Preliminary Estimating or Cost planning in project management is not just a part of the estimating phase of the project but a continuous process that is integral to managing the project throughout the entire lifecycle. Cost planning is the method used to retrieve the predetermined cost (Approximate Estimating) of a project. This approximate budget will be calculated mainly based on a similar project (cost analysis of a similar completed project). A cost plan can be prepared with primary sketch drawings of a project. And also it should include all possible expenditures that may arise in each stage of the project.
Preliminary estimating involves determining the project’s scope, tasks, and resources required to complete the project and estimating the cost of each task. Cost planning helps in estimating the total project cost.
Preliminary estimating Methods
There are various preliminary estimating techniques used at different stages of a project development process according to the RIBA plan of works. Other cost planning methods are performed to assess the financial viability of a proposed project at different stages. The following are the main cost planning techniques.
- Conference Estimating Method
A conference method is a systematic approach to cost estimation. This approach uses data and knowledge from the collective expertise of expert sources to make decisions about costs. This technique allows the client to look at the various perspectives when estimating a project’s budget.
- Financial Methods
To implement construction projects, the clients need to identify ways to finance the projects. The client uses financial cost planning techniques to research and compare different financial options and choose the lender offering the best terms.
- Unit Method
The unit method entails calculating cost estimates for a given project by multiplying the cost per unit with the total number of units required to complete the given project. Experts prefer this cost estimation method since it’s straightforward and saves time.
- Cube Method
Estimating the size of your project is extremely important, and the best way to do it is by using the cube method. The technique uses cubic-meter measurements, which helps account for variations of story height throughout your construction.
- Superficial Area Method
The superficial floor area is one of the quickest methods used in the Preliminary cost estimate phase. The method involves measuring the available floor space and multiplying it by a price per square meter. The technique is used in the initial design stage to calculate cost estimates for various proposed design options.
- Story Enclosure Unit Method
A Story enclosure unit is a method of estimating the approximate size of one story by multiplying the volume and weighting factor. The quantity surveyor determines the total floor area by calculating the external walls, floors, and roof areas and multiplies them by an appropriate weighting factor. The method is rarely used.
- Life Cycle Cost Analysis (LCCA)
Life Cycle Cost Analysis considers all costs associated with a construction project throughout its entire life span. The costs include construction, operation, and maintenance costs, and it enables the team of experts to help the client pick the best design from various design options and proposals.
- Life Cycle Cost Management (LCCM)
The technique allows the experts to make sure they consider not only the value of the project right now but also the potential costs of operating the property, such as maintenance. Predicting the life cycle cost of a property enables the clients to make sound financial decisions for their investments.
Preliminary estimating Process
Every construction project is different. But there are specific steps typical for most projects which project managers and clients apply to implement the projects successfully. The following are the construction project steps you should follow.
Inception. At inception, the client assesses a list of specific needs and hand-picks an appropriate person to manage the project design and implementation from start to finish. The person must have the necessary credentials and be an expert in the construction field.
Feasibility. The selected expert interprets the client’s project requirements and uses the information to assess and determine the project’s viability.
Outline proposals. The client’s requirements are established, and the experts have confirmed the project’s viability. In this stage, the architect provides the initial draft of the drawings. Also, the quantity surveyor offers an initial cost estimate detailing how much the project may cost and how long it might take.
Scheme design. The architect produces more detailed drawings, including sections and elevations, for the client’s review. The quantity surveyor determines the approximate costs of the proposed plans and is open to taking suggestions from others in the team about possible alternative solutions.
Detailed design. The architect prepares the final drawings that are accurate and meet all the client’s requirements. The quantity surveyor considers all necessary components and the quantities required and prepares more exact costs.
Production information. After the working drawings, detailed drawings, and the schedule of quantities are ready. The quantity surveyor makes sure the architect and contractor provide value for the money spent on the project. Notably, the quantity surveyor will assist the architect in negotiating with his client for any project changes or resolving any contractual disagreements regarding payment.
Benefits of preliminary estimating
There are many benefits of preliminary estimating in the project design and implementation process. Cost planning enables project managers to control costs and other expenditures related to a project.
The following are the benefits of cost planning.
- Helps to estimate the total cost of the project
- Helps in controlling the expenditure
- Helpful in making budgeting decisions
- Helps in determining the effect on specific project implementation processes
- Helps in overall project management
Cost planning in construction is crucial as it enables project managers and contractors to estimate costs and avoid cost overruns.
Building projects managers rely on elemental cost planning that entails developing and fast-tracking project development processes. In elemental cost planning, project managers use industry-accepted cost benchmarks from related projects to plan for the specific project. The standards are applied to each item throughout the project development process to ensure the tasks are completed according to accepted industry standards.
Elemental Cost Planning relies heavily on the Standard Form of Cost Analysis for buildings that allow project managers to compare costs in various preliminary cost estimate building construction examples.
The elemental cost plan examples help project managers benchmark or perform ‘target costing,’ which is most important in developing a customized cost plan template.
Before commencing any project, the developer, with the advice of project experts, uses cost planning processes and techniques to determine the size of the project, estimate the costs and evaluate the various alternatives to select the most cost-effective option.
Cost planning helps managers forecast future project expenditures and keep everything on track.