CHOP 4.2 - CONSTRUCTION PROJECT COST PLANNING AND CONTROL

Question 1

Construction Budget

Answer 1

The maximum amount of money, including contingency allowances, which the client is prepared to spend on the construction cost.

Question 2

Construction Cost

Answer 2

The total cost of the work to the client to construct all elements of the project designed or specified by, or on behalf of, or as a result of coordination by, the architect, consisting of the construction contract price, cost of changes to the work during construction, construction management fees or other fees for the coordination and procurement of construction services, and all applicable taxes, except value-added taxes, which shall be excluded. Construction cost excludes the compensation of the architect and consultants, land cost, land development charges and other professional fees.

Question 3

Construction Cost Estimate

Answer 3

The anticipated total construction cost at the anticipated time of construction, including contingency allowances, as determined or agreed to by the architect from time to time, the accuracy of which corresponds to the available level of detail of design development and the construction documents, and the extent of construction completed.

Question 4

Construction Contingency

Answer 4

A reserve included in the construction cost estimate established to provide funds for the implementation of risk management strategies should risk events occur, including such events as the evolution of the design prior to construction, price escalation between the time of cost estimate preparation and construction, unknown conditions, and/or function and design changes made during construction.

Question 5

Element

Answer 5

Term used in cost estimating to describe a component of a building, such as a sub-structure (footings, foundations) or envelope (walls and roof).

Question 6

Indexing

Answer 6

Applying an index or factor to adjust costs from one geographic region to another (a typical index might be expressed as a percentage, such as 102.7%

Question 7

Program

Answer 7

Group of related projects and operations that are managed in a coordinated way to obtain the benefit that could not be achieved if managed separately.

Question 8

Project

Answer 8

An endeavour undertaken within a defined period of time that produces a unique outcome.

Question 9

Project Budget

Answer 9

The client’s estimated total expenditure for the entire project. It includes, but is not limited to, the construction budget, professional fees, costs of land, rights of way and all other costs to the client for the project.

Question 10

Project Risk

Answer 10

The sum of uncertainties associated with a project undertaking.

Question 11

Quantity Survey

Answer 11

A bill of quantities or a detailed listing and quantities of all items of material and equipment necessary to construct a project.

Question 12

Providing Advice on Costs

Answer 12

In most client-architect agreements, one responsibility of the architect is to prepare an estimate of the probable construction cost. This estimate is neither a quotation nor a guarantee. Due to the variable market conditions, the architect should never guarantee or warrant a construction cost estimate. Such a warranty may void portions of an architect’s professional liability insurance policy.

Question 13

Cost Planning and Control by Project Stage

Answer 13

COST PLANNING:

1) Cost Limit established ( Requirements and Pre-Design)

2) First Cost Plan (Schematics)

COST CONTROL:

3) “Many” Cost checks (Design Development)

4) Finale Estimate and Cost Check (Contract Documents - Drawings and Specifications)

5) Cost Analysis (Bid / Contract Award) (Construction) (Take-Over) (Post Construction)

Question 14

Liability of the Architect

Answer 14

The typical client-architect agreement will include a general condition that stipulates the terms under which an architect will be responsible for redesign at no cost to the client should the lowest tendered bid exceed the construction cost estimate by a predefined amount, often 10% to 15%.

Question 15

Format of Cost Estimates

Answer 15

There are two widely accepted formats in which construction cost information is presented: Uniformat II and MasterFormat 2016, both developed by Construction Specifications Canada and the Construction Specifications Institute. These two formats relate through cross-referencing tables.

Question 16

Methods of Cost Estimation

Answer 16

There are several methods for estimating construction costs:

1) analogous (or top-down);
2) parametric;
3) bottom-up.

Question 17

Analogous Cost Estimating

Answer 17

An analogous cost estimate is performed when little, if any, information is available about the project at hand. It is very inexpensive and quick but its accuracy is highly questionable.

Question 18

Parametric Cost Estimating

Answer 18

Parametric estimating applies a measurement of a building, system, or component against a known cost per unit. For example:

• size of the building in metres X $/sq. m.;
• area of flooring X $/sq. m.;
• length of steel lintels X $/m.;
• number of light fixtures X $/supply and install of fixture.

Question 19

Bottom-up Cost Estimating

Answer 19

The bottom-up estimate is the result of analyzing the work in detail, including estimates of the effort hours, labour rates, materials, logistics and overhead. The bottom-up estimate is the most accurate but requires extensive effort from all parties in the construction endeavour.

Question 20

For Uniformat II Table Example

Answer 20

check chapter 4.2 Table 1

Question 21

Parametric Estimating: Area
(Cost per m2/Cost per ft2)

Answer 21

Extensive floor area cost data are available from a number of sources as a basis for interpolation and use in forecasting. These should be used when providing general cost advice and for the calculation of overall project costs.

NOTE: The architect should limit the use of this basic information by using it only as a general guide at the pre-design stage.

Question 22

Parametric Estimating: Volume
(Cost per m3)

Answer 22

This method is not widely used, except:

• for certain specialized building types such as warehousing (particularly freezer buildings);
• for multi-storey buildings where the floor area method might not adequately reflect the true costs;
• as a double-check on the other methods being used.

Question 23

Parametric Estimating: Unit Use
(Cost per bed, cost per seat, etc.)

Answer 23

This method uses simplified historic data as a basis for calculating cost. It is brief, to the point, and relatively reliable – provided that the historic data on projects are comparable. This method is useful for preliminary budgeting because the result is general in nature and more obviously “approximate.”

NOTE:
Architects should:

• use this method with caution, for preliminary advice only, and as a convenient double-check for comparison purposes;
• spell out clearly all qualifications and assumptions when the information is released.

Question 24

Classes of Cost Estimates

Answer 24

1) cost estimate Class D

2) cost estimate Class C

3) cost estimate Class B

4) cost estimate Class A

Question 25

cost estimate Class D

Answer 25

performed at functional program phase, based on:

1) information and historic data;

2) adjustments taking into account assumptions regarding inflation, location, risk, quality, size and project timing;

3) prepared prior to commencement of the design;
a rough order of magnitude;

4) estimating range of between ±20% and ±30% (Canadian Construction Association, 2012).

Question 26

cost estimate Class C

Answer 26

performed at schematic design phase;

prepared at an early stage in the project, when drawings are preliminary in nature, based on:

1) type of construction and quantities of materials;

2) all assumptions or qualifications to the estimate;

3) a relatively large design contingency allowance, which is used to provide for changes in scope and because information is more limited;

4) estimating range of between ±15% and ±20% (Canadian Construction Association, 2012).

Question 27

cost estimate Class B

Answer 27

performed at design development phase;

1) the estimating process is repeated when additional specification and drawing information becomes available, using an expanded format under the original headings;

2) the reduction in uncertainty made possible by better information from the design team allows for a reduced design contingency allowance;

3) estimating range of between ±10% and ±15% (Canadian Construction Association, 2012).

Question 28

cost estimate Class A

Answer 28

performed near or at completion of the construction document phase;

1) as the construction documents become more complete, the process continues, and the contingency allowance is reduced further;

2) estimating range of between ±5% and ±10% (Canadian Construction Association, 2012).

Question 29

Sample Cost Estimate Breakdown Over the Design Project Life Cycle

Answer 29

Chapter 4.2

Tables 3, 4 and 5 following feature a sample build-up, from summary to detail, of a cost estimate for a typical industrial manufacturing building over the design project life cycle.

Question 30

Factors Affecting Costs

Answer 30

1) Economic and Political

2) Site Context and Climate

3) Building Type and Design

4) Characteristics of the Owner/Client/Stakeholders

5) Definition of Project Requirements (Functional Program)

6) Type of Construction Project Delivery

7) Owner’s Responsibilities and Timetable

8) Other Factors

Question 31

Economic and Political

Answer 31

1) Inflation

2) Market Conditions

3) Other Economic Factors

4) Political and Social Climate

Question 32

Site Context and Climate

Answer 32

1) Site Characteristics

2) Weather and Season

3) Location

Question 33

Building Type and Design

Answer 33

Building types range from simple wood-framed structures to complex, technically sophisticated buildings such as hospitals and laboratories. Some costing handbooks classify building costs under several dozen different types. Construction costs vary considerably, from a warehouse building, $896.97 $/m2, to a performing arts centre, $4,719.33 $/m2 (Canadian dollars 2018).

Question 34

Characteristics of the Owner/Client/Stakeholders

Answer 34

Architects need to recognize the impact that the type of owner can have on the cost of a project.

Sophisticated clients, such as commercial and industrial corporations or developers who regularly procure design services and construction, frequently expect the delivery of completed projects at or below target costs.

Government agencies and public institutions are increasingly eager to find avenues for value generation and cost savings, but may be restricted from certain procurement methods due to regulations and key stakeholder interest and influence.

Question 35

Definition of Project Requirements (Functional Program)

Answer 35

The functional program defines the owner’s and users’ functional requirements for the design project. To minimize the possibility of cost overruns resulting from changes in the program, review the functional intent or objectives.

Apparent cost overruns may be the result of a functional program that was not validated against the construction cost estimate. A functional program may not have received detailed and critical analysis prior to being received by the architect.

Question 36

Type of Construction Project Delivery

Answer 36

Contractual relationships between the owner and the contractor can have an impact on the cost of a project.

Question 37

Owner’s Responsibilities and Timetable

Answer 37

Owner requirements beyond industry-accepted practices or norms can affect the construction budget. In all cases, these requirements should be discussed with the owner. Some of these circumstances include:

• a project schedule that is accelerated to suit an owner’s critical date, such as a school opening or the timing of an event due to market forces;
• construction work conducted only during hours when the building is not otherwise occupied, e.g., evenings and weekends;
• late commencement due to reasons beyond the owner’s control, for example, winter conditions, resulting in additional construction costs;
• delayed commencement of a project during a time of inflation and currency fluctuations;
  owner’s approval processes.

Question 38

Other Factors

Answer 38

1) Regulations

2) Inconvenient or unusual work arrangements

Question 39

Professional Service for Each Phase of the Project

Answer 39

1) Phase A. Pre-agreement Phase

2) Phase B. Schematic Design Phase

3) Phase C. Design Development Phase

4) Phase D. Construction Documentation Phase

5) Phase E. Bidding and Negotiation Phase

6) Phase F. Contract Administration Phase

Question 40

Phase A. Pre-agreement Phase

Answer 40

By listing all cost-related tasks, the architect:

• ensures that every aspect of spending on the project will be reviewed by either the architect, the client or another party;
• can prepare a complete proposal for services.

Question 41

Phase B. Schematic Design Phase

Answer 41

the architect establishes a preliminary design and a construction cost estimate for the project, based on the most reliable information available at the time from consultants and other specialists.

The architect may either:

1) instruct the design team to continue with conceptual work that will meet or satisfy the agreed-upon budget; or

2) review the scope, quality and cost for some or all of the building elements to re-define the project to fit within a pre-determined cost limit; or

3) revise the budget and re-define the scope of the project.

Question 42

Phase C. Design Development Phase

Answer 42

In this phase, the architect may:

1) provide for review and updating of the construction cost estimate as the reliability of the design and specifications improves;

2) undertake additional analysis, if necessary, to check the construction cost estimate and its assumptions;

3) refine the building’s scope, design, quality and details to ensure they will not exceed the limits of the construction cost budget.

Question 43

Phase D. Construction Documentation Phase

Answer 43

In this phase, the architect may:

1) update the construction cost estimate based on the construction documents (often at 50% completion and at 95% completion – the pre-tender stage, or at other defined milestones);

2) include allowances in the bid documents.

Question 44

Phase E. Bidding and Negotiation Phase

Answer 44

In preparing the bidding documents, the architect must determine what cost information is needed. The architect must consider the following cost information:

alternative prices;
itemized prices;
unit prices;
cash allowances;
addenda.

NOTE: Canadian Standard Form of Contract for Architectural Services indicates that if the lowest bona fide bid exceeds the construction cost estimate by a predetermined amount identified in the agreement, the architect shall either:

obtain approval from the client for an increase in the construction budget;
re-bid or negotiate; or
modify the construction documents to reduce the construction cost (for no additional fee).

Question 45

Phase F. Contract Administration Phase

Answer 45

The architect is usually required to determine the amounts owing to the contractor under the contract, based on the architect’s observations and evaluation of the progress of the work. The architect then processes the contractor’s application for payment and prepares a certificate for payment.

Question 46

Life Cycle Costs

Answer 46

The objective of life cycle costing is to determine the “total cost” of a building over its lifetime. This costing method:

allows comparisons to be made between alternative components or systems;
generates an understanding of the design of a project, how it functions and how costs arise;
facilitates further development of the design.

Life cycle costing of a building can be expressed as follows:

Total Cost = Capital Cost + Operating Cost + Maintenance Cost

Question 47

Value Analysis or Value Engineering

Answer 47

Value engineering is a systematic procedure to determine the best or optimum value for investments in a construction project. The terms “value analysis” or “value engineering” should not be understood as pseudonyms for cost-cutting.

During value analysis architects usually work with cost consultants and value engineers to compare trade-offs between design concepts, arrangements, materials and finishes, systems and construction techniques, as well as capital and life cycle costs.

Question 48

Embodied Energy Cost Analysis or Embodied Energy Consumption

Answer 48

his type of cost analysis assesses the environmental impacts and energy consumption resulting from the extraction, manufacture, delivery, installation, demolition, and recycling of building materials in buildings.