Elektif :BJTC3023 Pengukuran & Taksiran (Measurement & Estimation)

COST PLANNING
24th Jan.2011
Introduction
• Cost planning is defined as the assessment of cost prior to the
availability of knowledge of the elemental contents of a
project.

• It commences when little is known about the project other

than its overall size, probable location and type .

• Non elemental knowledge is known as `soft costing

information’

• Elemental knowledge is known as `hard costing information’

• Development of a cost plan through FOUR key stages, each

of which progressively uses more detailed information to
provide more sophisticated and accurate cost plan details
which can be used to inform a client of their expected
financial commitment.

• The final stage in cost planning is cost estimating which is

based on (an anticipated) elemental knowledge of the project
contents.

• As more information becomes available , objects can be

decomposed and more detailed cost plans provided.

Ahmad Yusni Bahaudin

 Elektif :BJTC3023 Pengukuran & Taksiran (Measurement & Estimation)
COST PLANNING

Process Definition

• Cost planning is carried out from the clients first enquiry

about the cost of a construction project through to the point
of where a contractor prices against an elemental scheme
design & specification.

• The process is carried out by the cost planner for each

succeeding stage and it is only the degree of detail
information input that changes from stage to stage.

• Cost planning , the planner is working with very `broad

brush’ or soft information in the early stages

• Cost estimating , the planner is working with a much more

exact or hard information such as detail design or
specification.

• However, until information is totally hard, costing may

include both elements of cost plan cost estimate

• Objective in developing a cost plan is to bring the cost

progressively closer to the actual cost of work.

• The actual cost can only be determined by completing the

work.

Ahmad Yusni Bahaudin

 Elektif :BJTC3023 Pengukuran & Taksiran (Measurement & Estimation)
COST PLANNING
The Cost Planning Cycle

• Order of magnitude- at this stage the project can be just a

building or civil engineering works of a `type’ in a
`location’ and the cost required is an overall budget value.

• Preliminary Appraisal Cost – at this stage the `object’ can

be an `element’ of a particular `material’ and
`configuration’ of building shape and the cost required is
still an overall value.

• Approximate Estimate- at this stage the `object’ can be an

`element’ that comprises a further collection of other
`component objects’ of a particular standard.

• Cost Estimate- at this stage additional information such as

the `construction process’ and `specification’ is available
which provides the basis of a more accurate costing
against which contractors place their tender prices.

PROJECT COST ESTIMATION

Ahmad Yusni Bahaudin

 Elektif :BJTC3023 Pengukuran & Taksiran (Measurement & Estimation)
COST PLANNING

AACE AACE Other Approximate Estimating

Classification Accuracy Nomenclature Engineering Methods
Range Progress
Order of -30 to +50 Conceptual 0-5 % Indices,
Magnitude Screening Capacity
Curves,
Capacity
Ratios.
Budget -15 to + 30 Preliminary 5-20 % Component
Appropriation Ratio,
Equipment
Factored

Semidetailed 30-50 % Square Foot,

Parameter or
Elemental
Definitive -5 to +15 Engineer’s Bid, 60 + % Detailed
Detailed Pricing & Take
off.

Note: the accuracy of the estimate is directly related to the amount of information
available.

AACE Other Utilisation

Classification Nomenclature
Order of Conceptual Feasibility Studies,
Magnitude Screening Choosing between alternatives
Early economic evaluation of projects.

Based on very preliminary information and has the

widest range of accuracy.
Budget Preliminary For budgeting and authorisation of funds and
Appropriation provide an early basis for cost control.

Semidetailed
Definitive Engineer’s Bid, The most accurate estimate because of the
Detailed availability of working drawings, detailed
specifications and supplier/subcontractor price
quotations. Include direct/indirect cost estimates of

Ahmad Yusni Bahaudin

 Elektif :BJTC3023 Pengukuran & Taksiran (Measurement & Estimation)
COST PLANNING
labour, materials, equipments, insurance, bonds,
allowances, contingencies and profit.

Ahmad Yusni Bahaudin