Page 54 - Civil Engineering Project Management, Fourth Edition

Payment arrangements, risks and project cost estimating
if not, to make some deletion to reduce the cost before the contract goes out to
tender. The estimate can also act as a guide when comparing tendered prices.
3.6 Project cost control 39

It is during the design stage that measures to keep the cost of a project within
a budget figure are most effective. All possible savings in design need to be
sought, not only because this is manifestly in the interests of the employer,
but because there are sure to be some unforeseen extra costs that need to be off-
set by any savings that can be made. Alternative designs of layout or of parts
of the works have often to be studied before the most economic solution is
found; hence completion of all design before starting construction makes a
major contribution to controlling project cost.
The most prolific causes of extra cost are:
• not completing the design of the works in all essentials before the contract
for construction is let;
• not allowing adequate site investigations to take place;
• encountering unforeseen conditions;
• making changes to the works during construction.

The first two listed above can be avoided by taking the appropriate measures.
The third, however, is not avoidable even if the site investigations have been
as reasonably extensive as an experienced engineer would recommend. The
last – changes during construction – can be minimized by ensuring designs are
complete before construction commences, and that the employer takes time to
assure himself that the works as designed are what he wants. But some changes
are unavoidable if, during construction, the employer finds changed economic
conditions, new requirements or more up-to-date plant, or new legislation
forces him to make a change. The designer should keep aware of possible
changes to the employer’s needs and other technical developments, and not so
design the works that possible additions or alterations are precluded or made
unacceptably expensive.
If tenders are received which exceed the budget estimate by so large a sum
that the employer cannot accept any tender, means of reducing the cost may
have to be sought. Generally speaking, down-sizing a part or the whole of
the works is usually not as successful in reducing costs as omitting a part
of the works. Reducing the output of some works or the size of a structure
by 25 per cent, for instance, seldom results in more than 10 per cent saving
in cost, and can make restoration at a later date to the full output or size an
expensive and uneconomic proposition. If the employer can find some part of
the works which can be omitted, this is a more secure way of reducing the
cost of a project, and it should be possible to negotiate such an omission with
the preferred tenderer.