Elemental Cost Plan: Preliminary Cost Report

What is an Elemental Cost Plan?

An elemental cost plan breaks down a construction project’s costs by the main functional elements of the building, such as:

• Substructure (foundations, basements)
• Superstructure (frame, upper floors, roof, stairs, external walls)
• Internal finishes (walls, floors, ceilings)
• Fittings and furnishings
• Services (plumbing, HVAC, electrical, transport)
• External works (landscaping, drainage, utilities)
• Preliminaries (site setup, management, temporary works)

By breaking down costs this way, an elemental cost plan gives you a clear picture of where your money is going and where you can save or cut costs early on.

Elemental cost plans provide end-to-end support for cost management, accurate cost estimation, and effective resource allocation, ensuring informed decision-making and successful project delivery.

Why Elemental Cost Planning Matters in 2024

The construction industry is facing some big challenges. According to Arcadis’ International Construction Costs 2024 report, rapid investment growth in advanced manufacturing combined with persistent inflation puts pressure on global construction markets.

At the same time, almost 40,000 homes across Australia are waiting to be built as rising interest rates and building costs hit developers. In NSW alone, 15,593 dwellings had approval but were yet to break ground by December 2023.

In this environment, elemental cost planning is more critical than ever. By giving you a detailed breakdown of costs, it allows you to:

• Forecast more accurately than lump sum estimates
• Identify and mitigate risks early, facilitating effective cost control
• Compare costs for different design or material options
• Communicate the project scope and budget to all stakeholders

Early cost planning provides a clear indication of project feasibility and helps manage estimated costs effectively.

The Elemental Cost Planning Process

So, how does elemental cost planning work in reality? At Duo QS, our process is:

1. Project scoping: Our quantity surveyors review your project brief, drawings, and specifications in detail to fully understand your requirements.
2. Element breakdown: Following the Australian Cost Management Manual, we break down your project into its functional elements.
3. Quantity take-off: We measure the work required for each element based on the design information.
4. Pricing: We apply current market rates to the quantified elements to estimate the total cost using our cost database, recent tender results, and supplier quotes. We also analyse historical data from previous projects to improve the accuracy of our cost estimates.
5. Risk analysis: We identify project risks and uncertainties and make allowances in the cost plan, such as design contingencies or escalation forecasts.
6. Reporting: We provide an elemental cost plan report and an interactive cost model in Excel for further analysis. We also prepare a presentation to explain the plan to your project team.

What Duo QS Provides

Our elemental cost plan reports give you a complete picture of your project costs. A typical report includes detailed and accurate cost estimates, enabling informed decision-making and effective project management:

Section	Description
Executive summary	Overview of key project details, total estimated cost, and major risks or assumptions
Element summary	Breakdown of estimated costs for each element, with rate and quantity information
Cash flow forecast	Projection of monthly expenditure based on the construction program
Assumptions and exclusions	Details of any items excluded from the estimate or assumptions made
Sensitivity analysis	Assessment of how changes in key rates or quantities could impact the total cost
Benchmarking	Comparison of elemental rates against similar projects to gauge the estimate’s competitiveness

But our service doesn’t stop there. We believe an elemental cost plan should be a live document that evolves with your project. As your design develops and more information becomes available, we will work with you to:

• Update quantities based on the final construction drawings
• Revise rates to reflect current market rates
• Incorporate approved variations or client changes
• Reconcile the cost plan with subcontractor quotes or tender returns

Keeping your elemental cost model up-to-date throughout the project allows you to track actual costs against budget and take action quickly if needed.

Have Control Over your Construction Projects

In today’s construction market, elemental cost planning is a must-have tool for any construction project, developer, architect, or builder looking to achieve better project outcomes. By working with a quantity surveyor, you can:

• Forecast your costs more accurately and with more confidence
• Elemental cost plans play a crucial role in project planning, helping to make informed decisions and manage risks effectively.
• Make informed decisions on design, materials, and procurement
• Identify and mitigate risks before they hit your budget
• Communicate with all project stakeholders
• Monitor and control costs during construction

Choose Duo QS for your Elemental Cost Plans

At Duo QS, we have a long history of producing accurate and informative elemental cost plans for many construction projects. Our quantity surveyors have:

• In-depth knowledge of the Australian construction industry
• Access to current cost data and benchmarking information
• Proactive cost management support throughout the project life cycle
• Customised solutions for your project

Our expertise in cost management and accurate cost planning significantly contributes to efficient project management and successful project outcomes.

Whether you’re building a residential development, commercial office, or industrial facility, we can help you get more visibility and control of your construction costs. Get your elemental cost plan with us today.