Construction cost management pdf

This detailed document gives a consistent method as an input that will be used for developing further plans. The scope and schedule baseline and other details can refine the cost management plan. The project charter states the scope, estimated budget, objectives, and stakeholders of a project. The budget will help in developing a bottom-up series of the budget.

EEF such as availability of resources, information system for tracking costs, etc. The information, knowledge tools, and documents used by a specific organization over time forms the organizational process assets. The processes followed in the past projects are used as a reference for new upcoming projects. To develop a cost management plan, the core team must plan and meet with experts on board.

The experts give their views on methods to adopt for estimation, funding implications, etc. The experts also provide analytical techniques to enhance the viability of the project.

Few financial analytical techniques such as return on investments ROI , net present value, and internal rate of return should be done on a mandatory basis. A work breakdown structure is a tool that gives an overview of the scope of work.

Thus, planning and controlling becomes easier. Along with the WBS, chart of accounts and checklists will facilitate resource planning. Tools such as MSP and Primavera can track the progress of the project daily. Units of measure and precision levels decimal places must be specified as it is a critical aspect of cost estimation.

Techniques such as earned value management and percentage completion method are essential for measuring cost performance. A threshold budget in check with the schedule must be specified.

Sources required for additional funds must be specified in the plan to avoid chaos in the future. The cost management plan is the major output at the end of multiple brainstorming sessions.

Also, each chapter is followed by exercises for training purposes. It is more of a service than a manufacturing industry. Growth in this industry in fact is an indicator of the economic conditions of a country. This is because the construction industry consumes a wide employment circle of labor. While the manufacturing industry exhibit high-quality products, timelines of service delivery, reasonable cost of service, and low failure rates, the construction industry, on the other hand, is generally the opposite.

Most projects exhibit cost overruns, time extensions, and conflicts among parties. Figure 1. Table 1. D dissertation, Aalborg University, In general, the construction industry is more challenging than other industries due to: its unique nature; every project is one-of a kind; many conflicting parties are involved; projects are constrained by time, money and quality; and high risk.

The goal of construction project is to build something. What differentiate the construction industry from other industries is that its projects are large, built on-site, and generally unique. Time, money, labor, equipment, and, materials are all examples of the kinds of resources that are consumed by the project.

Projects begin with a stated goal established by the owner and accomplished by the project team. As the team begins to design, estimate, and plan out the project, the members learn more about the project than was known when the goal was first established.

This often leads to a redefinition of the stated project goals. Construction Management 2 Dr. On first consideration, you might say the goal of expanding the railroad westward in the United States was to enable a train to go from coast to coast. But was it? Perhaps the goal of those railroad barons was not to get a train to go cross country, but to open up opportunities for commerce in the West.

Getting your goal straight Say your project involves training new employees in a new software system. Your goal in training them on this software could be to: - Make employees more productive in their jobs. These goals suggest different priorities as well as different measurements for gauging the degree to which your project has succeeded in meeting its goal.

How, exactly, do you go about determining your goal? Should the training have a measurable impact on job performance, customer satisfaction, employee retention, or cost of delivery?

The answer you get might be that the project should do all of these things. If overall training program cost reduction is the biggest goal factor, for example, employee productivity Construction Management 3 Dr. If customer satisfaction is the real goal, training costs might have to be adjusted accordingly. For now focus on the why and the desired result. Here are a few sample goal statements: - The goal of the project is to upgrade the shopping cart feature on our Web site to be easier to use so we can increase online sales by 25 percent.

Using the example of a training project, consider for a moment what such a project might involve. In that case, the scope of your project involves managing the entire creation, delivery, and maintenance of a training program. Or is your goal to simply create the training materials? Or should your focus be limited to launching the new training, including promoting it to management and staff?

These goals indicate very different projects, each with its own set of deliverables, tasks, resources, schedule, and costs. Writing a goal statement helps you focus on such a project from the outset. Project scope When you understand your goal, you can begin to define the specific parameters of the project. It is necessary to know that a scope is not a goal. Take a look again at this goal statement from the previous section: The goal of the project is to upgrade the shopping cart feature Web site to be easier to use to increase online sales by 25 percent.

A scope statement for this project might read: This project will involve all the steps to design and implement a new shopping cart feature but does not include maintaining or refining it once launched. The cost of the project Construction Management 4 Dr. The new shopping cart feature should help to increase sales by allowing customers more options to review their orders, give them more frequent opportunities to shop for more items after they have added a product to the cart, and allow them to save their cart contents and come back to complete the sale at a future date.

The new feature must function on our existing Web technology infrastructure. Writing a scope statement Scope statements define both what a project will involve and what it will not involve. In our example, the scope statement specifies that the maintenance of the shopping cart, once launched, will be handled by other project team. You typically get into specifics about the project budget, timeframe, and deliverables in a scope statement.

Together, a goal statement and a scope statement are two valuable tools for focusing yourself and your team and keeping you on track as you proceed. This would include specifying a project name, getting authorization in writing to begin the project as of a certain date and to draw on a specified budget, creating a list of responsibilities, and having those with an interest in the project called stakeholders sign off giving you authority to run the project.

You can use your goal and scope statements to help you obtain the various pieces of your project charter. When you start a new project schedule, one of the first things you will do is to enter individual tasks.

Knowing your goal and scope helps you to identify the steps you should be performing to accomplish them. Before you create your first task, you should probably begin to think beyond the scope of your project to more detailed project parameters.

These parameters help you determine what tasks to include in your project. For example, you might consider: Construction Management 5 Dr. Somewhere in your project should be tasks that reflect the delivery of each deliverable.

Knowing your completion criteria gives your team something specific to aim for and helps you create the last phase of your project. If you expect your team to hold a quarterly debriefing meeting and submit a progress report, you might include such a task in your project. If you expect management to sign off on a prototype, a task such as Prototype Approval is logical. Since the commitment of resources for such an investment is motivated by market demands or perceived needs, the facility is expected to satisfy certain objectives within the constraints specified by the owner and relevant regulations.

From the perspective of an owner, the project life cycle for a constructed facility may be illustrated schematically in Figure 1. A project is expected to meet market demands or needs in a timely fashion. Various possibilities may be considered in the conceptual planning stage, and the technological and economic feasibility of each alternative will be Construction Management 6 Dr. The financing schemes for the proposed alternatives must also be examined, and the project will be programmed with respect to the timing for its completion and for available cash flows.

After the scope of the project is clearly defined, detailed engineering design will provide the blueprint for construction, and the definitive cost estimate will serve as the baseline for cost control. In the procurement and construction stage, the delivery of materials and the erection of the project on site must be carefully planned and controlled. After the construction is completed, there is usually a brief period of start-up of the constructed facility when it is first occupied.

Finally, the management of the facility is turned over to the owner for full occupancy until the facility lives out its useful life and is designated for demolition or conversion. Of course, the stages of development in Figure 1.

Of the total surveyed households, Therefore, the households with higher investment The result showed that a substantial number of holds with lower investment capacity. The average households had obtained a loan for building houses. The loan amounts of all other building structures except Inter-Agency Common Feedback Project CFP, had RCC was below the total average because of the con- predicted that significant number of households who struction cost of these structures.

Average loan taken to build a building type structure Figure 8. Similarly, amount between the major lenders. Although holds to build houses was highest while it was lowest only 6. This might be due to the higher average bank, the average loan amount provided by banks was construction cost of Newar-Thakali households and the much higher than other lenders.

Households that had lower average construction cost of Dalit households obtained loans from informal sources like relatives, Figure 6. The loan amount and gender Relatives were the major lender followed by neigh- bors.

Loan data was available for a total of 44, households of which The data were normally dis- holds was Hence, the hypothesis H8 was also proved to be true. The lowest average interest rate was charged by banks followed by cooperatives. It was found that the informal sources like neighbors, relatives, and other Figure The result suggested that because of the long est rate paid by different ethnic groups.

Figure This proved could have been related to the investment capacity. The result confirmed that inter- loans and had to rely on informal sources. The problem and gender. There The interest rates paid by a male borrower were was a tendency of households with higher investment higher than interest rates paid by a female borrower capacity seeking more loans.

The test was carried out after confirm- pay back the loan. This was likely to worsen the debt The test also proved H10 to be correct. There was a situation of the households. The result showed that the difference between the average interest rates paid proportion of households seeking loans from infor- by male-headed households and female-headed mal sources was higher compared to those borrowing households, and the result showed that male-headed from formal sources, while the interest rate paid by households tended to pay higher interest rates com- the facilitated group like Brahmin-Chhetri and Newar- pared to female-headed households.

Thakali was lower. Those borrowing preferred informal sources despite the higher interest rates because of Conclusions and recommendations the tedious process of securing a loan from formal sources and also the requirement of collateral. Yadav This study had set out to examine the cost of the recon- et al. The research has reason. It is therefore necessary for the government to confirmed that the average construction cost was more understand the importance of supporting low-interest than twice the government grant amount.

Therefore, housing loans, and also to strengthen the capacity of it can be concluded that the government grant was Dalit and Janajati groups to pay back the loans, which insufficient to complete house construction, with were obtained at a higher interest rate compared to earthquake-resilient features and therefore additional other social groups. The additional cost was the financial burden limited access to resources and the requirement for on the households, which had forced them to manage building earthquake-resilient structures to be eligible the financial shortfall by seeking a loan from informal for the government grant, pushed the house owners to sources at a higher interest rate.

There was similar evidence of in rural areas. The Challenges of Housing loans through banks and financial institutions. Reconstruction after the April Gorkha, Nepal Future studies, could examine the perspective of Earthquake. Social pro- repay. Such studies could also explore if these loans tection and the informal sector in developing countries: were obtained only to complete house reconstruction Challenges and opportunities. World Bank. Population monograph of Nepal, the government had plans to support house owners Vol.

Government of Nepal, National Planning to enhance their payback capacities. Population monograph of Nepal, from house reconstruction is another area of study. Population monograph of Nepal, struction cost, and higher interest rates have worsened Vol. Government of Nepal, National Planning the exposure of households to debt. We also analysis. References [12] Cho, S. Integrating transportation network and regional economic models to estimate the costs of [1] Bennett, L. Caste, ethnic, and regional a large urban earthquake.

Journal of Regional Science. Demographic and Health Survey. Population Division, [13] Comerio, M. Housing Issues After Disasters. Household participation in [14] Delaney, P. Gender and formal and informal institutions in rural credit mar- post-disaster reconstruction: The case of Hurricane kets in developing countries: Evidence from Nepal.

Mitch in Honduras and Nicaragua. Washington, DC. Design Catalogue for Reconstruction [27] Mainali, J. High-resolution spa- of Earthquake Resistant Houses, Vol. Department tial assessment of population vulnerability to climate of Urban Development and Building Construction. Applied Geography. Design Catalogue for Reconstruction [28] Manandhar, B. Remittance and earthquake of Earthquake Resistant Houses, Vol.

Department preparedness. Risk Reduction. Ministry of Urban Development. Allocation of post-disaster recon- [29] Massey, D. Environmental change and struction financing to housing. Population and Information. Normality Tests [30] NPC, Assessment Vol. A: Key Findings.