W1- Cost data (f)

QSM 556 Construction Economics II 1

UNIVERSITI TEKNOLOGI MARA QSM 556

AIM HIGH!

By end of this class, you should: Understand the importance of Cost data

The usage of Cost Data

The sources of Cost Data

Introduction Why is it important? - At initial stage to reflect the

probable cost of the proposed project to the client and throughout the various stages of design and construction.

Where can I get cost data? - Generally, QS consultants, ISM, PWD, the Statistics Department and CIDB have ample cost data which are kept systematically.


In a NUTSHELL: For forecasting and control activity.

Which cost information should we use and where it comes

from is important!

“...the planning and design phase of a building project deserves more abundant resources and closer attention because in this phase we simultaneously encounter the greatest possibilities for influencing the total project cost and the lowest expenditures associated with the project.”

Building Cost Planning for the Design Team, by Jim Smith & David Jaggar


How cost planning influence cost?



Components of Cost

Plant & Equipment

Plant Hiring rates?

LabourWages per

day?

Material Cement-

RM?/50kg

Overhead5-10% of total cost

Purpose? Approximate estimate cost of the proposed project

Balance the cost in the estimate to assure money is spent based on the client’s preferences.

As a basis for preparing schedule of rates for the purpose of variations of work, contractor’s claim and final account.



Uses of Cost Data

To?

Predict Cost

Make cost comparison

Balance the cost

Analyse the cost trend


a. Prediction of cost

Prediction of total cost of construction based on data available and the suitability of the data

ALERT! Data must be an updated set of data- historical data must be adjusted for current analysis.

Current predicted Cost

BQ from prev.

project

Schedule of rates

Cost/m2


b. To make comparison of cost

Not merely to obtain the actual but to make the best comparison on alternative item/element that have similar functions/different in design.

Pitched Roof vs. Flat Roof?


Brickwall vs. Curtain Wall

c. Balancing of costCost per element orsmall units can be usedto conduct cost check.

Can be used inestimation todistribute cost basedon client’s needs.


Cost per/m2 of upper

floor?

Total cost for ceiling?

Total cost for Roof?

The element of cost of a building changesthrough time.

By using cost data, the trend of future changes can be forecast to accommodate client financial status. (i.e the hikes of materials price or wages for labour)

Construction of a Stadium

Construction stop-

financially incapable

d. Analysis of cost trend

2008- Steel price increased

Construction Start- 2007

Why QS need readily available cost data?? To prepare an estimate or budget

Plan outline and detailed costs during the design stages

Estimates tender for tendering purposes

Negotiate variation prices during the preparation of final account

Calculate and settle off the contractor’s claims

Adjust valuation of profit & loss

Manage maintenance & repair

Calculate the life cycle cost or cost in use

Du

ring

Co

nstru

ction

Post construction & for future

project

From Start of Project

1. Technical data Published in Journal &

Magazines (Building related)

Information on- price of materials, labour wages, hire-purchase of plant.

ISM- ‘The Malaysian Surveyor’ magazine [ECA, etc]

Advantage: more frequent up-to-date

information, applicable locally.

Disadvantage: not much space (articles

etc) therefore less details of cost

information

2. Price books In UK-Published annually- but not

yet available in Malaysia.

Some priced books can be referred to.

i.e. Spon’s Asia Pacific Construction Costs Handbook- contains price information for the Asia Pacific countries including Malaysia

Advantages: Organized & Comprehensive set of cost data

Disadvantages: Need to be updated by users periodically due to changes of market conditions, location etc

Spon’s Asia Pacific Construction Costs Handbook, 2000 (3rd Ed.)

Labour Types Wages for 8 hours/day(RM)

Total number of working hours per

year

Mason/Bricklayer 80.00 2304

Carpenter 80.00 2304

Plumber 80.00 2304

Electrician 80.00 2304

Semi-skilled labour 35.00 2304

Unskilled labour 30.00 2304

Plant operator 80.00 2304

Per month

Foreman 2,600.00 2304

Clerk-of-work 1,800.00 2304

3.Information services

Building Cost Information Services (BCIS) under RICS.

Published price books

AND Online data base for users in UK: http://www.bcis.co.uk

4. Tender/Contract Doc & BQ

MAIN SOURCES used by QS

Preferable at all times than published information thus knowledge on site condition, market prices, labour condition is required prior to the use of information.

In forms of: Schedule of rates, overall costs, basic rate of materials, labour, plant, contract period, and DL period.

ALERT! Different contract usually consist of different rates-thus-must inspect the factors that influence the differences. (i.e.- location, size, market condition, tendered &contract period)

Why BQs rates differ?

Factors?

LocationUrban Vs

Rural?Accessibility

Front/Back loading

Capital firstVariations

later

ErrorsMany items

to pricedVery

common

Inaccurate data

Time pressure

Historical Vs Updated

Site techniques

High out put Machinery?

Special techniques

Supply of Material

Own product

Sub-to supplier

5. Government Publications

In Malaysia-Government is the main client in the construction industry-thus has its own production of cost data and R&D

JKR (PWD), Department of Statistics (DSM), CIDB.

Cost Data available online

http://www.statistics.gov.my (go to free

Download tab)

http://www.cidb.gov.my (under Resources-

>Construction Resource Centre)

http://www.jkr.gov.my (under Info Contrak-

Jadual Kadar Harga)

24QSM 556 Construction Economics II

Conclusion: Do you understand the importance of Cost data?

Very important during design stage, especially to influence the cost, to do approximate costing, and

What are the purposes and how to use Cost Data?

What are the sources of Cost Data?

Discussion: What are the main source of cost data for quantity

surveyors, and why precautionary steps must be taken when using this source?

Past years exams Q:Some of the factors which may influence the cost data obtained from Bills of Quantities are:

i. Size of project

ii. Method of tendering

iii. Construction period

iv. Site location

v. Government policy

Discuss and give appropriate situations how each of the

factors affect the rates entered by contractors during

tendering exercise.

W1- Cost data (f)

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