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Module 7. Total Project Cost
Overview
This module is intended to provide the students the knowledge what
comprises the total project costs.
Learning Objectives
The student must be able to identify the items or works to be included in the
computation of the total project costs.
Topics
This module will discuss total project cost which includes the following:
Professional Engineering Cost
Construction Costs
Legal, Land, Administration, Staffing, and Financial Costs
Introduction
Note: This module adopted the discussion in PICE Manual.
Probable total cost is a major concern of the client throughout the planning,
design, and construction phases of a project. The probable total capital cost, often
used to establish budgets for a typical project, is made up of:
1. Professional engineering costs.
2. Construction cost
3. Legal and land costs
4. Owner’s costs, including projects administration, staffing, financing, and other
overhead.
5. Contingency allowance for unknowns.
Discussion
The following subsections are the inclusions of the total project costs:
Professional Engineering Costs
A Civil Engineer is often engaged to make a study and to render a planning
report on the contemplated project, including alternative solutions, layouts, and
locations along with initial estimates of probable project costs. These may involve
alternative or phased implantation schemes which add flexibility to the project.
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The study and report phase may include the cost for field or traffic surveys,
planning analyses, geotechnical explorations and analyses, in addition to the direct
engineering costs.
The costs of coordination, evaluation, implementation and compliance have
increased correspondingly. The extent of these concerns may not be identified
during the study and report phase, and sometimes not even after final plans and
specifications have been prepared. As a result, the estimated probable total cost of
the project based on the study and report phase must be understood to be
preliminary in nature.
Because projects vary widely in nature and scope, the study and report phase
is important because its implementation determines the scope and development of
the entire project and its ultimate capital and lifecycle cost. At times, preliminary
investigations become extensive and lengthy that the study and report phase costs
as much or more than the final design phase costs as much or more than the final
design phase.
During the final design and construction phase, additional surveying and
geotechnical engineering services may be needed. Also special or additional
engineering services may be needed. Also special or additional engineering services
not originally identified may be required by the client or recommend by the Civil
Engineer.
Construction Cost
The study and report phase of the project usually includes a preliminary
estimate of the construction cost for the contemplated project and for alternative
project configurations. Such cost estimates are approximate, since the final design
drawings and specifications have not yet been prepared. In addition, the timing of the
construction work must be considered because inflation will after the construction
costs.
Construction costs is the estimated total cost of constructing the facility to be
covered by the proposed detailed design or construction supervision services,
excluding the fees and other costs of such services, the cost of land and right-of-
way, and legal administrative expenses of the agency. The estimated construction
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cost must be approved by the client before the invitation to submit technical proposal
is issued.
LEGAL, LAND, ADMINISTRATION, STAFFING AND FINANCIAL COSTS
These costs, which include audits, the cost of issuing bonds, land costs, and
interest for borrowed money during construction, are part of the probable total project
cost and can best be estimated in cooperation with the client because they are
usually outside the knowledge and control of the Civil Engineer.
CONTINGENCY ALLOWANCE
As the project moves forward from the study and report phase through the
final design phase and finally to construction award, more becomes known about
project details and costs, until at the completion of the projects, the final project cost
becomes a known quantity.
To provide for intangible costs, contingencies should routinely be added to the
basic cost estimate. It is common practice to add 20% or more to be estimated
probable total project cost at the completion of the study and report phase, reducing
this to perhaps 10% at the completion of final design and perhaps to 5% when the
construction bids become known. Larger or more complex projects may require
higher contingencies.
Student Activity # 7. Search for a sample Program of Works of any civil
engineering projects then make a summary of the major items included in the
computation of the total project costs.
Surname_StudentActivity7 send to FB Msger Account Celeste A. De Asis
Feedback
This activity is for the student to be acquainted with the actual computation of
total project cost.
SUMMARY
Estimates of probable total project cost should be periodically revised by the
engineers as the design moves forward and more information becomes known. The
client is normally responsible for providing estimates of those costs which may lie
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outside the Civil Engineer’s knowledge or expertise, such as those in the legal, land,
administrative, and financial area.
Reference
Philippine Institute of Civil Engineers, Inc. 2003. Manual of Professional
Practice for Civil Engineers, 2nd Edition. Manila: Philippine Institute of Civil
Engineers, Inc.
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