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Construction Cost

Construction cost refers to the total cost of building a project, including all labor, materials, equipment, and other expenses incurred during construction without deductions. It does not include fees paid to architects and engineers or the cost of acquiring land. Construction cost is typically estimated based on the expected contract price agreed upon with the main contractor, adjusted for applicable taxes and market rates, but excludes other project costs like fees, land, or equipment. As a project progresses, cost planning evolves from initial appraisals to more detailed elemental and quantity-based estimates to improve accuracy as design and pricing information becomes available.

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91 views

Construction Cost

Construction cost refers to the total cost of building a project, including all labor, materials, equipment, and other expenses incurred during construction without deductions. It does not include fees paid to architects and engineers or the cost of acquiring land. Construction cost is typically estimated based on the expected contract price agreed upon with the main contractor, adjusted for applicable taxes and market rates, but excludes other project costs like fees, land, or equipment. As a project progresses, cost planning evolves from initial appraisals to more detailed elemental and quantity-based estimates to improve accuracy as design and pricing information becomes available.

Uploaded by

Vic Angelo Tuquib
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Construction Cost means and includes the cost of the entire construction of the Project,

including all supervision, materials, supplies, labor, tools, equipment, transportation and/or
other facilities furnished, used or consumed, without deduction on account of penalties,
liquidated damages or other amounts withheld from payment to the contractor or
contractors, but such cost shall not include the Consulting Engineer/Architect's fee, or other
payments to the Consulting Engineer/Architect and shall not include cost of land or Rights-
of-Way and Easement acquisition.

Construction Cost means the contract price (expected to be specified in a Construction


Contract), net of applicable taxes, to complete the Construction Work, as estimated by the
Cost Consultant and agreed to by the City and the Architect, acting reasonably, based on
the market rates expected to prevail at the time scheduled for the Construction Work, plus,
if the City is to provide any labour or material for the Construction Work, the market value
of that work or material; for the avoidance of doubt, “Construction Cost” shall not include
the compensation to be paid to the Architect, the Architect’s Consultants or the City’s
Consultants in connection with the Project or the cost of land, City of Vancouver
development cost charges or development cost levies or other costs which are the
responsibility of the City (except for labour and materials for the Construction Work).

Construction costs form part of the overall costs incurred during the development of a built asset such as
a building. Very broadly, construction costs will be those costs incurred by the actual construction
works themselves, and on some projects may be determined by the value of the contract with the main
contractor.

However, the construction contract may include costs that might not in themselves be considered
literal construction costs (hard costs), such as fees, profits, overheads, and so on.

Many projects will also include costs that it is not possible to determine when the construction contract is
awarded (such as prime cost sums and provisional sums), and there may be construction works that are
awarded by the client outside of the main contract (such as fitting out the interior, minor alterations to
the completed works, installation of equipment, and so on).

As a result, what is considered the actual 'construction cost' of a project must be clearly defined and may
not be finally determined until well after the actual construction works have been completed. This is true,
even if a contract is described as having a 'fixed price' or 'guaranteed maximum price'.

Cost planning
Cost plans evolve through the life of the project, developing in detail and accuracy as
more information becomes available about the nature of the design, and then actual prices are provided
by suppliers.

Cost plans may include:

 Initial cost appraisals, prepared during the feasibility study stage.


 Elemental cost plans, prepared during the project brief stage and carried through to detailed design.
 Approximate quantities cost plans, prepared from the end of detailed design through to tender.
 Pre-tender estimates, prepared alongside tender documentation.
 Contract sum, agreed with the selected contractor.
 Final account, agreed once the construction works are completed.

Other than initial cost appraisals, these all relate to the construction cost of the project (rather than
wider project costs that the client might incur, which could include; fees, equipment costs, furniture,
the cost of moving staff, contracts outside of the main works, and so on).

Contingencies will tend to be highest in the early stages of the project when there are the greatest
number of possible risks, but can generally be reduced as better particulars about the project become
available and some risks have passed or been overcome.

Cost estimates

The method used for estimating actual costs will change as the amount of detail available increases:

Initial cost appraisals might simply break down the overall project budget based on information provided
by the client, an analysis of comparable projects and the experience of the cost consultant.

Elemental cost plans might simply be the total construction cost for the project divided into
the main elements of the works on a percentage basis.

The approximate quantities cost plan is a first attempt to measure defined quantities from drawings (or to
take them off from a building information model). It presents a more accurate picture of where costs are
distributed, in particular it draws the attention of designers to those elements of the design that
are standard and those that are not and as a consequence may be more expensive.

The pre-tender estimate (PTE) is the final estimate of the likely cost of the works that are described
in completed tender documents. It provides a final comparison with the budget, and along with a cash
flow estimate enables the client to confirm that sufficient funds are available before committing to
seeking tenders. It also gives a basis for assessing and comparing tenders when they are returned.

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