Monitor Costing Systems 1

Monitor Costing Systems 1
CPCCBC5002A – MONITOR COSTING SYSTEMS ON MEDIUM-RISE BUILDING AND
CONSTRUCTION PROJECTS
Name
Course
Professor
University
City/state
Date

Monitor Costing Systems 2
CPCCBC5002A – Monitor Costing Systems on Medium-Rise Building and Construction
Projects
Assessment 1: Identify and classify project costs
Assessment 1(a): Roofing work estimate
The roofing estimate comprises of costs for materials, labour, plant and subcontractors used to do
the roofing work. The estimates are as provided in the table below:
GST (goods and services tax) is taken to be 10%
No. Description Unit Quantity Price ($) Total ($) GST 10% Total
1 Rafters m 250 20 5,000 500 5,500
2 Ridge board m 90 15 1,350 135 1,485
3 Hanging beam m 300 100 30,000 3,000 33,000
4 Under purlin m 750 20 15,000 1,500 16,500
5 Buttons m 1,000 10 10,000 1,000 11,000
6 Colour bond nos. 600 100 60,000 6,000 66,000
7 Fascia board m 300 20 6,000 600 6,600
8 Down pipes m 200 25 5,000 500 5,500
9 Gutters m 300 50 15,000 1,500 16,500
10 Girth ridge capping m 300 5 1,500 150 1,650
11 Fasteners and washers boxes 350 10 3,500 350 3,850
12 Rockwool insulation m2 350 15 5,250 525 5,775
13 Roofing sheets m2 350 12 4,200 420 4,620
14 Equipment Item 1 10,000 10,000 - 10,000
15 Labour Item 1 75,000 75,000 - 75,000
TOTAL 262,980
Assessment 1(b): Cost related risks
Examples of cost related risks relevant to this project are as follows:
#1 Inflation

Monitor Costing Systems 3
If prices of roofing materials or labour increase abruptly, it means that the estimated cost
will not be adequate to complete the roofing work. As a result, more funding will be needed,
which can delay the project or result to low quality work (Ojo & Odediran, 2015).
#2 Underestimation
This is also a cost related risks because if the cost of materials, equipment and labour for
the roofing work has been underestimated, it means that there will be less funds available for the
project. The contractor will have to ask for more funding from the client, which can lead to
contractual disputes and delays and low quality work.
#3 Local taxes
If there is any change in local taxes policy after cost estimation, the estimated cost may
not be adequate to complete the project. For example, if the GST changes from 10% to 15%, it
means that the estimated cost will be less than the cost required to complete the roofing work
(Riddell, 2017). This may result to low quality work or extended project duration.
The impact of estimated risk on estimated costs in this project is very huge. These is
because any of the cost related risks discussed above can delay the project significantly, cause
conflicts and disputes between the client and contractor, or result to low quality work due to
insufficient funds. However, the probability of the above three risks occurring is relatively low.
The table below shows the estimated risk value. The estimated risk value is found by multiplying
probability of risk with estimated impact (Ghorbani, 2017).
Risk Probability Estimated Impact ($) Expected value ($)
#1 5% -13,149 -657.45
#2 20% -52,596 -10,519.20
#3 2% -5,259.60 -105.20
Total expected value -11,281.85

Monitor Costing Systems 4
In this case, $11,281.85 should be added to the estimated cost of the project as a contingency so
as to cover for the above three identified risks.
It is therefore important to conduct cost risk analyses so as to reduce the discrepancy
between estimated costs and actual costs of the project. These analyses take into account cost
related risks, such as the ones mentioned above, when estimating costs of the project (Okmen &
Oztas, 2010).
Assessment 1(c): Pessimistic cash flow projections for the roofing
Pessimistic cash flow projections takes into account the costs of risks associated with the
project (Hulett, 2011). The roofing work is estimated to take 8 weeks. The weekly cash flow
projects for the roofing, including contingency, are as provided in the table below
Week Estimated cost ($) Contingency ($) Total Cost ($)
1 12,412 532.50 12,944.50
2 20,805 892.55 21,697.55
3 33,345 1,430.55 34,775.55
4 71,060 3,048.55 74,108.55
5 62,605 2,685.80 65,290.80
6 30,210 1,296.05 31,506.05
7 19,095 819.20 19,914.20
8 13,448.20 576.95 14,025.15
Total 262,980.20 11,282.15 274,262.40
Assessment 1(d): S-curve
The S-curve shows the weekly cumulative costs of the roofing project. It is plotted as
total cumulative cost of the project (estimated project cost plus contingency) against time
(weeks). The cumulative weekly cash flow projects are as provided in the table below