Project management, controls, cost engineering and quantity surveying (1)

The real estate agents’ mantra of location, location, location is as important to real estate as cost is to project management. Cost as one of the three main tripods of project management is defined as the fundamental benchmark and attribute with which tasks, activities, work packages and assets are compared and measured. Cost is the value of an activity or asset and it is a frequently used term mainly in relation to its monetary value.

Cost elements can be grouped into the following core areas: cost centres, labour, material, inventory, equipment, subcontracts, overheads and other commitments. Without the estimated or actual cost of a project, which starts with the cost management process, it is very difficult to proceed with the execution.

The project cost management process comprises all the essential requirements needed to develop, within agreed limits, the budget for a project. All the procedures that are employedfor the cost management process are closely related and interconnected with each other. The cost management process starts with the development of the project charter, the project management plan, the risk management plan and the cost management plan right up to when the project wraps up. The process also involves resource planning, value analysis, cost estimation, cost budgeting, cost engineering and cost control.

The cost management plan process involves planning how the entire project cost is going to be managed, monitored and controlled. The plan will detail exactly how the cost of the project will be planned, executed and how to best manage the cost baseline, control costs, prepare status reports, do performance measurements, do forecasts and manage variances. The way the cost management plan is developed varies widely from business to business. Each business has its proprietary organisational policies, process assets and enterprise environmental factors which influence a lot of funding decisions. Some businesses use this process to determine how the project is to be funded, either through company coffers, equity or from borrowed funds.

Prior to embarking on this process, the value analysis procedure must have been carried out and a decision is made to continue with the project. Value analysis or engineering is the process of assessing a project’s economics and feasibility. It is the process of finding out if what is to be gained from executing the project is worth the cost.

Resource planning is the diligent selection of resources that are needed to do a thorough job and complete the whole project. The resources which are required for the project to be done include personnel, materials, tools and equipment, consumable supplies, time and, most importantly, funds.

Once the required resources have been determined, the process used to attach monetary values to them and estimate how much the entire project is going to cost must begin. According to the Association for the Advancement of Cost Engineering International (AACEi), cost estimating is defined as “a predictive process used to quantify, cost and price the resources required by the scope of an asset investment option, activity or project”. The cost estimating process involves attaching cost estimates for each task, activity or work package. All types of costs should be estimated, and they may include overhead charges, cost of risks efforts, cost of resources associated with the project, such as the materials, training, labour, equipment and computers, cost of quality efforts.

The overall process used in completing a project is called project management while the costing and cost management processes fall under the purview of quantity surveying, cost engineering and project controls.

Quantity surveying
The quantity surveying profession and practice is responsible for coming up with just about what a construction project is going to cost. These professionals called quantity surveyors are also responsible for a lot more roles, most especially ensuring that construction costs are structured and managed as efficiently as possible.

Quantity surveyors prepare the schedule and bill of quantities which are estimates of the material, services and labour costs that suppliers and building contractors’ bids can be measured and benchmarked against. The schedule or bill is called a cost estimate, which has been defined earlier. These estimates are done in line with the client’s instructions, requirements and mandate and are developed for every major stage and milestone of the project, only with respect to labour, services and materials.

The principal duties and roles of a quantity surveyor are conducting feasibility studies, doing rough estimates as well as managing the finances for any kind of construction project, be it small, medium or large. These projects can be high-rise buildings and towers, roads, bridges, apartment complexes and residential houses. All these estimates are based on the designs and functionality of the intended piece of real estate. Quantity surveyors work to deliver the project on time, on budget and as efficiently as possible after studying an engineer’s or architect’s plan and design and identifying the basic costs therein. They also work proactively to reduce disputes arising from construction work and work to resolve amicably areas of disagreement amongst the contending parties.

AYODELE AKINGBADE
Akingbade, a project controls consultant and cost engineer, is the managing consultant of Grierson Consulting Group.
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