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Chap 2 Cost Control

Cost control is the process of ensuring construction projects are completed within agreed cost limits by carefully monitoring and managing costs. It aims to ensure resources are used efficiently and clients receive good value. The quantity surveyor plays a key role in cost control through tasks like preparing cost estimates and plans, reviewing payment applications, and comparing estimated to actual costs throughout the project lifecycle. Effective cost control requires monitoring site performance, controlling both tangible and non-tangible costs, and regular financial reporting.

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159 views

Chap 2 Cost Control

Cost control is the process of ensuring construction projects are completed within agreed cost limits by carefully monitoring and managing costs. It aims to ensure resources are used efficiently and clients receive good value. The quantity surveyor plays a key role in cost control through tasks like preparing cost estimates and plans, reviewing payment applications, and comparing estimated to actual costs throughout the project lifecycle. Effective cost control requires monitoring site performance, controlling both tangible and non-tangible costs, and regular financial reporting.

Uploaded by

Kah Keatt
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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ATBQ2022 Principles of

Building Economics
Chapter 2 Cost Control
Cost Control ● Cost studies of a buildings is about the understanding
and application of costs to building and other
structures.
● One of its aims is to ensure that scarce and limited
resources are used to best advantage.
● It is about ensuring that clients receive the best value
for money for the projects that they construct.
● As buildings have become more complex and clients
have become better informed the techniques and
tools available have become more extensive.
● The use of information technology has also provided
a new array of possibilities particularly in the ease of
modelling different design and construct solutions.
The Purpose of Cost Control
Cost control can be defined as the process of controlling the expenses in a
particular project, from the starting of the client’s briefs, to the project
completion and ultimately the final account of the aforesaid project.

Cost control is a process to ensure that:


● The cost of the building is kept within the agreed cost limits.
● Resources are used at the best advantage.
● Give the building client good value for money.
● To achieve a balanced and logical distribution of the available funds
between the various part of the building.
● To keep total expenditure within the amount agreed by the client.
The Purpose of Cost Control (con’t)
Cost control can be divided into two areas:
● The control of cost during design stage.
● The control of cost during the post contract stage.

Cost control of a project involves:


● The measuring and collecting of costs record of a project and its progress
of works. Comparison between planning and actual progress of physical
works on site.
● The main objective of cost control of a particular project is to achieve
maximum profit within the designated construction period and
satisfactory quality of works.
The Purpose of ● The implementation of a systematic procedures
Cost Control of cost control will give a good result of costs
(con’t) data collection particularly in estimation and
costs control aspect for future projects
undertaking.
● To limit the client’s expenditure to within the
amount agreed. In simple terms this means that
the tender sum and final account should
approximately equate with the budget
estimate.
The increased pace in society in general has
resulted in clients being less likely to tolerate
delays caused by redesigning buildings when
tenders are too high.

The client’s requirements today are more


The Importance of complex. A more effective system of control is
therefore desirable from inception up to the
Cost Control completion of the final account, and thereafter
during costs-in-use.

The clients of the industry often represent large


organisations and financial institutions. This is a
result of takeovers, mergers and some public
ownership. There has thus been an increased
emphasis on accountability in both the public
and the private sectors of industry.
The Importance of Cost Control (con’t)

There has been a trend towards modern Contractors’ profit margins have in real terms
designs and new techniques, materials and been reduced considerably and thus has
methods of construction. The designer is able resulted in their greater cost-consciousness in
to choose from a far wider range of products an attempt to redress possible losses and
and this has produced variety in construction. therefore move towards the elimination of
The traditional methods of estimating are waste, and a greater emphasis on the use of
unable to cope in these circumstances to the world’s scarce resources. This has
achieve value for money and more balanced necessitated a desire for improved methods
designs. of forecasting and control of costs.
Role of the Quantity Surveyor

To advice architects on cost Require the knowledge of


implications of their design and to construction and construction costs,
assist in obtaining economical and the property market and an ability to
efficient design. anticipate and visualize clients’
detailed requirements.

Requires the exercise of a high level Ensuring that the client receives value
of expert discretion and judgment in for money in building work.
conditions of considerable
uncertainty for estimating purposes.
Role of the Quantity Surveyor (Cont’d)

Advice on the To ensure that the Preparing budget Cost checking, Quantity Surveyor
relationship of cost of estimates, cost forecasting final is an encyclopedia
capital costs to constructing the planning, costs, settlement of information on
maintenance building is kept procurement of contractors’ every aspect of
costs, on costs within the agreed arrangements and claims, costs building costs.
implications of costs limit. tendering analysis and lift
design variables procedures, cycle costing.
and differing preparing contract
constructional and sub-contract
techniques. documents.
● Scrutinized the priced bills of quantities and
Quantity schedule of rates.
Surveyor’s ● Agree with the contractor on ground levels, suitable
cost control arrangements for dealing with dayworks.
● Claims for materials price fluctuation.
functions: ● Costing for variation orders.
● Measurements and interim valuation.
● Comparison of the estimate with the total allocated
financial resources.
Quantity Surveyor’s cost control functions
(con’t):
● Assessment of profitability of the contract secured.
● Preparation of cashflow projection. Many
construction companies become insolvent through
bad estimating and planning, ineffective cost
control or inadequate site control.
Site Cost ● Monitoring performance, comparing estimates
against pre-determined targets and taking remedial
Control action.
● Monitoring performance, comparing estimates
against pre-determined targets and taking remedial
action.
● Controlling against tangible physical resources i.e.
materials, machineries and sub-contractors.
● Controlling non-tangible items i.e. progress and
productivity (time), costs (money), quality, safety,
information, methods and the performance of
subordinate management staffs.
● Main sources of data include contract bills of
quantities, estimated costs, method statement and
work programme.
Site Cost Control (con’t)

● Supplementary sources include interim valuations, up-to-date accounts of labours,


plants, materials and sub-contracted work.
● Monitoring the consistent and inconsistent trends between the value and cost of
each of the earned allowances month by month.
Financial Reporting Control a project effectively.

Consists of

● Initial tender figures and expected profit.


● Forecast figures at completion for value
and profit.
● Current payment application.
● Current certified value.
● Adjustments to the certified valuation.
● Costs to date.
● Amount received to date, retention
deducted and certified sum unpaid.

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