Construction Project Cost Forecasting

This assignment delves into the crucial aspect of cost forecasting within construction projects. It emphasizes the significance of accurately pricing preliminaries (initial setup costs), resource availability, materials, plant, and technology during the bidding process. The text highlights the challenge of submitting competitive bids and suggests that forecasting lower bids is key to winning contracts. It draws upon various cost management techniques and references relevant literature on construction project estimation and tendering.

Running head: CONSTRUCTION MANAGEMENT
Construction Management
Name of the Student:
Name of the University:

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Table of Contents
Introduction......................................................................................................................................2
Part A: Project preliminaries costs..................................................................................................2
Section A1: Importance of accurately identifying and pricing cost-significant preliminaries to
maximise chances of winning a tender........................................................................................2
Section A2: Priced preliminaries bill for the identified cost-significant preliminaries items for
the given project..........................................................................................................................5
Conclusion.......................................................................................................................................9
References......................................................................................................................................11

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Introduction
The report is based on Bill of Quantities (BOQ) for a new two storey brick building with
concrete tiled roof consists of two apartments. The location of the construction of the building is
at 52 box road, East Hills. The type of contract is basically based on Australian General
Conditions of Contract. BOQ consists of bid process of entire project comprised of estimation of
cost, tendering, opening of tender for the project as well as award of contract (Cunningham
2016). Proper cost estimation helps to determine feasibility study of given project and facility for
procurement procedure of the project work. It helps to plan the finances needed for successful
project completion. From the perspective of the contractors, proper cost estimation helps to
prepare a bid for work and facilitate resource arrangements for evaluation as well as execution of
the work.
This particular report summarizes the importance of identification and pricing of cost
significant preliminaries in order to increase chances of winning the tender of the East Hills
project. It also analyzes the priced preliminaries bill for the cost significant preliminaries items
for the provided project. From the tendering review, importances of the description of BOQ and
in addition to its effects are highlighted throughout the project example.
Part A: Project preliminaries costs
Section A1: Importance of accurately identifying and pricing cost-significant
preliminaries to maximise chances of winning a tender
Jayaraman and Jayaraman (2016) stated that the employer are selected the contractor
based on lowest bid criteria. A lowest tendering price is a key significant way to win a tender.

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Seymour (2017) analysed that selection of lowest bid is not required to reflect true cost of the
project work. Tender pricing is a major part to prepare of BOQ. In the given project, cost
estimation is done for experienced workers such as sub-contractor those are specialized into
building construction. The pricing cost significant preliminaries are done to have cost
information based on interaction with the suppliers (Cunningham 2015). Tender price is taking
price information throughout quotation for the suppliers as well as sub contractors. This
particular project is a government project which provides higher quality and specializes into type
of construction they go for quotations (Fichtner and Michel 2016). The success of contractor for
obtaining of contract is based on quality of the quotations received for the materials and items to
subcontract. It is also required to have competitive prices at the time to prepare the estimation of
cost. Standard procedures are being established to the responsibilities of the person those are to
carry out the bid functions as well as negotiations that rose (Abas 2017). The list of the items for
which there is requirement of quotations is being established with comprehensive assessment of
the contracted documents.
The contractor submits a tender for the project which sets out experience of the
organization to undertake the building construction project, their proposed approach and
estimation of cost to undertake the project (Larson and Gray 2013). In order to win a contract, a
proper tender documentation is required for the project. Into the construction environment, the
contractors are tendered low for the elements like preliminaries as well as earthworks to win of
the contracts. However, prediction of low bid is a difficult task for the given project. Into the
project, lower bid is awarded the contract, then it is suggested that predictions of lower bid is
proper for winning the tender. Peng, Ding and Yu (2016) mentioned that bidding performance is
analysed by design estimators. The quality of advice offered to the client is improved if the

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consultant can see the design cost from the bidding results. Then, the contractor can able to relate
its ability in order to win the contracts (Abas et al. 2017). The contractors are submitted lower
prices for the project elements in order to win contracts of the tender.
Project overhead estimation is required to improve the accuracy of the tender pricing.
Efforts are provided to improve the methods to estimate the indirect cost. The contractor gains a
competitive edge by adjusting the preliminaries such as project overhead. Goh and Hall (2013)
forwarded the project scenario and concluded that quotations are obtained among the supplier
and subcontractor. Therefore, proper project pricing for the project overheads are required to get
success into the project bid (Wang and Wei 2014). Into the construction industry, preliminaries
are subjective as well as most of the times it is difficult to price the system work. The first
section of work is bill of quantities which consist of the financial matters those are related to the
contract (Azam, Sabrina and Mohyin 2016).The contractor has responsibility to price the
preliminaries items into the tender based on project requirements.
Anifowose et al. (2013) explained that preliminaries section of the bill of quantities
contains of two distinct types of items. The items those are not specific but have identifiable cost
considered for the purpose of tendering such as contractual necessity for insurances, site ability
for the employer as well as payment towards the local authority (Kang et al. 2013). Items those
are fixed as well as associated cost which derives from the contractor’s predictable method to
bring out the project work. The works are associated to bring of plant from the site and provided
that of temporary works (Jayaraman and Jayaraman 2016). The time associated subdivision is
provided for the preliminaries items which allow the tenderers to cost the items individually. The
tenderer has the capability to expand the time related cost items to outfit particular methods of
building construction. The achievement of contractor for gaining of contract is based on

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superiority of the quotations established for the materials in addition to items to contract out
(Brook 2016). Therefore, pricing the preliminaries items are significantly required to maximise
chances of winning the tender for the project.
Section A2: Priced preliminaries bill for the identified cost-significant preliminaries
items for the given project
A2: Preliminaries Bill
Item Description Amount
($)
Pricing approach with justification
1 Establishment of the site
1.1 Site clearance for
construction of new two
storey brick building
14,000 The area of the site consists of 400m2 for a cost
of $35 per m2, therefore the site clearance cost
is (400*35) = $14,000.
1.2 Scaffold, plant and
equipments, lifts as well as
cranes
20,000 The total of space is 500m2 for cost of $40 per
m2, therefore the cost is (500*40) = $ 20,000.
1.3 Testing of the soil 20,000 The total area for building the two storeys is
400m2, where the cost for testing the soil is
$50; hence the cost is $20000.
1.4 Authority charges 840 Authority charges $30 for the project with
working day of total 28 days.
2 Groundwork
2.1 Filling to the garden beds 740 The garden bed is cultivated to 100 deep with

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area of 37m2, the estimated cost is $20; hence
the total cost is (37*20) = $740. The top soil
mixture of the garden beds comprise of three
parts with imported topsoil and one part is
compost.
2.2 Organic fertilizer 2590 The organic fertilizer is being specified applied
at rate of 3kg per 10m2, includes of cultivation
to depth of 200 and ranks to surface level with
adjacent surfaces. The area is 37m2 with cost of
$70; hence the cost is (37*70) = $2590.
2.3 Planting and association of
excavation as well as filling
of the work
300 There is supply of 140 dia pots and plant into
the beds are specified as ceria turbinate with
total number of 10, and cost of $30; hence the
total cost is (10*30) = $300.
2.4 Excavation and beds for the
paths
208 There is excavation of the materials commerce
of 16m3 at reduced level not exceed 1.0m of
total depth of strip footings. It costs of $13 per
m3, hence the total cost is (16*13) = $208.
2.5 Excavation for the electrical
and drainage services
6800 4*25mm2 PVC cables into trenches (minimum
600m cover) as well as it are drawn into
conduits. It includes for excavation,
maintenance faces of excavation, backfilling,
warning tape with disposal of surplus spoil. The

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total area is 34m with cost of $200; hence the
cost is $6800.
2.6 Excavation from rain and
percolating water by way of
pumping out
200 15 diameter pipe works into chases in
brickwork is 10m, with cost of $20; hence the
cost is $200.
2.7 Maintenance faces to side of
excavation not to exceed
1.0m total depth for the strip
footings
2120 The area of the excavation for the strip footings
is 53m3 with cost of $40 per m3; hence the
price is $2120.
3 Windows and doors
3.1 Aluminium framed window 3000 There are two anodised aluminium framed
sliding window units inclusive of factory
glazing, fixings, furniture as well as trims. It
suits of opening 1210 wide* 1029 high with
includes of building into brick cavity wall. Each
of the windows is cost of $1500. Therefore, the
costs of the windows are (2*1500) = $3000.
3.2 Metal door frames 6000 There are six metal door frames to suit
2040*820*35 thick single leaf doors, complete
with pair of steel butt hingers, latch keep,
striking plate includes for the building 110 thick
brick partition walls. Each of the windows is
cost of $1000. Therefore, the costs of the

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windows are (6*1000) = $6000.
3.3 External timber doors 10,000 It is 1 half glazed single door, 2040*820*40
(timber frame measured). 1 glazed single entry
door in door and sidelight assembly to suit
overall opening size 1280 wide x 2067 high
(door only: timber frame complete with
sidelight). The total cost estimated as $10,000.
3.4 Internal timber door 2000 There is total of 1 single door of 2040*720*35
thick, 4 sliding door of 2040*820*35 thick and
6 single door of 2040*820*35 thick. Cost is
$2000.
3.5 Security viewers 300 There are 2 security viewers which are fixed
into the entry door to the apartments. The total
cost is $300.
4 Finishes
4.1 Concrete stair landing $80 Preparing of concrete stair landing used to
receive cement render by coating with PVA
bonding agent with area of 4m2, and cost of
$20, hence (4*20) = $80.
4.2 Concrete stair flights It consists of area of 5m2 with cost of $10,
hence (5*10) = $50.
4.3 Concrete stair strings and
floor slaps
30,000 The concrete stair strings consists of width of
130-280mm with floor slaps into wall area of 0-

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250mm high. Both are cost of $60, hence the
total cost is (250mm*60+250mm*50) =
$30,000
4.4 Door stops 3000 Wall mounted door stop, approximately 75 long
overall, comprising screw fixed nylon, cast
brass or diecast base plate and a close wound
spiral wire with plastic tip. The cost of the door
stops are $3000.
Conclusion
It is concluded that this particular report is based on estimation of preliminary cost of the
items in the project which is conducted for construction of two storey building. Estimation of the
price is focused on tender pricing and building up rates for the selected activities from BOQ. The
project parties participate into involvement into pricing for this particular project and factors are
considered when tender pricing is identified. It is analysed that the tender pricing process
consists of receipt of invitation to the tender, decision to the tender, collection of tender
documents, examination of the tender documents, collection of tender documents, tender
adjudication as well as submission of the tender documents. At the time of pricing the
preliminaries items, availability of the project resources, materials, plant and technology are to
be considered at pricing time. Pricing of the tender is considered as the major part to prepare the
BOQ. This particular procedure is to be done with use of various cost information. In order to do
the lower bid, it is considered as difficult task for the given project. Into the project work, there is

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lower bid that is awarded the contract, and then it is recommended that forecasting of lower bid
is appropriate for winning the tender of this particular project work.