1. COST PLANNING AND ESTIMATION
Wong Chear Ching

2. Course outline Overview of Cost Planning Cost Planning Techniques
Approximate Estimating
Elemental Method
Cost Planning at Various Stages of Design
Resource Analysis
Cash Flow
Valuation
Final Accounts

3. Teaching Scheme DATE CHAPTER 1. Overview of Cost Planning
2. Cost Planning Techniques
3. Approximate Estimating
4. Elemental Method
5. Cost Planning at Various Stages of Design
6. Resource Analysis
7. Cash Flow
8. Valuation
9. Final Accounts
Exam

4. 6. Resource Analysis
6.1 Estimating and Tendering 6.2 Resource Analysis 6.3 Analogous Rates or Pro-Rata Rates 6.4 Introduction to Overheads and Profit

5. 6.1 Estimating and Tendering
Project Procurement
Procurement is the acquisition of goods or services in line with a client’s requirements and main components are:
Procurement route – this is the arrangement of roles, responsibilities, contractual relationships and the allocation of risk to meet the client’s requirements in terms of time, cost and quality
Tendering – this is how the price for the works will be determined and agreed
Contract selection – this is how we select the most suitable form of contract to meet the client’s requirements, taking in to account the procurement route and type of tendering

6. 6.1 Estimating and Tendering
Project Procurement

7. 6.1 Estimating and Tendering
Project Procurement
A procurement route is defined by a range of criteria:
Roles and responsibility of the parties involved with the project
Contractual relationships of team members
Allocation of risk amongst the team
Impact on the project programme – overall length, certainty of end date
Impact on cost – overall cost, cost certainty, cost control
Impact on quality – control of design, construction quality
Design flexibility – ability of client to implement change

8. 6.1 Estimating and Tendering
Tendering Tendering is the process of establishing a price for the works. This might be a lump sum, a target figure, or agreeing the basis on which the final account will be assessed (e.g. re-measurement, cost reimbursable). This is done either by asking one party to suggest a price in competition with others, or by negotiation. The tendering process covers consultants, suppliers, as well as contractors and subcontractors. Tendering is a part of the procurement process.

9. 6.1 Estimating and Tendering
Tendering Public procurement often with “Open Tender” with a Tender Notice published on GeBIZ. Private procurement often with “Selective Tender” with an Invitation Letter is sent to limited tenderers, selected based on their past completed projects or recommendation.

10. 6.2 Resource Analysis
Unit rate of a work is the cost to achieve the deliverables of one unit of that work. Example: Unit rate for concrete = $180/m3 Meaning the cost of 1m3 of concrete is $180 $180/m3 = Labour cost/m3 + Plant cost/m3 + Material cost/m3 + Profits for Contractor

11. 6.2 Resource Analysis
Build up all-in-rate All-in-rate = Labour cost + Plant cost + Material cost + Profits for Contractor How much for painting of 1m2 of wall?
Labour cost: Takes 15mins to paint 1m2 of wall, charge $15/ hour
$15/60mins x 15mins = $3.75/m2
Plant/machinery/tools/equipment cost: Bucket, brushes, masking $20 for 20m2
$20/20m2 = $1.00/m2
Material cost: 1 bucket of $20 can paint 36m2
$20/36m2 = $0.56/m2
SUB-TOTAL
$5.31/m2
Add Profits for Contractor, assume 15%
$5.31 x 15% = $ 0.80/m2
TOTAL ALL-IN-RATE
$6.11/m2

12. 6.2 Resource Analysis Build up all-in-rate Labour cost
Salary, bonuses, allowances, CPF, cost of supervision, levy, insurance etc.
Plant cost
Rental/ initial capital sum, maintenance, fuel, consumable stores, operator etc.
Material cost
Discount, quality, quantity, wastage, different source of suppliers etc.
Profits for Contractor
Overhead, turnover, availability of resources, type of work etc.

13. 6.2 Resource Analysis Factors affecting rate
Type/ Method of construction
Location
Time
Minimum quantity order
Quality/ Workmanship
Profits
Market condition
Error

14. 6.3 Analogous Rates or Pro-Rata Rates

15. 6.3 Analogous Rates or Pro-Rata Rates
If 102.5mm thick common brickwork cost $35.10/m2, how much is it for 215mm thick? A quick estimated cost is $35.10 / x 215 = $73.62/m2

16. 6.4 Introduction to Overheads and Profit