So, the "micro" level for cost monitoring, reporting, and controlling purposes
during construction may be set at 1/10 of 1% of the total project construction
cost as a good rule of thumb. That is, this is the minimum value that would be
set to show up as a separately coded item in the routine cost reports. Conversely,
items that exceed, say, 2 1/2% would be required to be broken down once more.
This approach leads to more balanced items in the cost report, with a total of
around eighty items being reported, which is manageable - especially when segregated
For example, for a building project with a construction budget of $10 million,
the cost reporting structure would be set up to code items of not less than $10,000
and not more than $250,000. Such guidelines help considerably in developing initial
budget strategies and maintaining balanced judgment during the life of the project.
So, in evaluating design alternatives in the earlier planning phases, a lower
limit of significance might be set at say 2 1/2%. Hence, in the example given
above, in comparing the merits of design alternatives of elements in the $250,000
range, differences of $6,000 or more would be considered significant and worth
pursuing. This assumes, of course, that the design team has been diligent in maintaining
a reasonable and consistent level of cost consciousness.