Pricing books are a direct easy to use method for applying rates. One possible method would be the use of independent pricing books. There are many options for pricing books, but the most popular and widely used within the construction industry are SPONS and Wessex. SPONS the cost data is updated yearly by Davis Langdon (AECOM) Common sources of published historical data used in industry include Spon’s Architects’ and builders Book and Laxton Building Price Book. Spon’s architects’ and builders book is one of the most detailed, professionally relevant sources of construction price information that is available. Laxton Building price book is very detailed and offers practical information and advice too. Other sources of published …show more content…
As pricing books are printed, the information contained within them is naturally historic. Therefore in a volatile market, rates may quickly be outdated by the end of the year. So items are more exposed to inflation than others and may distort any cost pricing. As identified by (Kirkham, 2007, p. 219), that ‘in periods of rapid inflation or market changes they have suffered the drawback of having to prepare their information well in advance of the year of publication’. this could lead to cost data being misaligned with current market rates and will not reflect the true value in construction. Online Cost Services Another option would be BCIS. This stands for Building Cost Information Service, and is a subsidiary of; and therefore championed by the RICS. The BCIS carries out statistical analysis of UK construction projects and as an online tool allows the user to filter the data in such a way that allows for better cost estimation. The BCIS also gives the inflation and location indices to improve accuracy of cost modelling. So in comparison with pricing books, the data is more recent and can be updated for both location and price. Upon this basis I would recommend that that practice considers using this as the tool from which all prices are sourced. When the organisations are pricing each item they allow for a reasonable amount of work to be required.
There are also various cost assumptions used by businesses, with every entity choosing a respective method in accordance to their inventories, based on the effects they
For instance, there are generic principles of pricing of desired net income, competitive position, and market structure. According to (Cleverly, Song, & Cleverly, 2011), every business must generate enough revenue through its sales of products and services to sustain its operations and provide for the replacement of its physical assets as well as provide a return to its investors. Partners Healthcare System and among other organizations must recognize levels of pricing, so inadequate pricing doesn’t accumulate to lead to business disaster.
Prices of the different products and services of the organization should be market specific. The economic capability and disposable income of clients should be put into consideration in setting prices for the products and services offered by the organization. By matching prices with the economic capability of a people, it would be much easier to for customers to access the products and services without straining or having to compromise and going for other products of lower quality (Donna, 2012).
If a good cost-measurement system was set up, cost-plus contracts will demonstrate the advantages of cost-management better than fixed price contracts do. With a robust cost-measurement system, managers are able to know the real revenue drivers, to recognize the most valuable customers, and to offer more reasonable price bid. That is to say, cost-measurement system’s strength lies in differentiating clients’ value, projects’ value and operation processes’ value case by case. Under this circumstance, cost-plus contracts would surely dig more utilization and benefit more from such a system, because CitySoft would be able to charge different customers and projects for different prices, which is critical for increasing profitability.
However, the uncertainty stemming from these financial aspects of construction should be at least mitigated or ideally eliminated with proper forecasting techniques. During periods of economic expansion, major capital expenditures will raise the costs of construction, and during periods of economic downturn these same costs may decline. In order to control costs, some owners attempt to use fixed price contracts so that the risks of unforeseen contingencies related to an overheated economy are passed on to contractors (PM, 2012). Businesses must factor in that contractors will raise their prices to compensate for the additional risks.
Pricing is a relevant issue in procurement at all levels. Individuals purchasing the commodities of an organization should receive clarity on pricing. There is confusion in this
Two basic types of competitively bid construction contracts are lump-sum and the unit-price contract. The lump-sum contract is when the contractor agrees to complete all work for a pre-determined price including profit and the contract. The unit-price contract is when the contractor quotes work on units separately instead of entire project. Price is based on units of work performed, and cost varies depending on the quantities of units. Building the piers to support a large suspension bridge will
This is because companies need to understand what their costs are, like construction companies, to be able to bid on jobs. These types of companies understand what it takes to complete most aspects of the jobs they are bidding on. When they provide a prospective customer with a job cost sheet it breaks down material costs, labor costs, and overhead costs to show their customer where the costs are going to be incurred. These types of companies know how many hours it will take to assemble parts, construct parts of a house, repair pipes, and many other types of work of this nature. These companies spend time analyzing their costs per job to compute a standard for each category of their jobs and identify cost drivers to come to a standard cost.
When you are seeking prices for a project that requires construction, you go to a contractor, not an architect. Following this protocol will get you the best prices.
Alison uses the Architecture Institute 's standard list of professional rates as a guide. These standards provide different rates depending on the kind of work being done. Then Alison works out what has to be done and how long it is going to take. There may also be some added costs for travelling out to remote areas. She is often asked to do work for free but insists that this is not a good way to work.
We are requested to assist the building with creating a method of construction cost data for client throughout the pre contract. The task of data collection is a difficult procedure and can be include to wide variations. Based upon our experience as quantity surveyors we chose to develop a cost data collection method. Our define construction line items and quantities for relativity building types.
A design and build project allows the low risk factor as for the client has the contractor takes on the risk by offering a fixed cost contract. The web address designbuild-network.com states the original provision for a building cost was around £352m, with total project costs of £757m. A
Today’s highly competitive business world forces companies to create different tactics and relatively rely on multiple pricing strategies to conduct business.
Course Modules help instructors select and sequence material for use as part of a course. Each module represents the thinking of subject matter experts about the best materials to assign and how to organize them to facilitate learning. Each module recommends four to six items. Whenever possible at least one alternative item for each main recommendation is included, as well as suggested supplemental readings that may provide a broader conceptual context. Cases form the core of many modules but we also include readings from Harvard Business Review, background notes, and other course materials. I. Overview of suggested content (HBS cases unless otherwise noted) Title 1. Module Overview
Morledge, R, Smith, A, Kashiwagi, D (2006) Publisher; Blackwell, Place of Publication; Oxford, Building Procurement, p6.