CONSTRUCTION COST

ENGINEERING
FRANCES LORANE T. CALAPINI
CONSTRUCTION
Allocation of scarce resources
ECONOMICS
 LAND LABOUR CAPITAL ENTERPRISE
The value of the alternative forgone
Opportunity cost by choosing a particular
activity.
 CONSTRUCTION INDUSTRY
Construction
❑ The building or assembly of any infrastructure
❑ Building, altering, improving, repairing or demolishing of any real
property
❑ Planning, designing and constructing facilities in the built
environment
❑ The systematic act of process of building, erecting or constructing
building, roads or other structures.

Industry – is a way of classifying businesses that has something in common.

CONSTRUCTION INDUSTRY
Construction Industry – The sector of economy which constructs, alters,
repairs and demolishes building, civil engineering works and other structures.
It is not just about buildings but is also about roads, bridges, tunnels and
railways as well as houses, offices, supermarkets and leisure centers.

Construction has four distinguishing characteristics:

❑ Each project is regarded as unique one-off product
❑ Industry is dominated by a large number of relatively small firms
❑ General state of the economy influences demand
❑ Prices are determined by the tendering
CONSTRUCTION INDUSTRY
CONSTRUCTION INDUSTRY
CONSTRUCTION INDUSTRY AND THE ECONOMY:

SUSTAINABLE CONSTRUCTION
Sustainable construction can be described in simple terms as
comprising:

❑ Efficient use of resources

❑ Effective protection of the environment
❑ Economic growth
❑ Social progress that meets the needs of everyone

Commercial What is it?

Management

➢Looking after the profits of the

construction company.
➢Assess how commercial
competitiveness balances against
profitability.
➢Done by monitoring, reviewing, and
controlling costs to a minimum and maximizing
income.
Budget What is it?
Establishment
➢A statement of the amount of money
that is available to spend over a period of
time. ➢Approved cost limit.
➢Long and short term financial
plan. ➢Should be set as early as
possible.
Establishment of How?
project budget.
➢Assessment of projected income and
expenses through the life of the project.
➢Comparison with similar projects.
➢Assessment of the funds available.
➢Pre-design analysis of requirements.
➢Analysis of preliminary design
options.
Components of the Project Cost to the
Contractor:
Contractor’s Cost Control
System Purpose:
❑Means of comparing actual with
budget expenses
❑Develop a database of productivity
and cost-performance data
❑Generate data for valuing
variations and potential claims.
PROCUREMENT OF
SUBCONTRACT
NOMINATED NAMED

DOMESTIC LISTED

➢An agreement, purchase order, or any

such legal instrument issued under a
prime contract.

➢Sometimes referred to as ‘subbies’, or increasingly, simply as

 ‘suppliers’ ➢The Contractor must pay attention to the quality of work
produced by subcontractors, as ultimately the Contractor is fully
responsible to the Employer for all matters of quality, timing and cost on
the project.
PROCUREMENT OF SUBCONTRACT
ADVANTAGES:
➢The main contractor may be able to reduce his supervision and administration.
➢Work can be done quickly and efficiently by those who specialize in the job at
hand. ➢Subcontractor is also likely to cost less than general contractors.

DISADVANTAGES:
➢Loss of knowledge
➢Lack of control or influence
➢Quality could be an issue.
END