Construction Management: SRQ762 Cost Planning Assignment Solution

This assignment delves into the critical aspects of cost planning within the construction management domain. It begins by highlighting the importance of the B stage in the construction process, where cost suggestions are made based on client requirements, facilitating pre-contract cost control. The assignment then explores indicative costs, providing an estimated budget at the initial stage using a superficial method and comparing three design schemes for a hotel project. The calculations, based on a rate per square meter, offer a guide to clients for property valuation. The solution recommends Scheme C for its cost-effectiveness and design advantages, emphasizing natural ventilation and maximizing floor space. Furthermore, the assignment examines various factors influencing cost advice, including labor wage rates, site conditions, inflation, project schedules, insurance, contingency, engineering reviews, and construction material costs. Regulatory requirements and comparisons with similar projects are also considered, offering a comprehensive overview of cost management in construction projects.

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CONSTRUCTION MANAGEMENT
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Construction Management 2
Assignment 1
Question 1
The most important stage in cost planning in the construction process is the B stage
(Fewings & Henjewele 2019). In this stage, the consultant comes up with a cost suggestion on
the basis of the client requirements. This gives the client a way forward in finding funds to fund
the project.
This will also allow for the pre-contract control which involves the cost controls as listed
in the RIBA work plans (Sinclair 2019). This is important as it keeps the project within the
client’s budget.
At this stage, the client or the project manager could get proposals from different
suppliers or services providers for a cost comparison. This, in addition, will provide more insight
on how the client could save money and other resources for the project. For instance, based on
the client's requirements for the hotel, there is a need for comfort for the guests in the guest
rooms. With this in mind, the client may need to call upon mechanical heating, ventilation and
air conditioning consultants to advise on various ways this could be achieved. After reviewing
the company profiles of such consultants, the client may go forth to ask for a proposal quotation
for the same.
This stage is critical as it gives a guideline for budget allocation as it clearly shows where
more resources are required in a project. It is at this stage that the client could save on cost upon
identifying some of the following aspects. First, by familiarizing with the market rates, the client
can easily ask for discounts from the suppliers and services providers. Second, upon receiving

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the proposals, the client is in a position for negotiation so as to lower the budget as well as
making the bids more competitive.
Question 2
Indicative Cost
Introduction
An indicative cost is a cost generated as an estimate for a project at the initial stage to
give the client an overview of the preliminary budget (Nahman & Oelofse 2018). The indicative
cost was prepared considering the three design schemes provided and assuming that they both
had the same gross floor area. The calculation was done using a superficial method of estimating
cost. The rate was taken to be 500 Euros per square metre of floor space. This covers all the
construction costs and other services for such particular area. This is as per Australian code for
estimates and approximations for hotels and other related projects. Since the schemes are shown
as floor layouts without many details, the indicative costs are the best at this stage as they give
the client a rough idea of the total project cost. In addition, the indicative costs provide a guide to
the clients on how they stake their property during the selling or renting out using area.
Scheme A
The cost was estimated by;
The floor space = [62,500×8000×2] + [3000×20000]
Cost= floor space area ×rate
1,060,000,000/1000000×500
=530,000 Euros
Scheme B
The floor space= 1,060,159,265

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Cost= 1,060,159,265/1000000×500
=530,079.632 Euros
Scheme C
Cost=1,038,000,000/1000000×500
=519,000 Euros
The costs are based on the floor area and they are intended for estimation purposes only
without binding any contractor or service provider to future escalations or variations. When
multiplied by the number of floors, the costs tend to rise.
These costs are just for use in estimates only but not for tendering purposes as they do not
give in details the attributes or nature on such floor area. The costs generalize all the finishes,
services, furniture in such floor area into one unit. This, in other words, is termed as construction
cost and is indicative of the value of the property. Real estate experts use the indicative costs to
establish the value of a building and thus generate a selling strategy to make a profit for the
client.
The way scheme C is laid out, it is simple in terms of construction as it does not involve
complex geometry as scheme B. furthermore, scheme C as maximized the plot area leaving
spaces for amenities which could also be rented out for various outdoor activities. Services
provision such as lifts are possible with scheme C as they will simply be located at the central
core which is accessible from all the directions. According to green-sustainable buildings act,
developers are advised to maximize the use of natural light for lighting, among other features
(Kerzner, 2017). Scheme C allows for such provisions as the windows can be easily be installed
on the outer outline of the structure thus allowing maximum solar infiltration into the building
space. In addition, natural ventilation is possible via the windows and louvers and thus the client
saves much on electricity that would otherwise be used for air conditioning.

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Concluding Recommendations
Considering the indicative cost estimation for the three schemes, as shown above, I
would recommend that the client consider scheme C of the design proposal. First, it is the
cheapest of the three design schemes hence for financial reasons it will be the best and the client
will save a considerable amount of money. Second, the shape of the design allows for easy
ventilation within the apartments as opposed to B or A as there will be shorter duct runs due to
pretty natural ventilation. Finally, the scheme also gives more floor space at a cheaper cost.
Third, common services could be located at a centralized location at the central core. Common
amenities such as bathrooms, indoor games, lounges, receptions, services, stair, lifts, elevators,
etc. could be accommodated easily at the area without posing any negative impact on the guests
in the rooms. Since the core could be easily be reinforced, the roof level could host mechanical
equipment such as air conditioning outdoor units, water booster pumps and tanks, fresh air
supply and extract fans among other uses.
Question 3
The factors that are considered when giving the cost advice are numerous and really depend on
the type of project being handled. Projects range from entry-level, medium, and hight end
(Meredith, Mantel and Shafer 2017). The cost is thus dependent on the type of the project. High-
end projects may tend to put more resources on every level of construction including materials,
special equipment, highly skilled labor, and complicated systems of administration and
management with keen attention to details. On the other end, entry-level projects do not involve
complexities. Such clients use any means so as to lower all the costs as much as possible. In any
project, however, entry-level or high end, several common factors affect the cost requirements.

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Labor wage rates. Labor is not a constant aspect in construction projects and the wages
thus vary from place to place. It is important, therefore for the client to put this factor into
considerations. This is important as hired labor is the key driver to the completion of daily tasks.
When workers are paid well and on time, the construction project tends to accelerate towards the
completion deadlines.
Construction site condition: The site condition such as poor soils, wetlands and
conflicting facilities such as buried pipes must be considered as they can increase the cost of the
project. In addition, the existing structure on site that may need to be demolished should be
involved in costing.
Inflation factor: As the construction continues for years before completing the clients
must be made aware of inflation that might change the cost of materials and even other costs, so
it must be considered in cost advice at the planning stage. This might have impacts on the contact
changes which are inefficient in constructions.
Project schedule: The client must be keen on the project schedule as the longer it will
take for completion of the project the higher the cost involved. However, special allowances
should be factored in. factors such as weather or climate changes, diseases outbreak, and other
uncertainties should be considered.
Insurance requirements: The client must be keen to factor insurance costs for the
various tools, equipment, construction workers, etc. as that will be included in additional costs.
At the site, anything might happen to range from minor injuries, collapses, fires falls, flooding,
among others and thus the need for insurance of the works, machines, as well as workers on site.

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Contingency: When the client is advised, to set aside about 10% of contingency towards
the total project cost to cover for unforeseen costs and inflation. This helps to avoid unnecessary
delays along the project periods.
Engineering review: The review could be done by qualified personnel so as to give the
most correct data. The overall effect of these reviews are to establish the maintenance features,
warrantees, etc. for various services and equipment to be used on site.
Similar project: The client, when looking at costS, should compare with similar projects
of the same magnitude and see how the cost varied with the time and the adjustments needed.
This will provide a rough estimate of the budget allocation. However, it should be noted that the
projects differ in their own unique way and this should only be used as a guide.
Construction material cost: The cost of building materials is critical in cost planning as
this is dependednt on the shipping charges, taxes, and other regulations from environmental
authorities.
Regulatory requirements: It is common in the current century to find regulations that
monitor and approve construction projects. Getting these approvals come along with costs that
must be included in the cost plan.

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Reference List
Fewings, P. and Henjewele, C., 2019. Construction project management: an integrated
approach. Routledge.
Kerzner, H., 2017. Project management: a systems approach to planning, scheduling, and
controlling. John Wiley & Sons.
Meredith, J.R., Mantel Jr, S.J. and Shafer, S.M., 2017. Project management: a managerial
approach. John Wiley & Sons.
Nahman, A. and Oelofse, S.H., 2018. Implementing the waste management hierarchy: Applying the
SASCOST model to determine indicative costs of separation at source.
Sinclair, D., 2019. Guide to using the RIBA plan of work 2013. Routledge.