Hkkjrh; ekud IS 15883 (Part 3) : 2015

(Reaffirmed 2020)
Indian Standard

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Hkkx 3 ykxr çcaèku

Construction Project Management —

Guidelines
Part 3 Cost Management

ICS 03.100.30

© BIS 2015

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BUREAU OF INDIAN STANDARDS
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MANAK BHAVAN, 9 BAHADUR SHAH ZAFAR MARG
NEW DELHI-110002
www.bis.org.in www.standardsbis.in

December 2015 Price Group 8

Construction Management (Including Safety in Construction) Sectional Committee, CED 29

FOREWORD
This Indian Standard (Part 3) was adopted by the Bureau of Indian Standards, after the draft finalized by the
Construction Management (Including Safety in Construction) Sectional Committee had been approved by the
Civil Engineering Division Council.
A construction project is an endeavour undertaken by a project team on behalf of owner/client to create a built
facility suited to the defined functional objectives. From inception to commissioning, the project goes through
various distinct stages leading to progressive achievement of the project objectives. Each stage involves specific
inputs, processes (both technical and managerial) and deliverables. Typically, the life cycle of a project from
commencement to completion involves the following stages:
a) Project appraisal — Inception, feasibility and strategic planning;
b) Project development — Project brief development, planning and design, finalization of proposals,
procurement of strategy, construction documentation including tender drawings, construction drawings,
specifications, cost estimates, bill of quantities, procurement documents;
c) Planning for construction — Sequencing of project components, planning tools, resource planning and
time cost trade off;
d) Tender action — Open competitive bidding/pre- qualification of agencies, issue of tender documents,
evaluation of bids, negotiation if required and award of work;
e) Construction — Execution, monitoring, control, work acceptance ; and
f) Commissioning and handling over — Contractual closeout, financial closeout, defect liability
commencement, facility handling over.
The distinct features of a construction project include the temporary nature of the project team involved, the
evolutionary process of the project deliverables during project development stages and the unique output as the
built facility. As a result of these features, unless there is efficient and effective project management, a construction
project is faced with challenges of uncertainties leading to time over-runs, cost over-runs, changes in project
parameters, loss of quality and inability to meet the functional objectives. While technical soundness of a proposal
is an important aspect of a construction project, the management aspects, which involve techno-legal, financial
and other issues, have also a significant role in the success of a project. Therefore, management functions and
technical processes in a construction project need to be integrated towards achieving project objectives. Top
management commitment plays an important role in harmoniously achieving these project objectives. In some of
the public domain projects, it may be necessary to share relevant information with public at large through
appropriate means.
To provide necessary guidance on effective construction project management, a series of standards are being
developed as part of IS 15883 ‘Guidelines for Construction Project Management’. Part 1 General, of the standard
since published as IS 15883 (Part 1) : 2009, covers general aspects of overall construction project management.
This has been followed by publication of other parts as follows:
Part 2 : 2013 on Time management
Part 4 : 2015 on Quality management
Part 5 : 2013 on Health and safety management
Part 6 : 2015 on Scope management
Part 8 : 2015 on Risk management
The other parts of the standard are under preparation which will cover functions such as procurement management,
communication management, human resource management, sustainability management and integration
management.

(Continued to third cover)

 IS 15883 (Part 3) : 2015

Indian Standard
CONSTRUCTION PROJECT MANAGEMENT —
GUIDELINES
PART 3 COST MANAGEMENT

1 SCOPE management of the project is necessary for the

following reasons:
1.1 This standard (Part 3) covers guidelines for cost
management aspects of construction project a) It is essential that the project cost is
management. determined with reasonable accuracy and the
project is accomplished within planned time
1.2 The cost management aspects during the project
frame and resources.
formulation and appraisal stage of the project are not
covered in this standard. The scope of this standard, b) To develop realistic cost estimates to predict
therefore, covers the stages subsequent to the stage of the likely final cost as it provides the basis
approval (when a decision to implement the project for project budgetary processes.
including its financing is taken) till commissioning and c) Application of cost management on all stages
handing over of the project. of the project.
d) Cost estimates help determine the project
1.3 The provisions of this standard are to be read in
feasibility, obtain financial approvals, plan
conjunction with IS 15883 (Part 1).
project cash flow, provide basis for bid
2 REFERENCES evaluations and project durations.
e) The client’s need for cost management is to
The standards given below contain provisions which, achieve the creation of the built facility with
through reference in this text, constitute provisions of maximum value at economical cost within the
this standard. At the time of publication, the editions planned time frame. The contractor’s need for
indicated were valid. All standards are subject to the cost management is to organize and
revision, and parties to agreements based on this control the utilization of the resources and
standard are encouraged to investigate the possibility produce the deliverables within the agreed
of applying the most recent editions of these standards: cost and time frame adhering to the quality
IS No. Title and safety standards.
7337 : 2010 Glossary of terms in project
management (second revision) 4.2 Overview of Cost Management
10400 : 2013 Glossary of terms in inventory Project cost management aims to complete the project
management (second revision) within the authorized budgeted cost. The cost
15198 : 2014 Glossary of terms in human resource management essentially covers the processes related
development (first revision) to cost estimation, cost planning and budgeting, and
15883 (Part 1) : Guidelines for construction project cost monitoring and control. These processes are
2009 management: Part 1 General applied in all the following stages of the construction
project:
3 TERMINOLOGY
For the purpose of this standard, the definitions given a) Pre-construction stage:
in IS 7337, IS 10400 and IS 15198 shall apply. 1) Project development,
2) Planning for construction, and
4 GENERAL 3) Tender action.
4.1 Need for Cost Management b) Construction stage.
c) Commissioning and handing over stage.
A project is undertaken to create a built facility within
pre-determined budgeted cost utilizing the planned The bearing of the other project management functions
resources. Cost management is an essential component related to scope, time, quality, risk, procurement,
of project management and aims to achieve satisfactory health, safety and environmental aspects are to be
project cost performance through efficient project recognized and duly considered in the cost
planning and execution within the budgeted cost. Cost management processes.

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IS 15883 (Part 3) : 2015

4.3 Organizational Structure for Cost Management costs with the objectives of project completion within
the approved budgets with authorized variations.
4.3.1 The organizational structure and the mechanism
for the implementation of the cost management 5.1.1 The cost management processes shall be applied
functions are dependent on the type of procurement in all the project phases as cost is expended in all the
method adopted and the contractual arrangement phases to achieve the expected deliverables in these
between the project participants (client, design phases.
professionals, management consultants and
5.1.2 A cost management plan shall be established
contractors) specifying their roles and responsibilities
based on the nature, objectives and specific
and coordination arrangements.
requirements of the project to detail out the proposed
4.3.2 In the traditional design-bid-build model, two cost management methodology specifying the required
project management teams are involved; one dealing outputs, techniques and deliverables.
with the client’s objectives in all the project stages and
5.1.3 The cost management processes shall be detailed
the other managing the contractor’s interests during
out of project scope through the scope statements and
the post-contract award stages.
project work break down structure (WBS). The WBS
4.3.3 As the client is ultimately bearing the project cost, shall form the basis for the cost budgetary allocations
the client represented project management team shall and assignments of control accounts for the
be primarily responsible for managing the overall cost components of the WBS for the cost tracking and
management functions with the main objective of control processes.
keeping the project completion cost within the client’s
5.1.4 Wherever required, the cost management
project budget limiting the cost over-runs.
processes shall be integrated with the process of other
4.3.4 During the pre-contract project development project management functions. The time and cost
stages, the cost estimation functions are carried out processes shall be aligned for developing cost
through the cost estimators/quantity surveyors and integrated schedules and achieving the project
managed by the client’s project management team. This completion with the planned time and cost targets.
team shall also be responsible for coordinating the
5.1.5 While provisions relating to project formulation
value management processes for cost optimization and
and appraisal stages are not covered in this standard, it
also undertake the cost related bid preparation and
is to note that during project appraisal phase, the pre-
evaluation processes.
design cost estimates are worked out for determining
4.3.5 In some cases, for better collaboration, the cost the financial feasibility as part of establishing the
estimation processes are undertaken by the lead design overall project feasibility.
consultant as a parallel process along with the design
development by engaging the cost estimators/quantity 5.2 During Pre-construction Stage
surveyors as a part of the design team. However, the 5.2.1 The scope of cost management during pre-
client’s project management team shall closely construction process is to identify the various types of
coordinate with the design team to ensure that the cost resource requirements, determine the quantum and
estimates are in tune with the client’s functional timing and convert these resource requirements into
requirements and the budgetary costs. monetary terms of costs for carrying out the project
4.3.6 During the post contract award stages, the client’s activities and estimate the costs of obtaining the
project management team shall be responsible for deliverables. Acceptable levels of contingencies are
managing cost implied change orders and other cost added to account for unanticipated minor variations.
variations so that the costs incurred during project 5.2.2 Selection of project delivery system and contract
execution are in accordance with the planned baseline strategy, selection of design professional and
costs. The focus of the contractor’s cost management management consultants are some of the cost influencing
team during this phase shall be on the efficient aspects which are decided in pre-design stage.
utilization of the resources so that the project
completion is achieved with the desired markup. 5.2.3 The initial overall cost budget of the project is
developed under different relevant cost subheads
5 SCOPE OF COST MANAGEMENT amenable for easier cost aggregation and budgetary
allocations. In addition to the cost of the main building/
5.1 General infrastructure works, the cost shall have the following
The scope of cost management shall cover the effective components:
implementation of cost processes with appropriate a) Capital costs for land procurement and its
techniques in estimating budgeting and controlling development.

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 IS 15883 (Part 3) : 2015

b) Costs for site surveys and geotechnical potential for optimizing the project costs, while during
investigations. construction stage the cost management emphasis is
c) Cost of enabling infrastructure works. more on monitoring and control mode for adherence
d) Cost of engaging design professionals and to the budgeted costs.
management consultants.
5.3 During Construction Stage
e) Fee for approvals by the municipal/
development authorities and other statutory During construction phase, the scope of cost
approvals. management is to monitor and track the cost status for
f) Other costs chargeable to project. updating the project budget with actual costs incurred
and manage the changes to the cost baseline. The
5.2.4 Initial budgets prepared in the early stages of the
processes shall cover the comparison of actual costs
project are modified and updated with the availability
with budgeted costs analysing the reasons for the
of more information in the subsequent project design
variations. The scope of cost management in terms of
and development stages taking into consideration the
cost related processes carried out in different project
budgetary constraints. While developing the overall
stages are shown in Table 1.
budgetary costs, the component-wise target costs are
also assigned as a part of the cost planning and control 5.4 During Completion and Handover Phase
measures.
This close out phase shall cover documentation of as
5.2.5 Before the start of work, cost budgets and time
built costs, risk encountered and processes related to
schedules are integrated to establish the cost baseline
financial closure and approvals. Comparison of final
for the purpose of monitoring and control.
cost with the original approved cost estimates and
5.2.6 The cost management processes during the pre- analysis of reasons of cost variance shall be brought
construction stage of the project provides greater out.

Table 1 Mapping of Cost Related Processes in Project Stages

(Clause 5.3)
Sl Project Phases Planning and Design Processes Cost Related Processes
No.
(1) (2) (3) (4)
i) Preconstruction
Phase:
a) Project development 1) Project scope defined i) Initial budgets
2) Development of project brief ii) Project delivery and contract strategy
iii) Financing strategy
b) Planning for construction 1) Engineering surveys and investigations i) Preliminary cost estimates
2) Conceptual design of alternatives ii) Elemental cost analysis
3) Preliminary/schematic designs of selected iii) Value engineering
alternatives iv) Constructability analysis
4) Submission drawings for local
bodies/development authorities
c) Tender action 1) Detailed design and working drawings and i) Detailed cost estimates/bill of quantities
specifications: ii) Invitation of bids
i) Architecture iii) Bid evaluation and work award
ii) Structural iv) Contract agreement
iii) Services v) Construction schedule
iv) Development works
2) Preparation of tender document.
3) Pre-qualification process
4) Pre-bid construction schedules
ii) Construction phase 1) Construction drawings of all related i) Project baseline cost and schedule
disciplines (architectural, structural, ii) Site mobilization
services) and site development works iii) Cost monitoring and control
2) Construction activities and phase completion iv) Authorized revisions to baseline costs and
schedule
iii) Completion and handover 1) Testing and commissioning of services i) Documentation of as built actual costs
phase 2) Contract closure including cost per unit parameter
3) Handing over ii) Review Elemental costs.
4) Post utilization evaluation iii) Cost risk encountered and final revised
project cost and financial approvals
iv) Preparation of operation and maintenance
manuals

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IS 15883 (Part 3) : 2015

5.5 Value Management and Value Engineering during pre-construction process depending upon the
type of project delivery system and associated contract
Application of value management and value
type envisaged for the project implementation.
engineering methodology is one of the important cost
management processes. Application of value 6.1.2 Construction Phase
engineering principles on the selected alternatives
For the project execution, the physical resources
enables the selection of the cost effective proposal with
required are manpower of different categories,
maximizing the value at the optimum cost. It is an
construction materials, equipment and other site
organized approach for providing necessary functions
specific infrastructure facilities in terms of water,
at the lowest cost without compromising quality,
power, roads, communication, security and other
reliability and performance parameters. Although the
required facilities, as follows:
value engineering exercise could benefit the project
objectives in the entire project life cycle phases, its a) Manpower resources — Manpower resources
potential for cost savings is maximum during under the categories of construction workers
preliminary and detailed design and estimation stage. and technicians shall be planned for their
quantities, skills and time of requirement
5.6 Mapping of Cost Related Processes in Project based on the project details, WBS, time
Phases schedule and estimates. Resource histograms
Cost related processes are carried out in each of the shall be prepared for different categories of
project phases along with the planning and design work force which can be done by using
related processes as shown in Table 1. Based on the standard project management software with
level of information available, project costs are in-built labour constants. Necessary resource
progressively developed through different estimation levelling shall be carried out to sort out the
methods as close as possible to the final expected costs. peak demands exceeding the resource
In the pre-construction phase the cost management availability and also to resolve idle labour
focus is on the cost reduction/cost optimization situations by rescheduling certain activities
potential of the project costs. In the tender evaluations within the available floats without delaying
and work award phase, final project budgetary costs project completion time. Planning shall be
are firmed up. Before start of the work, the budgetary done to take care of any situation of non-
costs of individual activities/work packages are availability of local labour force necessitating
integrated with the project schedule and baseline cost import from other localities as in case of
profile is established. During construction phase, the projects in remote locations.
emphasis is on cost monitoring and control process to b) Construction materials — Construction
complete the project within the budgeted costs with materials constitute a major proportion of
approved variations for the changes [see 6.4.3.1(f)]. project cost and hence sound material
management process shall be established as
6 COST MANAGEMENT a subset of cost management process. Material
resource management essentially involves
6.1 Resource Management
identification of various categories of material
6.1.1 Pre-construction Phase requirements, market survey about their
source of availability, cost and leads involved,
Resource management of construction project
estimation of total quantities, determining the
comprises planning, estimation and procurement of
quantum and timing of requirements as per
various types of resources during pre-construction
project schedule, procurement process from
stage and control of their utilization during execution
suppliers and delivery at site. The site related
stage. In the pre-construction stage of the project,
material management processes are storage
decisions and procurement processes related to the
and handling, usage in works, and site
engagement of planning and design professionals and
practices for minimization of wastages and
management consultants are made by the client
prevention of environmental degradation.
organization following the established procurement
procedures and practices depending on the type and c) Construction equipment — The modern
magnitude of the project. For large magnitude projects, construction practices adopt mechanized
criteria like quality and cost based methods are used construction through the extensive use of
for the selection of planning and design professionals construction equipment for various project
and consultants. Selection of construction firm and activities for improving the quality and speed
contractors for project execution is an important of construction. Some of the major
component of resource management and carried out construction equipment usage are the

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 IS 15883 (Part 3) : 2015

equipment for earthwork operations; concrete past projects and make adjustments for
production, transportation, placement and escalation factor for time, location factor and
compaction; false work and shuttering; pile other cost influencing factors for the proposed
foundations; well foundations; launching of project.
girders for bridges diaphragm wall
6.2.2 Preliminary Cost Estimation During Scheme
constructions; road surfacing; material
Design
hoisting and handling; and smaller portable
equipment for individual construction This shall be done as follows:
activities. During the equipment resource
a) The estimate developed for the final scheme
planning process, the equipment type and
design shall cover all the cost components of
production capacities are decided based on
the project and the scope of project envisaged
the project requirements including the site
shall be firmed up. The exclusions shall also
constraints, on site availability of the
be brought out.
equipment and durations of their deployment
are worked out in relation to project schedule b) The estimate shall form the basis for
and quantum of work involved. For example, according of approvals by the client and for
the capacity of concrete batching plant is monitoring of project cost.
worked out based on the quantum of concrete c) The estimate shall be framed based on the
operations which are levelled considering the schematic designs of all the components. The
peak and low demand volumes. In the scheme design proposals should be further
procurement process of equipment, economic considered through the application of the
considerations of owning and operating costs value engineering exercises before proceeding
or hiring on rental/lease costs needs to be with the detailed designs.
considered. On the whole, the equipment d) The estimate shall take into consideration all
resources should be properly planned and the site specific information like, topographic
deployed for improved speed and quality survey, geotechnical investigations,
construction at economic costs. availability of peripheral services like
As part of the site management processes, due attention approach roads, water, power, etc. Local
shall be given for the location of the equipment and construction practices and availability of local
their onsite maintenance, planning and location of the manpower shall also be considered.
site offices and laboratories, location of the material e) The estimate shall take into account the basic
storage and other safety and site protection measures. cost related information on construction
materials, manpower costs, machinery and
6.2 Cost Estimation other cost influencing parameters. Provision
6.2.1 Approximate Cost Estimation During Concept shall also be made in the estimate for the likely
Design Stage escalation in the cost of materials and
manpower during the planning and execution
This shall be done as follows: phase of the project.
a) During the concept planning and design f) The estimate shall also take into account the
stages workable design solutions, with basic cost related information on construction
alternative building materials, technology materials, manpower costs, machinery and
options and services systems shall be worked other cost influencing parameters.
out by the respective design disciplines, the g) The estimate should bring out all the cost
cost estimation of these alternatives shall be drivers that significantly influence the project
determined and a final design scheme selected costs. Besides the direct costs the preliminary
based on the considerations of cost, time and cost estimate shall include cost towards design
other specific project objectives. It is professionals, project management services
recommended to evaluate these alternative and other specialized services. Project
designs through the application of value approval fee/charges levied by local
engineering principles. authorities shall be included. Usually separate
b) The approximate cost estimation methods estimates are processed for the land
adopted during this concept stage may be acquisition and its security measures.
analogous estimation technique based on the h) The realistic project duration required for the
cost data from the past projects. Analogous pre-construction stage activities, and project
estimation should consider the cost of recent execution shall be worked out based on the

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IS 15883 (Part 3) : 2015

magnitude and nature of the project and funds 3) Provision of basements and water
availability and incorporated in the proofing technologies;
preliminary project estimate. The project 4) Number of storeys and large spans
procurement strategy along with the type of involved;
contract envisaged shall also be firmed up in
5) Mechanized constructions and formwork
this stage. The project time lines with
technologies;
specified project durations shall be decided
with important milestone achievements. 6) Use of sustainability approach for
Realistic time durations should be allocated building planning, design and
for the pre-construction planning and design construction; and
and tender preparation and other enabling 7) Other costs for specialized items and
activities for the efficient implementation of services.
the project execution process.
b) Construction cost index — Construction cost
j) Prior to the project cost estimation, index (CCI) serves as an important tool in the
topographical survey and geotechnical preparation of the cost estimates of the
investigations should be carried out to provide projects. Among the different types of
design inputs that would have bearing on the construction industry related indices, CCI is
project costs. commonly used as a measure of increase in
k) Life cycle costing, value engineering and construction costs with reference to a selected
constructability analysis should be used to base year cost index which is usually taken
optimize the time and cost and improve the as 100. CCI is location specific and its
quality aspects. These techniques not only aim calculations takes into account the increase
to improve the value of the product but also in cost of major materials, labour categories
to improve the management processes and and equipment usage in the project over the
decisions and services. corresponding rates of these components in
m) Provision may be made for contingencies to the base year considered. The relative
account for the cost variations which are likely weightage contribution of these cost
to occur but are not identifiable at the time of components is pre-determined based on the
preparation of the estimates (see 6.2.4). of project wherein the type and quantum of
materials, labour and equipment usage
6.2.2.1 Building projects normally varies. In building projects, these
The following which are generally used for preliminary weightages also vary based on the materials
cost estimation in case of building projects, may be of construction and the structural systems
adopted: adopted. A format for the calculation of
building cost index and city-wise building cost
a) Floor area/total built-up area method — indices are periodically published by
Floor area/total built-up area method using construction organizations The CCI may be
unit area costs is commonly used for the used for updating of the preliminary estimates
preliminary cost estimation of the building prepared based on the available plinth area
projects. In this method the total built up area rates of the earlier year to the current cost
of the building is determined from the levels.
architectural drawings and multiplied by the c) Elemental cost method — Elemental cost
unit cost per square meter of similar category estimation is another approach that can be
of constructed buildings available from the used to work out the preliminary cost
database of construction costs. estimates. This approach is more informative
This method of cost estimation for its and along with value engineering technique
application should take into account the provides opportunities for the consideration
following cost influencing parameters: of alternative design solutions for the building
1) Construction technology aspects and elements/components. This method is broadly
proposed building specifications In outlined in Annex A.
accordance with the current code of
6.2.2.2 Infrastructure projects
practices like durability aspects,
earthquake resistance, fire safety, etc; The following methods which are generally adopted
2) Foundation systems based on subsurface for the preliminary cost estimation of infrastructure
conditions; projects like roads, bridges, water supply, sewerage

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 IS 15883 (Part 3) : 2015

drainage, airports, dockyards, and dams, may be preliminary layouts and designs of these
adopted: services are worked out to arrive at the
approximate quantities of the items and with
a) For road projects, based on the road layouts,
the information on current unit rates of these
cross-sectional details and construction
items, the preliminary cost estimates are
material specifications, geotechnical
worked out.
characteristics worked out in the planning
process, the parametric cost data in terms of 6.2.2.3 Other structures
cost per unit length or cost per unit surface
For other structures like airports, dams, dockyards and
area of the road compiled from the past
hydel project costing may be based on per unit costs
projects with suitable enhancements to cover
of similar structures where such data is available.
current costs are used to obtain the
Where data is not available, approximate quantities
preliminary cost estimates. Improved
based on preliminary designs of various components
preliminary cost estimation could be made
may be worked out and cost worked out based on
based on the approximate quantities of items
prevalent market rates/schedule of rates as available.
worked out from the preliminary layouts and
designs could be used with applicable unit 6.2.3 Detailed Cost Estimation Based on Detailed
rates of the items of work. Designs
b) For bridge projects, the preliminary cost The detailed cost estimation shall be done as follows:
estimation needs to be based on the
preliminary designs and drawings made a) Detailed cost estimates are prepared based on
considering the traffic requirements, site detailed designs. These detailed estimates are
constraints, subsurface conditions, etc. The prepared for trade-wise sub-heads of work.
approximate quantities of items are worked The trade-wise bill of quantities (BOQ) is
out from the preliminary drawings and costing prepared based on detailed drawings
done with available information on the unit following the Indian Standard methods of
rate of these items. For the bridge structures, measurements of the items of work involved.
elemental costing method is a useful approach The nomenclature of the items of the work
wherein costing of individual bridge elements should be fully described without any
like foundations, sub-structure, deck ambiguity as this forms the basis for the
structure, bearings, approaches, railing, payment of bills of executed items in the
drainage, lighting, landscape works, etc, is contract document. The item nomenclature
done. As the bridge deck structure constitutes shall be based on the proposed works
a major cost component, cost data on cost per specifications.
unit plan area of the bridge deck obtained b) Schedule of rates and analysis of rate
from the past projects may be useful for the documents periodically published by the
preliminary cost estimation. This unit cost construction organizations providing unit
information related to deck structure is rates with item nomenclature are adopted for
dependent on the parameters like span; width the preparation of the detailed cost estimates
of the bridge; deck cross-section; structural for building and infrastructure civil, electrical,
system: material type in terms of steel, water supply, sanitary and drainage works,
reinforced concrete, prestressed concrete, etc. For bridge and hydro-electric projects
precast or cast in-situ and concreting similar items available in these documents can
composite systems, and erection and other be utilized. For the specialized and other
construction technology aspects. project specific non-schedule items detailed
c) For infrastructure services such as water analysis of rates should be worked out on the
supply, sewerage and drainage systems for basis of similar works carried out in the past,
township like projects, database on the cost current market rates or based on any other
of these services worked out as cost per unit rational basis for the preparation of the
area of the site from the past projects could detailed estimates.
be adopted with suitable enhancements for the c) The bill of quantities of items of work in
time factors. Such unit area costs depends on standard measurement units can be prepared
the parameters like type of developments manually or more efficiently through
(low-rise, medium or high rise), housing computer aided methods for accuracy and
layouts, density and site characteristics. For speed of preparation. Commercial software
more realistic preliminary cost estimation, integrating the detailed drawings with

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IS 15883 (Part 3) : 2015

quantity surveying process can be cost estimate based on the experience on the past
advantageously used. These software can also projects and such percentage is usually 3 to 5 percent
used to monitor the as executed quantities in and this percentage may increase further for projects
relation to the estimated quantities during the involving greater uncertainties. A more realistic
project execution as a cost tracking and determination of project cost contingency can be
controlling process. worked out based on probabilistic methods taking into
d) The reasonability of detailed estimates can be consideration the various cost related uncertainties in
broadly assessed through the methodology of the project.
elemental cost analysis. In this method, the 6.2.4.4 Estimates may also include the amount for the
quantity and cost of the building elements management reserve to be funded for the project.
worked out in the detailed estimates are Management reserve is an amount of the project budget
expressed in terms of unit floor area of the withheld for management control purposes and are
building and compared with similar quantity reserved for unforeseen work that is within scope of
and cost in similar category of constructed the project. The management reserve is not included
buildings. This approach can also be used for in the cost baseline but is part of the overall project
infrastructure works considering the elements/ budget and funding requirements. When an amount of
components of such works. The concept of management reserve is used to fund unforeseen work,
elemental cost analysis for a typical building the amount of management reserve used is added to
work is given in Annex A. the cost baseline, thus requiring an approved change
e) The main purpose of the detailed cost estimate to the cost baseline.
shall be to predict the cost as nearly as possible
to the expected cost of construction based on 6.3 Cost Budgeting
market condition and hence the detailed
6.3.1 Costs and Schedule Integration
estimates worked out shall consider the
prevailing rates of material and labour and It shall be done as follows:
other market condition. The construction cost
a) The integration between the detailed project
index may be used to arrive at the percentage
costs and project time schedule shall be
enhancement to be added to update the carried out in the cost planning and budgeting
detailed estimate costs of the projects prepared process before the start of construction. The
based on the schedule of rates documents of project cost considered at this stage is the
the earlier years. firmed up budgeted costs of the work
6.2.4 Cost Contingency packages/work items of the accepted tendered
costs as per contract finalized with the
6.2.4.1 While framing the project cost estimates a successful tenderer. This contract cost may
certain amount of cost contingency shall be added to vary from the detailed estimate cost developed
the base estimates to account for the cost variations in the estimation stage due to the prevailing
which are likely to occur but are not identifiable at the market conditions.
time of preparation of the estimates. Incorporation of
b) For the traditional item rate contracts of the
cost contingency is a cost related risk management
design-bid-build delivery model, the contract
approach to reduce the cost over-runs to an acceptable
cost shall be in the form of trade-wise items
level. The quantum of the contingency is influenced
of work of the work package. For building
by the project size, complexity, associated level of risks
projects, the work packages should include
and level of information available during different
civil works; internal plumbing, electrical and
stages of the project development. Compared to new
air conditioning works; site development
constructions, repair/rehabilitation/re-modelling works
works such as roads, storm water drainage,
and below ground works may involve greater uncertain
water supply and sewerage work, etc. In case
conditions requiring increased contingency provisions.
of projects like major roads, bridges and
6.2.4.2 The project cost contingency shall be specialized works, the work packages should
considered in two components namely, design include the items for relevant trades of these
contingency to account for the design changes and the projects and the relevant costs for such items.
construction contingency to cater to the changes during For the cost and schedule integration the item
the implementation phase like change in site wise project costs shall be converted into
conditions. project activity costs. The activities shall be
identified in the scheduling process based on
6.2.4.3 The traditional approach of providing cost
work break down structure methodology. This
contingency is through a fixed percentage of the base
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 IS 15883 (Part 3) : 2015

process of working out activity costs from the information may obscure the effectiveness of the
items involved in the activities and approach. The approach shall not merely concentrate
determination of their occurrences in the on the past cost occurrences but shall be forward
timeline of project schedule is generally looking to forecast the cost trend and provide early
termed as cost planning process and the output warnings for timely corrective control actions. The
of this process is the project baseline cost appropriate cost monitoring and control methodology
curve and this forms the basis for the cost shall be decided prior to the start of the project with
monitoring and control process. The baseline the procedures established and documented.
cost curve is called as ‘planned value curve’
6.4.2 Cost Monitoring
and this is also known as ‘budgeted cost of
work as scheduled’. This term is used to Cost monitoring shall involve the following:
indicate that each of the project activity is
a) It shall involve tracking and comparison of
assigned with a budgeted cost that needs to
the actual cost being incurred during the
be monitored and controlled.
course of project stages with reference to the
6.3.2 Development of Cost Baseline baseline costs budgeted for each of the
activities in the project stages. Depending
The following information are required to develop the
upon the type, nature, size and complexity of
graphical profile of the cost baseline (planned value
the project, the cost monitoring shall be done
curve):
at various prefixed intervals of time and/or at
a) Itemized costs of work packages. specified milestones.
b) Individual activity costs derived based on the b) Monitoring of the costs during
costs of items involved in the particular preconstruction, construction and handing
activity. over stages shall be done by having closer
c) Bar chart form of project schedule containing watch on the various cost related processes
the project activities with their durations and as listed out in the Table 1.
costs. c) During the project development, working out
d) Information related to the proportion in which a realistic cost budget for the defined project
the activity cost is incurred in the duration of scope forms an essential component of cost
the activity since for certain activities the cost monitoring in this stage.
incurrence may not be in linear proportion d) The appropriate type of project delivery and
with time duration. contract type needs to be selected that would
e) Cost break-up of activities in terms of its enable closer cost monitoring processes.
components, materials, manpower and e) During the planning and design stage, the
equipment, etc. development of cost estimates needs to be
monitored to adhere to the initial budgeted costs.
Once the proportion of the planned costs of the
individual activities are known in each block of project f) Techniques of value management, value
durations (fortnightly or monthly), the summation of engineering, constructability analysis,
the monthly or fortnightly planned cost of the project elemental cost analysis may be used to carry
shall be obtained. From this, the cumulative as-planned out the cost reviews with the considerations
costs over the project duration shall be obtained for alternative designs, specifications and
forming the project baseline cost projection. The nature construction processes.
of this cost curve is usually a flat S-shaped curve g) During detailed estimation processes, the
depending upon the type and characteristics of the accuracy in the preparations of the bill of
projects. quantities with correct item nomenclature
with workable specifications needs to be
6.4 Cost Monitoring and Control monitored through review processes to avoid
variations and changes during the project
6.4.1 General
execution.
Cost monitoring and control shall be exercised on the h) During construction stage the cost monitoring
processes and resources utilized in each of the project processes to bring out the deviations from the
stages. The methods of cost monitoring and control budgeted costs may be carried out through
may vary depending on the size and characteristics of methods like periodic cost reporting systems,
the project and other project requirements. The variance analysis and cost performance
approach should be simple and effective for its measurement techniques.
implementation. Generation of large amount of
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IS 15883 (Part 3) : 2015

6.4.3 Cost Control procedures. Optimum use of materials should

be planned as a part of design process.
The cost control processes involve actions that are
Techniques of lean construction can be
required to control changes/deviations between the
adopted for waste minimization strategies.
budgeted costs and the actual costs so that the
Mechanization process integrated with
completed costs are within the budgeted costs including
material handling could achieve optimum use
authorised revisions.
of material resources.
The techniques of cost monitoring and control broadly d) Equipment control — For work items
fall into the following two categories: involving equipment, the equipment cost
a) Direct cost control of resource utilizations, component shall be substantial requiring
and effective equipment utilization control. The
cost of equipment usage per unit quantity of
b) Measurement of cost performance through
work item executed should be recorded and
earned value management (EVM).
monitored in comparison with the
6.4.3.1 Direct cost control corresponding budgeted costs towards the
equipment deployment (for example, cost of
In this approach, the total project cost shall be divided
equipment usage per unit quantity of
into the following cost elements and control is
excavation or quantity of concrete produced
exercised on these elements individually on each major
and placed in position). The equipment
items/subheads of the work:
hourly/daily utilization cost are arrived from
a) Physical progress — It is one of the important records of capital cost, depreciation value,
cost influencing parameters as time delay in maintenance and repair costs, fuel cost and
project execution and handing over would installation operational and demobilization
result in cost escalation of resources and loss costs. The records of daily job wise
of revenue/usage due to non-completion of deployment, number of hours worked, repair/
built facility within the stipulated time frame. idle time should be maintained. As an overall
Hence control on physical progress through cost management strategy, the economics of
schedule control techniques is an important owning or hiring options are to be worked out
aspect of cost control. based on capital cost requirements, utilization
b) Manpower control — For each of the work potential and other relevant factors.
items the actual manpower utilizations are e) Sub-contractor control — In construction
recorded and compared with the planned contracts, sub-contractors are engaged to
budgeted values. From these records the item- carryout identified components and/or
wise actual unit cost (man-hour/man-day) for specialized works like dewatering,
the labour component are arrived and waterproofing, HVAC and other services.
controlled to keep within the corresponding Proper coordination needs to be ensured to
budgeted costs. These man-power control make the work-front available for the sub-
measures are essential for labour intensive contractors.
work items. In major contracts, item-wise f) Cost of changes — Cost of changes have
labour cost component is managed/controlled major role in increasing the project costs over
by engaging labour rate contractors on labour the original budgeted costs and hence need
rates for the unit quantity of work items. proper control procedure to deal with such
c) Material control — As material constitutes cost changes. The changes may arise on
the major cost component of work items, its account of design changes, change of
effective utilization minimizing the wastage construction methods and material
forms an essential component of direct cost specifications, additions and substitutions, and
control. The actual consumption of materials other reasons. As far as possible, changes
are recorded and compared with the should be minimized with proper planning
theoretical/budgeted requirements and and design in the pre-construction stage with
deviations beyond the permissible variations the collection of all relevant information.
are identified and corrective actions taken. Every proposal for changes involving cost
The excessive material utilization may arise implications shall be examined for their
due to improper storage, handling and justification and reasonability and their cost
incorporation in the work process. Waste and time implications should be approved by
minimization should be achieved by proper the competent authority. As a part of the
material storage, handling and measurement contract document, the permissible variations,
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 IS 15883 (Part 3) : 2015

initiation of changes and their control process future cost performance based on the current cost trend
should be established. The changes may be and enables early warning signals for taking corrective
initiated by the design department or by the measures in the event of unfavourable cost trends.
field unit depending upon its origination.
Implementation of earned value methodology provides
Variations in the quantities of high cost items
the following information and enable managerial
should be examined and controlled.
actions in situations of unfavourable cost and time
g) Consultants — Professional fees to the design performance:
and management consultants are treated as
direct costs and budgeted as part of project a) Adherences of the actual costs incurred to the
costs. Quality and cost based selection of budgeted costs and identify the cost over-run
consultants should be carried out in large or under-run.
value consultancy works and such selection b) Adherence of the time progress to the as
process should be decided at the pre-design planned schedule and identify the time over-
phase of the project. Cost management runs.
functions shall be the part of the project c) Over or under utilization of resources.
management consultancy besides other d) Forecasting likely completion cost based on
aspects of project management. observed cost trend.
h) Other costs — Other costs may be on account
of salary, field and office expenses, site office, In construction contracts, it is valuable to incorporate
temporary facilities and utilities, security the EVM methodology for monitoring the time
services, equipments and tools, insurances, progress and cost reporting and control processes. The
taxes, etc. limitations of the EVM come from the fact that the
progress measurement based on the cost expenditures
6.4.3.2 Earned value management may not necessarily be in tune with the value creations.
Earned value management (EVM) is a valuable tool Also, the successful implementation of the method
for the cost and schedule monitoring and control of depends upon the extensive and accurate
the construction projects. The technique is used as a documentation of the periodic costs on various resource
tool for the measurement of current time and cost utilizations to capture the actual cost occurrences in
performance and forecast the future outcomes. The relation to the project schedules. However,
technique is detailed out in Annex B. computerized approaches could take care of these
aspects.
EVM considers project schedule status and updated
costs incurred at periodic intervals and provide an 6.5 Post Construction Review and Documentation
integrated approach for the measurement of cost and All project cost documents relating to built cost, as
schedule performance during the course of project built unit area rates, elemental/ component costs and
implementation. The performances are characterized cost related risks encountered shall be analyzed and
by the variance between the planned performance and preserved for later reference.
actual performance. The technique also forecasts the

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IS 15883 (Part 3) : 2015

ANNEX A
[ Clauses 6.2.2.1(c) and 6.2.3(d) ]
ELEMENTAL COST ESTIMATION METHOD

A-1 GENERAL
Table 2 Major Group Elements in Buildings
Elemental cost estimation approach can be used in the
(Clause A-2.2)
early stages of the design process to work out the
preliminary cost estimates. This approach is considered Sl Building Works Major Group Elements
more informative and provides opportunities for the No.
   !
consideration of different alternative design solutions
i) Structural works a) Super structure
for the building elements/components. The method is b) Sub-structure
broadly outlined in A-2 to A-4. ii) Civil works a) Envelopes/enclosures
b) Internal/external finishes
A-2 ELEMENTAL CLASSIFICATION c) Water proofing
d) Joinery works
A-2.1 The elemental classification is fundamental to e) Architectural elements
iii) Engineering services a) Electrical systems
elemental cost estimation and cost analysis. In this b) Plumbing systems
approach the built facility (buildings, roads, bridges, c) HVAC systems
etc) as a finished product is divided into various d) Fire protection and fighting
systems
components called elements which usually perform a e) Security systems
function regardless of its design, specification and f) Lifts, escalators and travelators
construction. These elements are usually divided in to g) Other mechanical utilities and
services
three or four levels: major group elements, group iv) Interiors a) Interior furnishings
elements, elements and sub-elements. Such b) Suspended ceilings
classification provides a hierarchical frame work of c) Acoustics
d) Lighting
division of the entire built facility system into v) External works a) Land development/site grading
distinctive components with the costs. This enables to b) Landscaping/horticulture
provide a clear picture of the cost allocation between c) Storm water drainage/harvesting
d) Roads/pavements
the elements of the built facility. The costs of the lower e) Water supply
level elements are summed to get the costs of the higher f) Sewerage
level elements which in turn are summed up to obtain g) Area/street lighting
h) Boundary protection
the total cost.
A-2.2 A typical classification of major group elements from the actual quantities and actual costs of the past
for a multi-storeyed building is shown in Table 2. projects are useful in the preliminary estimation of
Further division of one of the major group element subsequent projects.
(structural works) in to lower level elements is shown
in Table 3. In a similar manner all other major group A-4 SCHEDULE OF ELEMENTAL RATES AND
elements can be divided into lower level elements. COST ESTIMATION
A-3 ELEMENTAL QUANTITIES RATES AND Similar to the traditional schedule of rates of items of
ELEMENTAL COSTS works under different trade-wise sub-heads, the
schedule of rates of the individual elements per unit
The quantities of items of work constituting the element quantity of the element can be generated by adding
are worked and with the unit rates of these items the the cost of the work items constituting the element.
elemental cost is determined. These elemental costs For example, the unit elemental rate of the internal
are expressed as cost per unit of measurement brick masonry partition wall per square metre of the
applicable to the element. For example, for a wall wall area is obtained by summing up the cost of the
element the elemental cost is expressed as ‘per square- work items involved such as masonry work, plastering
metre’ of the wall area. It is useful to express the work and painting work in obtaining the finished cost
elemental quantities and elemental costs in terms of of this wall element. Such schedules of elemental rates
quantity per square-metre and cost per square-metre are useful in the cost planning/analysis and comparison
of the gross built-up area of the building. of the alternative elements for a specified functional
The elemental quantities and costs per unit gross built- use. The summation of the cost of all elements
up area of different categories of the building compiled constituting the building provides the total cost.

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 IS 15883 (Part 3) : 2015

Table 3 Division of Major Group Element into Lower Level Elements (R.C.C. Structural Works)
(Clause A-2.2)
Sl Major Group Elements Group Elements Elements Sub-elements/ Components
No.
(1) (2) (3) (4) (5)
i) Superstructure Vertical frames a) Columns 1) Concrete
2) Reinforcement
3) Shuttering
b) Shear walls 1) Concrete
2) Reinforcement
3) Shuttering
Horizontal floors a) Beams 1) Concrete
2) Reinforcement
3) Shuttering
b) Solid slabs 1) Concrete
2) Reinforcement
3) Shuttering
c) Waffle slabs 1) Concrete
2) Reinforcement
3) Shuttering
d) Flat slabs 1) Concrete
2) Reinforcement
3) Shuttering
e) Precast joists/slabs 1) Concrete
2) Reinforcement
3) Shuttering
ii) Sub-structure Excavation a) Earthwork
b) Dewatering
c) Shoring/strutting
d) Sheet piling
Shallow foundations a) Isolated footings 1) Concrete
2) Reinforcement
3) Shuttering
b) Raft foundations 1) Concrete
2) Reinforcement
3) Shuttering
c) Grade beams 1) Concrete
2) Reinforcement
3) Shuttering
Deep foundations a) Piles 1) Pile boring
2) Concreting
3) Reinforcement
b) Pile caps 1) Shuttering
2) Concreting
3) Reinforcement
c) Grade beams 1) Shuttering
2) Concreting
3) Reinforcement
Basement a) Columns/shear walls 1) Shuttering
2) Concreting
3) Reinforcement
b) Retaining walls 1) Shuttering
2) Concreting
3) Reinforcement
c) Beams 1) Shuttering
2) Concreting
3) Reinforcement
d) Slabs 1) Shuttering
2) Concreting
3) Reinforcement

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IS 15883 (Part 3) : 2015

ANNEX B
(Foreword and clause 6.4.3.2)
EARNED VALUE MANAGEMENT (EVM) TECHNIQUE

B-1 PERFORMANCE PARAMETERS OF is obtained based on the ‘budgeted cost of activities

EARNED VALUE MANAGEMENT (EVM) and as per planned’ project schedule, this is also termed
TECHNIQUE as budgeted cost of work as scheduled (BCWS).
The parameters of EVM that are used to measure the B-1.2 Earned Value (EV)
project cost and schedule performance are as shown
in Fig. 1. These parameters are categorized into four The term earned value (EV) indicates the value of work
groups namely, basic elements, variances, efficiency earned and this is obtained as the cumulative values
indices and forecasting parameters. Individual of the quantum of the work actually executed in the
parameters are defined and explained in the following activities multiplied by the corresponding budgeted
clauses and illustrated graphically in Fig.2. unit costs of the respective activities. The quantum of
the work executed in the activities at a given point of
B-1.1 Planned Value (PV) time (report date) could be as per planned quantity or
at variance from the planned quantity. The earned
The first step in the application of EVM methodology
value increases cumulatively as the activities gets
is to develop the project baseline cost curve called
completed along the project duration. This earned
planned value curve. It is the plot of cumulative
value plot is also called budgeted cost of work
budgeted cost of activities (defined in the project work
performed (BCWP).
breakdown structure) at the periodic intervals (for
example, monthly) of the project duration. The B-1.3 Actual Cost (AC)
cumulative costs at various project intervals are
obtained from the month-wise summary of cost The actual cumulative cost of activities at a given point
incurred on the activities. Since this baseline cost curve of time (review date) is obtained from the quantum of

FIG. 1 PERFORMANCE MEASUREMENT PARAMETERS OF EVM

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 IS 15883 (Part 3) : 2015

FIG. 2 EVM PARAMETERS

work actually executed in the activities multiplied by When EV and AC are equal, the project is on the
the actual unit costs of the work in respective activities. budgeted cost. A negative and positive value of CV
For well controlled project situations, the actual indicates the project cost over-run and cost under-run
quantum of work and their actual unit cost shall adhere respectively. The cost overrun could be on account of
to the planned quantum of work and their budgeted lower productivity of labour and equipment and over
unit cost. Otherwise they may be at variance with consumption or wastage of materials. Negative CV
respect to the planned quantum of work and their could also be attributed to the inaccuracy of the original
budgeted unit cost price indicating favourable or budget costs. Cost variance percentage indicates the
unfavourable project situations. Major effort in the cost over-run and cost under-run as the percentage of
EVM methodology is to continuously compile the earned value. Negative and positive cost variance
actual cost from the data collected on the cost of various percentage indicates percentage cost over-run and cost
resources utilized (manpower, material, equipment, etc) under-run respectively.
in the activities. The actual cumulative cost curve is
developed progressively with the completion of B-1.5 Cost Performance Index
activities during the course of project implementation. B-1.5.1 The cost variances are project specific values.
This actual cost curve is also termed as actual cost of However, the cost performance is also expressed as an
work performed (ACWP). index to serve as common basis for comparison with
other projects besides usage in forecasting calculations.
B-1.4 Measurement of Variances
The cost performance Index is expressed as percentage
B-1.4.1 Cost Variance (CV) to indicate the percentage efficiency of the cost and
performance.
The cost performance of the project is measured in
terms of cost variance which is the difference between B-1.5.2 Cost performance index (CPI) measures the
the earned value and the actual cost of the work carried value of work completed compared to the actual cost
out. incurred on the project and is calculated by dividing
the earned value by the actual cost. The CPI when
CV = EV – AC
expressed as percentage, indicates the cost efficiency
 CV  of the work completed.
Cost variance percentage =    100
 EV 

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IS 15883 (Part 3) : 2015

Cost performance index (CPI) = EV/AC costs and added to the up to date actual cost
CPI less than one and more than one indicates cost EAC = AC + (ETC) revised
over-run and cost under-run respectively.
B-1.6.3 Estimate at Completion (EAC)
B-1.6 Forecasting Parameters The forecast of the estimated cost at completion is
EVM methodology provided three basic forecasting determined by adding to the up to date actual cost (AC)
parameters relating to completion costs. These are the projected cost estimate to complete the balance
budgeted cost at completion (BAC), estimate to work (ETC).
complete (ETC) and estimate at completion (EAC). EAC is a new revised cost estimate at completion. EAC
The other parameters derived from the basic parameters is determined based on the following considerations:
are: variance at completion (VAC), planned percentage EAC = AC + ETC
complete (PPC), actual percentage complete (APC),
B-1.6.4 Variance at Completion (VAC)
and to complete cost performance index (TCPI).
The difference between the original baseline budgeted
B-1.6.1 Budgeted Cost at Completion (BAC)
cost and estimate at completion is termed as VAC, that
Budgeted cost at completion is the total cumulative is,
budgeted cost of all the project activities as per the
VAC = BAC – EAC
planned schedule. It is the total base line cost and is
the end value of the planned value curve. B-1.6.5 Planned Percentage Complete (PPC)
B-1.6.2 Estimate to Complete (ETC) It is the percentage of work planned to be completed
as on the reporting date.
The estimate to complete the balance work may be
determined in one of the following three approaches PV
as per the decision of the project team: PPC =
BAC
a) In the first approach, ETC is calculated with
the consideration that the balance work shall B-1.6.6 Actual Percentage Complete (APC)
be completed with the up to date trend of the It is the percentage of work actually completed as on
cost efficiency represented by CPI the reporting date
ETC = (BAC – EV)/CPI
EAC = AC + (BAC – EV)/CPI AC
APC =
As CPI = EV/AC, EAC may be written as: BAC
EAC = BAC/CPI B-1.6.7 To Complete Cost Performance Index (TCPI)
b) In the second approach, ETC is calculated TCPI is a planned cost performance index that needs
based on the decision that the balance work to be achieved for the completion of the balance work
shall be controlled and completed at the as per the decision of the project team. TCPI can be
original budgeted costs based either on budget cost at completion (BAC) or on
ETC = BAC – EV estimate at completion (EAC).
EAC = AC + (BAC – EV)
( BAC − EV )
TCPI based on BAC =
c) In the third approach the cost to complete the ( BAC − AC )
balance work shall be assessed by working
out a new cost estimate with revised budgeted ( BAC − EV )
TCPI based on EAC =
( EAC − AC )

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 IS 15883 (Part 3) : 2015

ANNEX C
( Foreword )
COMMITTEE COMPOSITION
Construction Management (Including Safety in Construction) Sectional Committee, CED 29

Organization Representative(s)
In personal capacity (103, Charak Sadan, Vikaspuri, New Delhi) SHRI P. KRISHNAN (Chairman)
Aecom India Private Limited, Noida REPRESENTATIVE
Airports Authority of India, New Delhi SHRI PRADEEP KUMAR
SHRI S. SREEKUMAR (Alternate)
Builders’ Association of India, Mumbai SHRI H. S. PASRICHA
SHRI SANJAY SONI (Alternate)
Building Materials and Technology Promotion Council, DR SHAILESH KUMAR AGRAWAL
New Delhi SHRI PANKAJ GUPTA (Alternate)
Central Building Research Institute (CSIR), Roorkee DR ACHAL K. MITTAL
SHRI AJAY CHAURASIA (Alternate)
Central Public Works Department, New Delhi SHRI B. B. DHAR
SHRI SANJEEV RASTOGI (Alternate)
Construction Industry Development Council, New Delhi SHRI P. R. SWARUP
SHRI RAVI JAIN (Alternate)
Creative Design Consultants and Engineers (P) Ltd, Ghaziabad SHRI AMAN DEEP

Delhi Development Authority, New Delhi SHRI ASHOK KHURANA

CHIEF ENGINEER (HQ) (Alternate)
Delhi Metro Railway Corporation, New Delhi SHRI DALJEET SINGH
Delhi Tourism and Transportation Development Corporation, SHRI JOSE KURIAN
New Delhi SHRI VIVEK BANSAL (Alternate)
EH and S Cares, New Delhi SHRI A. K. T RIPATHI
Engineers India Limited, New Delhi SHRI R. K. DAS
SHRI M. D. DESHPANDE (Alternate)
Hindustan Construction Company Limited, New Delhi SHRI D. M. KUDTARKAR
SHRI RAJENDRA SAWHNEY (Alternate)
Hindustan Prefab Limited, New Delhi CHAIRMAN AND MANAGING D IRECTOR
SHRI RAJEEV CHAUDHARY (Alternate)
Indian Buildings Congress, New Delhi SHRI A. K. SRIVASTAVA
SHRI P. S. CHADHA (Alternate)
Indian Institute of Technology, New Delhi PROF B. BHATTACHARJEE
DR K. N. JHA (Alternate)
Larsen and Toubro Limited, Chennai SHRI M. P. NAIDU
SHRI R. SHANKAR NARAYANAN (Alternate)
M.N. Dastur and Company (P) Limited, Kolkata SHRI S.K. GUHA
SHRI GOBINDA PAL CHOUDHURY (Alternate)
Military Engineer Services, Engineer-in-Chief’s Branch, BRIG MANOJ KUMAR
Army Headquarters, New Delhi COL M. K. PRASAD (Alternate)
Ministry of Statistics and Programme Implementation, DR DEVENDRA VERMA
New Delhi SHRI R. RAJESH (Alternate)
National Buildings Construction Corporation Limited, SHRI RAJENDRA CHAUDHARI
New Delhi SHRI H. K. DHAWAN (Alternate)
National Highways Authority of India, New Delhi SHRI R. K. GANDHI
SHRI R. N. CHOWDHARY (Alternate)
National Institute of Construction Management and Research, DR ANIL AGARWAL
Mumbai

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IS 15883 (Part 3) : 2015

Organization Representative(s)
Nirman Vikas Anusandhan Sansthan, Raipur SHRI SANJEEV K ASLIWAL
SHRI AMARJEET SINGH (Alternate)
NTPC Ltd, New Delhi SHRI A NIL K APOOR
PHD Chamber of Commerce and Industry, New Delhi DR RANJEET MEHTA
Planning Commission, New Delhi SHRI S. S. GANAPATHY
PMI Organization Centre Pvt Ltd, Mumbai SHRIMATI LEENA G UPTE SAMANT
SHRI TEJAS SURA (Alternate)
RITES Ltd, Gurgaon SHRI PAWAN CHOUDHARY
SHRI M. D. JOSHI (Alternate)
School of Planning and Architecture, New Delhi DR V. K. PAUL
Shelter Consulting Engineers, Noida SHRI MANOJ K UMAR MITTAL
The Institution of Engineers (India), Kolkata LT GEN (RETD) HARI U NIYAL
SHRI O. P. GOEL (Alternate)
In personal capacity (204, Sector A, Pocket-C,Vasant Kunj, DR VANITA AHUJA
New Delhi)
In personal capacity (411, Technology Apartments, Patparganj, SHRI R. P. LAHIRI
Delhi)
In personal capacity (Flat No. 125, Ankur Apartments, SHRI A. K. SHARMA
Patparganj, Delhi)
In personal capacity (Flat No. 220, Ankur Apartments, DR V. THIRUVENGADAM
Patparganj, Delhi)
BIS Directorate General SHRI J. ROY CHOWDHURY, Scientist F and Head (Civil Engg)
[Representing Director General (Ex-officio)]

Member Secretaries
SHRI SANJAY PANT
Scientist E (Civil Engg), BIS
and
SHRI S. ARUN KUMAR
Scientist C (Civil Engg), BIS

Panel for Construction Project Management, CED 29/P1

Organization Representative(s)
In personal capacity (103, Charak Sadan, Vikaspuri, New Delhi) SHRI P. K RISHNAN (Convener)
Central Public Works Department, New Delhi SHRI B. B. DHAR
SHRI SANJEEV RASTOGI (Alternate)
Creative Design Consultants and Engineers (P) Ltd, Ghaziabad SHRI AMAN DEEP
Delhi Tourism and Transportation SHRI JOSE K URIAN
Development Corporation, New Delhi SHRI VIVEK BANSAL (Alternate)
EH and S Cares, New Delhi SHRI A. K. TRIPATHI
Engineers India Limited, New Delhi SHRI S. MUKHERJEE
Larsen and Toubro Ltd, Chennai SHRI M. P. NAIDU
NTPC Ltd, New Delhi SHRI SATISH UPADHYAY
School of Planning and Architecture, New Delhi DR V. K. PAUL
Shelter Consulting Engineers, Noida SHRI MANOJ K UMAR MITTAL
In personal capacity (204, Sector A, Pocket-C, Vasant Kunj, DR VANITA AHUJA
New Delhi)
In personal capacity (E-9, Gaur Green Avenue, Abhay Khand-II, SHRI IFTIKHAR A. DRABU
Indirapuram, Ghaziabad)
In personal capacity (C-2/2324,Vasant Kunj, New Delhi) SHRI CHANDRA PAL
In personal capacity (411, Sector A, Pocket-C,Vasant Kunj, SHRI KRISHNA KANT
New Delhi)

18
 IS 15883 (Part 3) : 2015

Organization Representative(s)
In personal capacity (608, Technology Apartment, DR S. N. MANDAL
I.P. Extension, Delhi)
In personal capacity (Flat No. 125, Ankur Apartments, SHRI A. K. SHARMA
Patparganj, Delhi)
In personal capacity (Flat No. 220, Ankur Apartments, DR V. THIRUVENGADAM
Patparganj, Delhi)

Working Group on Cost Management, CED 29/P1/WG2

Organization Representative(s)
In personal capacity (Flat No. 220, Ankur Apartments, DR V. THIRUVENGADAM (Convener)
Patparganj, Delhi)
Larsen and Toubro Limited, Chennai SHRI R. SHANKAR NARAYANAN
In personal capacity (C-2/2324,Vasant Kunj, New Delhi) SHRI CHANDRA P AL
In personal capacity (E-9, Gaur Green Avenue, SHRI IFTIKHAR A. DRABU
Abhay Khand-II, Indirapuram, Ghaziabad)
In personal capacity (411, Sector A, Pocket-C, SHRI KRISHNA KANT
Vasant Kunj, New Delhi)
In personal capacity (608, Technology Apartment, DR S.N. MANDAL
I.P. Extension, Delhi)
In personal capacity (W-12/34D, Western Avenue, DR ANIL SAWHNEY
Sainik Farms, New Delhi)

19
(Continued from second cover)

This standard (Part 3) on cost management is intended to cover the guidelines on cost management processes
which are to be carried out during the project phases and for project completion within the approved budgeted
costs with the authorized variations. The successful project outcome depends on the efficient cost management
restricting the cost overruns besides the other parameters of adherence to time targets, achieving specified quality
standards and safety provisions. In situations of improper management of cost aspects, the timely project completion
and planned utilization of the built facility will get seriously jeopardized due to such cost overruns and resulting
financial problems. Even the project may abruptly get halted on these accounts. Such adverse situations should
be avoided by implementing a robust cost management mechanism in all phases of project.
This standard is organized in the following sequence: at the beginning the need for cost management and scope
of the cost management processes during pre-construction phases are brought out; then cost management process
flow through project phases is covered; followed by three essential cost related processes namely, cost estimation,
cost planning and budgeting, and cost monitoring and control are covered along with the tools and techniques.
The techniques of cost estimation and analysis through elemental method, and cost monitoring and control
through earned value method (EVM) are incorporated in detail in Annex B. For improved productivity, speed
and accuracy, the implementation of cost related techniques using computerized approach with appropriate project
management software are encouraged.
The guidelines may be applicable in general in all construction projects. However for smaller projects, the
applicability of various provisions may be decided appropriately by the parties concerned.
The composition of the Committee responsible for the formulation of this standard is given in Annex C.
For the purpose of deciding whether a particular requirement of this standard is compiled with, the final value,
observed or calculated, expressing the result of a test or analysis shall be rounded off in accordance with IS 2 : 1960
‘Rules for rounding off numerical values (revised)’. The number of significant places retained in the rounded off
value should be the same as that specified value in this standard.
Bureau of Indian Standards

BIS is a statutory institution established under the Bureau of Indian Standards Act, 1986 to promote
harmonious development of the activities of standardization, marking and quality certification of goods
and attending to connected matters in the country.

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Enquiries relating to copyright be addressed to the Director (Publications), BIS.

Review of Indian Standards

Amendments are issued to standards as the need arises on the basis of comments. Standards are also reviewed
periodically; a standard along with amendments is reaffirmed when such review indicates that no changes are
needed; if the review indicates that changes are needed, it is taken up for revision. Users of Indian Standards
should ascertain that they are in possession of the latest amendments or edition by referring to the latest issue of
‘BIS Catalogue’ and ‘Standards : Monthly Additions’.

This Indian Standard has been developed from Doc No.: CED 29 (7906).

Amendments Issued Since Publication

Amend No. Date of Issue Text Affected

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