Cost Planning / Budget Development
The first estimate of a project cost is usually the most important one as the most critical decisions are based on it. You want your project to run smoothly and be successful. Underestimating a budget may permit a faster approval but this will lead to serious problems down the road. Overestimating allows for breathing room, but the risk of having a project denied is too great. We recommend and offer a very thorough and detailed approach to creating the most reliable initial estimate possible. Your project’s success is riding on this estimate which, once approved, becomes the budget.
Cost Management is the process of planning and controlling the project’s expected cost. Expected costs are calculated while the project is still in the design stage (see Milestone Estimates) and are approved beforehand. This allows for more informed decision making, and allows for changes to be made earlier in the process, while the cost of making changes is minimal. During construction, all expenses are recorded and monitored to make sure they stay in line with the cost management plan.
Implementing a cost management structure for projects can help a project keep their overall cost within the approved budget.
Milestone Estimates occur at predetermined stages in the design process and are intended to ensure the design remains on budget so there are no cost surprises after the design is finalized. As the design progresses, more and more detail is added into the construction drawings and documents. At the earlier stages of design, the Quantity Surveyor not only quantifies the detail in the design, but also interprets what will be included in the design at a later stage. Typically the detailed specifications on Mechanical and Electrical systems are not available until much later in the design but it is imperative to make allowances for this in the budget. Our familiarity with the design, experience pricing and reviewing costs on hundreds of construction projects and knowledge of costs of materials and labour allows us to properly estimate the costs of the project, before the detail has even been written.
Depending on the size and complexity of your project, different milestones may be appropriate. For a more detailed description of design milestones, please check out our Guide to Design Milestones.
Cash Flow Development
Cash Flow Development is essential to the financial success of the project because it provides an analysis and plan of not just the bottom line, but how much money is being paid out and when in comparison to the availability and release of available financing as applicable.
There is risk involved in every project and in order to mitigate these risks, it is essential to plan for them in advance. By identifying each risk scenario, evaluating the time and cost impact of each scenario and the likelihood of occurrence, the Quantity Surveyor establishes an appropriate contingency or reserve to build into the budget and estimates and develops strategies with the design team to counter the higher probability, higher risk items. t doesn’t stop there however. Throughout the project, the risk registry developed is monitored and updated. Since risks are identified in advance, they are easier to manage and result a lesser negative cost impact.
Value Analysis / Value Engineering
Value Analysis / Value Engineering explores alternative ways of addressing the design to make it more cost effective and sustainable, while still achieving the owner’s requirements, capital & operating budget and time frame. Value Engineering sessions involve representatives from the entire design team and each alternative is evaluated from functional, capital cost, planning, design, life cycle cost, and sustainability perspectives. Projects that have undergone comprehensive value engineering deliver the most value over the entire life cycle of the project.
Parallel Estimating / Peer Review
Parallel Estimating / Peer Review involves two independent, qualified Quantity Surveying teams preparing cost estimates at the design milestones and reconciling their estimates to each other. It is often used on large, complex projects and allows for an added degree of risk mitigation and cost certainty. Each team reconciles the estimates, identifying and analysing the variances found. A reconciliation meeting is held where the variances are discussed, supporting evidence provided and the independent Quantity Surveyors agree to an appropriate allowance on each element of the project. During this session, opportunities for value engineering are usually recognized.