Essay Sample on Cost Management: Achieving High Cost Surety & Quality Standards in Building Projects

Introduction

Cost control tends to achieve a high degree of cost surety throughout the different stages involved in a building project to complete the project within the budget. Among the significant tasks carried out by professional cost, managers are the provision of advice to clients. A successful project can be viewed as one which is completed within the approved budget, desired quality standards, and on time (Brook, 2016). Therefore, professional cost managers have a significant contribution on efficient management of design costs by planning budget allocation to various project's elements, suggesting solutions on where costs are likely to exceed approved budget, actively overseeing the project evolution, and so on. The thesis of the paper is, therefore, premised on how techniques of cost planning of a 'traditionally' procured architectural and design construction work during the pre-contract stages of a project.

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Traditional Procurement Routes with Bill of Quantities

Traditional procurement route is a method where the construction work will separate from the design work. A typical example of this method of construction industry procurement is the architect and design. The employer or client would appoint a consultant team which comprises of the architect, professional cost manager, and consultant engineers (Ogbu, Asuquo, and Oyoh, 2012). The consultant team would take full control of the design and costs involved.

Moreover, the employer or client would appoint a contractor team consisting of the domestic and nominated subcontractor. The contractor team would actualise the building project and take responsibility for all the artistry and materials. The main contractor would then prepare the tender documents, especially the Bill of Quantities based on the consultant team specifications and bills (Ogbu et al., 2012). The contract is usually rewarded to the lowest bidder, which is the lowest tenderer.

The Bill of Quantities commonly referred to as BQ is a document prepared by the professional cost manager under the consensus of colleagues in the consultant team. The document highlights the specific project measured quantities of the various elements of work items dictated by the specifications and drawings contained in the tender documentation (Ogbu et al., 2012). The measurement of the quantities can be done in various manners, including area, length, volume, weight, number, time, or length.

The Bill of Quantities can only be prepared upon completion of design and preparation of specification. The document is availed for tenderers mainly the contractors to enable them to prepare price they deem fit for implementing the building project (Eadie, McKeown, and Anderson, 2013). The contractor tenders would then be in a position to calculate construction costs of the same quantities as those specified by the Bill of Quantities.

Given the designed and approved budget by the professional cost managers, the architect, and design construction work tender would be awarded to the lowest contractor tenderer. The lowest tenderer is the one who would have priced lowered for the same project's quantities provided in the Bill of Quantities and his/her budget within the designed budget (Eadie et al., 2013). Preparation of this document is, therefore, a technique of cost control and plan of construction work during the pre-contract stages of a project.

Role of the Professional Cost Manager

The core and fundamental role of the professional cost manager would be proposing solutions and offering advisory concerning budget allocations of the construction project. Also, the professional cost manager would be a task with establishing budget allocations to the various elements of the construction project, issuing realistic, and meaningful cost control advice throughout the stages of the project, advising the employer or the client. The advice is on the repercussions of the various design decisions and close supervision of the evolving design of the construction project (Doloi, 2012).

Depending on the approved budget by the employer or client and the resources readily available for the construction project, the professional cost manager would come up with avenues deemed fit during the execution of the construction project (Smith, 2016). In general, the professional cost manager would be responsible for the financial accounting of the intended construction project and would seek to build and maintain a good relationship between the client and the contractors' team. Therefore, the functions of a project manager revolve advisory functions on matters financing.

Cost Planning, Measurement, and Pricing Techniques

The primary objective of cost planning, measurement, and pricing techniques during the pre-contract stage is to ensure that the awardee of the tender does not exceed the client's budget. With regards to cost planning and pricing, a technique of cost forecasting would be used. This involves breaking down the design phase into various stages and client issued with cost forecasts in every stage, putting into consideration the client's approved budget (Holden, 2019).

The technique of designing to a cost enhances cost control as all the overruns that may occur during the design phase are corrected to be in harmony with the authorised cost limit. Pricing techniques, such as cost limits are enforced through budgetary control. Prices of the various elements of the construction project would not exceed established cost limits determined by professional cost manager (Lu, Won, and Cheng, 2016). This is achieved through the principle of 'only touch what you can afford.

There exist standard measurement guidelines applicable to anyone venturing into a construction project. Also, the set of rules offers essential guidelines on cost management and control of any construction project (Ashworth and Perera, 2018). The RICS new rules of measurement (NRM), especially NRM 1 and NRM 2 would be used for construction works for the pre-contract stages of the project. NRM 1 provides a wide range of guidelines on how to quantify construction work with the main aim of coming up with a friendly cost plans and estimates (Lu et al., 2016).

The duo is key measuring techniques that would be a vital tool for a professional cost manager in controlling project costs. Other items that form part of the construction project are also having guidelines on how to quantify them. Such items include risk allowances, inflation, preliminaries, design team fees, and so on (Lu et al., 2016). Thus NRM 1 remains to be the cornerstone of effective cost control and management of construction projects.

On the other hand, NRM 2 provides key guidelines on the advanced measurement and description of any construction work with regards to establishing a tender price. This rule guides the preparation of Bill of Quantities document in regards to its format, structure, content as well as usage and merits of the Bill of Quantities. NRM 2, therefore, is a fundamental tool to especially the professional cost manager while preparing the Bill of Quantities (Holden, 2019).

RIBA Plan

The RIBA Plan mainly categorise the whole construction project into several key stages. According to the RIBA Plan of Work 2013, the project work comprises of eight stages numbered from 0 to 7 (Davies, 2019). The RIBA plan of work section 0 to 4 forms part of the pre-contract stage of a project which is the design phase carried out by the professional cost manager under consultant team. Section 0 is the strategic definition stage where appraisal, the definition of a project and eventually, a detailed brief of the project is prepared. Section 1 is the preparation and brief stage. It involves determining the feasibility of the project as well as developing project aspirations and budget (Sinclair, 2019). The concept design stage is section 2 of RIBA Plan. Under this section, the final project brief is created. Section 3 is the developed design stage where specifications, strategies and cost information are updated in line with the design program. Lastly, section 4 is the technical design stage which encompasses all specifications by the various specialists and strategies that are consistent with the design drawings (Brook, 2016).

The RIBA plan of work section 0 to 4 is not only effective but also efficient during the pre-contract stage. Pre-contract stage is the design phase mainly executed by the professional cost manager under the watch of the consultant team (Brook, 2016). The RIBA plan section 0 to 4 is a fundamental technique of cost planning of construction as it provides room for flexibility, sustainable processes of project design and procedures for proper cost planning. Therefore, it can be a fundamental tool for a professional cost manager in controlling the cost of a project.

Conclusion

In summary, achieving satisfactory project cost requires formulation and implementation of effective techniques of cost planning of construction work during the pre-contract stages of a project. Cost overruns can be eliminated through a selection of favourable techniques of cost planning (Holden, 2019). Practically, all clients or employers have limited funds, thus the need to control planning cost so as not to exceed the authorised cost estimate.

References

Ashworth, A. and Perera, S., 2018. Contractual procedures in the construction industry. Routledge. Retrieved from http://repository.fue.edu.eg/xmlui/bitstream/handle/123456789/2844/6808.pdf?sequence=1&isAllowed=y

Brook, M., 2016. Estimating and tendering for construction work. Routledge. Retrieved from http://llrc.mcast.edu.mt/digitalversion/Table_of_Contents_3888.pdf

Davies, I., 2019. Contract Administration: RIBA plan of work 2013 Guide. Routledge.

Doloi, H., 2012. Cost overruns and failure in project management: Understanding the roles of key stakeholders in construction projects. Journal of construction engineering and management, 139(3), 267-279. Retrieved from https://www.researchgate.net/profile/Hemanta_Doloi/publication/258141024_JCEM_Doloi_2013/links/00b7d5271b6f86690c000000.pdf

Eadie, R., McKeown, C. and Anderson, K., 2013. The impact of the recession on construction procurement routes. International Journal of Procurement Management, 6(1), pp.24-38. Retrieved from http://llrc.mcast.edu.mt/digitalversion/Table_of_Contents_3888.pdf

Holden, P., 2019. Construction: A Practical Guide to RIBA Plan of Work 2013 Stages 4, 5 and 6 (RIBA Stage Guide). Routledge.

Lu, Q., Won, J. and Cheng, J.C., 2016. A financial decision-making framework for construction projects based on 5D Building Information Modeling (BIM). International Journal of Project Management, 34(1), pp.3-21. Retrieved from http://www.projcp.com/Readings/180329%205D%20bim.pdf

Ogbu, C.P., Asuquo, C.F. and Oyoh, A.J., 2012. Factors Affecting the Pre-Contract use of the Bill of Quantities. FUTY Journal of the Environment, 7(1), pp.90-101. Retrieved from https://www.ajol.info/index.php/fje/article/viewFile/82773/72909

Sinclair, D., 2019. Guide to using the RIBA plan of work 2013. Routledge.

Smith, P., 2016. Project cost management with 5D BIM. Procedia-Social and Behavioral Sciences, 226, pp.193-200.