TYPE OF COST MODEL

1.

Traditional model
a) Functional unit

Definition
Functional unit method
estimating consists of choosing
a standard unit of
accommodation and
multiplying an approximate
cost per unit
Estimate = Standard units of
accommodation x cost/unit

Advantages
Disadvantages
More accurate than Not useful for onesimple superficial
off projects
method
Useful only for
No published cost
client body involved
data
in continuous and
consistent program
of similar projects

For example:
i. Schools, universities, colleges
- cost per student
ii. Hotels, hospitals - cost per bed
iii. Roads - costs per Kilometers
iv. Car parks - cost per car
The tehnique is based on the
fact that there is usually some
close relationship between the
cost of a construction project
and the number of functional
units it accommodates.
Functional units are those
factors which express the
intended use of the building
better than any other
b) Superficial unit
Definition
In Superficial unit method
estimating, the area of each
floors is measured and then
multiplied by the cost per
square metre.
In order to provide
comparability between various

Advantages
Disadvantages

Unit is meaningful Difficult to allow for

to all parties
effects of design

Most cost data is

decisions such as
plan shape, storey
published in $/m2

height quality, etc

Estimates
are

Separate allowance
quickly and easily
must be made for
prepared
site
works
and

schemes, the floor areas are

calculated from the internal
dimensions of the building.

external services

It is largely a post-1945
method, and became
appropriate for projects such as
schools and housing where
storey height are similar.
Storey heights, plan shape and
methods of construction are
particularly important when
deciding on the rate to be used.
c) Cube
Definition
Advantages
Disadvantages
The Cube method estimating is The estimate can be Does not take into
specific for building projects
prepared quickly
account changes to
and aims to overcome the
plan, height, storey
current criticism to the floor
and the overall
area method that does not take
height of the
into account possible variations
building
of the storey height
Unrelated work to
the volume has to be
Estimate = Volume x Unit Cost
calculated separately
(Cost/m3)
Estimate = External plan area x
height x cost (Cost/m3)
d) Storey Enclosure
Definition
Storey enclosure unit measure
the area of external walls,
floors and roof areas
(effectively enclosing the
building) and multiplying them
by an appropriate weighting
factor

Advantages
Provides a single
rate
Take into account
of difference in
plan shape total
floor area, vertical
position of the
floors, overall
height, storey
height, extra costs
of providing usable
floor areas below

Disadvantages
Not much used in
practice and
involves greater
calculation
Historical data are
not readily available

ground
e) Approximate Quantity
Definition
Approximate quantity method
estimating is to estimate the
cost to the employer of their
desired scheme
It usual to base the pricing of
such estimates on historical
cost data gleaned from the
analysis of the costs of similar
buildings adjusted to account
for any fluctuations in price
levels and for project
idiosyncrasies

Advantages
Most accurate
method
Simple, reliable
and accurate
method
Can clearly reflect
adjustments of
quantity and/or
quality
Cost data readily
available

Disadvantages
Time-consuming
Applicable only to
building work
Applicable only in
later stages of cost
planning

Advantages
Flexible, adaptable
method, suited to
Stages B, C and D
Easily understood
by all parties
Facilitates
comparison
between projects
Facilitates analysis
of cost implications
of design decisions

Disadvantages
Time-consuming
High level of
expertise required

The accuracy of the estimate

will be influenced by the state
of the design information, both
drawing and specification
notes
f)

Elemental Cost Analysis

Definition
In Elemental method of
estimating, the building is
divide into elements such as
foundations, structural frame,
external envelope, internal
divisions, floor finishes, etc.
Each element is sub divided
into components.
A rate is calculated for the
component by breaking the
component up into its
individual items to be priced
per measurable unit of the
component.
For example: A slab can be
broken up into concrete,

reinforcement, formwork, and

power floating.
Format of element codes:i. Element groups used in Stage
B - Outline Proposal
ii. Individual elements used in
Stage C - Sketch Design and
Stage D - Tender Document
g) Bill of Quantities
Definition
The bill of quantities is a
document prepared by the cost
consultant (often a quantity
surveyor) that provides project
specific measured quantities of
the items of work identified by
the drawings & specifications
in the tender documentation.
The quantities may be
measured in number, length,
area, volume, weight or time.
Preparing a bill of quantities
requires that the design is
complete and a specification
has been prepared.

2) Non-traditional Model
a) Statistical/Econometric Model

Advantages
Disadvantages
Provide a consistent Time-consuming
basis for
competitive bids so
that the contractor
who is the most
efficient and the
least expensive in
providing the items
of works is likely to
be commissioned
for the job.
Provide an open
basis for the
contract; the client
provides an
extensive and clear
statement of the
work he/she
requires and the
contractor states the
price at which
he/she is prepared
to undertake the
job.
Provide a very
strong basis for
financial
administration of
the contract.

 Analyze costs within a relevant range, which is the limits within which a cost
estimate may be valid.
Relevant range for a projection is usually between the upper and lower limits
(bounds) of past activity levels for which data is available.
- regression analysis
Definition
In statistical modeling,
regression analysis is a
statistical process for
estimating the relationships
among variables
It includes many techniques
for modeling and analyzing
several variables, when the
focus is on the relationship
between a dependent variable
and one or more independent
variables

Advantages
The estimates of the
unknown
parameters obtained
from linear least
squares regression
are the optimal
Estimates from a
board class of
possible parameter
estimates under the
usual assumptions
are used for process
modeling
It uses data very
efficiently. Good
results can be
obtained with
relatively small data
sets
The theory
associated with
linear regression is
well-understood
and allows for
construction of
different types of
easily-interpretable
statistical intervals
for predictions,
calibrations and
optimizations

Disadvantages
Outputs of
regression can lie
outside of the range
[0,1]
It has limitations in
the shapes that
linear models can
assume over long
ranges
The extrapolation
properties will be
possibly poor
It is very sensitive to
outliers
It often gives
optimal estimates of
the unknown
parameters

Advantages
Reliance on
historical data is
relatively

Disadvantages
Reliance on
historical data may
be the only readily

- causal model
Definition
Estimating approach based on
the assumption that future
value of variable is a

mathematical function of the

values of other variable(s)
Used where sufficient
historical data is available, and
the relationship (correlation)
between the dependent
variable to be forecasted and
associated independent
variable(s) is well known

inexpensive
available, cost Computational tools
effective basis for
estimating costs
allow for more data
Analysts must be
to be used than for
non-statistical
alert to cost-activity
methods
changes

Also called causal forecasting

model

b) Risk/Simulation Model
A simulation model take the form of a set of assumptions about the operation of the
system, expressed as mathematical or logical relations between the objects of interest
in the system
-Monte Carlo simulation
Definition
Computation intensive
forecasting technique applied
where statistical analysis is
extremely cumbersome due to
the complexity of a problem
(such as queuing or waiting
line probabilities, or
inventories involving millions
of items).

Advantages
Straightforward and
flexible
Computer software
make simulation
models easy to
develop
Enables analysis of
large, complex,
real-world
situations
Used only where the problem
Does not interfere
has a chance (random)
with real world
component, and is subject to
system
unpredictable influences, it
Enables study of
simulates (models) a situation
interactions
on the basis of current and past Enables time
(historical) data.
compression
Enables the
In the simulation process, it
inclusion of realcomputes an equation
world

Disadvantages
Often requires long,
expensive
development
process
Does not generate
optimal solutions; it
is a trial-and-error
approach
Requires managers
to generate all
conditions and
constraints of realworld problem

(mathematical model)
thousands or millions of times,
each time injecting random
numbers to come up with a
range of possibilities or
outcomes of possible actions.

complications

Larger the number of

computations, the greater the
probability (according to the
law of large numbers) of
approximating the future
events-provided the maximum
amount of known-data is
incorporated into the model

-Value Management
Definition
Advantages
Application of value analysis
Delivers value for
(value engineering) techniques
money to the
for improvement of business
organisation when
effectiveness and efficiency
applied correctly
and methodically
Enables the client,
key stakeholders,
and the end user to
discover and
achieve their needs
and wants through
the workshop and
create a balance
between their
priorities for the
project
Enhances value by
clarifying objectives
and requirements,
establishing better
communication and
preventing conflicts
between key
stakeholder
Improve value by
identifying the most

Disadvantages
Need to spend time
and money to carry
out the value
management study
It is hard for the
value manager to
choose a good team
with the right
participants and
appropriate skills
mix as well as
creating a suitable
environment for
them
In Value
Management study,
many professionals
have to leave their
workplace for a
couple of days in
order to execute the
workshop and
usually this costs the
client a lot of money
and time
The confused and

appropriate way for

satisfying the
stakeholders needs
and wants

inconsistent use of
Value Management
terminology and the
lack of standard
definition are
considered as
weaknesses as well
as barriers to its
widespread
application

3) New Wave Model

a) Artificial Intelligent System
Artificial Intelligence is the branch of computer science concerned with making
computers behave like humans.
-Artificial neural networks
Definition
An artificial neural network
(ANN) is a computational
model based on the structure
and functions of biological
neural networks
Information that flows through
the network affects the
structure of the ANN because
a neural network changes - or
learns, in a sense - based on
that input and output

-Neuro-Fuzzy

Advantages
A neural network
can perform tasks
that a linear
program cannot
When an element of
neural network
fails, it can continue
without any
problem by their
parallel nature
A neural network
learns and does not
need to be
reprogrammed
It can be
implemented in any
application
It can implemented
without any
problem

Disadvantages
The neural network
needs training to
operate
The architecture of a
neural network is
different from the
architecture of
microprocessors
therefore needs to be
emulated
Requires high
processing time for
large neural
networks

Definition
In the field of artificial
intelligence, neuro-fuzzy
refers to combinations of
artificial neural networks and
fuzzy logic

Advantages
The chances of
error are almost nil
and greater and
accuracy is
achieved
Utilized in carrying
out repetitive and
time-consuming
task efficiently
Enable to store
enormous amounts
of data

Disadvantages
Cost incurred in the
maintenance and
repair