Advantages of cost planning in construction. Unit Method of Estimating 2019-01-08

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The Importance of Cost Control in Construction Contracts

advantages of cost planning in construction

Data collection was carried out through a structured questionnaire survey consisting of 16 factors identified through a comprehensive literature review. However, the consulting quantity surveyor can also refer to annual building cost data compiled by municipalities and property developers. She brings more than 20 years of experience in corporate finance and business ownership. . The total value of construction and any additional maintenance costs must be estimated.

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Unit Method of Estimating

advantages of cost planning in construction

For example, if construction is scheduled to last three years, 2001 to 2003, the cost of construction should be divided evenly between the years 2001, 2002, and 2003. Under Strip Footings, the items associated with this primary item are mass concrete footings, excavation, risk of collapse, compaction, backfilling, blinding and ant proofing. Benefit-Related Engineering Analysis Decisions about appropriate level of detail made while planning the benefit-cost analysis become important when generating benefit-related data. By the cost planning, we are able to find out the problem of manpower and scheduling arrangement if any. Cost estimation methods for contractors develop detailed analyses of the material and labor costs that are directly traceable to the project, as well as projections of the indirect costs, preferably using activity analysis.

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Elemental Method of Estimating

advantages of cost planning in construction

The surviving defender is the most economically efficient. The primary transportation-related elements that can be monetized are travel time costs, vehicle operating costs, safety costs, ongoing maintenance costs, and remaining capital value a combination of capital expenditure and salvage value. Compute the total benefit for travel time, vehicle operating costs, and safety accrued during the analysis timeframe. However, the new lane may lead to a decrease in the number of vehicle-miles traveled on other facilities in the area. The method makes it difficult to allow additional costs for factors such as the size and shape of a building and differences in materials and finishes used on a particular project. Improve creditworthiness: A lower debt-to-equity ratio improves the financial strength of the firm and increases its credit rating.


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Unit Method of Cost Planning

advantages of cost planning in construction

The 8D incorporates safety aspects in both the design and the construction process. In conclusion, effective cost control coupled with realistic forecasting, subjected to regular review is imperative in order for the contractor to maximise his profitability. Costs can be divided into two general classes; absolute costs and relative costs. M2 20 Roads, Paving, Etc. If results seem out-of-step with impacts, the assumptions and analysis methods should be reviewed.


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Advantages of Planning

advantages of cost planning in construction

Figure 7 illustrates data interpolation. When assessing the costs and benefits of a project, it is necessary to take into account the time value of money by converting the costs and benefits that take place in different years into a common year. Safety Data The safety analysis results in the number of crashes expected for each severity type fatal, type A injury, type B injury, type C injury, and property damage only. If the past project was done more than a year back, the value of the building should be updated. Try to have parallel planning with lots of cross-checking, and 4. Instead of borrowing the total project cost upfront and beginning to pay interest on the total immediately , cost planning allows an owner to borrow only what will be spent in a particular period and to avoid paying interest on the balance until it is received. In this case, the lowest and highest values are given, including the average.

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The Advantages of Cost Control

advantages of cost planning in construction

See that all plans move in the forward direction at the same time. Private and public construction clients prefer to know the detailed costs of a project, and their required financial commitment, before the in-depth project design work has been completed. When taking off quantities from a design plan, the Estimator only needs to measure the length of strip footings the external perimeter of brickwalls is used in this case. It is good for cost planning budgeting because the summary shows the cost of each element. These rates can be obtained from municipality plan approval office, property developers, quantity surveyors, bank housing loan department and experienced building contractors with a rich portfolio of finished works.

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Advantages and Disadvantages of Planning

advantages of cost planning in construction

The level of detail enables structured value management to be undertaken at any time with the ability to comprehensively review options and defined products. Other Cost Estimate Factors Many other factors affect an estimate's accuracy. Profit is always the main consideration of a company, and we are able to maximize the profit through the proper cost planning and cost control. Evaluating the results — benefit-cost analysis. An appropriate study area should be chosen so that the majority of the effects of the project are included. With the rapid growth of technological development, it is essential for a manager to keep abreast of the up-to-date technology.

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Square Metre Method of Estimating

advantages of cost planning in construction

Incremental Benefit-Cost Ratio If more than one alternative is considered for a single project, an incremental benefit-cost ratio can be used to determine which Alternative s are the most economically desirable optimize additional benefits gained for the added cost. By the click of a button, you can add selected items from a past project to create your element. Figure 4 below shows the relationship between level of data and level of analysis. Cost Control Cost control in construction stage is the key to take effective way for construction. Cost controls are the mechanisms that an owner can use to monitor the performance of the business and improve its operations. Just by looking at the summary, the Quantity Surveyor can identify elements which are taking up too much cost, and an investigation can be launched. So, technically, what is building information modelling? This also has the advantage of being a specific operation which has no requirement to commit to additional costs later on.

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The Importance of Cost Control in Construction Contracts

advantages of cost planning in construction

Travel-time unit costs should reflect the percent autos and trucks, auto occupancy in peak and off-peak periods, and value of time per person for autos and trucks. A typical capacity improvement done in an area with a high-level of commuter traffic trips between home and work should use 260 days, the number of weekdays Monday through Friday in a year. Return tenders are similarly more consistent, greater pricing integrity and more competitive because the supply chain has been provided with the opportunity to provide their best price. Although two buildings may have the same gross floor area, the aerial plan might be different. Aid to Planning Create budgets: Cost controls are the foundation for creating budgets. For example, with a new or reconstructed highway, pavement overlays may be required 8, 12 or 15 years after the initial construction year. Building information modelling and automated quantities technologies can provide the industry with consequential opportunities to raise the quality of the industry to a much higher and sophisticated level.

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Advantages of a Cost

advantages of cost planning in construction

For example, a company might know the exact cost of the materials needed to produce a new product, but it is impossible to know exactly how many units a new product will sell when it goes on the market. Cost-benefit analyses are advantageous because they simplify complex business decisions. Is it a hospital, road, school, mall or home? Economic valuation consists of two parts: A highway user benefit calculation, and B cost calculation. Cost planning is a key due diligence step in preparing for a construction project. Every alternative has its own merits and limitations. Putting the procurement process of this item on hold till the last minute would mean one of two things; either the overall project duration gets dragged by a period equivalent to that which the item takes in transit and testing; or, short cuts are taken to deliver it within time and most times this comes with a cost implication and sometimes a compromise on quality. Government control, natural calamities, etc.

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