Cost control process

Introduction about cost control

It is very vital to understand the correct meaning of the cost, before moving further about the cost control process. Cost would be based on activities performed in the production or scenarios. (V.Ragasekaran, p.207). This is one of the very useful definitions to analyze in the construction project since it has several activities to be done to get a final product. The basic aim of the cost control is to provide value for money to the respective client not only earning higher profit. It starts with inception stage of the project and continues until agreement of final account. It is very important for construction project because generally all the projects are dealing with huge amount of investment.

Elementary cost control process

According to Nunnally (1998), cost control of a project involves the measuring and collecting the cost record of a project and the work progress. As per the name elementary cost control, it covers analysis of the cost according to the different elements of the building. Generally element of the buildings are sub-structure, super structure, internal finishes, services (mechanical, electrical and plumbing), external finishes, etc.
For the detail explanation the following example is taken. It is stated this example is purely based on the assumption.

Project Name: Sangakara Shopping Mall
Contract Value: LKR 6,000 million (Expected)
Duration: 28 months
Now the elemental cost control process are described in line with the mentioned example.

Cost controlling 

Step one:

This whole process states with anticipated contract sum. In other words it is known as cost limit. In the example it is LKR 6000 Million. Now it is the responsibility of the cost controller to distribute the same as per the elements of the building.


         Element                Cost limit (In LKR million)
• Sub-structure                      900
• Super-structure                  1600
• Internal finishes                 600
• Fittings and furniture         950
• Services                             1350
• External finishes                 700

Step two:

From the above step, it is the time to identify each and every element detail analysis. For example if sub-structure is covering 300,000 m3 of work, cost control team would calculate the cost of the one unit. It is noted in this particular step, specification and drawings should be considered with important.

Step three: 

This step is known as cost monitoring. For an example, as per the step two, cost of the one cubic meter concrete is LKR 20,000.00 It is very vital to check with actual cost. It may be favorable or adverse. If it is adverse, find out the reasons and try to fix the issues. If that also not possible make arrangement to revise the budget. In other way around, if the actual shows as a favorable. It is advised to maintain the same for the whole process.

Step four:

If the whole process will always reviewed and the results shall be communicated to all the project management. Staff for a very effective cost control process.
In conclusion, as per the Austen 1982, the main purpose in cost controlling for a construction project should be active controlling of final costs for owner and not just to record and registering payment. For this achievement, cost reporting is very vital.

Important technical terms (Drawing Related) for a Quantity Surveyor

Though below mentioned terms can be easily familiarized by Professional Quantity surveyor within no time after he enter into real construction industry, it is useful for the students to understand the concepts & procedure completely. For the clear explanation purposes they are discussed in different headings.

Sample drawing

A. Terms related to drawings

1. Tender drawings

These are the drawings given to the bidders at the tender time to price the blank BOQ. It should be read in line with specifications to proper pricing of the BOQ. For example sometimes supports are not mentioned in tender drawings but if it is provided in specification, bidder should consider the cost of that supports while pricing the particular item. Tender drawings & Specifications are very important in the post contract stage to deal with variations.

2. IFC Drawings

It is the short form of “Issued for construction”. This is the drawing is given by the consultant for construction purposes as well as preparation of shop drawings to the contractor. Some times for reference purposes and information purposes drawings shall be issued. They are known as “Issued for reference” (IFR) and “Issued for Information” (IFI) respectively.

3. Architectural Drawings & Structural Drawings

These two drawings decide the stability of the construction. As name suggests Architectural drawings are prepared by Architects & Structural drawings are prepared by Structural Engineers. Architects are the first people who make the client’s requirement in paper. Structural engineers make sure that Architect’s design safe and structurally secure. Both the drawings are meaningless without each other.

4. Interior Design Drawings (ID drawings)

It provides the details or the interior structure of the construction project. For the commercial building projects it adds value. Proper coordination with other trades is very vital for deliver quality interior to the project.

5. Shop drawings

It is prepared by the service provider. Sometimes by Sub-contractor or supplier. The purpose of the shop drawings is to give assistance to the people who are doing the actual work at site. It has more details than other construction drawings. When MEP Sub-contractor makes shop drawings, he has to refer the IFC, ID drawings, Architectural Drawings & Structural Drawings proper the proper coordination.

6. Request for Information (RFI)

This is very common term which is used in construction industry. When a contractor is making the shop drawings, if he found a discrepancy he shall write to the consultant for clarification. That is known as RFI. The response shall be used for the continuous process.

7. As-built drawings

As name suggests these are the drawings prepared by the contractor after the execution of the works at site. These drawings reflect the actual construction of the project. These can be used for the final account purposes as well as the maintenance purposes.

It is very important to know about these type drawings for QS since he has to deal with the variations to the contract. Simply any changes to tender drawings, specifications shall be known as variations. (To be discussed in detail).

The following diagram summarized the above mentioned process.

Process of preparation of drawings

The above mentioned process is common for the traditional method re-measurable type contract. Here traditional method means consultant is responsible for the design & contractor is only undertaking the construction. Re-measurable contract means, contractor shall be paid for the work actually done at site by using the agreed rate of the BOQ. The process will be varied to other types of contract. Example: design & Build. In next article, terms related to contract shall be discussed in detail.

Written by Gowrinath  © BasicCivilEngineering.com

Basic things you should know about Bill Of Quantity (BOQ)

BILLS OF QUANTITIES (BOQ)

The survival of any business is heavily depend on the success of commercial management. When it comes to commercial management in construction industry, Bill of Quantities (BOQ) is the term which brings attention of every construction professionals and stakeholders.

It is one of the communication tool which connects the parties (Client, consultant & contractor) of construction project. Keith defines, BOQ is a schedule which categories, details and quantifies the materials and other cost items to be used in construction project. It is important to know that, direct costs & indirect costs are to be considered for complete cost of the project which are covered in different parts of the BOQ.

Generally BOQ is in tabular form which contents description, unit, quantity, rate & amount in different columns.

Sample BOQ

Description column provides a brief explanation of what to be done. For example, in the first item, the 32mm diameter CPVC pipes should be laid for cold water services in 20 bar operating pressure. Specification & drawings are other two important items to be analyzed in detail for clear understanding. Here the term engineer means the consultant for the project.

The Importance of BOQ

BOQ shall be used in every phase (pre-contract & post-contract) of the project but need of BOQ differs based on different contract agreements & project. The major usages are listed below.

1. It provides basic idea of the project by giving the quantities to tenderers. 
2. It defines the extent of the work. (But it should be identified in line with drawings & specification as well).
3. It gives estimated or anticipated contract sum. (very important to client)
4. It provides a basis for valuation of variation. (Variation is to be discussed in detail).

The major Parts of BOQ

Parts of BOQ can be varied according to the project size as well the practices. Generally it has measured works, Preliminaries & Provisional sums. The contract sum would be addition of these three items.

Preliminaries

In construction industry, preliminaries is known as the indirect cost for execution of project but these are the costs which is very much vital for the construction activities. The reason for these cost mentioned separately is it is very difficult to distribute these cost amongst with measured works. The examples for preliminaries listed below.

1. Charges for performance bond, advance payment guarantee & Workmen compensation
2. Maintenance of the site clean
3. Requirement of site office, site stores & staff accommodation.
4. Cost towards the project management staff (QS, Project Manager, Engineering professionals)
5. Charges for drawings & safety

From the above mentioned examples, it can be understood these costs cannot be distributed to work item but without these expenses there will be no project.

Measured works

It is the actual or estimated work will be carried out to complete the project. The works have been measured in different units. They are liner meter, square meter, cubic meter, number, item & etc. Value of measured works will be calculated by multiplication of quantities and rate.

Provisional sums

It is the sum which is allocated for the undersigned works at the tender time. It will be adjusted after the execution of the project.

In summary BOQ is very much important for the commercial management purposes. It should be understood by every construction professional to deliver a quality and expected product to client. In other words to provide value for money.


Written by Gowrinath  © BasicCivilEngineering.com