CE7-QUANTITY SURVEYING (Hand out no.

1)

Construction Cost- form part of the overall costs incurred during the development of a built asset
such as a building or costs that incurred by the actual construction works themselves, and on some
projects may be determined by the value of the contract with the main contractor.

Preliminary estimate is an initial approximation of a particular value, quantity, or measurement that is

based on incomplete or limited data. It is a rough calculation or estimation made early in the planning or
design process, before more detailed information becomes available

Work Breakdown Structure (WBS) - Breaking work into smaller tasks is a common productivity
technique used to make the work more manageable and approachable. For projects, the Work
Breakdown Structure (WBS) is the tool that utilizes this technique and is one of the most important
project management documents. It singlehandedly integrates scope, cost and schedule baselines
ensuring that project plans are in alignment.

What is a PMIS?

A PMIS is a software program or application that organizes and controls the flow of project data and
information.

Project managers use a PMIS to plan, monitor, and execute their project deliverables more efficiently,
without getting overwhelmed with data.

Though project management information systems may vary in scope or complexity, they share common
features, such as work management, information collection, and task scheduling.

How does PMIS in project management work?

Your PMIS functions differently based on the project phase. It aligns with the project manager's needs
and helps complete the specific project phase requirements.

Project initiation phase

In the initiation phase of the project, a PMIS can be helpful in:

 • Establishing a preliminary project budget including cost and resource estimates

• Outlining the project scope and preparing bids

• Scheduling the project tasks and assigning them to the relevant team members

• Organizing project information and generating necessary reports for presenting to the key project
stakeholders

Project planning phase

Are you planning your project? A PMIS can be your best friend, assisting with:

• In-depth project scheduling, including critical path analysis and related tasks

• Executing resource planning for the entire project, identifying available resources, and making
a contingency plan for those that may be needed later

• Establishing baseline metrics for project schedule, cost, and scope.

Project execution stage

A PMIS can be indispensable for executing projects. Since every project has multiple stakeholders within
and outside the organization, tracking their conversations and responses can be challenging. The PMIS

• Stores all project team communications, recommendations, files, and documents in one unified
hub that can be securely and easily accessed by all stakeholders

• Enables easy comparison of actual project data with the baseline estimates from the project
planning phase

• Allows project managers to revise cost, budget or schedule forecasts midway into the project and
make adjustments based on actual project needs

• Supports the efficient completion of multiple project modules, such as material management, cost
management, project performance measurement, and project reporting

Project review and closure stage

The project review and closure is the most important phase in a project. Each project has a specific
predetermined objective or goal, and in the project review and closure stage, those goals and objectives
are met. The PMIS:

• Allows a thorough appraisal to ensure that the defined project goals are met or exceeded

• Organizes and stores all project information in a centralized hub for easy access and review at a
later stage

• Archives all project information as historical data for use in upcoming projects

• Helps produce the final project reports and productivity analysis metrics for stakeholder decision
making

Advantages of project management information system

• Having a project management information system can give you a leg up while managing a
project.

• As you zip through successive project stages, you need a project management information
system that evolves and suits your needs for each phase.

• You may be sending a client quote, working on a shared file, or planning team tasks — wouldn't
it be great if your PMIS could do all that for you? Here are some of the advantages of
implementing a project management information system.

• By tracking costs, budgets, and work schedules, your PMIS can help you avoid costly project
slippages. Instant notifications and work tracking keep the project on its scheduled timeline.

• The PMIS also acts as a discrepancy tracker. Most project management information systems
track project progress and send you text or email notifications immediately if anything does not
go to plan.

• With quick updates from the PMIS, the team can instantly make any required adjustments,
reassign resources, and implement new processes.
 • Once the corrective actions are underway, teams can monitor them to confirm their efficacy.
The PMIS’ rapid tracking system acts as an effective competitive edge for companies, helping
them manage projects within the budget and scheduled timeline.

• Fosters better collaboration and teamwork

• Gives a competitive advantage

Examples of PMIS

A typical PMIS has two key functions:

• A method for gathering and organizing information

• A software application that performs the process steps

Any system with these two elements can be considered a PMIS. Here are some examples of PMIS:

• A document filing system that uses Microsoft Excel to collect and organize information

• A full-suite project management information system that has multiple tools with custom workflows
and processes.

Construction Cost Estimation Background and Purpose

Construction cost estimating is the process of forecasting the cost of building a physical structure. Of
course, builders and clients both worry about the financial impact of cost overruns and failing to
complete a project. That’s why they devote time and effort to estimating how much a project will cost
before deciding to move forward with it. Clients considering large projects often seek multiple cost
estimates, including those prepared by contractors and those calculated by independent estimators.

Project owners use cost estimates to determine a project’s scope and feasibility and to allocate budgets.
Contractors use them when deciding whether to bid on a project. You usually prepare estimates with
the input of architects and engineers to ensure that a project meets financial feasibility and scope
requirements.
A good cost estimate prevents the builder from losing money and helps the customer avoid overpaying.
It’s a core component of earned value management, a project management technique that tracks a
project’s performance against the total time and cost estimate.

Creating a construction cost estimate is good practice for anyone who cares about how much their
project will cost. You routinely do cost estimates for all kinds of construction projects, from building new
structures to remodeling.

Accurate estimates are especially critical for development projects, which have budgets and timelines
closely linked to paying back lenders and generating revenue as early as possible. They are also essential
for large civil projects or mega-projects because of their scope and the potential involvement of public
money. On a mega-project, small miscalculations become magnified. In projects constructed with public
funds, cost estimates increase accountability, provide transparency, and enhance trust in your ability to
manage the project properly.

The accuracy of a cost estimate relies on a number of things: the quality of the project plan; the level to
which the estimator defines a project; the experience and skill of the estimator; the accuracy of cost
information; and the quality of any tools and procedures the estimator uses.

Depending on the type and size of a project, as well as the industry, cost estimation may fall to one
individual or a team, and estimators may hold a number of different positions. For some construction
projects, contractors and subcontractors prepare the cost estimates. Architectural firms may have in-
house estimators, typically people who take on the estimator’s function in addition to their primary role.
Increasingly, however, qualified independent estimators handle estimates against which one verifies the
contractor’s estimates.

For contractors, good cost estimates win jobs. Customers usually select the lowest bid that meets the
standards and specifications they set. In a competitive bidding situation, the time and effort you spend
preparing the estimate are a cost of doing business and an investment in winning the job. If urgency is a
factor for a project, the speed at which you prepare a bid can also be a differentiator.

Overview of the Construction Estimation Process

Here are the nine basic phases of a building project:

1. Commissioning a Project: Commissioning is essentially a verification process that ensures a builder
designs, constructs, and delivers a project according to the owner’s requirements. It begins early in the
construction process and can last until up to a year of occupancy or use.

2. Determining Requirements: The first real step in constructing a project is a pre-design phase or
planning phase. The pre-design phase involves defining a project’s requirements: what its function(s)
will be, how much it should cost, where it will be located, and any legal requirements it must comply
with.

3. Forming a Design Team: The project owner contracts with an architect who will then select other
specialized consultants to form a design team. Complex projects and projects which require meeting
specific design requirements — such as acoustics or housing hazardous materials — will have more
specialized consultants on board to ensure the design meets requirements. The architect is generally
responsible for overseeing and coordinating the design process, though for some projects (such as
industrial construction), an engineer may be one of the people overseeing design.

4. Designing the Structure: This step deals with the architect creating a series of designs. The architect
works first with the owner to decide on the broad strokes of the design and then increasingly closely
with the other members of the design team to flesh out the structure’s design in accordance with
requirements. Designing thus progresses from a schematic design phase, when the architect presents a
high-level design to the owner for approval, to a design development phase, when the architect works
with the design consultants to decide on specifics of the construction design. The last step is the
construction documents phase, i.e., creating construction drawings and specifications from which the
contractor will build. The specifications, which various participants in the construction process read,
appear in a standard format called the MasterFormat, which the Construction Specifications
Institute developed. Estimators produce and revise cost estimates for the project as the architect
designs.

5. Bidding Based on the Scope of Work: Once the construction documents are finalized, they are
released to contractors who wish to bid on the project. Along with these bidding documents, they
include instructions on how to submit bids, a sample of the contract agreement, and financial and
technical requirements for contractors. These documents, which effectively define the scope of the
work, are the basis on which contractors prepare their estimates. For more on how to develop a
statement of work, consult this guide. To ensure fair bidding, all contractors receive the same
information, and the project owner usually selects the lowest qualified bidder. This bid tabulation
template can help you compile your estimate.

6. Signing the Contract: Once the contractor has been selected, they execute a set of contract
documents with the owner. The contract documents encompass the bidding documents, which now
function as a legal contract between owner and contractor. Contracts can follow a number of models,
depending on how complete the construction design is and how the owner and contractor bear risks.
One of the basic models is a lump sum (also called a stipulated sum or turnkey) contract, which involves
the contractor bidding a fixed sum for the total project and agreeing upon it when the project’s design is
virtually complete. A unit price contract allows for more flexibility in design by having the owner pay the
contractor per number of units they build. A cost-plus contract, signed when the design is incomplete,
has the owner pay for all costs plus a predetermined fee for the contractor. A variation of this is cost
plus a fee with a guaranteed maximum.

7. Construction: During the construction phase, the contractor oversees building in accordance with the
construction documents. A general contractor will hire specialized subcontractors for different sets of
construction tasks, such as plumbing or foundation work. Throughout the construction process, the
contractor engages in careful cost control, comparing actual expenditure with forecasted expenditure at
multiple points in the construction process. Cost control ensures that the contractor is actually able to
turn a profit. This budget template can help you compare actual costs to estimated costs.

8. Close-Out: When the builder comes close to finishing a structure, the contractor requests the
architect perform a substantial completion inspection in which the architect verifies the near-complete
status of the project. At this stage, the contractor provides the architect with a document called the
punch list, which lists any incomplete work or needed corrections. After the architect inspects the
structure, they will add any additional incomplete items to the punch list.

Prepared by: Engr. Jovin Manarin, RCE