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Budgeting and Risk in

construction project

Engr. Mridul Hasan.PEng.


Managing Partner
BuildScape
Project Budgeting
1 Materials 60 %
2 Construction (Labour & Contractor) 25 %
3 Administrative Overhead 6 %
4 Design, Drawing, Consultancy 6 %
5 Contingency 3 %
100 %
Land value excluded

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Breakdown of cost
PROJECT BUDGETING
Design, Drawing,
Contingency
Consultancy
3%
6%
Administrative Overhead
6%

Construction (Labour &


Contractor)
25% Materials
60%

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Sample project @ 4500 BDT/SFT

TBA 100000 sft


Project Cost 450000000 BDT

1 Materials 270000000
2 Construction (Labour & Contractor) 112500000
3 Administrative Overhead 27000000
4 Design, Drawing, Consultancy 27000000
5 Contingency 13500000
450000000

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Sample project @ 4500 BDT/SFT

Contingency, 13500000
Design, Drawing,
Consultancy,
Administrative 27000000
Overhead, 27000000

Construction (Labour &


Contractor), 112500000 Materials, 270000000

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Construction Cost Head Breakdown
(Excluding land and Material)

1 Civil Works Individual Contract


2 Electrical Works Individual Contract
3 Sanitary and Plumbing Works Individual Contract
4 Tiles, marble and floor finish Works Individual Contract
5 Glass and Aluminum PAKAGE WITH MATERIAL
6 HVAC PAKAGE WITH MATERIAL
7 BMS PAKAGE WITH MATERIAL
8 Fire-fighting PAKAGE WITH MATERIAL
9 Painting PAKAGE WITH MATERIAL
10 Water Body / Swimming pool PAKAGE WITH MATERIAL
11 Wood Work Individual Contract
12 Lift PAKAGE WITH MATERIAL
13 Landscape PAKAGE WITH MATERIAL
14 Pest Control PAKAGE WITH MATERIAL
15 Generator and Transformer PAKAGE WITH MATERIAL
16 ETP/WTP PAKAGE WITH MATERIAL

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Type of Risk

1) Design risks
2) External risks
3) Environmental risks
4) Organizational risks
5) Project management risks
6) Right of way risks
7) Construction risks

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Categories

 Likelihood 1 (rare)-5 (very frequent)

 Impact 1 (very low)-5 (very high)

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Risk Matrix

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Design risks

 D1 Design errors and omissions 4 5


 D2 Design process takes longer than anticipated 3 4
 D3 Stakeholders request late changes 3 3
 D4 Failure to carry out the works in accordance with the
contract 3 3

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External risks

 Ex1 New stakeholders emerge and request changes 2 4


 Ex2 Public objections 1 3
 Ex3 Laws and local standards change 1 3
 Ex4 Tax change 1 4

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Environmental risks

 En1 Environmental analysis incomplete 2 4


 En2 New alternatives required to avoid, mitigate or
minimize environmental impact 2 4

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Organizational risks

 O1 Inexperienced workforce and staff turnover 3 3


 O2 Delayed deliveries 3 3
 O3 Lack of protection on a construction site 2 4

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Project management risks

 PM1 Failure to comply with contractual quality


requirements 3 4
 PM2 Scheduling errors, contractor delays 4 4
 PM3 Project team conflicts 3 3

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Right of way risks

 R1 Expired temporary construction permits 1 4


 R2 Contradictions in the construction documents 2 3

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Construction risks

 C1 Construction cost overruns 4 4


 C2 Technology changes 2 4

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