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# What is Cost Planning?

Cost plan is prepared by finding a cost analysis of a similar project to the one under consideration, and by studying how the cost was allocated in the old project, in order to prepare an estimate for the new scheme. Cost plan is a statement of the intended cost to spend on each element of a proposed building within a total sum and in relation to a defined standard of quality. 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. Techniques for arriving a cost plan or cost limit. The allowances set against each element are cost targets. These modifications are usually for differences in price level Quantity Finishes and standards Method of Cost Planning Unit Method The unit method involves the use of a single functional unit that serves as a multiplier. Historical data from previous, similar construction projects is used to build a cost model of construction costs for one new unit. This unit is then multiplied by the number of units necessary to complete the project, which provides an overall cost estimate. A functional unit may be bedroom in a hotel, the cost per student for a school or cost per bed for hospitals. Some project cost models may use a cost per square foot, based on historical costs for other projects. The estimated costs to build 1 square foot are multiplied by the planned square footage for all floors in the building. This method does not deduct costs for

elevators, stairwells and internal walls, which creates some inaccuracy. Example of Unit Method Unit Method Estimating The unit method estimating consists of choosing a standard unit of accommodation and multiplying an approximate cost per unit Estimate = Standard units of accommodation X Cost/Unit For example: Schools costs per pupil place Hospitals - costs perbed place Roads per Kilometers Car parks costs per car space Method of Cost Planning Elemental Cost Method

A system of cost planning and cost control to enable cost scheme to be monitored Relies upon the Standard Form of cost analysis to allow cost to be compare. Cost check throughout the design stage to ensure design kept within overall cost target Sum of target cost must be less than total cost of estimate. Building is broke down into element , each element is allocate based on the cost analysis of previous project Plan are prepare and unit cost is derived from the approximate method

Phases of Cost Planning. Inception At the initial stage, client wishes to know: How much will the idea cost? How best might available capital be spent? Feasibility Develop a brief indicating: Location Floor areas Type of accommodation Nature of the site Indicative cost etc

Outline Proposal Develop the optimum design solution to satisfy the brief. Indicates size, type, location, number of storeys, plan shape etc. Scheme Design Ensure the overall design is the most cost effective. To establish the final cost plan (limit of cost) Preparing brief cost summary/the elements of cost plan.

Advantage of Cost Planning The tender value will be either close to or similar to the clients estimate. The effectiveness of cost and value for money can be achieved with cost planning process. A balanced expenditure distribution may produce a more rationalized design.

Cost consideration will be given more attention since the QS is involved in the early stage of the design process. The BQ can be prepared more easily since the QS is already familiar with or skilful in the project and thus has clear understanding of what is to be achieved by a designer. Disadvantage of Cost Planning It requires a lot of preparation at the early stage of the design process. The designers may have some limitation in their work style. The QS need to be equipped with past experience and knowledge pertaining to cost and factors influencing the cost. Both designer and QS are involved with a lot more work at the design stage as compared to when no cost planning is used.