Muhammad AbuBakar - B.Tech. MRICS (APC) on LinkedIn: Types of Cost Data Used in the Construction Industry 1. Construction… (2024)

Valuing construction work is the process of estimating the current cost of a construction project. This can be done for a variety of reasons, such as to:* Determine the value of a construction project for insurance purposes* Settle disputes between contractors and clients* Obtain financing for a construction project* Sell a construction projectThere are a number of different methods that can be used to value construction work. The most common methods include:* Cost valuation: This method involves estimating the cost of the materials, labor, and other resources that will be required to complete the construction project.* Income valuation: This method involves estimating the future income that will be generated by the construction project.* Market valuation: This method involves comparing the construction project to similar projects that have been recently sold.The best method for valuing construction work will vary depending on the specific circ*mstances. For example, if the construction project is new, then it may be necessary to use a cost valuation method. However, if the construction project is existing, then it may be possible to use an income valuation or market valuation method.It is important to note that valuing construction work is a complex process. It is important to have a good understanding of the construction industry and the valuation methods that are available. It is also important to have access to accurate and up-to-date information about the construction project.If you need to value construction work, it is advisable to consult with a qualified professional, such as a Quantity Surveyor or a construction valuer.Here are some of the factors that can affect the valuation of construction work:* The type of construction project* The size and complexity of the construction project* The location of the construction project* The current market conditions* The experience and qualifications of the contractor* The quality of the materials and workmanshipBy understanding these factors, you can get a better understanding of how construction work is valued.#qsabdul

2

There are five common types of construction contracts: Lump Sum (or fixed price), Time and Materials (T&M), Unit Price, Guaranteed Maximum Price (GMP), and Cost-Plus. Each of these contract types are suitable for some projects and not others, and each has both advantages and disadvantages for various stakeholders involved in a construction project. Learning more about different contract types can help you find the right terms to manage financial risk on your project. To assist you, the authors provide a comprehensive table of definitions and descriptions of each of the five contract types, followed by a detailed discussion of their respective merits and demerits. Noting there’s no one-size-fits all contract for construction, nor a perfect contract for any situation, the authors provide guidelines on choosing a contract type that’s likely to match well with a project. One thing to bear in mind is that many projects involve different contract types for different phases or aspects of the job. JTE Claims Consultants Ltd. provides comprehensive services to the Canadian construction industry, including construction claims consulting services and commercial advisory & project controls services. Learn more by visiting our website at https://lnkd.in/gJW8uR4. https://ow.ly/fxGg50PaYNl#ConstructionContracts #LumSum #UnitPrice

1

There are five common types of construction contracts: Lump Sum (or fixed price), Time and Materials (T&M), Unit Price, Guaranteed Maximum Price (GMP), and Cost-Plus. Each of these contract types are suitable for some projects and not others, and each has both advantages and disadvantages for various stakeholders involved in a construction project. Learning more about different contract types can help you find the right terms to manage financial risk on your project. To assist you, the authors provide a comprehensive table of definitions and descriptions of each of the five contract types, followed by a detailed discussion of their respective merits and demerits. Noting there’s no one-size-fits all contract for construction, nor a perfect contract for any situation, the authors provide guidelines on choosing a contract type that’s likely to match well with a project. One thing to bear in mind is that many projects involve different contract types for different phases or aspects of the job. JTE Claims Consultants Ltd. provides comprehensive services to the Canadian construction industry, including construction claims consulting services and commercial advisory & project controls services. Learn more by visiting our website at https://lnkd.in/g43aR6r. https://ow.ly/58fe50PaYNj#ConstructionContracts #LumSum #UnitPrice

4

Owner as Contractor Impact on Cost.....Costs associated with a construction project include the cost of labor (wages for workers and management), the cost of construction materials, and the cost of project fees (such as building permits, insurance, and financing). In a commercial and residential construction project, the overall cost of the project can vary greatly depending on which party - the owner or a designated contractor - is responsible for directing the construction and making decisions. As when considering quality and delivery time, which were discussed in sections 3 and 4, it is important to note that both direct and indirect costs need to be considered. Direct costs are expenses which can be exclusively attributed to the construction of the building and these include, but are not limited to, the cost of materials and labor. Indirect costs, such as the fees for the new project financing which will be needed by the owner assuming that the owner is directing the construction, typically continue even after the construction is completed. In this study, potential cost overruns are considered and these can be defined as additional percentage spent (for example, 15% over the budgeted cost) when compared to the project cost originally estimated. Potential cost overrun, sometimes also known as a percentage of completion on the costs, is often a headache for all the parties involved in a construction project. A typical example of how cost overruns might occur is that the owner initially had a certain plan with a preliminary, rough cost estimation before the project started. At a later stage when the construction work is ongoing, the owner may change his or her mind and request for some changes. However, research indicates that changes in scope of the project at a later stage after the project has begun contributes significantly to cost overruns. It also highlights that if the project cost is being estimated by the owner and not by a professional third-party contractor, the likelihood of cost overrun increases. Also, letting commercial pressures determine investment in land and location or investment time, rather than focusing on place or design solutions that create long-term value, is believed to be another reason which may cause cost overruns.

2

Construction bonds, also referred to as contract bonds, ensure the fulfillment of contracts, commonly in construction projects. They're often mandated by government agencies for public projects, but private companies are increasingly requiring them. Various types of construction bonds are utilized throughout different project stages.1. Performance Bond: Ensures the contractor completes the project per contract. If not, a claim can be made to hire another contractor.2. Retention Bond: Similar to a Performance Bond, it guarantees completion of obligations or defect rectification post-project completion.3. Bank Guarantee: Offered instead of cash retention, it's accepted or rejected by the employer and must be stated in the contract.4. Payment Bond: Protects suppliers and subcontractors if the lead contractor goes bankrupt during the project.5. Bid Bond/Tender Bond: Ensures serious bid proposals and allows the project developer to claim if the contractor withdraws the bid.6. Advanced Payment Bond: Secures an advance payment to contractors before work commences.7. Environmental Bond: Ensures compliance with environmental regulations and mitigates environmental risks.8. Maintenance Bond: Provides insurance against defective materials and workmanship post-project completion.9. Site Improvement Bond: Covers improvements to renovation projects for older structures or existing properties.10. Subdivision Bond: Maintains contractor responsibility for building public structures within subdivisions.11. Supply Bond: Ensures completion of material, equipment, and other supplier orders as per agreement.Question: What are the bonds submitted along with Interim Payment Application?

21

Associated Builders and Contractors reported on July 11th that its Construction Backlog Indicator remained unchanged at 8.9 months in June, according to an ABC member survey conducted June 20 to July 5. Backlog in the infrastructure category increased for the third straight month and is now at the highest level in nearly two years. On a regional basis, the South remains the region with the highest backlog, despite being the only region in which backlog declined in June.Many contractors are beginning to see backlog and #surety programs stretched to historical levels due to a combination of inflation pressures over the last year, as well as an abundance of work. Unfortunately, these increases have not had sufficient time to work their way into the balance sheets of many contractors, leading to tougher conversations between contractors and their surety providers.Selectivness of project opportunities, prequalification of subs, plans around talent development & retention, and strategic joint-venture partnerships, are all going to be part of the conversation in getting surety providers comfortable with these growing backlogs.Feel free to reach out, if you’d like to discuss any challenges you are experiencing!Email: Michael.o.fernandes@aon.comTel: (862) 289-2116

6

So...how do you get more #construction bids⁉ The construction industry is competitive, but we have some valuable strategies to enhance success and cash flow at the same time. #constructionindustry #cashflow #propertyandcasualty

So...how do you get more #construction bids⁉ The construction industry is competitive, but we have some valuable strategies to enhance success and cash flow at the same time. #constructionindustry #cashflow #propertyandcasualty

7

So...how do you get more #construction bids⁉ The construction industry is competitive, but we have some valuable strategies to enhance success and cash flow at the same time. #constructionindustry #cashflow #propertyandcasualty

So...how do you get more #construction bids⁉ The construction industry is competitive, but we have some valuable strategies to enhance success and cash flow at the same time. #constructionindustry #cashflow #propertyandcasualty

5