Introduction to

cost planning
Lesson
Lara Tookey

1
 COST CONTROL
Pre-contract cost control Post-contract
cost control
COST PLANNING
Cost limit / Analysis to Cost
Indicative Outline Cost Detailed Cost Analysis of
Plan Plan check Cost Monitoring /
cost Final
Plan against Forecasting /
First Account
Cost priced SoQ Financial
estimate Checks Statements

Outline Detail Production Project Site Feed-

Inception Feasibility Scheme Design SoQ Tender Completion
Proposals Design Information Planning Operations back

BRIEFING SKETCH PLANS WORKING DRAWINGS SITE OPERATIONS 2

Introduction

Cost planning – refers to the method of controlling the cost of a project

so that it will not exceed the preliminary estimate at the design stage.

It provides rough cost estimations to inform what designs correspond

with what level of costs.

Cost plan – a cost statement in terms of how a designer intends to

design each element or part of a building.
 • Cost planning is used from the inception
stage of the project until the project is
handed over to the contractor for
construction. (Refer to RIBA Plan of Work)
Cost • It involves a systematic framework
Planning procedure and demands high commitment
from the design team to cooperate with the
quantity surveyor to endure that the
objectives in terms of cost, time and quality
are achieved.
 One of the criteria of a successful
construction project is to ensure
that the client’s needs are met.
A good cost planning system will
Client’s consider all the client’s needs
Needs especially those pertaining to cost.
It is insufficient to just monitor the
cost, as the cost also needs to be
monitored and managed.
What does a Client
need?
• Price certainty
• Project constructed within budget
• Project completed on time
• Best quality possible based on
reasonable price

• In fulfilling a client’s needs, the

following combination of factors
need to be considered:-
Time
Cost
Quality
 1. Ensuring the client receive value of money.
2. Ensuring both the client and designer are
Purpose of aware of the implications of their decision
Cost to cost.
3. Providing advice to the designer to enable
Planning him to design within the budget.
4. Integrating cost with time and quality.
Cost Planning
Features
Cost plan provides the basis for a cash flow plan, allocating
expenditure and income to each period of the client’s financial year.
Therefore, cost planning typically involves two features:

1. Overall budget for the project. This is the total amount that the
project is expected to cost. This amount is based on the
current project scope and design and can be determined
through various types of estimates.
2. Allocation of costs over time. This involves predicting when
along the project schedule costs will be incurred and paid.
What if you decide NOT
to have a Cost Plan?
• Surprises from tender sums resulting in major
changes to the design to cut costs.
• Dissatisfied client due to the design changes
• If the client decides to return to the start to
redesign due to blow out in costs
• May not be possible or cost effective
• No guarantee new design will provide correct cost
solution
• Abandonment of project
 • The tender sum is more likely to equate with the
approximate estimate
• Less less changes as you progress through the construction
stage
• Cost-effectiveness and a value-for-money design
Advantages of • A balanced distribution of expenditure produces a more
rational design
Cost Planning • Involvement of Quantity Surveyor at the design process
results in easier preparation of Bill of Quantities
• Involvement of both architect and quantity surveyor at pre-
tender analysis enable more decisions to be taken earlier,
resulting in a smoother running of project on site
• Provides a basis for comparing different projects
 • It requires a lot of preparation in the early stage of the
design process.
Disadvantages • The designers may have some limitations in their work
style.
of Cost • The quantity surveyor needs to be equipped with vast
Planning experience and knowledge pertaining to cost and factors
influencing the cost.
• Both the designer and QS are involved with a lot more
works at the design stage compared to when no cost
planning is used.
 1. Elemental cost plan
• Also know as Cast Target / Cost Limit (realistic)
• Used when “Designing to a Cost”.
Two • A cost limit is fixed or stated by the client
• Normally used in public sector
methods to
prepare a 2. Comparative cost plan
cost plan • Used when “Costing to a Design”
• Archi generally has several design alternatives
for the Client to provide value.
• Normally used in private sector
Three key terms
• Cost Control
• Cost Planning
• Cost Plan

• Ensure you know the difference – Refer to NRM1

definitions
Cost Planning
• No universal method of cost
planning.
• A method of controlling the cost
(price to Client) of a project.
• CP will give advice to Client on
expected project cost.
• Will also give anticipated date of
expenditure (forecasting for
budget planning)
Cost Control
• The process of collecting actual
costs and collating them in a
format to allow comparison with
project budgets.
• Cost control is necessary to keep a
record of monetary expenditure
for purposes such as:
• Minimising cost where possible;
• Revealing areas of cost
overspend.
What is the
difference between
cost planning and
estimating?
Thank you.