Cost management can result in construction project savings - Insiders Outlook

Recent methods introduced by cost management professionals ensure that developers, owners and tenants receive value for their money on their construction projects. From the setting of the initial budget to the evolution of the design through actual construction, procuring the right economic information at the right time is the best way to build a successful project.

It is imperative from early design stages to compare economic evaluations of different design solutions. By classifying and pricing a building into common elements for which historical information on costs can be easily recorded, a quicker and more economic evaluation of alternate design solutions may be made, as well as determinations of straightforward substitutions.

From project inception, a cost manager will analyze the whole project. Cost analyses expedite the necessary paperwork, define the overall budget and help determine where flexibility in a design may be found when necessary to the economics of the project.

Most importantly, a cost manager is an independent consultant with no allegiances to architects or general contractors, only to the client whether it is a developer, building owner or tenant. In many countries, professional cost managers are a separate, but key function of the development and construction teams. In the United States, however, cost management has been often under the auspices of the owners and developers, architects or general contractors, all of whom have experience in various aspects of cost management, but only within the context of their individual disciplines. Moreover, they are not necessarily impartial, nor independent in the process.

The most effective economic coordination of any building project--and the most beneficial to the client is actually between cost manager and project manager, the one group overseeing the economics and the other coordinating the construction project. (Interestingly, universities around the world offer extensive cost management curriculum and industry specific degrees in cost management.)

The fundamental approaches to cost analysis and cost planning are universal and at the earliest design stages of a building project, financial evaluations are made regarding different design solutions. The current practice widely used in the U.S. is based upon a trade product/material system, which often makes analysis difficult to do, especially at an early stage with little design on paper, because costs are spread throughout the different functions in a building. In this method, the breakdowns are primarily predicated on the costs of trade labor. For example, a trade contractor is responsible for putting up a predetermined amount square footage or dry wall or painting a specified number of rooms, etc. However, the result is that key information provided by various subcontractors, coming from so many different sources, lacks coordination and is rife with miscalculations.

A recently introduced method of classifying building costs called Uniformat is becoming increasingly popular at early design stages. It differs from the traditional CSI Format layout, which has been widely used for pricing and specifying construction work in this country, by implementing a system classification rather than product/material classification (i.e., private office and open plan offices).

Classifying a building into a use format makes economic evaluation of alternative designs a much easier task. It enables worthwhile comparisons between different buildings, so that at early design stages, economically efficient choices may by made based upon historical data.

With the Uniformat, early analysis requires little detailed information about the proposed building. But it will still reflect a realistic indication of costs if based upon actual measurements and costs of the elemental components of similar buildings, suitably adjusted. As the design evolves, the analyst can follow a hierarchical approach, breaking down elements into more detail. This ensures that design alternatives from conception, as well as systems to produce and materials, are considered at the appropriate time.

It increases the probability of achieving a design that is not only overall cost effective, but is designed in a manner that reflects a client's individual budget requirement and expenditure priorities. In its most fundamental form, this is what we call cost planning, producing a design concept within a given set of cost parameters that have been developed to meet the client's unique requirements and budget constraints.

BY PAUL NASH

DIRECTOR OF COST MANAGEMENT

GARDINER & THEOBALD, INC.

COPYRIGHT 2003 Hagedorn Publication
COPYRIGHT 2003 Gale Group