Republic of the Philippines

CAPIZ STATE UNIVERSITY

Fuentes Drive, Roxas City, Capiz, Philippines
Tel. No. (036) 6214-578 fax No. (036) 6214-578
website: www.capsu.edu.ph email address: [email protected]
Group 6:
Irish Lavinia Laude Jonnah Mae Gargoles
Kessah Marie Lim Trisha Alliyah Roxas
Elyanna Maree Garcia
Total Projected Cost
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 Costs
- Construction costs
- Legal and Land Costs
- Owners Costs, such as Project Administration, Staffing, Financing, and Overhead
- Contingency Allowance for Unknowns
Professional engineering costs
- Fees paid to Engineers
- Estimate of probable cost intended for professional engineers responsible
- Must be approved by client
Construction Cost
- Expenses related to the actual project processes or materials
- Includes cost of materials, labor, and equipment
Legal And Land Cost
- Related to acquiring permits
- Usually outside the control of engineers
- Must be estimated with client
Owner Cost
- Related to administration, staffing, financing, and overhead
Contingency allowance
- for unknown expenses
- added to estimated probable cost at the start of the project
- reduction of this cost is possible
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TOTAL PROJECTED COST
1. Professional Engineering Cost
Accredited: Accrediting Agency of Chartered Colleges and Universities of the Philippines (AACCUP)
Member: Philippine Association of State Universities and Colleges(PASUC)
Agricultural Colleges Association of the Philippines (ACAP)
 Republic of the Philippines
CAPIZ STATE UNIVERSITY
Fuentes Drive, Roxas City, Capiz, Philippines
Tel. No. (036) 6214-578 fax No. (036) 6214-578
website: www.capsu.edu.ph email address: [email protected]
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.

What is Cost Engineering?

Cost engineering is the application of scientific principles and techniques to problems of
estimation, cost control, business planning and management science, profitability analysis,
project management, as well as planning and scheduling. It is the practice of managing the
costs involved on a construction project. This includes activities such as cost control,
budgeting, forecasting, estimating, investment appraisal and risk analysis.

AACE International Constitution and Bylaws which states:

Article I-Section 2-The Association is dedicated to the tenets of furthering the concepts of
total cost management and cost engineering. Total Cost Management (TCM) is the effective
application of professional and technical expertise to plan and control resources, costs,
profitability and risk. Simply stated, it is a systematic approach to managing cost throughout
the life cycle of any enterprise, program, facility, project, product or service. This is
accomplished through the application of cost engineering and cost management principles,
proven methodologies and the latest technology in support of the management process.
Article I-Section 3-Total cost management is that area of engineering practice where
engineering judgment and experience are used in the application of scientific principles and
techniques to problems of business and program planning, cost estimating economic and
financial analysis; cost engineering: program and project management; planning and
scheduling; and cost and schedule performance measurement and change control.

Six Construction Project Phases

a. Study and Report d. Bidding/Negotiation
b. Preliminary Design e. Construction
c. Final Design f. Operation

The six standard phases of a construction project and the engineering service:
1. Study and Report Phase-Analysis of client needs, evaluation of alternatives and
recommendations of a preferred option, conceptual design, and conceptual opinions
of probable construction cost.
Accredited: Accrediting Agency of Chartered Colleges and Universities of the Philippines (AACCUP)
Member: Philippine Association of State Universities and Colleges(PASUC)
Agricultural Colleges Association of the Philippines (ACAP)
 Republic of the Philippines
CAPIZ STATE UNIVERSITY
Fuentes Drive, Roxas City, Capiz, Philippines
Tel. No. (036) 6214-578 fax No. (036) 6214-578
website: www.capsu.edu.ph email address: [email protected]
2. Preliminary Design Phase-Preparation of final design criteria, preliminary drawings,
outline specifications, and preliminary estimate of construction cost.
3. Final Design Phase-Preparation of construction drawings, specifications, estimates of
probable construction cost, and other contract documents.
4. Bidding or Negotiating Phase-Assistance to the client with the bidding or negotiating
process for construction of the project.
5. Construction Phase-Representation of the client during construction and inspection
of construction.
6. Operation Phase Assistance to the client in startup and operation of the project,
including periodic inspections.

Professional Engineering Cost

o 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.
o The estimated probable total cost of the project based on the study and report phase
must be understood to be preliminary in nature.
o 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.
o During the final and construction phase, additional surveying and geotechnical
engineering services may be needed.
o Costs for additional or special engineering services may be required by the client or
recommended by the Civil Engineer
2. Construction Cost
- The total cost of the entire construction project.
- Sometimes called “hard costs”
a. Contract sum
- is the price agreed with the contractor and entered into the contract.
- Contract Sum can be adjusted
- Used to analyzed the estimated cost during the pre and post construction
phases of the project.
b. Cost Planning
Used to analyzed the estimated costduring the pre and post construction phases
of the project.
Cost planning includes:
Accredited: Accrediting Agency of Chartered Colleges and Universities of the Philippines (AACCUP)
Member: Philippine Association of State Universities and Colleges(PASUC)
Agricultural Colleges Association of the Philippines (ACAP)
 Republic of the Philippines
CAPIZ STATE UNIVERSITY
Fuentes Drive, Roxas City, Capiz, Philippines
Tel. No. (036) 6214-578 fax No. (036) 6214-578
website: www.capsu.edu.ph email address: [email protected]
 Initial Cost Appraisal

 Elemental Cost Plans

 Approximate Quantities Cost Plans

 Pretender Estimates

 Contract Sum

 Approximate Quantities Cost Plans

c. Cost estimates
- 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

d. 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,
e. Cost Index
Construction Cost Index is an indicator of the average cost movement over
time of a fixed basket of goods and representative related to Construction
Industry.
Cost Indexes for different locations:
 Cost and availability of labor.

 Cost of transportation of equipment and labor.

 Import duties and local taxes.

 Currency exchange rates.

f. Capital Cost and operational cost

Accredited: Accrediting Agency of Chartered Colleges and Universities of the Philippines (AACCUP)
Member: Philippine Association of State Universities and Colleges(PASUC)
Agricultural Colleges Association of the Philippines (ACAP)
 Republic of the Philippines
CAPIZ STATE UNIVERSITY
Fuentes Drive, Roxas City, Capiz, Philippines
Tel. No. (036) 6214-578 fax No. (036) 6214-578
website: www.capsu.edu.ph email address: [email protected]
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
 Wages
 Utilities
 Maintenance and repairs
 Rent Sales
 General and administrative expenses

g. 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.
h. Hard cost and soft cost
Hard costs are costs that are directly related to your construction project.
Some refer to the seasbrick-and-mortar costs, because these costs include the
structure, construction site and landscape.

Hard costs might include:

 Labour, equipment and materials required to complete the built structure.
 Site costs,such as utilities, drainage and so on.
 Landscape costs.

Accredited: Accrediting Agency of Chartered Colleges and Universities of the Philippines (AACCUP)
Member: Philippine Association of State Universities and Colleges(PASUC)
Agricultural Colleges Association of the Philippines (ACAP)
 Republic of the Philippines
CAPIZ STATE UNIVERSITY
Fuentes Drive, Roxas City, Capiz, Philippines
Tel. No. (036) 6214-578 fax No. (036) 6214-578
website: www.capsu.edu.ph email address: [email protected]

Soft costs are the indirect expenses involved in construction and

development that are not directly attributed to the physical construction.
Examples:
 Fees
 Landcosts
 Off-site costs
 Loans accounting fees and interests Insurances and taxes
 Public relations and advertising costs

3. 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 legal administrative construction, expenses and other
services.
Examples:
1. Legal fees
2. Real estate and land acquisition fees
3. Building permit review fees
4. Printing (construction documents and spec books)
5. Builder’s Risk Insurance
6. Construction bond
7. Construction interest expense
4. 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 inherent uncertainty and risks that are
associated with any project or undertaking.
Purpose of Contingency Allowance:
 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.
How is Contingency Allowance Calculated?
Accredited: Accrediting Agency of Chartered Colleges and Universities of the Philippines (AACCUP)
Member: Philippine Association of State Universities and Colleges(PASUC)
Agricultural Colleges Association of the Philippines (ACAP)
 Republic of the Philippines
CAPIZ STATE UNIVERSITY
Fuentes Drive, Roxas City, Capiz, Philippines
Tel. No. (036) 6214-578 fax No. (036) 6214-578
website: www.capsu.edu.ph email address: [email protected]
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 a 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're
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 budgeting. It helps us manage the risk of unexpected costs and keep the project
moving forward, even when things don't go exactly as planned.

Accredited: Accrediting Agency of Chartered Colleges and Universities of the Philippines (AACCUP)
Member: Philippine Association of State Universities and Colleges(PASUC)
Agricultural Colleges Association of the Philippines (ACAP)