TOTAL PROJECT COST

GROUP 6

Anleo, Jason
Ayad, Lyka Mae
Lapisboro, Marissa Joy
 What is Total Project Cost?

Includes all expenses related to the

project, such as materials, labor, and design
services.
 COMPONENTS OF THE
TOTAL PROJECT COST

 Professional Engineering Cost

 Construction Cost
 Legal , Land , Administration , Staffing
and Financial Cost
 Contingency Allowance
 PROFESSIONAL ENGINEERING COSTS

• Fees paid to Engineers

• Estimate of probable cost intended for professional
engineers responsible
• Must be approved by client
 CONSTRUCTION COSTS

• Expenses related to the actual project processes or materials

• Includes cost of materials, labor, and equipment
 LEGAL AND LAND COSTS

• Related to acquiring permits

• Usually outside the control of Engineers
• Must be estimated with client
 CONTINGENCY ALLOWANCE

• For unknown expenses

• Added to estimated probable cost at the start of the project
• Reduction of this cost is possible
PROFESSIONAL
ENGINEERING COST
It is a part of the total project cost which are costs based on the
engineering services. This may involve alternative or phase
implementation schemes which add flexibility to the project.
Furthermore, Civil engineering services are required for each of
six typical phases of construction projects. All services are
preferably performed by the same Civil Engineer for consistency
and efficiency.
SIX CONSTRUCTION PROJECT PHASES
• In the study and report phase, the costs included based on Civil Engineering
services are as follows: field or traffic surveys, planning analyses, geotechnical
explorations, and analyses.
• The estimated probable total cost of the project based on the study and report
phase must be understood to be preliminary in nature.
• Study and report phase is important as it determines the scope and development
of the entire project that includes the project’s overall capital and lifecycle cost.
• During the final and construction phase, additional surveying and geotechnical
engineering services may be needed.
• Costs for additional or special engineering services may be required by the client
or recommended by the Civil Engineer.
CONSTRUCTION COST
 What is Construction Cost?

• The total cost of the entire construction

project.
• Sometimes called “hard costs”
 Contract Sum

• Is the price agreed with the contractor

and entered into the contract.
• Contract Sum can be adjusted
 Cost Planning

Used to analyzed the estimated cost during the pre and post construction phases of the
project.

Cost planning includes:

• Initial Cost Appraisal

• Elemental Cost Plans
• Approximate Quantities Cost Plans
• Pretender Estimates
• Contract Sum
• Approximate Quantities Cost Plans
 Cost Estimate

 Is the process of predicting the overall cost of a new building project.

 The method used to estimate actual cost will vary with the increase in the
amount of detail available.

1. Initial Cost Appraisal

2. Elemental Cost Plans
3. Approximate Quantities
4. Pre-Tender Estimates
5. Contract Sum
6. Final Account
 Construction Price

The cost of the entire construction of the project, including all

supervision, materials, supplies, labor, tools, equipment,
transportation and/or other facilities furnished, used or
consumed, without deduction on account of penalties,
liquidated damages or other amounts withheld from payment
to the contractor or contractors.
 Cost Index

Construction Cost Index is an indicator of the average

cost movement over time of a fixed basket of
representative goods and services related to
Construction Industry.
Cost Indexes for Different Locations
 Capital Cost and Operational Cost

Capital Cost are associated with one-off expenditure on the acquisition, construction or
enhancement of built assets and might include:

• Land or Property acquisition

• Commissions
• Statutory fees
• Consultant fees directly associated with the development
• Materials, plant and equipment
• Labor
• Fixtures and Fittings
• Project Insurance, inflation, taxation and financing
• Internal costs directly associated with the development
Operational cost incurred in a day-to-day operations might include:

• Wages
• Utilities
• Maintenance and repairs
• Rent
• Sales
• General and administrative expenses
 Whole-life Cost

It is also known as the lifetime cost, “cradle to grave,” or womb to tomb.

Whole-life cost consider all costs associated with the life of a building, from
inception to construction, occupation and operation and even ultimate
disposal.

Whole-life cost also takes into account certain costs that are usually
overlooked, such as those related to environmental and social impact
factors.
 Hard Cost and Soft Cost

HARD COST

Hard costs are costs that are directly related to your construction project. Some refer
to these as brick-and-mortar costs because these costs include the structure,
construction site and landscape. Hard costs might include:

• Labor, equipment and materials required to complete the built structure.

• Site costs, such as utilities, drainage and so on.
• Landscaped costs.
SOFT COST

Soft costs are the indirect expenses involved in construction and

development that are not directly attributed to the physical construction.

• Fees
• Land costs
• Off-site costs
• Loans accounting fees and interests
• Insurance and taxes
• Public relations and advertising costs
LEGAL, LAND,
ADMINISTRATION,
STAFFING AND
FINANCIAL COST
These are part of the probable total costs and are estimated in
coordination with the client since they are usually outside the
knowledge and control of the Civil Engineer. It includes audits,
land costs, the cost of issuing bonds, interest for borrowed
money during construction, legal administrative expenses and
other services.
 Project Management

Cost estimation in project management is the process of

forecasting the financial and their resources needed to
complete a project within a defined scope. Cost estimation
accounts for each element required for the project – from
materials to labor – and calculates a total amount that
determines a projects budget.
Here are some typical elements that a cost estimation will take into account:

LABOR: The cost of team members working on the project, both in terms of
wages and time.

MATERIALS AND EQUIPMENT: The cost of resources required for the project,
from physical tools to software to legal permits.

FACILITIES: The cost of using any working spaces not owned by the organization.
 Financing

Financing is the process of providing funds for business

activities, making purchases or investing. This also refers to the
financial planning, budgeting and control of construction
projects. This involves developing a budget, tracking expenses,
and making adjustments to ensure that the project stays within
the budget.
 Staffing

Every project will require resources for executing project

activities. There will be a need for both manpower resources
and physical resources. The resources requirement for each
activity will be estimated. The resources will be acquired during
project execution as per the schedule.
CONTINGENCY
ALLOWANCE
A contingency allowance is an amount of money that
is set aside in a project budget or plan to cover
unexpected events or costs that may occur during the
project. This allowance is intended to help account for
the inherit uncertainty and risks that are associated
with any project or undertaking.
 Purpose

• Mitigate the risk of unexpected costs and to provide a safety

net in case of unforeseen events such as bad weather,
unexpected site conditions, or cost overruns on materials
and labor.
• Help ensure that your project is completed successfully
without incurring any major delays or budget overruns.
 Advantages

• Savings account or extra fund to cover underestimated or

omitted items in project costs.
• Cover for lack of experience, definition and contractual
agreement during bidding stage.
• Cover additional costs caused by longer schedules,
construction problems and lower productivity.
 Disadvantages

• Potential risks for uncertainties at certain time result from

unavailability of resources.
• Workforce insufficiency and legal implications.
 How is Contingency Allowance Calculated?

Contingency allowances can be calculated in different ways, but a common

method is to allocate a percentage of the total budget or estimated costs. The
percentage chosen may depend on the level of uncertainty and risk associated
with the project, and can vary from project to project. For example, a
contingency allowance of 5-10% may be sufficient for a low-risk project, while
a higher-risk project may require a contingency allowance of 20% or more.
Example of how a contingency allowance might be used in a construction project:

Suppose a construction company is contracted to build new office building. The total
cost of the project is estimated to be P200 million, and the company decides to
allocate a contingency allowance of 10% to account for unforeseen events.

During the course of the project, unforeseen issues arise that require additional work
and expense, such as unexpected site conditions or delays in receiving materials.
These issues lead to an additional P5,000,000 in costs. However, because the
contingency allowance was established, the construction company is able to cover
these extra costs without exceeding the budget or requiring additional funding.
It’s important to keep track of the contingency allowance, and
make sure that we are not spending more than we need to. If we
don’t use all of the contingency money, we can use it for other
parts of the project or give it back to the project owner.

In conclusion, contingency allowance is a vital part of construction

project planning and budget. It helps us manage the risk of
unexpected costs and keep the project moving forward, even
when things don’t go exactly as planned.