Budget Forecast and Cost Elemental Plan for Oakworth Offices - Essay Example

 Task One Budget forecast of Oak worth 2 Storey Offices Due to theincrease in externalandinternalbusinessactivitiesbudgetestimaterepresents a significantimportantelement both in cost accounting andbusinessanalysis. Itentailsbothcomparison of expenditureestimatesandincomesrequired to accomplish a particulartaskand in thelongrundetermination of variances that could occur. In thebusinessandeconomicsworldforecastincludethefuture expectation of costsorsales to be madeorincurred with comparison of thepreviouscosts. They, therefore, entails a significantfactor in profit maximization of a firm as well as costcontrol in theorganization. In theconstruction of a goodbudgetforecast that can depend upon forcostanalysis, allrevenueandexpenses must be correctlymatched with, thebudgetestimate must makesenseandpropermethodssuch as varianceanalysis must be able to draft from forexample in comparison with actualandexpectedexpenditure. In defining a goodconstructionplan, projectcosts must be clearlydefined, to achievefarandmorereachinggoals in theindustry (Building LLC 2014). The driving force towards establishing a goodconstructionbudgetedforecast is to is to be aware of theamount of cashthe investor orshareholder is ready to spend on theprojectso as to avoidrunning of budgetdeficits in thelongterm.They will assist both themanagementandtheprojectcouncil to deduceifextracashneeds to be handed in, theproject will continueforthe foreseeable futurepurposes. Thebodyin charge of quantity surveying must analyze critically thecostandexpenserequiredandmakesure there is no wastage of resourceswhen there are inaccurateestimations that will havefutureimbalanceswhencompared to thesource of moneyspocket. (Xiao, Xui, Xiao 2009).Project Budgeting will, therefore, includecostssuch as softcosts, constructioncosts, otherownercontracted, facilitiesandfurnitureexpenses. In thepreparation of budgetforecastforthe Oaks worth, two storeysbuilding an evaluation of timeprovides a 10-month constructionperiod, which would be allocated in tabular form as providedbelow. Thetimerequiredforeachprojectactivity will be allocated based on thecost allocation methodssuchas thedirectmethodandstep down method that majorly base on theamount of cash to be spent in theprojectprocess. (Schwulst 2014). In Oakworth project based on theprovidedchartsandplans, thegroundfloorplan, firstfloorplanandtheelevationcrosssectionplan an estimatedtime of 10 months would be required which will be redistributed to 1 monthforfinishing up of theproject which will entailtheapplication of paint, ceilingerectionandthedesign implementation of storeyaccommodationhouse.Layingtheroof will be approximated to take a month. Drawing of theplans, as well as mapping as an entirelylongprocess, will take an amount of 2/1/2 months; fullconstruction of foundation will be allocatedmoretime due to thelargestnumber of activities that are involvedsuch as removal of theprevious laid building.Construction of wallsassigns one month. To minimizethecostsrequiredlayingtheroof will be estimated to take an amount of 2 weekstime as noadditionaltime will be necessaryformaturity, unlike otherprojects that require cementation. This to theprojectmanager will ensurerightbalance between timeandrisks based on factorssuch as size of theproject, management methodologies number of teamstheprojectmanager has to manage, magnitude of uncertaintyandtheconstraints of theproject. (Bondale 2013). From the time analysis schedule the established budgeted forecast schedule will be presented in the tabular formation shown below Type of Item Material Cost Estimated 1 Two Storey Office building 2500 570 1,425,000 2 Externally – 15 car park spaces 900 600 540,000 3 Cost of finance (1% per month compound interest) - - 180,000 4 Land and legal costs – finance for 24 months - - 195,000 5 Professional fees – finance for 16 months - - 215,000 Total 2,555,000 From the table schedule provided above the estimated cost of 2555000 million pounds required for the project. Hence in the budgeted trend a figure of amount 2555000 amount will be projected for the sake of variance analysis as well as cost control purposes. Task two Cost elemental plan for Oakworth offices (Cost plan 1) Costplan is oftenconstructed by surveyorsandcostconsultants, andtheyinvolvemainlythenature of designbuildingandthecostincurred in theconstructionprocess. Thefeaturescontained in thecostplanincludeinitialcost, elemental costplan, approximatecostplan, pretenderestimates, contractsumanalysis as well as finalaccounts.(Burohapold 2015).The Idea of costplans after beingcoined in theunitedkingdom in the 1950S became majorly used by suppliers, investors andqualifiedsurveyors (Bowen, Brian, Robert Charette, and Harold Marshall, 1992).Thevaluation based on estimated data, assessment of expenses at eachstage, approximated costarrangement, tender evaluation issued to theforeman, totalamountincurred in thecontract by thebuilder, totalnumber in contractinvestigationandthefinaldocument which is free from riskstudy.Theexpense must be under thecustomer’s expectation and be measuredaccording to theamount of timeandexpenserequired in theproject. In theideas of elements, something could be put into run before an expensehaddone. Theexpensethenmeasured as per theamount of costvaluationrequired to completetheproject to accurateassessment through a givenmarketrateprovided. Thetableindicatesthevalue of costnecessaryforthecompletion of thetask. Thegrossfloorarea will amount to 500,000 cashbecause of thelargeamountconsideration of thequantity of spaceneededforthebuilding. Areas of theexternalwalls will take an amount of 100000 dollarsbecauseitapproximatelyforms an areasecondlargest. Internaldoorsestimated a cost of 150,000 because of thehighconcentration of doors in Oakworth accommodationstoreyhouse. Externalwork which would includethedoorandthewindows as part of finishing would amount to 350000 dollarshenceindicating a significantexpenditure expectation. From thecostanalysis, internalwallsandpartitions will consume a limitedquantity of timeandresourcesbecause of thesmall quantified area. Element Cost per m2 ($) Cost ($) 1 Gross floor area 25 35,910 2 Area of External walls 10 14,020 3 Area of Internal walls and partitions 46 65,023 4 Internal doors 34 47,860 5 External windows and doors 46 65,023 6 External Works 8 12,300 Total 169 240,136 Thecostmanager will thenpresent a detailedsubmission to theprojectmanager a detailed elemental plan, reconciliationstage against eachscheme, review of risksandvalueimprovements, updatedcashflowstatementsshowingeachandeverytransactionwherethecostmanager will analyzechange of everyimplicationprovided.(imperialcollege,2015). Budgetandcostplanning has numerousadvantagesandbenefitsboth to themanagement, society as a wholeandtheprojectinvolved in theconstructionsite. Itincludesbudgetandvalueaccountability, greatersatisfaction with endingresults, lessprobability of overestimation or under estimation,a balanceddistribution of expenditure which showsthe level of rationality. Italsoprovides a basisforcomparison of variousprojectsundertaken at a particulartime as well as allowing decision-making hencesmoothrunning of activities. Over thelongterm, it will ensureeffectiveandefficient running of activitieshence in case of anyrisksadequatemeasurestaken into control. (Seamus 2007) References Xiao Hui, Xiao.(2009) “Trending and forecasting in construction operations”, Master’s thesis, Civil, Building, and Environmental Engineering, Concordia University, Montreal, Canada. Moselhi, O., Ji,li, and Alkass, Sabah(2004)“Construction Management and Economics.” Vol. 1, pp. 35-46. MacDonald.(2002) M. Review of Large Public Procurement in the UK. Rossiter, J.(1996) Better value from benchmarking, CIOB   Richard Kirkham.(2007) Cost Planning of Buildings, Wiley-Blackwell; 8th Edition Bowen, Brian and Robert P. Charette. 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(Imperial college2015) elemental cost plan Retrieved from:http://www3.imperial.ac.uk/estatesprojects/projectprocedures/processes/cm/4.10/4.10.04 (Bondale 2013.) Project management resources Retrieved from http://www.projecttimes.com/kiron-bondale/right-sizing-project-manager-allocation-to-projects.html (Schwulst 2015) .cost allocation methods. Retrieved from Read More