliminary cost plan
Can be alternatively used as cost TARGET from
a pa
u s t
QS’s advice on cost advice derived from either
alternative methods of construction or matters

va m
which have contractual implication.

di
Need to be adjusted/updated for inflation or
regional factors.
f a ra
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 a pa
Techniques for project
cost control
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 Basic approaches to design cost
management
a pa
u s t
va m
a di
f a
Designing r
ht :
to a Cost Costing a
y r i g design
co p
 Designing to a cost

a pa
u s t
Client establish
m
Design team
va
cost
di develops design
limit/budget
f a ra within a budget

ht :
y r i g
co p Design within a
budget?
Design exceed
budget? Revise
Proceed
 Costing a design

a pa
u s t
Design to suit
m
Design forms
va
client’s
di basis of initial
requirements
f a ra costing

ht :
y r i g
co p Affordable?
Not
Affordable?
Yes? Proceed
Revise
 Cost procedure flowchart

Procedure Cost study, Feasibility Outline Cost Prepare

a pa
Prepare Cost

s t
establish cost Studies Plan Detailed Cost Check

u
limit Plan

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Design stages Inception Feasibility Outline Scheme Detailed

va
Proposal Design design
Cost Cost study of Preliminary

di
Estimate Estimate Approximate

ra
calculation samples of estimate: based on based on quantities

a
techniques similar Either from group individual method

f
buildings developer or elements elements

ht : consultant
(using unit

y r i g method, floor
area, cubic

p
content

c o
Cost procedure flowchart (cont’d)

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Prepare Bills
of
Cost
Analysis,

u s
Cost Report Prepare
Final
t Update
record

m
Quantities Tender Account

va
Evaluation

i
Production Bills of Tender Project On-site Completion Feedback

d
information Quantities action planning operation

a ra
Detail Elemental Work Monthly Detail cost Record any

f
costing cost analysis Breakdown checking of breakdown changes in

t :
according to of tender System variations inclusive of terms of

h
drawings and VO design, cost

i g
instructions etc

p y r
c o
 Cost checking

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 Preliminary cost plan
Information required to prepare cost plan:
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s
Drawings – at least include plans and elevations in sketch form

u t
Indication of the materials to be used and standard of finishing expected

m
Contractual information – procurement types, contract period &

va
probable start date

di
A comparable cost analysis from similar previous project

ra
Other analysis which can be used as second opinion

t : f a
r i g h
o p y
c
 Redesign

a
• Alter the element to maintain
cost target

t a p
u s
v a m
i
Approve the change in
element cost
r a d
t : f a
• But re-examine other elements
for cost-savings measures

i g h
pyr Approve the change and

co
accept
• But client must be informed
and agrees to the suggestion/s
 CONSTRUCTION ECONOMICS
TERMINOLOGIES
a pa
u s t
A number of terms are widely used in construction

va m
economics and it is important to define and

i
understand the terms prior to their use.

ra d
t : f a
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o p y
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 • Cost plan

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q A s tatement o f t h e proposed

u st
m
ex penditure on eac h sec tion of

i va
.
the element of a new building
. , -

ra d
f a
q Each cost ite m is regarded as a cost

t :
h
t arge t and is usually expressed in

y r i g
te rms of cost per square metre of
gross floor area of the building as well

co p as total cost of the element.

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 • Cost check

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The process of

u s t
check ing t he
es t imated cost of each sect ion

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or element of th e building as th e

di
de tailed designs are developed,

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against th e cost ta rget as set in

t : f a
th e cost plan

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o p y
c r
 • Cost Analysis

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 • Approximate estimating

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cost of building ear lysin
• Dete rmina tion of possible
u t
design s tage inm
to client is'v a al
rela tion

r a d f undament

faThis t akes place prior to

requiremen ts

ht :
y r i g preparat ion of f ull set of

co p working drawings or bill

of quant it ies.
 • Element

a p a
building t hat f u lf ills a s
• A component or part of a
u t
specific
a m
function(s) irrespective
design, specifvication
of its

a d i or

ff a r
construct ion, such as walls,

ht : loors and roof s

y r i g • includes t he compila tion of

p
cost data bases and other

co statisti cal cos t informat ion

 • Costs in use

a pa
t
• The t o t al costs o f bui lding

u s
pr o j ect s - init i al capit a l costs, and

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maint e nance and r unning costs

va
t h roughout t h e pr edicted l ives o f

i
t h e buildings.
d
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• The costs in use has now been

f a
lar gely superseded by t h e t er m

t :
lif e cycle costing (LCC)

r i g h • LCC compr ises t h e t o t a l cost o f an

asset over it s operat i ng lif e,

o p y including land acquisit i on costs and

subsequent operating costs, and
c possibly it s disposal at t h e end o f
i t s oper at i onal l if e
 • Cost research

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•

u s
build ing costs and th eir t
Me thods of inves t iga t ing

va m
inte r r e la t ionship, includ ing

di
mainte nance and running costs,

f a ra
in order to build up a posit ive

:
body of inf orma t ion which will

g ht f orm basic guidelines in

y r i planning and controll ing t he

co p cost of f utu r e projec ts

 • Cost control

• All met hods of cont rolling th e cost of

a pa
s t
building projec ts within t he limit s of a pre

u
dete rmined sum, th roughout th e design
and construc tion s tage
va m
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f a ra
ht :
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 • Cost planning

• Im plemented
a
dur ing t he
pa
design stage
u s t
va m
• involves c r it ica l brea kdown

di
of propos ed tota l

f a ra
ex penditure into a llowances

:
to be mad e f or t he var ious

g ht elements of t he proposed

y r i proje c t.

co p
 • Cost limit
• Max imum expenditur e client is
a pa
s t
prepared to make in rela t ion to
completed building
u
va m
di
f a ra
ht :
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co p
 • Unit costs
Costs applied to a unit of work such as a
a pa
s
concrete f ounda t ion slab, ground f loor

u
construct ion, a door including its f rame, t
va m
ironmongery, paint ing, Iinte l and o t her
related it e ms
di
f a ra
ht :
y r i g
co p
 • Appearance
• Quality
Performance • Function
a pa
s
• Durability

u t
m
• Maintenance

di va • Design length

ra
• Start date
Time

t : f a • Hand-over
• Completion

r i g h • Budget

o p y • Estimate

c Cost • Tender
• Final account
• Costs-in-use
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 a pa
u s t
a m
•What is principle of cost studies?
v
•What is cost management
a d i and its
importance
f a r
ht :
•The process/techniques of cost

g
management

y r i
•Understanding the implications of client’s

co p
requirements towards budgeting a project
 a pa
u s t
v a
THANKm
di
f a ra YOU
ht :
yr i g
co p
copyright: faradivamustapa