Cost Planning Process in Construction

Cost planning is a specialist technique used by the Quantity Surveyor. It aims to help the design team to arrive practical and efficient designs for the project and to keep within the budget. Effective cost planning will help to ensure that, once a realistic estimate is agreed, everything that follows is in accordance with it, from the successful contractor’s tender to the final project cost.

If the employer decides to change his plans and introduce variations, the quantity surveyor will assess the cost implications. Cost planning obtains improved economy standards and better value for money.

Cost planning process

The Royal Institute of British Architects formulated a suggested pattern of procedure for architects in the preparation and the implementation of building schemes.

Cost Planning Process in Construction

(A) Inception

This represents the employer’s decision to build, the setting up of the administrative organization, and the appointment of the architect and other members of the design team. The architect requires a site plan, details of preliminary items, erection times and any cost limit.
This process is known as client briefing.

(B) Feasibility

At this stage the architect and the employer are attempting to establish the employer’s specific requirements. The quantity surveyor supplies cost information. The design team should consider the design time table and the tendering procedures.
Economical feasibility – Quantity Surveyor
Structural feasibility – Engineer
Functional feasibility – Architect

(C) Outline proposals

The employer’s requirements have now been established and their feasibility confirmed, then architect consider the alternative ways of design and construction.

Some drawings will be produce at this stage and the quantity surveyor will be in a position to give on costs and, to evaluate the financial effect of different solutions, and he prepares an outline cost plan.

(D) Scheme Design

The major planning problems will be resolved and the outline designs will develop. The sketch designs will include sections and elevations, and, services and finishes will be considered. The quantity surveyor checks on his approximate estimate and, with the aid of cost information.

(E) Detail Design

Sketch plans are now finalized and some working details are prepared. Outline schemes will be prepared by consultants and designing subcontractors. The quantity surveyor will provide comparative costs of different forms of construction, materials, components and service layouts and will adjust the distribution of costs in the cost plan if required.

When all the design drawing have been prepared and cost checked, a final cost review should be made by the quantity surveyor and report submits to the architect.

(F) Production Information

The final working drawings (production drawings) are now prepared from which the bill of quantities can be produced.

The quantity surveyor continues his cost checks on the data produce against the final cost plan. He will give advice to the architect on any financial or contractual matters associated with the project.

Cost planning techniques

Cost planning establishes the needs, sets out the various solutions and the cost implication of these solutions, and finally produces the probable cost of the project. At the same time a sensible relationship must be maintain between cost on the one hand, and quality, function and appearance on the other.

Various methods of cost planning have been developed. Cost control, operating at various stages of the design process. There are, broadly, two methods of cost planning currently in use.

Objectives of Cost Planning

• To determine the probable cost of a project development. 
• To know the cost of a new building before they started work on it.
• Help the building owner to get rid of many of problems and secure a firm cost commitment before starting work.
• Important for the client to have a good idea of what the building was likely to cost before he had committed himself.
• Avoid unnecessary costs to client and designers.
• To provide a balanced design and value for money.

The Cost Planning Process

The cost planning process consists essentially of three phases,

1. The first of these involves the establishment of a realistic first estimate (Preliminary Approximate Estimate)
2. The second stage plans how this estimate should be spent among the various parts or elements of the project (Cost Plan)
3. The final stage is a checking process to ensure that the actual design details for the various elements can be constructed within the cost plan (Cost Checking)

Types of cost planning

Designing to cost – Elemental cost planning

Costing a design – Comparative cost planning

Elemental cost planning

Sketch plans are prepared and the total cost of the work is obtained by some approximate method, such as cost per place or per square meter of gross floor area. The building is then broken down into various elements of construction or constructional parts such as walls, floors and roof, and each element is allocated a cost base on cost analyses of variously erected building or similar type.

The some of the cost targets set against each element must not exceed the total estimated cost. Cost cheeks are made throughout the design stage and lastly a final cost check is made of the whole scheme.

Target cost planning: Cost limit is fixed for the scheme and Architect prepare the design not to exceed this cost.

Architect’s design in financial terms –design budget.

Develop the design within the designated cost limit.

Control the Architect’s freedom of expression.

Most appropriate to public sector project.

Limits placed on the amount of money that could be made available for a project.

Designing to a cost.

QS can check the cost of the architect’s selection against the pre-determined budget.

Comparative cost planning

It starts from sketch plans but does not use a fixed budget like the elemental system. Instead a cost study is made showing the various ways in which the design may be performed and the cost of each alternative approach. It provides a ready guide to design decision and it enables the architect to select a combination of alternative.

The quantity surveyor will need to carry out cost checks periodically through the design stage as with the elemental system, to ensure that the architect’s proposal are being kept within the total cost limit agreed with the employer.

Sets out the estimated costs of individual sections of work, where appropriate the estimated costs of alternative methods and materials.

Allows various solutions to be evaluated.

Select the most suitable with complete awareness of the cost consequences.

Most expensive –Good for private sector projects.

Costing to design.

Advantages of Cost Planning

• Early cost checks ensure preliminary estimate is more accurate
• Saves time of architect of redrawing and, of QS and contractor on agreeing amendments
• Rational distribution of expenditure throughout the design is achieved
• Closer alliance between design team assist in understanding each other
• QS is familiar with the design at the earliest stages
• Better chance of comparing different projects 

Disadvantages of Cost Planning

• More preparation is necessary in the early stages of design
• Architect is likely to be more restricted in his method of working
• QS requires a greater knowledge of pricing of the design factors that affect the cost Architect and QS are likely to be involved in more work.

Difference between elemental and comparative cost planning

Difference between elemental cost planning and comparative cost planning

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