Cost Management Report: Al Batinah Expressway – Package 4

This report provides the management of the cost factors for the project of Al Batinah Expressway – Package 4 which is a construction project and it involves the development of the Oman’s expressway. The report would highlight the project background for the project of Al Batinah Expressway as it a construction project and the cost estimation would be widely based on the activities and the resources used for the project.

Running head: COST MANAGEMENT REPORT
Cost Management Report:
Al Batinah Expressway – Package 4
Name of the Student:
Student ID:
Name of the University:
Author’s note:

1COST MANAGEMENT REPORT
Table of Contents
Introduction......................................................................................................................................2
Project Background.........................................................................................................................3
1. Principles of Preparing cost budgeting........................................................................................4
2. Critical Discussion of cost estimating technique.........................................................................7
3. Critical Analysis of impact of construction methods on project cost........................................10
4. Evaluation of analytical estimating methodologies and NRM2 standard.................................12
5. Application of cost management tools for the project...............................................................14
6. Application of value engineering concept...................................................................................0
Conclusion.......................................................................................................................................2
Recommendations............................................................................................................................3
References........................................................................................................................................4

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Introduction
Cost Management holds an integral role in the development of the effective information
processing for the project (Francis, Cervera and Frazeri 2017). The implementation of the cost
management would help in easing the deployment of the extensive and operative development of
the operations. The deployment of the cost management would allow the formation of the
effective and improved management of the activities. The cost management holds an integral
part in the development of the effective operational development. According to Claxton et al.
(2015), the integration of the cost management would allow the formation of the successive
development and integration for the overall calculation of the cost. The contract of constructing
the Oman’s 272km long expressway had been assigned to Galfar Engineering & Contracting Co.
The completion of the project would tend to form the deployment of the effective documentation
and alignment of the operations. The project development would allow the integration of the
construction activities for forming the final project deliverable.
The following assignment would provide the management of the cost factors for the
project. The project taken for study is Oman’s Al Batinah Expressway – Package 4 which is a
construction project and it involves the development of the Oman’s expressway. The project had
included a number of cost expenses for the resources used. The integration of the operations
would allow the formation of the effective operation development. The report is developed for
the analysis of the project cost budgeting and the alignment of the improved estimation reports.
The report would highlight the project background for the project of Al Batinah Expressway as it
a construction project and the cost estimation would be widely based on the activities and the
resources used for the project. The various cost estimation principles and techniques would be
critically evaluated in this report for the provided case study of Al Batinah Expressway.

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Project Background
The project of Al Batinah Expressway would be helpful for the alignment of the
improved operation development. The expressway is 272km long and it is built for the developed
for the construction of the long expressway (Ascione et al. 2015). It would include huge amount
of RO26 million or $68 million for completing all the construction works and alignment of the
expressway. The project is formed for the alignment of the effective management of the project
activities. The contract of constructing the Oman’s 272km long expressway had been assigned to
Galfar Engineering & Contracting Co. The completion of the project would tend to form the
deployment of the effective documentation and alignment of the operations. The project
development would allow the integration of the construction activities for forming the final
project deliverable (Muennig and Bounthavong 2016). The activities that are listed for the
alignment of the construction of the expressway for the organization are being included in the
project.
The project had considered the usage of the resource optimization for fixating the budget
and accommodating the project activities within the fixed budget allocated for the project. The
employment of the effective project management would help in easing the flow of the operations
and develop effective management of the operations (Yet et al. 2016). The alignment of the
project development operations would help in easing the construction of the expressway at
Muscat, Oman. The project had been scheduled for completing in 426 days and there had been
ad addition of 30 more days for the mobilization activities of the project. The alignment of the
project activities would help in easing the development of the system development and the
alignment of the operations for the integration of the activities. The project development would
be supported by the integration of the operations.

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1. Principles of Preparing cost budgeting
The preparation of the cost budgeting is developed for the alignment of the expense
listing and the calculation estimation of the project expenses. The preparation of the cost budget
preparation would be based on the 4 factors like conservative approach, consultation, time
management, and excellent documentation (Gregory et al. 2016). These four factors would help
in easing the development of the cost budget preparation and the alignment of the successive
project development operations. The construction project of Al Batinah Expressway would
require the use of the mentioned principles for developing the cost budgeting by considering all
expenses that would be incurred in the project. The explanation of the principles for the project
of Al Batinah Expressway is given below,
Conservative Approach: The conservative approach is the most suitable approach for
the development of the cost budgeting (Brodszky et al. 2014). The implication of the
conservative approach would help in considering all factors of the cost that would or could occur
during the course of project work. The conservative approach does not lets the cost budgeter to
be optimistic and it helps in considering all the factors of project development and the alignment
of the operations for forming the final project deliverable (Sears et al. 2015). The conservative
approach would allow the budgeter for integration of the effective integration management. The
integration would align with the formation of the operations and the alignment of the successive
development operations. The analysis would be helpful for the deployment of the effective
integration management. The deployment of the conservative approach would help in
considering the surrogate expenses that can form the impact on the project of Al Batinah
Expressway project. The material shortage, machine equipments failure, and any additional costs
would be considered as provisional cost while estimating the project costs. The formation of the

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conservative approach would help in addition of the effective development of the project budget
(Harrison and Lock 2017). It would ensure that in case of emergency, the project would have
some resources for overcoming the expense for the project.
Consultation: The consultation approach would help the budgeter for making the final
project cost estimation by aligning with the formation of the operations (Boardman et al 2017).
The process of consultation would help the project team or steering committee for providing
some specific ideas for the development of the project budget. The consultation is the process of
getting some information on the any topic from various persons so that a detailed inference can
be made. The consultation of the cost budgeting method would work in the same way and it
would help in accumulating information before development of the project budget. The
development of the project budget for the project of Al Batinah Expressway would help in
consulting with experts about the cost estimation. The budgeter would be able to get acquainted
with the types of expenses that are probable for the project and form accurate project budget. For
example- the consultation with the market expert would help the budgeter for getting idea of the
costs that would be required for the development of the raw material cost summarization (Greene
et al. 2016). The integration of the effective cost budgeting would help the integration of the
smart project deliverable operations. The consultation would help in reducing the probability of
missing any vital point while development of the final cost budget.
Time Management: The time management is another crucial factor that would form the
impact on the development of the cost budget. According to Chhatwal et al. (2015), time plays a
vital role in the development of the cost budget. The alignment of the cost estimation budget
would help in forming the final project deliverable for the project. The time management is
deployed for considering the project for alignment with the effective project cost estimation. The

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management of time would help in forming the final project deliverable and the alignment of the
improved functional development. The management of the time factor would help in forming the
effective development of the operations. The integration of the time management would help in
considering the management of the cost budget too (Greene et al. 2016). The construction project
of Al Batinah Expressway would require time management for the development of the
successive integration management. For example- the time management would help in vitalizing
the project of effective development model. The analysis would also help in dealing with the
development of the cost estimated budget for the alignment of the final project deliverable.
Excellent Documentation: The development of the excellent documentation would be
helpful for the alignment of the effective development model (Trautman et al. 2016). The
documentation of the cost budget would be helpful for forming the consideration of the advance
project management operations. The documentation technique is very crucial as it would result in
marking whether the developed project had covered the crucial project requirements. The
development of final documents would help in easing the flow of the information for developing
the effective and final project documentation. The documentation is the reporting of the
outcomes in a proper structured way so that it can be used in future (Trautman et al. 2016). The
documentation would be carried on for the alignment of the effective operation development.
The documentation would help in easing the flow of the information for further usages. The
proper documentation methods are aligned with the formation of the improved final report
documentation. For example- the documentation of the cost budget would help in forming the
final project deliverable successful for the alignment of the operations (Hong et al. 2016). The
documentation approach is helpful for the alignment of the operations and development of the

7COST MANAGEMENT REPORT
activities. The deployment of the operations would be helpful for carrying out the alignment of
the successive development processes.
2. Critical Discussion of cost estimating technique
According to James et al. (2017), there are four types of cost estimation methods that can
be implied for the calculation of the final cost of the project of Al Batinah Expressway and they
are analogy, parametric, engineering, and actual costs. The cost estimation is implied for the
development of the successive management operations. The cost analysis and program
evaluation would help in easing the calculation for the project of Al Batinah Expressway. The
cost estimation is done for the future costs that may incur for the project of Al Batinah
Expressway. The cost estimation is largely based on the historical performance, cost prevailing,
technical data, and schedule for the project. The study of literature by Armstrong et al. (2015)
has helped in understanding that the alignment of the operations can support the development of
the effective operations and development. The four estimation methods of costs had been
explained below,
Analogy: The analogy is the most appropriate method of calculation of the cost for the
initial period of the project (Sullivan 2014). The deployment of the operations was supported by
the project lifecycle analysis. The analogy is a primitive calculation of the cost by the help of
taking the cost estimated from a single point source. The method is highly efficient for the
calculation of the costs in early stages of the project. The analogy cost estimation is done by
adjusting analogous cost system and creation of cost factor for the overall calculation of the cost
budget. The project of Al Batinah Expressway can use the calculation of the initial costs by the
use of the analogy cost estimation methods. In this method, the project budgeter would have to

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take required data from a single point of data and form the complete estimation of the cost
budget. However, it is risky process as the cost estimation might not be accurate and it would
result in forming the errors in calculation (Orfanos, Wright and Munk 2016). Although the
process is very fast, inexpensive, and easy to change, the estimation process is more likely to be
subjective for the project costs.
Parametric: Parametric is the statistical cost estimation process that would tend to form
the evaluation of the final project deliverable (Ascione et al. 2015). The method is used for the
mid period of the project lifecycle as it would help in estimating the probable errors of the
estimation too. The parametric estimation is helpful for the evaluation of the effective operation
development and alignment of the cost estimation methods. The process involves the application
of the statistical data analysis for finding out the cost of 2 or more than 2 systems. The process is
largely responsible for the development of CER estimation methods. The parametric method can
be implied for the project of Al Batinah Expressway and it would help in forming the
measurement of the cost across the complete program. The method is based on the use of
statistical methods for calculating the overall cost of the construction project of Al Batinah
Expressway. The consideration of more than single trend for the estimation of the project would
help in forming less risky system for the cost estimation (Yet et al. 2016). However, the major
setback of the method is that the data can be misleading and the calculation is constrained by the
quality and amount of data used for the measurement.
Engineering: The Engineering is a more detail estimation process for calculating the cost
budget for the project (Reyes-Uruena et al. 2017). The method is the detailed build up of the
progress and project for estimation of the project costs. It is predominantly used in the late
phases of the project for calculating the least value of money. The latter phase of program would

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tend to form the estimation of the costs for decreasing the expenses and increasing the profits.
The process estimates the lowest cost level of the project activities and sums the costs entry by
WBS. The summation of the costs would tend to form the estimation of the overall project
budget. The Engineering cost estimation can be used for the project of Al Batinah Expressway
for calculating the final cost value for the development of the activities. The calculation would
help in easing the final project calculation methods and the method would help in enabling better
visibility to the cost drivers (Gregory et al. 2016). However, the implication of the Engineering
cost estimation method would result in the problems of slow operations, expensive operations,
and intensive labour. These problems would result in hampering the development of the
operations for the cost estimation methods.
Actual Costs: The actual costs have resulted in the formation of the analysis of the actual
costs for the alignment of the project operations. The actual cost estimation is the most
appropriate method for calculating the cost and alignment of the activities for the development of
the operations (Francis, Cervera and Frazeri 2017). The actual cost estimation would help in
easing the analysis of the costs of the development model. The extrapolation of the current
program costs is used for the calculation of the actual costs for the total budget estimation using
extrapolation of program costs. The method is used for the development of the cost estimation
using current program costs. The method evaluates the trend from the development of the
operations and alignment of the activities for the management of the operational development.
The method of actual costs would be helpful for the project of Al Batinah Expressway and it
would help in forming the development of the improved activities. The implication of the cost
estimation would be helpful for the analysis of the operations (Jeong, Koo and Hong 2014).
However, the actual cost estimation would bring about the issues of late and slackness of

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operations. The adjustment of the actual costs would tend to delay the operational development
and formation of the correlation issues.
3. Critical Analysis of impact of construction methods on project cost
According to Claxton et al. (2015), the construction of the Al Batinah Expressway is a
major construction project and it would built an expressway of 272km length in Oman. It would
include huge amount of $68 million for completing all the construction works and alignment of
the expressway. The project is formed for the alignment of the effective management of the
project activities. The contract of constructing the Oman’s 272km long expressway had been
assigned to Galfar Engineering & Contracting Co. The completion of the project would tend to
form the deployment of the effective documentation and alignment of the operations. The project
development would allow the integration of the construction activities for forming the final
project deliverable (Muennig and Bounthavong 2016). The activities that are listed for the
alignment of the construction of the expressway for the organization are being included in the
project. The construction activities included in the project are site development, road splitter,
paving, cementing, carving, pillar works, boundary development, express way development, and
alignment of the operations. The development of the construction activities would tend to form
the alignment of the project operations favourable for the deployment of the effective operations.
The project of Al Batinah Expressway would have to face the modifications of the operations
and the alignment of the major deliverable issues. The use of traditional or modern method of
construction has direct relation with the project cost (Muennig and Bounthavong 2016). The
modern methods of construction is cost efficient and consumes very less amount of resources.
Hence, the overall cost expended for the completion of the project activities would be altered
with the inclusion or exclusion of the improved methods of construction.

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The construction methods play a significant role in the development of the cost budget
for the project. The implication of the modern methods of construction would tend to form the
impact on the development of the successive project activities. The traditional project activities
are being avoided due to cost saving. Bilinski et al. (2017) have stated that the modern methods
consume lesser amount of resources and provide better results for the development of the
construction project activities. The modern tools and equipments are cost efficient and they
consume very less time for completion of the project activities. It would help in reducing the
overall cost factor of the project. Moreover, the implication of the activities would also result in
developing the effective operation development. The alignment of the construction safety risk
procedure would reduce the probability of occurrence of health hazards for the project. It would
help in forming the development of the operations and aligning the cost effective methods for the
project duration (Darmon and Drewnowski 2015). The implication of the modern methods of
construction would also help in reducing the effort required for the completion of the project. For
example- if the paving of the road for the construction of the Al Batinah Expressway would have
taken 5 days before the introduction of the modern equipments. It would only take 3 days with
the help of the paving equipment and hence it would reduce the labour costs by 2 days. The rent
of the machine would be negligible in compare to the two days wages of the whole worker
group. Moreover, the introduction of the modern methods of construction would also help in
reducing the number of persons required for any work (Pil et al. 2017). Suppose the cleaning of
the road would have taken a total of 6 workers before the use of the modern methods of
construction. The use of the cleaning vehicle would clean the road of Al Batinah Expressway by
consuming only 2 workers. The wages of the 4 labours would be reduced in return of a nominal
rent of the machine.

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4. Evaluation of analytical estimating methodologies and NRM2 standard
According to the study by Whiting et al. (2014), the project costs budget can be evaluated
by the help of four estimating methodologies of analogy, parametric, engineering, and actual
cost. The project of Al Batinah Expressway can use the calculation of the initial costs by the use
of the analogy cost estimation methods. In this method, the project budgeter would have to take
required data from a single point of data and form the complete estimation of the cost budget.
The method is highly efficient for the calculation of the costs in early stages of the project
(Stiglitz and Rosengard 2015). The analogy cost estimation is done by adjusting analogous cost
system and creation of cost factor for the overall calculation of the cost budget. The parametric
method can be implied for the project of Al Batinah Expressway and it would help in forming
the measurement of the cost across the complete program. The method is based on the use of
statistical methods for calculating the overall cost of the construction project of Al Batinah
Expressway. The consideration of more than single trend for the estimation of the project would
help in forming less risky system for the cost estimation. The method is used for the mid period
of the project lifecycle as it would help in estimating the probable errors of the estimation too
(Messori et al. 2018). The parametric estimation is helpful for the evaluation of the effective
operation development and alignment of the cost estimation methods. The process involves the
application of the statistical data analysis for finding out the cost of 2 or more than 2 systems.
The Engineering cost estimation can be used for the project of Al Batinah Expressway for
calculating the final cost value for the development of the activities. The calculation would help
in easing the final project calculation methods and the method would help in enabling better
visibility to the cost drivers (Nas 2016). However, the implication of the Engineering cost
estimation method would result in the problems of slow operations, expensive operations, and

13COST MANAGEMENT REPORT
intensive labour. The method is the detailed build up of the progress and project for estimation of
the project costs. It is predominantly used in the late phases of the project for calculating the least
value of money. The latter phase of program would tend to form the estimation of the costs for
decreasing the expenses and increasing the profits. The process estimates the lowest cost level of
the project activities and sums the costs entry by WBS.
The method of actual costs would be helpful for the project of Al Batinah Expressway
and it would help in forming the development of the improved activities. The implication of the
cost estimation would be helpful for the analysis of the operations (Wetzelaer et al. 2017). The
actual cost estimation is the most appropriate method for calculating the cost and alignment of
the activities for the development of the operations. The actual cost estimation would help in
easing the analysis of the costs of the development model. The extrapolation of the current
program costs is used for the calculation of the actual costs for the total budget estimation using
extrapolation of program costs. According to Dos Santos et al. (2017), the method is used for the
development of the cost estimation using current program costs. The method evaluates the trend
from the development of the operations and alignment of the activities for the management of the
operational development.
NRM2 provides the detailed measurement that should be followed for the development of
the construction works. The volume provides the guidance of the detailed measurement of the
building works and the details of the operations for building work management (Wang et al.
2016). The rules set by NRM2 would address all the aspects of construction development for bill
of quantities production. It also sets out the information required for the implication of the
effective implication development. The construction of the activities had helped in easing the
development of the operations for alignment of the operations. The guidance of the project

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implementation would help in easing the deployment of the operations for the alignment of the
successive development model. The analogy cost estimation is done by adjusting analogous cost
system and creation of cost factor for the overall calculation of the cost budget (Araujo,
Goncalves and Fonseca, 2016). The parametric method can be implied for the project of Al
Batinah Expressway and it would help in forming the measurement of the cost across the
complete program. The method is based on the use of statistical methods for calculating the
overall cost of the construction project of Al Batinah Expressway. The consideration of more
than single trend for the estimation of the project would help in forming less risky system for the
cost estimation (Thornton 2015). The method is used for the mid period of the project lifecycle
as it would help in estimating the probable errors of the estimation too.
5. Application of cost management tools for the project
The various cost management tools are Profitability Analysis, Budget Plan, and Cash
Flow Statement for project (Kyriopoulos et al. 2017). The project of Al Batinah Expressway
would be helpful for the alignment of the operations and develop successive cost budget
estimation. The project was estimated for a budget of $68million dollars. The project of Al
Batinah Expressway is 272km long and it is built for the developed for the construction of the
long expressway. It would include huge amount of RO26 million or $68 million for completing
all the construction works and alignment of the expressway. The contract of constructing the
Oman’s 272km long expressway had been assigned to Galfar Engineering & Contracting Co.
The completion of the project would tend to form the deployment of the effective documentation
and alignment of the operations.

15COST MANAGEMENT REPORT
Profitability Analysis: The profitability analysis is the study of the cash flows for a
defined period (Russo et al. 2017). The analysis would consider the total inflow and out flow of
the cash in the project for the period of 3 years. The net income and outcome of the project
would be calculated by considering the overall costs of the project.
The net inflow of year 1 of the project can be calculated by adding the agreed loan of
year one and client’s payment for the four quarters of the 1st year.
$50,000 + $1,500,000 + $1,500,000 + $1,800,000
= $5,300,000
The net inflow of year 2 of the project can be calculated by adding the agreed loan of
year one and client’s payment for the four quarters of the 2nd year.
$150,000 + $3,200,000 + $1,500,000 + $1,500,000 + $11,000,000
= $18,700,000
The net inflow of year 3 of the project can be calculated by adding the agreed loan of
year one and client’s payment for the four quarters of the 3rd year.
$17,000,000 + $3,000,000 + $3,000,000 + $23,000,000
= $46,000,000
The net outflow of year 1 of the project can be calculated by adding the expenses on
engineering, purchasing, construction, contingency, and escalations for 1st year.

16COST MANAGEMENT REPORT
$140,000 + $230,000 + $240,000 + $370,000 + $170,000 + $180,000 + $190,000 +
$170,000 + $1,000,000 + $190,000 + $320,000 + $480,000 + $50,000 + $780,000 +
$20,000 + $310,000 + $10,000 + $240,000
= $5,090,000
The net outflow of year 2 of the project can be calculated by adding the expenses on
engineering, purchasing, construction, contingency, and escalations for 2nd year.
$260,000 + $400,000 + $150,000 + $290,000 + $1,230,000 + $190,000 + $240,000 +
$2,320,000 + $1,500,000 + $340,000 + $260,000 + $4,500,000 + $1,450,000 + $350,000 +
$650,000 + $3,500,000 + $250,000 + $205,000 + $90,000 + $150,000
= $18,325,000
The net outflow of year 3 of the project can be calculated by adding the expenses on
engineering, purchasing, construction, contingency, and escalations for 3rd year.
$210,000 + $360,000 + $180,000 + $8,900,000 + $180,000 + $130,000 + $340,000 +
$6,470,000 + $8,900,000 + $1,400,000 + $240,000 + $1,370,000 + $6,880,000 + $890,000 +
$2,040,000 + $2,880,000 + $680,000 + $215,000 + $150,000 + $2,380,000
= $44,795,000
Profitability Analysis Year 1 Year 2 Year 3
Inflow $5,300,00
0
$18,700,000 $46,000,000
Outflow $5,090,00 $18,325,000 $44,795,000

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0
Net Flow $210,000 $375,000 $1,205,000
Discounting factor @5% $10,500 $18,750 $60,250
Final Net Flow $199,500 $356,250 $1,144,750
Cumulative Net Flow $199,500 $555,750 $1,700,500
Budget Plan: The budget plan had been made considering the expenses of the project
activities for engineering, purchases, construction costs, contingency costs, and escalation costs
of the project. The development of the project budget plan for the project is shown below,
The total cost of engineering can be calculated by summing the cost of engineering for all
four quarters of 1st year, all four quarters of 2nd year, and all four quarters of 3rd year.
$140,000.00 + $230,000.00 + $240,000.00 + $370,000.00 + $260,000.00 + $400,000.00
+ $150,000.00 + $290,000.00 + $210,000.00 + $360,000.00 + $180,000.00 + $8,900,000.00
= $11,730,000.00
The total cost of purchases can be calculated by summing the cost of purchases for all
four quarters of 1st year, all four quarters of 2nd year, and all four quarters of 3rd year.
$170,000.00 + $180,000.00 + $190,000.00 + $1,230,000.00 + $190,000.00 +
$240,000.00 + $2,320,000.00 + $180,000.00 + $130,000.00 + $340,000.00 + $6,470,000.00
= $11,640,000.00
The total cost of construction can be calculated by summing the cost of construction for
all four quarters of 1st year, all four quarters of 2nd year, and all four quarters of 3rd year.

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$170,000.00 + $1,000,000.00 + $190,000.00 + $1,500,000.00 + $340,000.00 +
$260,000.00 + $4,500,000.00 + $8,900,000.00 + $1,400,000.00 + $240,000.00 + $1,370,000.00
= $19,870,000.00
The total cost of contingency can be calculated by summing the cost of contingency for
all four quarters of 1st year, all four quarters of 2nd year, and all four quarters of 3rd year.
$320,000.00 + $480,000.00 + $50,000.00 + $780,000.00 + $1,450,000.00 + $350,000.00
+ $650,000.00 + $3,500,000.00 + $6,880,000.00 + $890,000.00 + $2,040,000.00 +
$2,880,000.00
= $20,270,000.00
The total cost of escalation can be calculated by summing the cost of escalation for all
four quarters of 1st year, all four quarters of 2nd year, and all four quarters of 3rd year.
$20,000.00 + $310,000.00 + $10,000.00 + $240,000.00 + $250,000.00 + $205,000.00 +
$90,000.00 + $150,000.00 + $680,000.00 + $215,000.00 + $150,000.00 + $2,380,000.00
= $4,700,000.00
Cost Value
Cost of
Engineering
$11,730,000
Purchases $11,640,000
Construction Cost $19,870,000
Contingency Cost $20,270,000

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Escalation Cost $4,700,000
Total Cost $68,210,000

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Cash Flow Statement:
Quarterly Cash flow
2017-2018 2018-2019 2019-2020
1 2 3 4 1 2 3 4 1 2 3 4
Cash Inflow
Agreed Loans $500,000 $1,500,000 $2,000,000
Client's
payment
$1,500,000 $1,500,000 $1,800,000 $3,200,000 $1,500,000 $1,500,000 $11,000,000 $17,000,000 $3,000,00
0
$3,000,000 $23,000,000 $68,000,000
Total Inflow $500,000 $1,500,000 $1,500,000 $1,800,000 $4,700,000 $1,500,000 $1,500,000 $11,000,000 $17,000,000 $3,000,00
0
$3,000,000 $23,000,000 $70,000,000
Cash outflow
Engineering $140,000 $230,000 $240,000 $370,000 $260,000 $400,000 $150,000 $290,000 $210,000 $360,000 $180,000 $8,900,000 $11,730,000
Purchasing $170,000 $180,000 $190,000 $1,230,000 $190,000 $240,000 $2,320,000 $180,000 $130,000 $340,000 $6,470,000 $11,640,000
Construction $170,000 $1,000,000 $190,000 $1,500,000 $340,000 $260,000 $4,500,000 $8,900,000 $1,400,00
0
$240,000 $1,370,000 $19,870,000
Contingency $320,000 $480,000 $50,000 $780,000 $1,450,000 $350,000 $650,000 $3,500,000 $6,880,000 $890,000 $2,040,000 $2,880,000 $20,270,000
Escalation $20,000 $310,000 $10,000 $240,000 $250,000 $205,000 $90,000 $150,000 $680,000 $215,000 $150,000 $2,380,000 $4,700,000
Total Outflow $480,000 $1,360,000 $1,480,000 $1,770,000 $4,690,000 $1,485,000 $1,390,000 $10,760,000 $16,850,000 $2,995,00
0
$2,950,000 $22,000,000 $68,210,000
Net Flow
Periodic Flow $20,000 $140,000 $20,000 $30,000 $10,000 $15,000 $110,000 $240,000 $150,000 $5,000 $50,000 $1,000,000
Cumulative $20,000 $160,000 $180,000 $210,000 $220,000 $235,000 $345,000 $585,000 $735,000 $740,000 $790,000 $1,790,000

0COST MANAGEMENT REPORT
6. Application of value engineering concept
Value Engineering is an advanced method of systematically increasing the value of the
goods/ services by implying examination function (Ferrufino et al. 2017). The inclusion of the
value analysis is the most effective way of calculating the expected value of the systematic
development. The cost of the services or products is affected by a number of factors and hence,
the use of value engineering would help in keeping the value of the products or services intact. It
might even help in increasing the value to some extent. The methods of value engineering are
functional analysis, standardization of components, alternatives of functions, value cost analysis,
and re-engineering (Kerzner and Kerzner 2017). The following of these methods would help in
implementing the value engineering concept for the project of Al Batinah Expressway.
Functional Analysis: The functional analysis is helpful for the analysis of the
components of the construction projects and forms the major intake of the development of the
successive integration model. The analysis of the functions of the project would also help in
easing the construction activities and develop an understanding of the successive development
model (Shen et al. 2015). The functional analysis would also help in forming the modification of
the operations for the analysis of the integration model. The analysis of the functions of the
development would help the increment or decrement of the activities and the alignment of the
operations favourable for the listing of the operations.
Standardization of components: The standardization of the components would help in
easing the development of the successive management of operations. The synthesis of the
components would be aligned for the development and the alignment of the operations for the
integration of the operations and it would be helpful for the deployment of the operations

1COST MANAGEMENT REPORT
(Harrison and Lock 2017). The deployment of the standardization would help in easing the
development. The development of the standardization of the components would be implied for
increasing the profitability of the operations. The deployment would help in easing the
management of the operations and alignment of the successive development model. The
increment of the operations would be integrated for the deployment of the effective operation
and development of integration. The management of the activities would help in scheduling the
deployment of activities and alignment of the operations.
Alternatives of Function: The alternatives of the function are developed for aligning
with the development of the improved activities and formation of the support and integration of
the operations (Sears et al. 2015). The functions required in the development of the operations
would help in forming the management of the operations of successive development operations.
The alignment of the operations would help in easing the development of the aligned operations.
The alternative function alignment would be helpful in forming the deployment of the activities.
The alignment of the functions would tend to align the functional development. The alternatives
would help in easing the deployment of the operations.
Value Cost Analysis: The value cost analysis would help in forming the development of
the operations and form the development of the successive alignment of operations. The value
cost analysis would help in easing the development of the value cost analysis and the alignment
of the operations (Brodszky et al. 2014). The analysis of the value cost would help in easing the
management of the activities and the sincere alignment of the activities for development of the
operations. The value cost analysis is done for ensuring that the program management would
help in forming the development of the analysis of the value of the materials used.

2COST MANAGEMENT REPORT
Re-Engineering: The re-engineering is used for the analysis of the effective and
improved system development (Burtonshaw-Gunn 2017). The reengineering of the objectives
would help in forming the deployment of the existing functions and form the improved
functional development of the operations that are helpful for the alignment of the inclusive
activities. The re-engineering would allow the formation of the operations and alignment of the
successive deployment of the operations. The re-engineering would help in forming the
supplementary deployment of the effective operation development. The re-engineering process
would help in easing the implication of the operations.
Conclusion
It can be concluded from the assignment that the role of cost budget development had
been helpful for the alignment of the activities and development of the successive and effective
development of the operations. The major factors that had helped in forming the management of
the effective integration for the alignment of the successive development were assigned for the
deployment of the operations. The cost budget estimation had helped in forming the analysis of
the costs that had been incurred in the project. The report had highlighted that the preparation of
the cost budget preparation was based on the 4 factors like conservative approach, consultation,
time management, and excellent documentation. The four types of cost estimation methods that
were implied for the calculation of the final cost of the project of Al Batinah Expressway and
they are analogy, parametric, engineering, and actual costs. The study had helped in analysing
these methods for the evaluating the cost estimation of the project. The study inferred that the
modern methods of construction is cost efficient and consumes very less amount of resources.
Hence, the overall cost expended for the completion of the project activities would be altered
with the inclusion or exclusion of the improved methods of construction. The rules set by NRM2

3COST MANAGEMENT REPORT
had addressed all the aspects of construction development for bill of quantities production. It had
also set out the information required for the implication of the effective implication development.
The various cost management tools were Profitability Analysis, Budget Plan, and Cash Flow
Statement for project. The methods of value engineering were functional analysis,
standardization of components, alternatives of functions, value cost analysis, and re-engineering.
Recommendations
The implication of the effective operations and cost budget estimation for the
development of the operations had been helpful for the improved operations of the Al Batinah
Expressway. The following recommendations can be implied for the alignment of the operations
and development of the successive integration methods.
Utilization of SDLC: The implication of SDLC would help in developing effective
design of Al Batinah Expressway for the alignment of the architecture design development.
Implication of Project Management Principles: The project management principles
would help in easing the project operations of Al Batinah Expressway.
Alignment of Operation Development: The operation development would help in
forming the successive alignment of Al Batinah Expressway project.

4COST MANAGEMENT REPORT
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