Price Lists / Regulerbare ydelser

#5 Understanding the tools for Cost management/control

The rates in the bill of quantities (BoQ), provide a basis for estimation of variations of work. Additional rates, received as part of the Price Lists, which should be part of the bill of quantities (BoQ), can also be used to calculate the prices of other components not specifically described in the BoQ.

These conditions should be specifically described as part of the tender special conditions, so that the process is clear for all parties when requesting extra work.

Post-tender estimate / Skøn efter udbuddet

#3 Understanding the tools for Cost management/control

The purpose of this estimate is to corroborate the funding level required to complete the building project by the developer, including rates adjustments, fees, as well as other development and project costs.

After all tender offers have been received and evaluated, it is possible to produce a Post-tender estimate, that will be based on the outcome of any negotiations with the final contractors, including rates and quantities adjustments, clarifications of scope and the like.

This estimate will take into account the actual known construction costs and any residual risks, and the uncertainties of market conditions became clear. This estimates are used as the control estimate during construction, as it defines the basis of all the works going forward and all updated agreed quantities.

All possible future variations will be checked against the post-tender estimate.

Cost planning / Omkostningsplanlægning

#4 Understanding the tools for Cost management/control

The aim of a Cost Plan is to redistribute the elements into works packages for the purpose of budget and cost control during the design phases, for procurement while defining the tender strategy and during the tender phase and for cost control during the construction phase of the building project.

Cost planning is a constant and reiterative process, that develops in steps of increasing detail as more design information becomes available. A cost plan provides both a work breakdown structure and a cost breakdown structure.

It provides cyclic information for future feasibility studies, and allows to focus value engineering efforts by understanding main cost impacts of the different packages to the over all project economy.

Having a standard Cost Plan breakdown for all projects, ensures the company will be able to take intelligence decisions for future development projects, based on actual and historical information.”

Pre-tender estimates / Skøn før udbuddet

#2 Understanding the tools for Cost management/control

Pre-tender estimates are prepared immediately before calling the first tenders for construction. This is the final cost-check undertaken by the cost manager before tender bids for the building project, or any part of the building project, are obtained. Therefore, it is essential that the design has finalized, the project has been quality checked, and no more changes to the project material are done after the Quantity Surveyor begins the Tender estimate.

This way, the estimate is based on the very same conditions that the different contractors will base their own offers in the tender. This allows as well to prepare the basis for the tender analysis later on, and allows to compare side by side all offers received against the pre-estimate expected.

When a bill of quantities (BQ) is the basis of obtaining a tender price, the pre-tender estimates will be based on the BQ.

Bill of Quantities / Tilbudslister

#1 Understanding the tools for Cost management/control

Almost more important than a good process for commercial management, are the tools implemented in the project to carry on this task.

The most used tool for this purpose would be a standardized Bill of Quantities.

The main purpose of a bill of quantities (BoQ) is to present a coordinated list of components/items, together with their identifying descriptions and quantities that encompass the building works, so that the tendering contractors are able to prepare tenders efficiently and accurately.

Having a standardized BoQ will assure parity of tendering, as all bidders will base their offers on the same conditions and contents.

For a quantity surveyor/cost manager, the BoQ becames a vital tool, as it will be used to manage and control the costs of the building project. Cost management and control uses include:

  • Pre-tender estimates;
  • Post tender estimates;
  • Cost planning;
  • Pricing variations; and
  • Interim valuations and payment.