22. Design Economics Level 2 Flashcards
What is an order of cost estimate?
Tell me about how you revised a cost estimate on Mercury House?
When the 2.4m figure was presented to me, I didn’t feel comfortable that this was a sufficient representation by benchmarking this figure to other projects of similar nature.
The cost estimate was broken down into different elements, such as direct construction works where I looked at the calculation of a flat roof replacement, lift figure. By analysing each component costs were much higher than initial allowances made.
Asbestos allowance was only 20k but by doing early survey works on site the cost came to 149k. So by revising majority of the costs, I also advised that the inflation allowance should be higher due to uncertain times the cost was revised to 6.5m.
The 2.4m was the first cost estimate prepared by the cost estimating team.
The increase from the 2.4m to 6.6m is huge. Can you please tell me why this increased so much?
To be truthful the initial allowances were insufficient. Asbestos was initially valued at 20k, lift was 100k, flat roof replacement, the initial cost didn’t take into account the programme length, it was mostly based on allowances and percentage figures.
However by increasing the cost to 6.5m I saved the client from running out of budget.very quickly.
What is included within a cost plan?
I know New Rules of Measurement 1 has a structure
But in this case I had to follow Rail method of Measurement structure:
Direct construction works
Indirect construction works which was a prelim cost as a percentage
Design Cost
Risk
Inflation
What is a cost plan?
A cost plan is a document typically done at Rita stages 2-4 and it outlines how the cost is to be spread out across different elements of a project
How was the initial 2.4m made up?
It had 1m worth of direct construction works
What changes did you make to the cost plan?
On Spekeland road you mentioned implementing value engineering to try and bring the figure below 26.6m. Can you tell me what you identified to value engineer?
What is value engineering?
For the Spekeland Road maintenance delivery unit, how did you restructure the cost plan to meet budget constraints while focusing on essential project components? What impact did this have on the project scope and overall budget?
I restructured the cost plan by strategically removing non-essential components, such as the delivery unit, and reallocating resources to prioritize the office building.
This restructuring allowed us to maintain focus on essential project components while meeting the client’s budget constraints.
The impact on the project scope was a reduction in non-essential elements, streamlining the project’s focus and ensuring that resources were allocated efficiently.
Overall, this restructuring enabled us to deliver the project within the client’s budget while still meeting their key objectives and requirements.
What impact did removing the delivery unit component from scope have on the overall cost plan, including design, preliminaries, overheads, and profit?
Removing the delivery unit component had a cascading effect on various aspects of the cost plan.
It resulted in a reduction in direct construction costs, which in turn affected design, preliminaries, overheads, and profit, as they were calculated as a percentage of the direct construction works.
Overall, this led to a significant reduction in the cost plan figure, aligning it with the client’s budget threshold.
How did you address the funding constraint when the client required the project cost to be below £16m for the Spekeland Road maintenance delivery unit?
I identified the need to prioritize and streamline project components to meet the client’s budget requirement.
To address the funding constraint, I proposed removing non-essential components, such as the delivery unit, from the project scope, focusing solely on the office building.
By prioritizing essential elements and reducing scope, we were able to align the project cost with the client’s budgetary constraints.
Can you explain the process and rationale behind your decision to scrutinise every component of the initial order of cost estimate?
Scrutinizing every component of the initial order of cost estimate was essential to identify inaccuracies and discrepancies that could impact the project’s budget and success.
By thoroughly reviewing each element, such as allowances and cost plans, I aimed to ensure that the budget was based on realistic and reliable data.
This process involved comparing the initial estimates with market rates and previous quotes to obtain more accurate cost figures, enabling informed decision-making and budget adjustments to align with project requirements.
In reviewing the cost estimate for Mercury House and identifying the need for a substantial budget increase, what specific actions did you take to obtain more accurate cost figures and justify the increased budget to stakeholders?
I meticulously scrutinized every component of the initial order of cost estimate to identify discrepancies and areas for improvement.
For instance, I conducted market research and obtained quotes from suppliers to obtain more accurate cost figures, such as the lift cost, which was initially underestimated.
By proactively engaging with the market and consulting specialists, I ensured that the cost estimates were based on realistic and up-to-date data, enhancing the accuracy of the project budget.
How did you manage the stakeholders’ expectations when the project budget increased significantly from £2.4 million to £6.6 million?
I communicated transparently with stakeholders about the reasons behind the budget increase, highlighting the factors that necessitated the adjustment, such as more accurate cost figures obtained through thorough analysis and market engagement.
I emphasized the importance of ensuring that the project’s budget aligned with the scope and quality expectations to deliver a successful outcome.
Additionally, I collaborated with stakeholders to reassess project priorities and objectives in light of the revised budget, ensuring alignment and buy-in from all parties involved.
