Quantity Surveying & Approximate Cost Guide Module 1: Basic Concepts, Project Management, and Legal Framework
Dec 1, 2025
The success of a construction project depends not only on architectural design or solid engineering but also on how closely the project sticks to its budget. Managing project costs — with its complex terminology, multi-stage processes, and strict legal regulations — is one of the most critical disciplines in the industry. In the first module of this comprehensive guide we prepared at Approx, we lay the foundational concepts needed to understand what and why the entire cost-management process is done. In this article, we bring together the industry’s key jargon, the vital role these concepts play in project management, and the legal “rules of the game” that govern the whole process.
Understanding the Core Terminology
Construction projects rely on a set of core financial concepts that together form the cost lifecycle of a project. While these concepts are often confused or used interchangeably, each serves a distinct and critical purpose.
What Is Quantity Surveying?
Quantity surveying is the process of measuring and calculating the quantities of construction work items — such as concrete, masonry, finishes, structural elements, and installations — based on architectural, structural, mechanical, and electrical drawings.
Why is it important?
Quantity surveying answers the fundamental question: How much work will be performed?
It forms the basis of all cost calculations. Errors or omissions at this stage directly impact the accuracy of the project budget.
What Is a Cost Estimate?
A cost estimate represents the total construction cost calculated by multiplying measured quantities by predefined unit prices for each work item.
Formula:
Cost Estimate = Quantity × Unit Price
Why is it important?
It reflects the baseline construction cost before contractor profit, overheads, and taxes are added. It provides a clear answer to the question: What is the direct cost of the project?
What Is the Approximate Project Cost?
The approximate project cost is the estimated total contract value determined by the project owner before issuing a tender or request for proposals, particularly in public construction projects.
How is it calculated?
The approximate cost is generally obtained by adding contractor profit and general overheads to the base cost estimate. Depending on the procurement method, taxes may be included or excluded.
Why is it important?
It enables the project owner to establish a realistic budget, initiate the procurement process, and evaluate submitted bids, including the identification of abnormally low offers.
What Is a Variation Record?
A variation record is a formally documented and approved record of work that was either not included in the original contract scope or whose quantities or specifications changed during construction.
Why is it important?
It provides contractual and financial justification for additional or revised work and forms the basis for adjusting project payments and final costs.
What Is a Progress Payment?
A progress payment is a periodic payment request submitted by the contractor for work completed during a defined period, typically on a monthly basis.
Why is it important?
Progress payments ensure contractor cash flow and formally document both physical progress and financial performance. Payable amounts are calculated based on measured quantities and agreed unit prices.
What Is a Price Adjustment?
A price adjustment is a financial correction applied to contract payments to account for changes in material, labor, or fuel costs that occur between contract signing and execution.
Why is it important?
In long-term projects or inflationary environments, price adjustment mechanisms protect contractors from unforeseen cost increases and help maintain financial balance.
The Role of Cost Management in Project Delivery
These concepts are not merely accounting tools — they are integral components of effective project management. Successful construction projects are built on three pillars: time, cost, and quality. Quantity surveying and cost estimation play a central role in maintaining control over the cost dimension throughout the project lifecycle.
Regulatory Framework and Standards
Cost planning and payment processes, especially in public construction projects, are governed by strict legal and regulatory standards.
Public Procurement Regulations
Procurement regulations are designed to ensure transparency, competition, and efficient use of public resources. They require project owners to prepare an approximate project cost before launching a tender.
Construction Measurement and Specification Standards
Technical specifications define how quantities must be measured and how work items are described, ensuring consistency and fairness in cost calculations.
Contract Types and Risk Allocation
Different contract structures — such as lump-sum and unit-price contracts — significantly affect risk distribution, quantity responsibility, and cost control strategies.
Module 1 Summary
In this first module, we established that quantity surveying is far more than a measurement exercise — it is the foundation of effective cost control:
- Measured quantities form the basis of cost estimates and approximate project budgets
- Accurate quantity surveying is essential for budgeting, planning, and cost monitoring
- Regulatory standards define how cost planning and payments must be executed
In the next module, we will move from what and why to how, focusing on practical workflows, tools, and methodologies used in real-world projects.