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Factors Impacting Project Cost

All projects are not the same. Even if you are in the business of building the same facility over
and over, the price of each project will differ. Many specific factors will always influence the
pricing of the project, and the estimator must be able to discern the level of impact for each.
Many of these factors call for the art of estimating, and the more experienced the estimator, the
more accurate the gut feel for some of these impacts will be. Lets consider several of these
factors and see just how they might influence the pricing of the project.
2.1

Shape On Plan

The shape of a building has an important effect on cost. As a general rule the simpler the shape
of a building, the lower will be its unit cost.
The rule of thumb is that every time you turn a corner, it is going to cost you more money. The
facility can be exactly the same square metres, but if the shape moves from a square or rectangle
and the number of corners increases, the price is going to go up. Shape impacts the price of all
elements of the building: the ceiling, the roof, the doors, the windows, the staircases, and so on.
A flat ceiling is easier to construct than a vaulted ceiling. A gable roof is easier to build than a hip
roof. A rectangular window costs less than a circlehead window. A rectangular door costs less
than an arch top door. And a straight stair costs a lot less than a winding stair. Shape clearly
impacts cost.
Let us illustrate this as follows:
A. Irregular Shapes

Building A

Building B

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We note that both plans have exactly the same floor areas, yet building B is far more expensive
due to the shape of its design. Reasons for the increase in costs are:
Building B has a higher perimeter/floor area ratio (as discussed before) and requires 6%
more external walling to enclose the same floor area than Building A.
Setting out costs will be increased by as much as 50%.
Excavations will cost between 6% and 20% more.
Drainage costs will increase by approximately 25% due to the extra manholes and extra
length of piping needed.
Additional costs will also result from other elements of the building such as the walling
and roofing due to the work being complicated by the shape.

It can therefore be concluded that the irregular shapes of buildings add to their overall cost.
B. Regular Shapes
Regular shapes in contrast, become more expensive the longer and narrower they are planned.
This can be illustrated by the following examples of a square and rectangular building with the
same floor area.

BUILDING A

BUILDING B

CASE A
Area on plan = 400m
Length of walling = 80m
Assume 3m high walling @ RWF 50,000/m2
Then cost/m = 80 x 3 x 50,000 400 = RWF 30,000 m2
CASE B
Area on plan = 400m
Length of walling = 208m

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Assume 3m high walling @ RWF 50,000/m

Then cost/m = 208 x 3 x 50,000 400
= RWF 78,000/m
The length of Building B thus resulted in an additional expense of RWF 19,200,000 [(78,000
30,000) x 400 m2] over that of Building A.
Conclusion
It is important that both architect and client are fully aware of the additional costs (or savings)
that probably will arise from even small changes in the shape of the building.
They can then adopt a rudimentary cost benefit approach in considering the advantages of
different shapes in seeking a suitable balance between cost, aesthetics and functional aspects.
Although the square building is the simplest plan in shape, one must remember that the shape of
a building is dictated by:
Function
For instance factory shapes depend on the form of machines used and the production layout.
Schools and hospitals rely on natural lighting and therefore tend to be rectangular in shape.
Hotels are orientated towards the best view.
Site
The slope and shape of a site might dictate the shape of the building especially where the plan to
plot ratio approaches one.
Economics
Office buildings with depths up to 18m lease more readily to smaller businesses as areas can be
easily split to accommodate different concerns. Buildings often become a function of the owners
financial success and tend to reflect this in the use of materials and design detail
2.2

SIZE OF BUILDING:

Increases in the size of a building usually produces reductions in unit cost such as the square metre
rate. The prime reason for this is that on costs do not rise proportionally with increases in the
plan size of a building. Expressed in another way we can say that the Preliminary and General
items expressed as a percentage of total cost tends to decline with an increase in size and cost. A
practical illustration would be the construction of two shops for RWF 125,000,000 and RWF
375,000,000 respectively:

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SHOP A
Cost : RWF 125,000,000
Foremans salary : RWF 2,500,000/month
Construction time : 3 months
Percentage of on-costs = RWF 2,500,000 x 3 (RWF 125,000,000 - (RWF
2,500,000 x 3))
= RWF 7,500,000 RWF 117,500,000
=6.4%
SHOP B
Cost : RWF 375,000,000
Foremans salary : RWF 2,500,000/month
Construction time : 5 months
Percentage of on costs = RWF 2,500,000 x 5 (RWF 375,000,000 - (RWF
2,500,000 x 5))
=3.4%
In larger buildings other reductions in unit costs may arise due to savings in:
(i)

Prices paid for materials by the builder

(ii)

Vertical transportation costs in high rise buildings

(iii)

Larger room sizes etc

2.3

Perimeter/Floor Area Ratio

We have already seen that the plan shape directly conditions the enclosing walls. The
Perimeter/Floor area Ratio allows us to compare different plans to establish the more economical
proposal.
The lower the ratio, the more economical will be the proposal. Circular buildings have the best
ratio but savings are more than offset by the higher cost of circular work.
Let us once again look at a practical example:
Assuming that both buildings have an identical floor to ceiling height of 3.00m then the:

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Perimeter/Floor Area Ratio For:

Building A
= Area of Enclosing Walls Total Floor Area
= 50m x 3m 100m
= 1.50
Building B
= Area of Enclosing Walls Total Floor Area
= 40m x 3m 100m
= 1.20
It should be borne in mind that the perimeter cost can be in the order of 20% to 30% of total
cost and an external wall is normally almost twice as expensive as an internal partition.
Once again we should keep other design criteria in mind but the Perimeter/floor area ratio does
allow the more experienced client to state the optimum ratio (from analysis of similar buildings
erected in the past) as part of the design criteria during his brief to the Architect.

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Circulation Space

The minimization of circulation space by the economic layout of the building provides a definite
cost benefit. Entrance halls passages corridors, stairways and lift wells can be regarded as dead
space which cannot be used profitably, but involve considerable cost in air-conditioning, lighting
cleaning and decorating.
In doing a trade-off analysis between cost and circulation space, one has to consider the
functional and aesthetic inputs as previously discussed, but substantial savings can be made by
sound subjective judgment.
A fair ratio for circulation to total space can be obtained from previous projects and included in
the criteria given during the design brief.
It is interesting to note that in a recent comparison of two alternative plans, the circulation space
in blocks of flats varied between 22% and 32%
Unfortunately very few cost analysis done in the past give details of circulation space and
information for different uses are sadly lacking.
2.5

Other Variables

Several other variables play a role in determining the cost of the design and should be borne in
mind.
(i) Floor To Ceiling Height
It is obvious that by increasing the height of walls, we must increase our rate per M. Anything a
worker cannot reach by standing on the ground will increase the cost of construction. Whenever
you have to employ ladders, scaffolding, man lifts, and cranes, the price goes up. It takes
additional time to set up, take down, and move this equipment around, and it also takes time to
move manpower and materials up and down the equipment. The expected productivity by a
craftsperson standing on the ground versus the expected productivity of the same craftsperson
working on scaffolding is always less.
(ii)

Height of Building

A comparison of the unit rates for a single storey and multi-storey buildings will show substantial
differences. Savings can be achieved by decreasing the plan size and increasing the height of
buildings but a point is eventually reached where the cost of vertical transportation, services,
substructure etc., outweigh the cost of an additional storey. Land values, plot size and the
buildings function tend to have direct influence on its height.
(iii) Constructional Differences
Reinforced concrete walling in lieu of brick walling of industrialized building methods in lieu of
conventional methods will have a huge influence on the cost. The Quantity Surveyor should be
brought in as early as possible in the design stage to advice on the influence of the proposed
construction method on cost.

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(iv) Quality of the Works

Careful attention should be paid to the standard of finishes required, especially of those on the
vertical components of a building as they are more difficult to incorporate in our yardstick of unit
rate.
The quality of the project is defined by the standards set forth in the specifications. Quality clearly
impacts project cost. The specifications stipulate what materials to use and equipment to install.
There are grades of performance, durability, and aesthetics associated with every construction
product. A project that specifies minimum standards for the products and equipment to be
installed will cost less than a project that includes several high-end materials and installations.
Obviously, marble or granite tiles are going to cost more than ceramic tiles. Stainless-steel toilet
partitions are going to cost more than painted metal partitions. Although both of them serve the
same purpose, the degree of performance, durability, or appearance variesthe higher the
quality standard, the higher the cost. An experienced estimator gets a good idea of just how
much impact quality will have on the overall cost of the project after just a quick review of the
plans and specs.
(v)

Time Of Construction

Time is one of the factors that every estimator must be very aware of when putting together the
numbers for the project. There is always a time period between when a project bids and when
the construction actually starts. There is also the time between when a project starts and when it
is anticipated to endsometimes several years. The estimator must be careful to anticipate
fluctuations in prices and availability of labour during these stretches of time.
An earlier completion date saves money but can only be achieved by careful planning during the
design and construction phases of the project.
The use of C.P.A or network analysis programming tools should be encouraged.
A case can be made for the view that construction time should not be specified in the tender
documents, but that the builder should be given the opportunity to tender on time as well as
price.
The exception should be when a building has to be completed in a shorter period than would be
reasonably contemplated.
It could well be that the higher price from a tender is the most economical, once construction
time, earlier trading and savings on escalations are considered.
Although most tenders make provision for a penalty for late completion, almost none provide
the builder with an incentive bonus for early completion.
A detailed and more specific brief to the Architect may require more effort on the part of the
client, but is the cornerstone to efficient time management.
(vi) Locality Of Area
Building costs within Rwanda vary considerably and allowance should be made for locality in the
cost plan or feasibility for this. The location of the project impacts the ease of procurement and

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delivery of materials, labor, and equipment, and therefore it affects the overall pricing of the
project.
Tendered rates within the same town or city may also vary due to conditions imposed on the
Contractor by the Client. An example of this is where work has to be done within a high security
area and the Contractor is subjected to security requirements that result in lost time or a restricted
labour force.
Location also impacts the availability and cost of labour. For example, when trying to construct a
new facility in a small community, the contractor may run up against a shortage of skilled labour
to perform the work. In a case like this, the contractor would have to import the needed labour
from outside locations. When this occurs, the contractor usually has to provide housing and
meals for the workers, adding to the costs of the overall project. If the estimator does not
anticipate this added expense up front, there will be labour cost overruns. On the other hand,
another location may have an abundance of skilled labour, and the estimator can anticipate fairly
competitive pricing in the area and estimate the job accordingly.
(vii) Market Conditions
Market conditions always have an impact on the estimate. The basic laws of supply and demand
go to work here. In very tight markets where construction contracts are scarce, the cost of
construction becomes very competitive, and the estimates will reflect this condition. In an effort
to keep good employees working, some contractors are even willing to take a job at cost with
little or no profit on the project.
However, when there is a lot of construction work going on, the market becomes very selective.
General contractors and subcontractors alike become much pickier about which jobs they are
willing to go after, and their pricing will reflect a more conservative approach to risk. The
estimating team takes all of this into consideration when pricing the project.
(viii) Management Factors
Management factors are those considerations that once again have more to do with the art of
estimating than the science of estimating. Management factors include such things as knowing
that a particular owner or architect is more difficult to deal with than another, sensing that you
are going to have to watch things more carefully with an inexperienced subcontractor, or
knowing that the owner is very slow at making decisions.
Some management factors are much more predictable, such as dealing with a public project
versus a private project. With a military project, for example, the paperwork and reporting
required for standard contract administration tasks such as a submittal or an application for
payment are at least twofold. All of that extra work takes extra time, and extra time means extra
cost. Once again, an experienced estimator takes all of these factors into account before
submitting a bid.