Cost Planning

Cost planning is the technique by which budget is allocated to the various elements of an intended building project to provide the design team with a balanced cost frame work within which to produce a successful design  which can be discussed, amended, revised & finalized during the scheme or sketch design stage. This is often interpreted as controlling the cost of a project within a cost limit during the design stage, & normally envisages the preparation of a cost plan & the carrying out cost checks.

The system should be in an easy format, which should be understood by the design team & the client. It is a statement of the proposed expenditure on each section or element of a new building related at a definite standard of quality. Each item of cost is generally regarded as a ‘cost target’ & is usually expressed in terms of cost per square meter/square foot of floor area of the building as well as total cost of the building.

Experience has shown that major causes of construction project cost over-run are often associated with the following:
Unclear project objectives. Project objectives changed during the course of the project.
Risk allocation that is often unrealistic or over optimistic.
Design not complying with statutory requirements. Lack of design coordination between disciplines.
Incomplete, unclear or inconsistent development brief. Unrealistic estimates (often politically optimised to ‘tick the box’). Unrealistic estimation of allowances for cost escalation.
Lack of a robust change management process. Lack of consideration of operational and maintenance issues at design stage.