Construction Cost Analysis

765 Words4 Pages
Purpose of Cost Estimate

Malaysia is one of the development countries and is in the process of rapidly developing. Construction industry in Malaysia is an indicator in creating wealth and promoting a feature of life for Malaysians through the transformation of government’s socio-economic policies into social and economic infrastructure and buildings. Furthermore, construction industry also serve many job opportunities for communities. In construction industry, it is important to have estimation on cost performance of projects to ensure the construction cost is within the owner’s budget for the project.
In the construction industry process, estimation provides a number numerous of functions. Basically, it is to serve an indication of the probable
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In the early stages of a construction program, the owner needs an estimate of the probable cost of construction. This conceptual estimate has to be prepared from a minimum amount of information because it is required at a time when the project is often little more than a vague idea in the mind of the owner (Pratt, 2004). Once the design of the project is started, budget amounts can be established for the various elements of the project. When the design is finalized, a final pre-bid estimate can be compiled to anticipate the contractor’s bid price for work. If this estimates is accurate, the obtained bid prices will be within the owner’s budget for the project. Most contracts that emerge in the construction industry results from competing bids from contractors to supply goods and services to meet certain specification for a stipulated sum of money. (Pratt et al.,…show more content…
According to Pratt et al. (2004) estimates are also required after works starts on the project. In the cost control programs, estimating is required to assist the control of expenditure of founds on a project. Peurifoy et al. (2002) clarified that the estimator and his or her team play an important role in preparing estimations whether using computers or not. The computer can assist during the activities process, but the estimator need to know their role and responsibility to manage and to control the estimating process. As an estimator, he or she is expected to carry out tasks for example thoroughly examine tender documents, attend a site visit, prepares methods statement and tender program, develop conceptual estimates and make inquiries and receive quotations based on production rates for materials, plant and subcontractors. The estimator also must review and check all parts of an estimate to ensure the relevant cost of particular project besides document the estimate, so that it will be used for cost control
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