Elemental Cost Plans: Everything You Need To Know
Cost planning is an important part of determining the feasibility of a construction project during its early stages. It can allow you to determine whether a proposed project is suitable for your time and budget constraints and whether it is likely to deliver the required return on investment.
You can also use cost plans to help secure funding for construction projects from banks, investors and the government, helping to get the ball rolling.
However, to fully assess project feasibility and secure funding, cost plans need to be accurate. A detailed and accurate cost plan in the early stages can be the difference between a successful project and one that comes in over budget and is completed late.
An elemental cost plan can help deliver the accurate details required at the start of your project before all aspects of design are available, allowing for management of the construction budget right from the start.
What is an elemental cost plan?
The elemental method of estimating for cost planning is a detailed way of calculating the cost of a construction project, especially when compared to the more superficial area or unit methods.
With an elemental cost plan, the plan is broken down into a series of elements. To start with, this will show the total cost of a construction project divided into elements on a percentage basis. This type of cost plan should also set out any assumptions and include any exclusions agreed with the client. The result will be a cost plan that presents an outline assessment of all the costs throughout the total project.
As a project’s design becomes more detailed, the elemental cost plan is updated alongside it, with costs based on the quantities of work and materials that will be required throughout the life of the project. This helps to avoid designing outside of the budget and can ultimately save you huge sums of money throughout your project.
Once the design for your project is complete, the bill of quantity (BOQ) can be prepared and a more detailed cost calculated.
When should you use an elemental cost plan?
An elemental cost plan is a good method to use when you need to compare design alternatives provided by an architect, as it gives a clear idea of the costs involved in each design option.
This type of plan is also beneficial when you have a strict budget and want to choose the best design to fit it.
Elemental cost plans should also be used for presentation purposes, such as when presenting plans to secure funding from a bank or investor. This is because this type of plan includes detailed costings that can better showcase the feasibility of your project.
What are the advantages of an elemental cost plan?
A big advantage of an elemental cost plan is that it’s easy to understand. The cost breakdown of elements is clear, ensuring that everyone involved in the project can make sense of it.
As mentioned above, elemental cost plans are also beneficial for budgeting purposes. For example, the biggest costs can be easily identified for readjusting as needed to reduce the estimated cost.
The checking system on the costs also means it is likely there will be fewer changes to the BOQ, as changes can be made before the production of the final design. This ensures you save time and money as you don’t need to make any changes to the final costing and design.
What are the disadvantages of an elemental cost plan?
The biggest disadvantage when it comes to an elemental cost plan is that constant cost checking and plan adjustments can take a lot of time in the early stages. You also need good insights into and understanding of the cost implications of design specifications. This includes construction technology, building materials, plan shape, etc.
Hiring a quantity surveyor can make this easier and ensure your time is available to deal with other parts of project planning, especially as a QS will have good industry knowledge that can make the process smoother and more accurate.
In construction, a cost plan is recommended as it will allow you to control estimated costs and will provide you with accurate progress and expenditure information at every stage of the project. Early cost planning does this and gives you a clear indication of the feasibility of a project.
Opting for an elemental cost plan ensures that your design fully reflects your budget and that there is a rational distribution of expenditure throughout the design. They can be prepared and updated as your design evolves, even if the full design is not available, ensuring you are always working within your budget. Ultimately, elemental cost plans can help deliver better ROI by allowing you to identify savings opportunities.