cost target

8/9/2019 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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