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BUDGET/COST PLAN Continued.. Part 2 of 3

Today's post is in continuation to yesterday's post on Budget/Cost Plan.

I would be explaining the first two costs involved in the formation of a budget/cost plan:

  • A - Construction cost - which would involve all physical costs involved in the construction of the project.
        So what are these 'physical' costs?

  1. Physical costs are all direct construction costs involved in the completion of the building. 
  2. This will be essentially bare costs excluding all forms of over-heads, profits and/or taxes. 
  3. This would include all material, labour and plant with appropriate wastage incorporated.
  4. Physical costs are arrived based on the quantities that have been calculated from the drawings.
                     
  • B - Indirect costs - which would involve preliminary costs, consultant costs, legal costs, approval costs, mock up costs, marketing costs etc. If the budget is being made from the point of view of a builder/developer, the cost of land may also be incorporated.
                      Going one by one:
  1. Preliminary Costs: refers to all initial costs involved in a project, this would include preliminary survey, soil investigation, market survey costs, ground clearance, etc.
  2. Consultant Cost: refers to the over-all cost of the consultants involved in all the stages of the project, this would include marketing, structural, architectural, legal, interiors, landscaping, etc.
  3. Legal Cost: all costs incurred for any legal activities, i.e., sale deeds, purchase deeds, etc.
  4. Approval costs or Capital contribution: costs involved for all statutory approvals including construction commencement, fire, labour, environmental, electrical, water, sewerage, etc.
  5. In addition to the cost stated above, we need to appropriately include for any corporate social responsibility costs that may be required during the duration of the project or around the project vicinity.
That covers the topic for today, I will deal with the other costs pertaining to the budget in my next post.

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