cost target
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(PRE AND POST CONTRACT)
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COST CHECKING WILL EXIST IN EACH PART / ELEMENT TO ENSURE
THE COST LIMIT / COST TARGET IS WITHIN THE BUDGET
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TOTAL COST OFTHE PROJECT
(COST LIMIT)
CLIENT PROVIDECOST ESTIMATE
& CONSULTANTCONFIRM
CONSULTANT
PROVIDE COSTESTIMATE
CAN BE DONE USING TWO METHOD :
FINANCIAL METHOD & INTERPOLATION METHOD
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COST LIMIT FOR GROUP OFELEMENT (SUBSTRUCTURE)
COST TARGETPILING
ADJUSTMENT FOR
PRICE LEVEL
ADJUSTMENT FOR
QUANTITY
SIMPLE PROPORTION INTERPOLATIONAPPROXIMATE
QUANTITIES
ADJUSTMENT FOR
QUALITY
COST TARGETWBLFF
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` Cost target is the allowance made for an individual element
at the Scheme Design Stage.
` An element of a building is a major component common to
most buildings which usually fulfills the same function orfunctions irrespective of its construction or specification.
` Cost target are prepared for each group of elements by
allowing for the major differences between the buildinganalyzed and the new project, then updating to the date of
preparation of the cost plan.
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` Information required:
1. A cost plan of a similar building (analyzed building)
The same one that was used in the preparation of cost limit
(feasibility report)
2. Sketch plan and elevations
To enable scaling direct from drawing to get EUQ. Drawing should
contain as much accurate, no assumption on information as possible
3. A more accurate and detailed schedule of proposed finishes
Not too detailed but sufficient for the QS to justify making an
adjustment for different standards and finishes in the two building
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` To ensure that the overall cost does not exceed the cost
limit.
` To ensure that the overall design is the most effective as
it helps to provide quality building within the limited
budget, but not a cheapest building.
` Available in terms of the approved requirement (by the
client and designers) as expressed in the brief and other
documents.
` Confirm or set the final budget.` Establish elemental cost targets.
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` Each cost target prepared is by isolating the differences between
the analyzed building and designed building.
` There are three factors affecting element cost and adjustments are
to be made to the cost analysis. It should be done in this order of
the factors:
1. Price Level
2. Quantity
3. Quality or standards and finishes
` These adjustment are not design contingencies as these are
considered in a separate adjustment for the whole design in the
previous stage.
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` The differences in quantity and quality will vary from element
to element but differences in price levelare mostly to affect all
elements equally from the date of cost data (analyzed) to the
present date (proposed).
` Adjustment is done on an elemental basis. All three factors are
allowed for in each methods used to prepare cost targets.
These methods are:
1. Simple proportion2. Inspection
3. Approximate quantities
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` Price level is adjusted due to various considerations:
Difference in general market price
Variation between the contractors price level and general market
price level at tender date
Difference in site conditions and location
Difference in contract conditions, weather conditions and the like
` (1) The most difficult allowance to make is for a changes in general
market price level between the date of tender of analysed building and
the date of tender of new project.
` Instead of guessing on the future index which may not accurate, we
may use the latest value available which is the index at the date of
preparation of the cost plan to update for each element.
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` This means that the cost targets in the cost plan incorporate
realistic allowance for general market price level changes up to
date of preparation of the cost plan.
` (2) The differences in general market price between the date ofpreparation of the cost plan and receipt of tender and the possible
difference between the contractors price level and the general
market price level are allowed in lump sum / percentage.
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` Can be identified in two stages :
` The differences between the general market price level at the
date tender of the building analysed and at the date of
preparation of the cost plan is allowed for by using anappropriate index to update for each element.
` The difference between the general market price level at the
date of preparation of the cost plan and the contractors price
level on the tender is allowed for in the price and design risk.
` (3 & 4) Variation in site conditions, location and contract
conditions are allowed in Preliminaries.
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` The quantity of an element is refer to its total quantity in the
building.
` An adjustment need to be done if the quantity of analysed
building and proposed building is differ.
` The QS will measure the quantity from the sketch plan. However,
its only appropriate for several elements which at horizontal
position .
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` The adjustments made for a change of the quality of an element are
often expressed as percentage additions to (or deductions from) the
costs obtained after adjusting for price and quantity.
` It because the quality of each element cannot be specified explicitly at
all until the Detail Design Stage.
` Adjusting the cost of an element for Price and Quantity gives the
current cost of the amount of the element required in the new project if
exactly same detailed specification used.
` By examining the specification of the element in the cost analysis, thedesign team can spot any parts of element which are different and make
realistic allowance (%) for the proposed building.
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` Useful method when the source of cost data is a cost
analysis or a series of cost analyses of the same building
type. It automatically includes allowances for everything
required in the element in the particular type of building
considered.
` This technique is based on the assumption that the cost of
an element is directly proportional to both the general
market price level and the quantity of the element.
` This method can be used to adjust for price level, quantity
and quality.
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Adjustment In Price Level
` Assuming that the cost of an element is proportional to the
price index, then
Current element cost = element cost in analysis
Current index index at analysis tender date
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Example:(where both price and quantity adjustments are needed)
The following information is for element OO
UE in analysis = M62.80/m2EUQ in new project = 1416m2
Total cost of element = M88,925.00
Index at tender date of Analysed building = 195
Index at date of cost plan = 211
No adjustment of quality is requiredTarget cost for OO = M62.85 x 1416 x (211/195)
= M96,298.00
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Adjustment or Quality
` The adjustments made for a change of the quality of an element areoften expressed as percentage additions to (or deductions from) thecosts obtained after adjusting for price and quantity.
` Example:
The analysed building has a clear anodised aluminium framing andclear float single glazing in fixed (50%) and sliding (50%) windows.The design team decides that they would like to have better qualitywindows in the new project. The design team decides to increase theallowance for the element by 20%.
The figure obtained from ECA after adjusting for price and quantity isM 75,860.00
The cost target is adjusted for quality
M 75,860.00 + 20% = M 91,032.00
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Notes:
` The price and quantity adjustments are usually donebefore the quality adjustment because
They always have to be made, and tend to havemore effect on the total cost figure than thequality adjustment
The quality of an element is more likely tochange later in the design process than thequantity of the element
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` Usually reserved for elements or sub-elements such ashardware or drainage, for which no effective measure ofquantity has been devised.
` This consists of assembling a range of costs of corresponding
elements in previous projects to suggest a pattern from whichsuitable cost targets can be chosen.
` Element such as door, which is seldom of great costsignificance in terms of total cost is one where inspectiontechnique may be used.
` Inspection method should be used when measures of quantityare not available, considerable time would be required formeasurement of approximate quantities, and the qualitystandard of the element in question is not unusual.
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Building Tender date
Cost of External
Doors
M2
/GFA (RM)(After adjustments fordifferences in tender dates)
A Jan 1992 12.75
B March 1993 12.80
C February 1991 13.15
D September 1990 12.24
` Example: ELEMENT EXTE NAL DOO S
` The cost of external doors in existing office building are as follows:
` Decision: After the adjustments for the differences in tender dates, it
is decided that the cost of external doors should be M12.73 per m2
G A
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` Used when a new requirement for the project is under considerationand can be reasonably defined, so that some measurement can bemade.
` However, when using this method, it is easy to overlook details thatcan normally be considered and measured during the tender
document stage.
` In this method, a relatively detailed specification is required (and prepared) for the element. Approximate quantities are thenmeasured from this specification and priced in the traditional way.
` At this stage, the specification prepared for this technique is not as
detailed as the one prepared during the tender document stage, andthe design team is not committed to finally using the specification
prepared for the approximate quantities but simply to using one of asimilar general quality.
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Example: ELEMENT INTE NAL LOO INISHES
` Analysed building PVC tiles to all corridors, entrance andcommon area.
` Proposed building the architect has indicated that the entrance
area finishes should be of high standard and other circulation areashould be of budget grade.
` It is advised that floor finishes to the office area are the tenant'sresponsibility.
` The areas can easily be measured and it is decided that approximate
quantities method is used based upon assumed specification. Thenew specification allowed is ceramic tiles for the entrance area andPVC in other circulation areas. The gross floor area of the project is2216 m2.
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Type of finishes Quantitym2
RateRM/m2
Total CostRM
Entrance area
High Grade
Ceramic Tiles
52 75.00 3,900.00
Other circulationarea PVC tiles 152 45.00 6,840.00
Office area
Cement Render1,739 10.00 17,390.00
Wet area
Ceramic Tiles200 55.00 11,000.00
TOTAL 39,130.00
Thus, Target cost = M 39,130.00
Cost/m2 GFA = M 39,130.00/2,216 m2 = M 17.66
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` Simple proportion the element cost from the costanalysis chosen adjusted by proportion for price,
quantity and quality.
` Inspection the target cost is chosen from a range
obtained from a selection of suitable cost analysis andcost studies.
` Approximate quantities a provisional specification of
the required quality is prepared for the element and
priced by Approximate Quantities.
` No matter what method used, the cost target prepared
must be a reasonable allowance within which element
may be designed.
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