Factors Affecting Cost of Work

Introduction

In the field of quantity surveying and costing, understanding the factors that affect the cost of work is crucial. Cost estimation plays a vital role in project planning, budgeting, and decision-making. By analyzing and considering various factors, professionals can accurately estimate the cost of a project and ensure its successful execution.

Key Concepts and Principles

Factors Affecting Cost of Work

There are several factors that influence the cost of work in quantity surveying and costing. These factors include:

1. Overhead charges

Overhead charges are indirect costs incurred during the execution of a project. They are not directly attributable to a specific activity but are necessary for the overall functioning of the project. Some common types of overhead charges include administrative expenses, utilities, insurance, and equipment maintenance.

To calculate and allocate overhead charges, the following steps are typically followed:

• Identify the types of overhead charges applicable to the project
• Determine the cost base for calculating overhead charges
• Calculate the overhead charges using appropriate rates or percentages

1. Contingencies

Contingencies are unforeseen events or circumstances that may impact the cost of a project. They are included in the cost estimation to account for potential risks and uncertainties. Contingencies can be categorized into two types: known contingencies and unknown contingencies.

To allocate contingencies, the following steps are generally followed:

• Identify the types of contingencies required for the project
• Determine the risk factors and their impact on cost
• Allocate contingencies based on the level of risk

1. Work charge establishment

Work charge establishment refers to the process of determining the cost of work based on the resources required for a project. It takes into account factors such as labor, materials, equipment, and project duration. The work charge is calculated to ensure that the project is financially viable and can be completed within the allocated budget.

To establish the work charge, the following steps are typically followed:

• Consider the scope and complexity of the work
• Analyze the resources required for the project
• Calculate the work charge based on the estimated resources and project duration

Step-by-step Walkthrough of Typical Problems and Solutions

To better understand the application of factors affecting the cost of work, let's walk through some typical problems and their solutions.

Problem 1: Calculating overhead charges for a construction project

1. Identify the types of overhead charges applicable
2. Determine the cost base for calculating overhead charges
3. Calculate the overhead charges using appropriate rates or percentages

Problem 2: Allocating contingencies for a quantity surveying project

1. Identify the types of contingencies required
2. Determine the risk factors and their impact on cost
3. Allocate contingencies based on the level of risk

Problem 3: Establishing work charge for a construction project

1. Consider the scope and complexity of the work
2. Analyze the resources required for the project
3. Calculate the work charge based on the estimated resources and project duration

Real-world Applications and Examples

To illustrate the practical application of factors affecting the cost of work, let's consider some real-world examples.

Example 1: Cost estimation for a residential building project

1. Identify the overhead charges applicable to the project
2. Allocate contingencies based on the project's risk factors
3. Establish the work charge considering the project's scope and resources

Example 2: Cost estimation for a civil engineering project

1. Calculate the overhead charges for the project based on the cost base
2. Allocate contingencies considering the project's risk factors
3. Determine the work charge establishment based on the project's requirements

Advantages and Disadvantages of Factors Affecting Cost of Work

Understanding the factors affecting the cost of work in quantity surveying and costing offers several advantages and disadvantages.

Advantages

1. Provides a comprehensive understanding of cost estimation
2. Helps in accurate budgeting and cost control
3. Enables effective decision-making in project planning and execution

Disadvantages

1. Complexity in calculating and allocating overhead charges
2. Difficulty in accurately predicting contingencies
3. Challenges in establishing work charge due to varying project requirements

Conclusion

In conclusion, understanding the factors affecting the cost of work is essential in quantity surveying and costing. By considering overhead charges, contingencies, and work charge establishment, professionals can accurately estimate the cost of a project and make informed decisions. It is crucial to apply these concepts and principles in real-world scenarios to ensure successful project execution and cost control.

Summary

Understanding the factors affecting the cost of work is crucial in quantity surveying and costing. By considering overhead charges, contingencies, and work charge establishment, professionals can accurately estimate the cost of a project and make informed decisions. This involves identifying the types of overhead charges and contingencies, calculating and allocating them, and establishing the work charge based on the project's scope and resources. Understanding these factors provides a comprehensive understanding of cost estimation, helps in accurate budgeting and cost control, and enables effective decision-making in project planning and execution. However, there are challenges in calculating and allocating overhead charges, accurately predicting contingencies, and establishing work charge due to varying project requirements.

Analogy

Calculating the cost of work is like planning a road trip. You need to consider various factors such as the distance to be covered, the type of vehicle, the fuel consumption, and any potential detours or unexpected expenses. Similarly, in quantity surveying and costing, professionals analyze factors like overhead charges, contingencies, and work charge establishment to accurately estimate the cost of a project and ensure its successful execution.