Estimating the cost of any construction project is an exact science and it is usually the responsibility of a cost manager or a quantities surveyor. Given the above it is imperative that clients seek professional assistance to derive an accurate cost of their project before the start of construction.
Fun Fact:
The Project Costing is developed and fine- tuned as the project phases unfold.
For example, if you are planning on constructing a house, it is at the initiation phase the moment you got the idea, the “ah-ah moment” that the first project cost is derived or determined.
Fun Fact 2:
Given that the details of the project at this stage will be unrefined, vague and still simply a thought, the Project Cost is usually determined by a simple equation.
Project Cost = Area of House * Factor (f) + Cost of Land Acquisition + Legal Transfer Fees+ Government Taxes
* Factor (f) is based on data collected by the Cost Manager / Quantities Surveyor.
As the project progresses and the designs are finalized the Cost Manager is now in a position to calculate a robust cost for the construction. In determining this cost the following cost centers are usually assigned.
It should be noted this is just a preliminary listing the actual listing will vary from project to project.
- Labour – Skilled Labour including Profit and Overheads for the Certified Builder.
- Materials – Procurement of Goods from Hardware Stores and may include overseas purchase
- Transportation – Cost associated with the delivery and handling of materials from the point source to project area.
- Bank Fees – The Cost associated with securing a bank loan
- Lawyer Fees – The Cost associated with securing a bank loan- Legal Documents
- Utilities – Cost for Electricity , Water, Telephone, Internet Services
- Waste Disposal – Cost associated with the removal of Construction Waste
- Stamp Duties – Government Tax
- Equipment Rental – For Construction Work
- Local Government Taxes – Associated with the approval of building plans
- Management and Supervision – The owner may provide oversight or outsource this service
- Vat Charges – Government Tax on Materials, Labor etc.
- Design Services – Architect Cost, Project Management Services
- Security – Provision of on Site Security
- Testing of Materials and Works – Pressure Testing of Plumbing Works and Concrete Test
- Temporary Works – Work Area Shed, On Site Wash Room and Water, Rental of Container or Purchase
- Insurance Cost – Building Works Insurance.
The final cost which is never documented is the Sweat Equity i.e. the Client’s time and effort.