UNIVERSITI TEKNOLOGI MARA QSM 556

QSM 556 Construction Economics II 1

AIM HIGH!
UNIVERSITI TEKNOLOGI MARA QSM 556

QSM 556 Construction Economics II 3

By end of this class, you should:
 Understand the importance of Cost data
 The usage of Cost Data
 The sources of Cost Data
Introduction
 Why is it important? - At initial stage to reflect the
probable cost of the proposed project to the client and
throughout the various stages of design and
construction.
In a NUTSHELL: For forecasting and control activity.

 Where can I get cost data? - Generally, QS consultants,

ISM, PWD, the Statistics Department and CIDB have
ample cost data which are kept systematically.
Which cost information should we use and where it comes
from is important!
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 “...the planning and design phase of a building project
deserves more abundant resources and closer
attention because in this phase we simultaneously
encounter the greatest possibilities for influencing the
total project cost and the lowest expenditures
associated with the project.”

Building Cost Planning for the Design Team, by Jim Smith & David Jaggar

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How cost planning influence cost?

QSM 556 Construction Economics II 7

 Plant & Plant Hiring
Equipment rates?

Wages per
Labour
day?
Components
of Cost
Cement-
Material
RM?/50kg

5-10% of
Overhead
total cost

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 UNIVERSITI TEKNOLOGI MARA QSM 556

Purpose?
 Approximate estimate cost of the proposed project

 Balance the cost in the estimate to assure money is

spent based on the client’s preferences.

 As a basis for preparing schedule of rates for the

purpose of variations of work, contractor’s claim and
final account.

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Uses of Cost Data
Predict
Cost
Make cost
comparison
To?
Balance the
cost
Analyse the
cost trend

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a. Prediction of
cost
Prediction of total
cost of construction Cost/m2
based on data Schedule
of rates
available and the
suitability of the data BQ from
prev.
project
ALERT! Data must be
an updated set of
data- historical data
must be adjusted for
Current predicted Cost
current analysis.

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b. To make
comparison
of cost
Not merely to
obtain the actual
Pitched Roof vs. Flat Roof?
but to make the best
comparison on
alternative
item/element that
have similar
functions/different
in design.
Brickwall vs. Curtain Wall
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c. Balancing of cost
Cost per element or
small units can be used
to conduct cost check. Total cost
for Roof?

Can be used in
estimation to
distribute cost based Total
Cost per/m2
cost for
on client’s needs. ceiling? of upper
floor?

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d. Analysis of cost trend
Construction
Construction
of a Stadium
The element of cost of a Start- 2007
building changes
through time.
2008- Steel
By using cost data, the Construction price increased
stop-
trend of future changes financially
can be forecast to incapable
accommodate client
financial status. (i.e the
hikes of materials price
or wages for labour)
Why QS need readily available cost
data?? From Start of
Project

 To prepare an estimate or budget

 Plan outline and detailed costs during the

During Construction
design stages
 Estimates tender for tendering purposes
 Negotiate variation prices during the
preparation of final account
 Calculate and settle off the contractor’s claims
 Adjust valuation of profit & loss
 Manage maintenance & repair
 Calculate the life cycle cost or cost in use Post construction
& for future
project
1. Technical data
 Published in Journal &
Magazines (Building related)
 Information on- price of
materials, labour wages, hire-
purchase of plant.
 ISM- ‘The Malaysian Surveyor’
magazine [ECA, etc]
Advantage: more frequent up-to-date
information, applicable locally.

Disadvantage: not much space (articles

etc) therefore less details of cost
information
2. Price books
 In UK-Published annually- but not
yet available in Malaysia.
 Some priced books can be referred to.
 i.e. Spon’s Asia Pacific Construction
Costs Handbook- contains price
information for the Asia Pacific
countries including Malaysia

Advantages: Organized &

Comprehensive set of cost data

Disadvantages: Need to be updated by

users periodically due to changes of
market conditions, location etc
Spon’s Asia Pacific Construction Costs
Handbook, 2000 (3rd Ed.)
Labour Types Wages for 8 Total number of
hours/day(RM) working hours per
year
Mason/Bricklayer 80.00 2304
Carpenter 80.00 2304
Plumber 80.00 2304
Electrician 80.00 2304
Semi-skilled labour 35.00 2304
Unskilled labour 30.00 2304
Plant operator 80.00 2304
Per month
Foreman 2,600.00 2304
Clerk-of-work 1,800.00 2304
3.Information services
 Building Cost
Information Services
(BCIS) under RICS.
 Published price books
 AND Online data base
for users in UK:
http://www.bcis.co.uk
4. Tender/Contract Doc & BQ
 MAIN SOURCES used by QS
 Preferable at all times than published information
thus knowledge on site condition, market prices,
labour condition is required prior to the use of
information.
 In forms of: Schedule of rates, overall costs, basic rate of
materials, labour, plant, contract period, and DL period.

ALERT! Different contract usually consist of different

rates-thus-must inspect the factors that influence the
differences. (i.e.- location, size, market condition,
tendered &contract period)
Why BQs rates differ?
Urban Vs
Location Accessibility
Rural?

Front/Back Variations
Capital first
loading later

Many items Very

Errors
to priced common
Factors?
Inaccurate Time Historical Vs
data pressure Updated

Site High out put Special

techniques Machinery? techniques

Supply of Own Sub-to

Material product supplier
5. Government Publications
 In Malaysia-Government
is the main client in the
construction industry-
thus has its own
production of cost data
and R&D

 JKR (PWD), Department

of Statistics (DSM),
CIDB.
Cost Data available online
 http://www.statistics.gov.my (go to free
Download tab)

 http://www.cidb.gov.my (under Resources-

>Construction Resource Centre)

 http://www.jkr.gov.my (under Info Contrak-

Jadual Kadar Harga)

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Conclusion:
 Do you understand the importance of Cost data?
Very important during design stage, especially to
influence the cost, to do approximate costing, and
 What are the purposes and how to use Cost Data?
 What are the sources of Cost Data?
Discussion:
 What are the main source of cost data for quantity
surveyors, and why precautionary steps must be taken
when using this source?
Past years exams Q:
Some of the factors which may influence the cost data
obtained from Bills of Quantities are:
i. Size of project
ii. Method of tendering
iii. Construction period
iv. Site location
v. Government policy

Discuss and give appropriate situations how each of the

factors affect the rates entered by contractors during
tendering exercise.