Detailed Breakdown of Costing for Any Construction Project

1. Detailed Breakdown of Costs

Costing involves breaking down the entire project into smaller parts. It’s not just about saying, “The building will cost ₹1 crore.” You need to get into the details—what part of the project is costing how much.

Example:

Let’s say you’re constructing a 3-storey commercial building. The overall cost might seem straightforward, but when you break it down, you’ll realize:

• Foundation work costs ₹20 lakhs, including materials like concrete, sand, and labor for excavation.
• Structure costs ₹40 lakhs, which includes steel reinforcement, concrete, and labor for masonry work.
• Finishing costs ₹30 lakhs for tiling, painting, windows, and doors.

Now, you’re not just looking at one big figure, but multiple smaller amounts, and this helps you keep track of where your money is going.

2. Material Costing

One of the biggest chunks of any construction project is the material cost. This includes cement, steel, sand, bricks, and other materials needed to build the structure. Material prices fluctuate, so you need to estimate the cost based on current market prices and make sure you have a buffer for any price hikes.

Example:

Imagine you’re building a 100-flat apartment complex. You’ll need to estimate how many bags of cement, tons of steel, and truckloads of sand will be required for each floor. Let’s say the price of cement is ₹400 per bag when you start, but six months later, it jumps to ₹450 per bag. This increase can add lakhs to your project’s cost, so you have to plan for such situations in your costing.

3. Labor Costs

The other major factor in construction costing is labor. How much you pay your workers can vary depending on the location, the type of work, and the duration of the project. You’ll need to estimate how many workers you’ll need, for how many days, and what their daily wages will be.

Example:

For a hospital construction project, you might need masons, carpenters, electricians, and painters. Each of these workers has a different daily wage rate. The masons might charge ₹800 a day, carpenters ₹1,000 a day, and so on. You’ll need to estimate how many days of work each type of laborer will need to finish their part of the project.

If the project gets delayed due to weather or material shortages, the labor cost increases because you’re paying them for extra days. So, estimating the labor cost accurately is crucial to ensure that you don’t run over budget.

4. Overhead Costs

Construction isn’t just about materials and labor. There are plenty of overhead costs that you have to account for as well. This includes things like:

• Site office expenses: Setting up an office at the construction site with furniture, computers, etc.
• Machinery rental: If you’re renting cranes, bulldozers, or other heavy machinery, this cost adds up.
• Permits and approvals: You’ll also have to pay for government permits and approvals before starting the construction.

Example:

Let’s say you’re building a highway flyover. You’ll need to rent a crane for lifting heavy beams into place. The crane rental might cost ₹50,000 per day, and you’ll need it for about 20 days. This cost must be included in your overall project costing so that it doesn’t eat into your material or labor budget.

5. Contingency Costs

Even with the best planning, unexpected things happen on a construction site. You might face delays due to weather, or the design might change mid-project, leading to extra costs. Contingency costs are like a buffer—money set aside to cover any unforeseen expenses that pop up.

Example:

Imagine you’re constructing a residential villa. Halfway through, the client decides to change the design of the kitchen or add a swimming pool. These changes mean extra costs for materials and labor, and that’s where your contingency fund comes into play. Without it, such changes could mess up the whole project’s budget.

A good rule of thumb is to keep around 5-10% of the total project cost as a contingency fund.

6. Profit Margin

In construction projects, the contractor’s profit is another factor in costing. After estimating all the material, labor, overhead, and contingency costs, the contractor adds their profit margin to the total cost. This is usually a percentage of the overall project cost.

Example:

Let’s say you’re handling a factory construction project. After estimating all your costs, you come up with a total cost of ₹5 crore. As the contractor, you add a 10% profit margin, making the final contract value ₹5.5 crore. This ensures that after covering all expenses, you still make a reasonable profit from the project.

7. Costing for Different Project Types

Costing can vary depending on the type of project. A residential building, for example, might have a different costing approach than a commercial office space or infrastructure project like a bridge or a highway.

• Residential projects: Focuses more on material costs (like bricks, cement, tiles, etc.) and finishing items (like doors, windows, and paint).
• Commercial projects: You’ll need to factor in things like elevators, HVAC systems, and high-quality finishing materials.
• Infrastructure projects: In projects like roads or bridges, the costing will be heavily focused on earthwork, concrete, steel, and machinery costs.

Example:

In a bridge construction project, costing would primarily revolve around steel reinforcement, concrete, earthwork (like excavation), and the heavy machinery needed for piling and lifting large elements. You’ll also factor in safety barriers, signage, and lighting as part of the final estimate. The whole costing approach here is different from a residential building project, where the focus would be more on architectural finishes and interior designs.

Wed Sep 4, 2024