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| Cost control during the Pre-Contract stage of a Construction project |
How to control the costs in the design stage of a ‘traditionally’ procured project that is up to the stage where the contract documents are prepared. My article is confined to only capital costs of building projects and does not give any insight to whole life cycle costing. One of the most important tasks carried out by employer's quantity surveyors (QS) in 'traditionally' procured projects involves providing advice to clients and design team to enable the design to be finalized within the approved budget. Clients generally expect the final cost of their project to not exceed the original estimate.
Quantity surveyors will provide effective contributions in cost management to the clients from the inception stage by providing realistic cost advice through different cost plans in various stages of design like formal cost plan 1 at concept stage (stage- C), cost plan 2 at design development stage (stage- D) and cost plan 3 at stages -E & F (Technical design & production information stage) as per RIBA work stages and NRM
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1. The primary objective of cost planning and pre-contract cost control is to ensure that the successful contactor’s tender does not exceed the client’s budget. Generally, at the inception stage of a project itself, client need an indication of how much the project is likely to cost to assess the overall feasibility of the project. If the project is considered to be viable then the design process may be set in motion. There are two basic approaches to control the cost at design stage. They are ‘costing a design’ and ‘designing to a cost’.
Cost Control Strategies and Techniques :-
Quantity surveyors employ a number of strategies and techniques to keep the design within the budget like
1) Performing value engineering in design stage is the main technique in pre-contract stage
2) Understanding the clients brief clearly and acting accordingly without any re-work in design
3) Selecting appropriate procurement strategies ( Many studies say that Design-build procurement route gives competition in both the design and pricing aspects of the project, often deliver the cheapest capital cost solution. It also identified that strong cost certainty exists in this D&B, as the contractor is required to develop the design within the quoted price, i.e. (designing to a cost). In the same way management contracting and construction management routes emphasize both in quality and speed, but these are achieved at an additional cost) .
4) Selecting competent contractors, that are ‘hungry for work’, thus helping to secure a keen price by negotiating with particular contractors.
For example: Faithful+Gould is appointed as project management, cost management and contract administrators for King's college hospital, Dubai. Here the client originally planned for traditional type of procurement but due to some factors company suggested to switch to D&B to allow earlier contractor appointment and earlier construction works start based on schematic design.
But here in this above mentioned case there is a shortage of contractors with relevant experience in D&B type of work, where client/PMC cannot run a competitive tendering process.
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The Author: Ganesh Garimella
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Ganesh Garimella, MBA Quantity surveying (RICS-SBE)
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