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In microeconomics, economies of scale are the cost advantages that enterprises obtain due to their scale of operation, and are typically measured by the amount of output produced per unit of time. A decrease in cost per unit of output enables an increase in scale that is, increased production with lowered cost. At the basis of economies of scale, there may be technical, statistical, organizational or related factors to the degree of market control.
Cost accounting is defined by the Institute of Management Accountants as "a systematic set of procedures for recording and reporting measurements of the cost of manufacturing goods and performing services in the aggregate and in detail. It includes methods for recognizing, allocating, aggregating and reporting such costs and comparing them with standard costs". Often considered a subset of managerial accounting, its end goal is to advise the management on how to optimize business practices and processes based on cost efficiency and capability. Cost accounting provides the detailed cost information that management needs to control current operations and plan for the future.
Construction is a general term meaning the art and science of forming objects, systems, or organizations. It comes from the Latin word constructio and Old French construction. To 'construct' is a verb: the act of building, and the noun is construction: how something is built or the nature of its structure.
An operating expense is an ongoing cost for running a product, business, or system. Its counterpart, a capital expenditure (capex), is the cost of developing or providing non-consumable parts for the product or system. For example, the purchase of a photocopier involves capex, and the annual paper, toner, power and maintenance costs represents opex. For larger systems like businesses, opex may also include the cost of workers and facility expenses such as rent and utilities.
Design–bid–build, also known as Design–tender, traditional method, or hardbid, is a project delivery method in which the agency or owner contracts with separate entities for the design and construction of a project.
A general contractor, main contractor, prime contractor, builder (UK/AUS), or contractor is responsible for the day-to-day oversight of a construction site, management of vendors and trades, and the communication of information to all involved parties throughout the course of a building project. In the USA a builder may be a sole proprietor managing a project and performing labor or carpentry work, have a small staff, or may be a very large company managing billion dollar projects. Some builders build new homes, some are remodelers, some are developers.
A quantity surveyor (QS) is a construction industry professional with expert knowledge on construction costs and contracts. Qualified professional quantity surveyors are known as Chartered Surveyors in the UK and Certified Quantity Surveyors in Australia and other countries. In some countries such as Canada, South Africa, Kenya and Mauritius, qualified quantity surveyors are known as Professional Quantity Surveyors, a title protected by law.
Construction management (CM) aims to control the quality of a project's scope, time, and cost to maximize the project owner's satisfaction. It uses project management techniques and software to oversee the planning, design, construction and closeout of a construction project safely, on time, on budget and within specifications.
A bill of quantities is a document used in tendering in the construction industry in which materials, parts, and labor are itemized. It also (ideally) details the terms and conditions of the construction or repair contract and itemizes all work to enable a contractor to price the work for which he or she is bidding. The quantities may be measured in number, area, volume, weight or time. Preparing a bill of quantities requires that the design is complete and a specification has been prepared.
A cost estimate is the approximation of the cost of a program, project, or operation. The cost estimate is the product of the cost estimating process. The cost estimate has a single total value and may have identifiable component values.
Construction waste or debris is any kind of debris from the construction process. Different government agencies have clear definitions. For example, the United States Environmental Protection Agency EPA defines construction and demolition materials as “debris generated during the construction, renovation and demolition of buildings, roads, and bridges.” Additionally, the EPA has categorized Construction and Demolition (C&D) waste into three categories: non-dangerous, hazardous, and semi-hazardous.
Materials management is a core supply chain function and includes supply chain planning and supply chain execution capabilities. Specifically, materials management is the capability firms use to plan total material requirements. The material requirements are communicated to procurement and other functions for sourcing. Materials management is also responsible for determining the amount of material to be deployed at each stocking location across the supply chain, establishing material replenishment plans, determining inventory levels to hold for each type of inventory, and communicating information regarding material needs throughout the extended supply chain.
Construction bidding is the process of submitting a proposal (tender) to undertake, or manage the undertaking of a construction project. The process starts with a cost estimate from blueprints and material take offs.
Construction cost estimating software is computer software designed for contractors to estimate construction costs for a specific project. A cost estimator will typically use estimating software to estimate their bid price for a project, which will ultimately become part of a resulting construction contract. Some architects, engineers, construction managers, and others may also use cost estimating software to prepare cost estimates for purposes other than bidding such as budgeting and insurance claims.
Edward Skoyles was the first quantity surveyor employed in the UK to research costs and practices in the construction industry. He did his research from 1960 until 1984 at the Building Research Establishment. Among his research projects was developing a new type of tendering for construction projects called operational bills. He also started the study of the actual amount of waste in the construction industry, and investigated the varying methods of cost estimation practices used in different countries. His contributions are still widely discussed in the academic literature particularly upon operational bills, and building waste
Pre-construction services are services that are offered to support owners, architects, and engineers in making decisions. They are used in planning a construction project before the actual construction begins. The stage where these services are offered is called pre-construction or "pre-con".
The following is a glossary of terms relating to construction cost estimating.
Australian Construction Contracts govern how the parties to a construction contract behave and how the project manager and the contract manager administer the relationship between the parties. There are several popular standard forms of construction contracts that are currently used in Australia.
A construction contract is a mutual or legally binding agreement between two parties based on policies and conditions recorded in document form. The two parties involved are one or more property owners and one or more contractors. The owner, often referred to as the 'employer' or the 'client', has full authority to decide what type of contract should be used for a specific development to be constructed and to set out the legally-binding terms and conditions in a contractual agreement. A construction contract is an important document as it outlines the scope of work, risks, duration, duties, deliverables and legal rights of both the contractor and the owner.
Early contractor involvement (ECI) is a type of construction contract where the principal contractor is engaged at an early stage in a project to offer input into the design phase. It is in contrast to the design–bid–build model where the contractor is only brought onboard at the end of the design phase. The model allows the contractor to have an input in the design of the scheme and suggest value engineering changes. Studies have shown that savings of around 10% in construction phase time and 7% in cost are achievable through the use of ECI. The ECI model has become increasingly popular in the United Kingdom since the early 2000s and is also used in Australia and New Zealand.
References
- 1 2 3 Skoyles, E. R. (1966) Examples from operational bills OCLC 61861509
- 1 2 3 Skoyles, E. R. (1967) Preparation of an operational bill. Building Research Station ISBN 978-0-85125-019-9 OCLC 271085985
- ↑ Shanley LF. (1970). Report on pilot project on operational bills. An Foras Forbartha (Irish National Institute for Physical Planning and Construction Research) ISBN 978-0-9501356-0-1
- ↑ England Symposium on Operational Bills (1967). "Symposium on Operational Bills discussion. Report on a Symposium on Operational Bills held at the Building Research Station, 8th March." ASIN B000X8332G
- 1 2 3 4 5 Potts, K. (2008). Construction Cost Management: Learning from Case Studies, Routledge. ISBN 978-0-415-44286-2
- ↑ Royal Institute of Surveyors (Republic of Ireland Branch) (1970). The bill of quantities and the operational bill: Seminar, Dublin, March. An Foras Forbartha (Irish National Institute for Physical Planning and Construction Research) ISBN 978-0-900115-01-1
- ↑ Skoyles, ER. (1970). Bills of quantities, or the operational bill? Architects' Journal (28 January) 233-240.
- ↑ Skoyles, ER. (1981). Production orientated tendering: a resume and re-examination for the early eighties of the issues involved. Quantity surveyor, 37, (6) 110-113.
- ↑ Skoyles, ER. (1968). Introducing bills of quantities : (Operational format). Building Research Station. OCLC 61864680
- ↑ Skoyles ER. (1969).Examples from bills of quantities (Operational format). Building Research Station. OCLC 43131569
- 1 2 3 4 Ashworth, A. (2002). Pre-contract studies: development economics, tendering and estimating. Edition: 2. Wiley-Blackwell. ISBN 978-0-632-06472-4 p.332.
- ↑ Lal H. (2002). Quantifying and Managing Disruption Claims. Thomas Telford. ISBN 978-0-7277-3165-4.
- 1 2 3 Dmaidi, N. (2003). The State of the Art in Integration of Cost and Time Models Archived 2010-05-29 at the Wayback Machine . An-Najah University Journal of Research. 17(1). 99-122. pp. 108-109
- 1 2 Jaggar D. Ross A. Smith J. Love P. (2002). Building Design Cost Management. Edition: 2. Wiley-Blackwell. ISBN 978-0-632-05805-1 pp147-148