In the construction industry, a cost plan is considered one of the most important factors to be taken into consideration before any development is embarked on.
This is because a cost plan helps in the determination of the fiscal feasibility of an initiative, and thus is used as a means of controlling the estimated costs of the project.
Unfortunately, many people do not know how to go about cost planning, and choose to dive into projects blindly.
David Nahinga, CEO of UjenziBora Investments Limited, gave us his professional opinion on some of the factors that must be considered when cost planning for a project.
Have a design in mind
One of the major factors that goes a long way in determining the cost of your project is the design you want it to have.
“Factors such as the shape and the size of the building you want, how complex you want the design to be, as well as the circulation space of the building, including the height and structure of the design, all have an implication on the final cost of the project,” says Nahinga.
He adds that it is important to note that the workmanship and quality of materials to be used as determined by the specifications of the design will have an impact on the cost.
Building materials will always come in different qualities, and play the same function, but are priced differently.
They also require different levels of expertise, which has a bearing on the final cost of roofing.
When choosing a design, it is important to focus on one in which high-quality building materials can be acquired at a cost-friendly price and achieve the desired end goal of the project.
“Many people grasp a design without fully understanding how much achieving it will cost,” notes Nahinga.
“Many get surprised at how varying one item, like the type of finishes, can have a high impact on their construction budget. Every building material has a substitute which could be cheaper or more expensive but plays the same function.”
The value of a shilling
A country’s economic climate will immediately have an effect on the final cost that will be put into a project.
For instance, the interest on borrowed funds and price fluctuations caused by inflation or market forces can affect the initial cost plan of a project.
The source of the building materials — that is, whether available locally or imported — will also affect the overall cost plan.
“Oftentimes, when it comes to complex designs, there may arise the necessity to source skilled labourers as well as importing of the construction materials necessary to complete the project,” he says.
And adds that some designs may necessitate sourcing of skilled labourers, and this would add to the overall cost.
Political factors in terms of how stable a neighbourhood is or the safety index of a neighbourhood must be considered when cost planning for your building project.
“Having your construction in a high-end zoned neighbourhood where the development is controlled could be cheaper in terms of security measures to be incorporated in the cost plan, but relatively expensive since one has less free-play in the design variables,” Nahinga advises.
"This is opposed to neighbourhoods where there are high cases of riots and theft, as this will be an added cost when one has to replace damaged or stolen goods.”
Project baseline report
After one has completed their design and has a complete understanding of all factors that affect the cost plan, then the tasks, timings and costs of the project, will eventually be summarised in a “developer’s budget”, also known as a “project baseline plan”, that will enable you to keep track of all the costs and finances that will be involved in the project.
“The developers budget will have a breakdown of costs such as construction, land purchase, professional fees, legal fees, preliminary costs, management costs, marketing costs if the development is for sale and the anticipated return on investment of the project,” Nahinga says.
He adds that such a budget is important as it reflects all the factors that will affect the building or infrastructure project from inception to completion, thus enabling one to decide whether to go ahead or put a pause on the project.
Nahinga gives a word of advice to anyone looking to embark on a building project: You must be confident enough to make a comprehensive cost plan and be honest with yourself in order to avoid starting projects that may end up stuck in the middle of construction.
It is also important that anyone who is not familiar with construction should seek the help of a professional to help in cost planning.