Project managment

Estimating probable final cost of works

When a construction project is moving towards completion the employer may ask for an estimate of its probable final cost. To deal with this it is a help if the bill of quantities for the project is divided into separate bills for separate structures.
This makes it easier to identify where extra costs have arisen and where further extras can be expected. The following type of analysis may then be adopted:
• An analysis of amounts incurred under variation orders is made, dividing them out over the separate bills. The analysis should include VOs pending.
If a VO covers many items spread over several bills, it can be allocated to general contingency money, to save time on too much detailed analysis.
• The page totals in the original priced bill of quantities should be compared with the latest page totals for interim payments certified to date. Additions should be made where, by examination, it is thought payment for items on that page will come to £500 or more than the original page total shown.
Deductions will be made where it is expected a page total will reduce by £500 or more because of items omitted, or for which payment under a VO has been substituted. Smaller differences are ignored. The total for each bill for a separate structure is then derived by adding up the revised page totals.
• The probable final cost outcome of the main construction contract can then be assessed as shown in Table 14.1.

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