cost planning estimation tutorial Flashcards
What is the objective of a cost planning exercise
to define as accurately as possible the minimum realistic cost of executing an activity
What are the various purposes of undertaking a cost planning exercise
comparing technical solutions
identifying financial commitment
as a basis for tendering
as a yardstick against which performance can be measured
which parties undertake a cost planning exercise and why
All parties, particularly promoter and contractor
contractor = to provide a tender
the promoter = to establish the likely final cost of project and thus to secure funds for payment
What are the main elements of an estimate? (give subcategories)
Personnel - labour (various skillsets of labour required, management)
Plant (or equipment) - mechanical, non mechanical
Materials - consumables, steel, pipes, bricks, tiles, cladding, steelwork
Subcontractors
Specialist services
overheads
What are main forms of cost data
period based - hourly, daily or weekly costs
fixed costs -
unit output costs
Raw cost data are pretty much useless on their own, why?
costs data particularly for labour and plant are period based
this doesn’t indicate cost for an amount of work, which needs to be known for estimating purpose
it can be converted to a unit output if knowledge of the resources productivity is known
suggest items which would come under ‘overheads’ cost element
staff
accommodation (offices)
small tools and plant
welfare and first aid
transport
insurance
security
storage
workshops
what influences the accuracy of a cost estimate
accuracy of cost model
accuracy of data fed into it
number of items it contains
what is the main advantage and disadvantage of BoQ model
Main advantage - allows comparison of different estimates / tenders
main disadvantage - time consuming to prepare, does not allow direct entry of overheads
Estimation of duration of activities requires 3 types of data, list these and how data is obtained?
Quantity of each item - (MTO) Material take off from drawings, or from BoQ
Resources required - usually from experience of managing these resources
unit output - most difficult
1- from experience or historical production records
2 - using published ‘standard’ outputs
3- from work study, although only used with repetitive processes
How can PM ensure critical activity does not affect the overall duration of a project
ensure activities preceeding finish on time
ensuring duration of activity is monitored and controlled so it does not increase
ensuring adequate sufficient resources are available
ensuring finish time as planned
