COST PLANNING

TOPIC4
DCQ5212 CONSTRUCTION ECONOMICS
PREPARED BY: NURUL
AQILAH IBRAHIM
POLITEKNIK SULTAN AZLAN SHAH

QIL/PKK/2016
 REFER:
CONSTRUCTION ECONOMICS
2nd EDITION
By KHAIRANI HJ AHMAD

COST PLANNING (refer pg 43)

•The use of the term “cost planning” starts from the inception
stage of the project until the project is handed over to the
construction.
•The post contract is known as cost control stage.
•It is quite common that the terms cost planning and cost control
overlap and is used simultaneously.
QIL/PKK/2016
 REFER:
CONSTRUCTION ECONOMICS
2nd EDITION
By KHAIRANI HJ AHMAD

COST PLANNING (refer pg 43)

•It is a system that requires total coordination of the project from

its commencement to completion.
•It involves a systematic framework procedure and demands high
commitment from the design team to cooperate with the QS to
ensure that the objectives in terms of cost, time and quality are
achieved
QIL/PKK/2016
A GOOD COST PLANNING SHOULD:

•Ensure the tender figure is as close as possible to the first

estimate, or that any likely differences between the two is
anticipated and within an acceptable range
•Ensure that the funds available for the project are allocated
effectively and economically to the various elements and sub-
elements
•Always involve the measurement and pricing of approximate qty
at some stages of the process
•Aim to achieve good value at the desired level of expenditure
QIL/PKK/2016
 PURPOSE OF COST PLANNING
1. Ensuring the client receive
value for money, not
necessarily lower than the
initial cost. There must be a
balance between quality,
Usage suitability, initial cost
and life-cycle-cost for the
entire lifespan of the element.
2. Ensuring both the client
and designer are aware of
the implications of their
decision on cost.
3. Providing advice to the
designer to enable him to
design within the budget.
QIL/PKK/2016
 PURPOSE OF COST PLANNING
4. To ensure the tender sum
could be within the budget of
the client. This will avoid
project being aborted.
5. A reasonable expenditure
between sections of the
building by relating the
design and specification to
the client’s budget so that a
more balanced design is
obtained.
QIL/PKK/2016
In addition, cost planning is important to control building cost at
the design stages. The Tender cost should be lower than the
planning cost.

•This ensure that client and the
design team knew the design of
proposed building within cost limit.
•Greater satisfaction with end
results
•Better value for money
•Improved building quality and
performance
•Budget and value accountability
•Improved relationships between all
project participants
•Design problems identified and solved
earlier
•Early identification of high-cost
elements
QIL/PKK/2016
 METHODS IN COST PLANNING

1.Elemental cost planning 2. Comparison cost planning

- Cost Planning by Element - Cost Planning by Comparatively
- Cost Target Plan - Cost to Design
- Design to Cost

QIL/PKK/2016
QIL/PKK/2016
 ELEMENTAL COST PLANNING
It is a system of cost planning
& cost control, typically for
buildings; which enables the
cost of a scheme to be
monitored during design
development.
QIL/PKK/2016
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.
 COMPARATIVE COST PLANNING
•Different design will give different cost implication
•The object is to achieve economy of
design by investigating a range of
design
•Proposals and establishing a
combination of element designs
which best meet the clients
réquirements for standard etc.
•Also known as ‘pricing according to
design’, where cost plan are prepared
according to the design that have
been made/selected.
•Usually, architect will design more
than one alternative to meet the
client requirement.
QIL/PKK/2016