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Pre-Contract Cost Planning and Cost Controlling - Assignment Example

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Pre-Contract Cost Planning and Cost Controlling

Cost planning not only enables capital cost budgets to be set but also provides a structure to accommodate as well as manage transformations to the client’s brief and design (Murdoch & Hughes, 2007, p.80). An effective Cost plan enables a client together with the design team to understand where and how finances have been allocated towards the completion of a project. On the other hand, Cost control should be provided from start to completion of the project, ensuring that the estimated final cost is always known. However, Pre-contract Cost Controlling is quite different from the Post-contract Cost Controlling.
Pre-Contract Cost Planning and RIBA Plan of Work
As aforementioned, an effective construction plan is the foundation of the budget development as well as schedule for work. Pre-construct cost planning is thus crucial when preparing a construction plan. Even though construction costs can be pre-planned as well as estimated, it is quite possible for these to significantly change in the course of the actual construction (Chitkara, 1998, p.99). Pre-contract cost planning informs the owner when financial installments will be required to enable him/her keep current with the billings (Ferry, et al., 1999, p.55). When establishing a pre-contract cost plan it is important to create one that follows the RIBA Plan of Work. RIBA plan of work is one that tends to organize the process of managing as well as designing building projects while administering building contracts to a number of essential Work Stages (Potts, 2007, p.13). The Work Stages included in the RIBA Plan of Work are Preparation, Design, Pre-Construction, Construction and Use (Mincks & Johnston, 2004, p.109). Under the Preparation stage, identification of client’s needs and objectives is done. Feasibility studies as well as assessment of options enabling the client to make a decision is also prepared under this stage (Murdoch & Hughes, 2007, p.81). The contractor then develops an initial statement of requirements into the Design Brief as a way of confirming the main requirements and constraints. The Design Brief is then implemented, and additional information prepared. Under the Design stage, concept design is developed and includes updated outline specifications, cost plan and structural and building services systems (Ferry, et al., 1999, p.57). The Pre-Construction stage involves preparation of production information in full detail enabling tender(s) to be acquired. Further information for construction required under the building contract is also prepared after application for statutory approvals has been done (Chitkara, 1998, p.100). Identification as well as evaluation of potential contractors for the project is then carried out, and recommendations submitted to the client. During Construction stage, the ...Show more


Cost planning is considered important where successful planning, design and construction of projects are concerned (Mincks & Johnston, 2004, p.102). Its main objective is to provide the best value solutions to project managers. …
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Pre-Contract Cost Planning and Cost Controlling
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