Model Answers

Cost Studies 2013 Aug

Important The answers included here are the model answers in brief only. The
students need to explain the given factors in detail to earn full marks.
Q1.
I.

Use the following equations as appropriately to solve the given problem

II.

Utilities for services

Disposal costs
Technology
Indirect costs associated with administration
Licence
Non-energy operation costs
Cost of Management of the building
Cost of Electricity
Cost of Water supply
Cost of Gas
Cost of Equipments
Lease payments(if any)
Sanitary fittings

Question 02
1. Should start with a good definition for value management and consequently
describe the followings.
A systematic process which is clearly defined
Key focus on the function
Not an individual work, but a multi disciplinary effort

2.

Process that is accepted worldwide

Complete process that works for all situations
Contains safeguards for avoiding failures
Reliable step by step process (Job plan)

Describe the followings using examples.

Conducting seminars and short courses to educate professional in the
industry
Conduct workshops for low costs initially
Introduce a regulatory body ton observe and regulate the application of value
management
Knowledge elicitation of successful value management applications in the
various industries of other developed countries

3. Describe the followings using examples.

Costly projects
Complex projects
Repetitive projects
Projects with restricted budget

Q3.

I.
Superficial area method
II.
Estimate = Area of each of the floors*Cost per m2
Most Popular preliminary estimating method

Advantages

Quick method
Easy to employ as the rules for calculations are much more simple
Directly relates to accommodation
Allow comparison of different Designs
Meaningful in its concept of measurement(m2) to both client and architect
Allow comparison between buildings that differ in size and shape

Disadvantages

Fails to take account of any variation in plan and shape or storey height

* Try to highlight the advantages of this method by analysing the above mentioned
points.

III.

Typical unit rate for a shopping complex : Rs. 90,000 100,000/Sqm

Hence for this shopping complex assume unit rate as 90000+100,000 = 95000.00

2
Hence, Estimate

IV.

= 8000sqm*95,000Rs/sqm
=760Mn

* First explain what elemental cost planning technique is.

Elemental cost planning is often referred to as 'designing to a cost' or 'target cost

planning' since a cost limit is fixed for the scheme and the architect must then
prepare a design not to exceed this cost. However it has following advantages.

system of cost planning and Cost control

Overcome the disadvantages of the preliminary estimating methods
Form of construction, materials and labour content, quality of the element is
compared with the element of analyzed building
Ensure that the tender amount is close to the first estimate, or that any likely
difference between the two is anticipated and is acceptable.
Ensure that the money available for the projects is allocated consciously and
economically to the various components and finishes.
Always involves the measurement and pricing of approximate quantities at
some stage of the process.
Aim to achieve good value at the desired level of expenditure.

*then describe the information required to calculate by using an example.

Ex: Construction of two storey office building
Q4 I.

frame of reference (cost limit);

method of checking (cost target);
means of remedial action (cost check).

Advantages of cost planning.

The tender value will be either close to or similar to the clients estimate.

Since there is a checking system on the cost, there is possibility that less changes will be made to
the BQ. Discussions among designers can be made before the production of the final design. This
will definitely save time in making adjustment to any changes to the cost and design.

The effectiveness of cost and value for money can be achieved with cost planning process.

A balanced expenditure distribution may produce a more rationalized design.

Cost consideration will be given more attention since the QS is involved in the early stage of the
design process.

The BQ can be prepared more easily since the QS is already familiar with or skilful in the project
and thus has clear understanding of what is to be achieved by a designer.

Cost planning provides basic information on cost comparison between different project

Disadvantages
1. It requires a lot of preparation at the early stage of the design process.
2. The designers may have some limitation in their work style.
3. The QS need to be equipped with past experience and knowledge pertaining to cost and factors
influencing the cost.
4. Both designer and QS are involved with a lot more work at the design stage as compared to when
no cost planning is used.
II.

It is a process whereby the estimated cost is being checked against cost target
set or elements of building and takes place during the design stage of
contract.
The cost checking process can be defined as being the assessment of the
probable cost of the Architects design, in step as it develops. The checks are
carried out by the Quantity Surveyor and the control exercise of the
Architect.
In another words, cost checking is the process of checking the estimated cost
of each section or element of the building as the detailed designs are
developed, against the cost target set against it in the cost plan.
Advantage of cost checking is that will help to keep the cost of detail design prepared
by the Architect does not exceed the cost target.

III.
Remedial action should be taken before any serious damage is done or work is so advanced that a great
deal of abortive work is the result. That is, before the decisions creating over-expenditure are irrevocably
incorporated into the project. The remedial action must be taken quickly and, ideally, as soon as the cost
overruns become known and the decisions communicated to everyone in the team. Remedial action thus
ensures that total project expenditure is contained within the cost limit.
Occasionally, suitable remedial action is impossible, and additional finances must be obtained to complete
the project. The client will generally be requested to supply the additional funds. This implies that the
initial estimate was incorrect and will certainly embarrass the design team. However, the presentation to
the client of a carefully completed and detailed revised budget is the most convincing argument to justify
the need for additional funds. The alternative does not bear consideration
Result
1. Cost Check Cost Target

Action
1.

Cost target is confirmed

2. Cost Check < Cost Target

3. Cost Check > Cost Target

1. Surplus fund subsidise element in situation 3

2. Elements upgraded
3. Surplus kept as reserved
1. Use surplus fund in element in situation 2
2. Redesign lower the standard
3. Inform client to put more money Cost Limit will
increase

Q5
I.

Explain: Elements. Prepare cost targets, BCIS data, previous experience and report, selecting
appropriate cost model, Adjustments

II.
Planning contingency
risk of not being able to design the spatial relationships and achieve the desired functional area and
travel/engineering allowances.
Design (risk) contingency
an allowance to cover the risk of the estimator/cost planner not adequately foreseeing the correct design
or the complexity of the design.The amount of the Design Contingency will depend on the amount of
detail available, and will be reduced to zero at Tender Document stage
Contract contingency
an allowance to cover the risk of variations and unforeseen items encountered during construction.
Project contingency.
to cover delays and/or inflation, major changes required by the client or authorities, fee negotiations and
similar.
The amount of each contingency should be decided before preparing the outline cost plan
III.
Location: Assessment of ease or difficulty of entry to and egress from the site, distance from
major highways, requirements for temporary roads.
Space available on site: Limited on-site storage and space for facilities (inner city sites) is likely
to require special measures leading to increased costs.
Security: Temporary fencing, hoardings and gantries required for public safety and to protect the
works from pilfering and vandalism are significant costs affected by the location and length of the
boundary of the site.
Contract period: Many items in preliminaries are related directly to the length of the construction
period supervision, cleaning, accommodation, hire, telephones and the like. Additionally, when

a client requires an early completion time the preliminaries section may be increased to account
for overtime payments, weekend working and penalty rates generally.
Plant: Many items of plant, particularly those provided by the subcontractor, are directly related
to the works in an element and are priced in that section. However, where the contractor provides
general items of plant for use by the whole site and across several subcontractors then these are
likely to be priced in the preliminaries element. Examples of these include scaffolding, hoists, site
cranes and a range of small tools.
Insurance: The requirement for insurance for public liability, adjoining owners and value of the
works is included in preliminaries and should be judged on the basis of risks influencing the
specific site.

Q6. Following points should be discussed

Can be formed in to complicated shapes, weakness in tension, improving the tensile strength
Quality control, speed and economy in construction, fire resistance ability, effect of green building
concept, economies in formwork