CEM
Construction value estimating is each an artwork and a science. To be an powerful estimator, you want for you to interpret a facility layout, and visualize and plan the method in the direction of constructing the facility. The nice estimators also are excellent at expertise preceding creation costs, and deciphering the situations with a purpose to upload or lessen destiny costs. Construction value estimates are created at many distinctive factors in time in the course of a mission. The proprietor can also additionally expand very early feasibility estimates to decide if a mission is economically viable. A clothier or creation supervisor can also additionally expand a chain of regularly certain estimates for the duration of the layout procedure to make sure that the mission is being designed to the proprietor’s price range. A trendy contractor or exchange contractor will expand estimates to decide their bid or price range values for a mission. And there can be more than one estimates evolved to decide the effect of diverse layout options, or expand a value estimate for a layout trade for the duration of the development procedure.
Construction costs form a part of the overall costs incurred throughout the development of a constructed asset consisting of a building. Very broadly, production costs could be those costs incurred through the actual production works themselves, and on some projects can be decided through the value of the agreement with the important contractor. However, the production agreement might also additionally include costs that won't in themselves be taken into consideration literal production costs (hard costs), consisting of fees, profits, overheads, and so on. Many projects can even include costs that it isn't viable to decide whilst the production agreement is offered (consisting of high price sums and provisional sums), and there can be production works which can be offered through the client out of doors of the important agreement (consisting of becoming out the interior, minor alterations to the completed works, installation of equipment, and so on). In addition, the agreement is possibly to permit for the agreement sum to be adjusted as a result, for example, of variations to the works, claims for loss and expense, or fluctuations (a manner of dealing with inflation on large projects that could ultimate for numerous years). It is due to those unknowns that clients are cautioned to keep a contingency.
These are the costs associated with the personnel on the project. They include salaries and the cost of benefits (such as vacation time and health insurance) if they apply. Employee or contractor salaries and expenses are one of the biggest budget items on any project. The people costs can either form a part of direct or indirect costs. This depends on the activity undertaken by the individual person. So if the work undertaken by a person can be directly attributed to a project activity it is a direct cost. Administrative costs are the everyday costs that support the work of the project but are not necessarily directly related to a specific task on the project. Phone expense, copier paper, heating expenses, and support personnel are examples of administrative costs. Project teams have to work and meet somewhere, so that means that there is some sort of facilities expense in the form of rent, lease, or mortgage payments. If the building or facility was leased or purchased specifically for the project, it would be classified as a project cost instead of an administrative cost. Administrative costs are part of the indirect costs of the project. Resource and project costs include things such as materials needed for specific tasks, equipment leases, travel expenses, and so on. These expenses are specific to the project. Resource costs are typically the largest expense and estimating these costs will require research by the project manager and team. If you as the project manager have initial budget input or responsibility for creating the initial project budget, then careful examination of each of these categories will help you come up with a reasonable budget for the project. If not, being aware will help you identify what may have been missed and it will certainly help you as you manage the project budget on an ongoing basis throughout the engagement. The above mentioned cost categories can be grouped as either direct or indirect costs. Direct costs include costs such as salaries, equipment rentals, software, and training for team members. Any cost that can be directly attributed to a particular activity of a project is a direct cost. Direct costs =Cost specifically related to a particular activity of a project. Indirect costs are not specific to the project. When your project team works with other members of the organization who are not working on the project in the same building, things like the lease cost of the building would be considered an indirect cost because it is not specifically related to the project. Another indirect cost would be administrative staff who will be assisting you with project activities but aren't assigned specific project tasks themselves. Indirect costs = Costs associated with the project but not directly related to a particular activity of the project. Indirect costs also include the penalties for late completion of the project and benefits for early completion. Project indirect costs are a function of time i.e. the longer the project takes to complete the higher are the indirect costs associated with it. On the other hand, in an effort to reduce the indirect costs we may increase the direct costs as they are indirectly proportional to the duration of the project. Longer the project duration lower are the direct costs and vice versa. This means that longer project durations lead to higher indirect costs but lower direct costs. This creates a dilemma for the project manager as he has to strike the right balance between duration, direct and indirect costs. To overcome this dilemma the project manager has to undertake a time-cost trade-off. The People cost The Administrative cost The Project Resource Cost Direct and Indirect cost
The project network diagram and particularly its critical path contain valuable information about the duration of the project, the critical activities, the non critical activities and the various floats associated with these non-critical activities. This information can be used to find ways to expedite the project and then study its effect on the cost of the project. The effect of expediting the project activities on its cost is referred to as time-cost trade-off. The primary premise here is that the duration of some activities can be cut down if some additional resources are employed in performing them. Example: the number of people required to dig a trench 20 feet deep and 200 meters in length within 5 days is 4. If 4 more people are assigned to the task naturally the number of days required would be fewer then the number now required let us assume this number is 3. Now the task is performed faster but the number of man-days that have expended on the digging of the trench are higher (5x4 = 20 v/s 8x3=24). Thus, merely adding more resources to an activity does not result in expediting of the project activity. Sometimes adding more resources brings in diseconomies of scale wherein more resources means more inefficiency. Higher direct costs are associated with lower activity duration and vice versa. The act of adding more resources to expedite project activities is called project crashing. Although, it may be tempting to reduce the duration of the project it cannot be done indefinitely. The project crash time represents the maximum duration by which the project activity can be crashed and any attempt to further crash it will only raise the direct costs without reducing the time. While, crash time represents the time by which the project activity can be crashed, crash cost represents the minimum direct cost required to bring about the crash. The figure below shows the graphical representation of the time-cost relationship. the graph the normal time represents the shortest time required to perform an activity under normal cost and normal cost represents the absolute minimum of the direct cost required to perform an activity. The line connecting the normal time-cost point to that of crash time-crash cost point indicates that as the reduction in duration increases so does the cost and at the beyond the crash time-cost point the benefits of reduction in duration are lower than the cost associated with the reduction. Thus, there is an incremental cost per unit of time saved under conditions of crashing and can be represented as follows: Incremental Cost = crash cost - normal cost/ normal time-crash time So, if for an activity the crash cost and crash time is 900 Rs and 6 days respectively and normal cost and time are 700 and 9 days then the incremental cost per day is= 900 - 700/9-6-67 Rs per day. The activities on the critical path need to only be taken into consideration as they determine the project duration. Crashing of non-critical activities would not prove useful as it will not assist in reducing the project duration. Once the critical path is crashed a new path may emerge as the critical path. If during the course of the crashing if there are more than one critical paths then the activities that are common to them should first be taken up for crashing. The crashing is done for one unit of time i.e. a day, week, etc. Step 1: The first step in crashing is to identify the critical path and then select the activity that has the minimum incremental cost of crashing. Step 2: Once the activity with the minimum incremental cost of crashing has been crashed a new critical path may be created. The critical path is again identified and the same procedure is applied.
A venture entails finishing touch of quantity of activities. The price/period of the venture relies upon upon the activities, extrade with inside the period and as a result price of an pastime impacts the venture period and the overall price of the venture. Time-price Optimization determines period and corresponding price. It is likewise known as as Time-price trade-off. The goal of time-price optimization is to decide the everyday period of the venture, the minimal feasible period of the venture and the top-rated period of the venture and the corresponding venture costs. The approach utilized in time-price optimization are- Compression Decompression Compression of an pastime refers back to the discount with inside the period of an pastime through growing the assets allotted to it or through decreasing the technical specification of the work. The technique of shortening a venture is known as crashing and is commonly finished through including more assets to an pastime. Decompression is the method of restoring compressed statistics to its authentic form. Data decompression is needed in nearly all instances of compressed statistics, consisting of lossy and lossless compression.
Unit - 8
Construction Costs
Key Takeaways:
Construction value estimates are created at many distinctive factors in time in the course of a mission. The proprietor can also additionally expand very early feasibility estimates to decide if a mission is economically viable.
Key Takeaways:
Production costs could be those costs incurred through the actual production works themselves, and on some projects can be decided through the value of the agreement with the important contractor.
1. The People Costs:
2. The Administrative Costs
3. Project Resource Costs
A. Direct Costs vs. Indirect Costs:
Key Takeaways:
Classification of costs are as follows:
Rules for Crashing:
Steps in Crashing:
Key Takeaways:
The effect of expediting the project activities on its cost is referred to as time-cost trade-off. The activities on the critical path need to only be taken into consideration as they determine the project duration. Crashing of non-critical activities would not prove useful as it will not assist in reducing the project duration.
Key Takeaways:
Compression of a pastime refers back to the discount with inside the period of a pastime through growing the assets allotted to it or through decreasing the technical specification of the work. Decompression is the method of restoring compressed statistics to its authentic form. Data decompression is needed in nearly all instances of compressed statistics, consisting of lossy and lossless compression.
References:
1. Varghese, P.C.,” Building Construction”, Prentice Hall India,2007.
2. National Building Code, Bureau of Indian Standards,New Delhi,2017.
3. Chudley,R.,Construction Technology,ELBS Publishers,2007.
4. Nunnally,S.W.Construction Methods and Management,Prentice Hall,2006
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