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RICS-SY > Commercial Management/Design Economics > Flashcards

Commercial Management/Design Economics Flashcards

1
Q

where can QS find guidance on benchmarking

A

RICS Practice Standards UK-Cost Analysis and Benchmarking, 1st edition 2011

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2
Q

what is cost analysis

A

A full appraisal of costs involved in previously constructed buildings
Aimed mainly at providing reliable information that will assist in accurately estimating cost future buildings

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3
Q

what main cost analysis be used for

A
  • estimating costs for similar buildings
  • estimating costs for construction elements
  • comparing the cost of design option at elemental level
  • cost modelling design solutions
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4
Q

what is benchemarking

A

The process of collecting and comparing data internally and externally to identify the ‘best in class’

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5
Q

what is an elemental cost plan

A
  • a critical breakdown of the cost limit of the building into cost targets for each element
  • updated as design progresses, ensures project remains in budget and provides value
  • also provides work breakdown structure and cost breakdown structure, useful for packaging up works for procurement later on
  • early elemental cost plans will be total construction cost of projects divided into elements by percentages
  • later elemental cost plans will be ‘measured’ based on actual quantities and materials required
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6
Q

what is the purpose of cost planning

A
  • to ensure the client can afford the project

- to ensure the client is getting value for money

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7
Q

what are the benefits of recording historic cost data

A
  • provide an accurate record of the projects as constructed
  • creates a means of modelling the project costs
  • help inform the design development and cost planning processes of planned, similar projects
  • project cost data can be an indication of construction economy activity which can be used for future projects (if enough data)
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8
Q

what information you would expect to find with a historic cost analysis

A
  • contract details
  • description of project
  • GIA;NIA
  • Contract Sum
  • Base Date
  • Location
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9
Q

what is the BCIS

A

Building Cost Information Services-Cost and price information is collected by RICS from across the UK construction industry, then collated, analysed, modeled, interpreted and made available to the industry to facilitate accurate cost planning

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10
Q

what does standardising the cost analysis format provide?

A
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11
Q

what are the two key parameters that will influence construction costs

A
  • location

- the state of the construction economy at the time (date)

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12
Q

why may construction costs be different for different locations

A
  • availability of materials
  • transportation costs
  • availability of local and specialized labour
  • ease of access to site
  • availability of service to site
  • local labour costs
  • proximity to amenities
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13
Q

what parameters does BCIS offer

A
  • location
  • time
  • build type (new build, refurbishment)
  • building use (school, residential, offices)
  • AC/noAC
  • basement
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14
Q

when is the BCSI base date for TPI

A

1985=100 all in TPI

2010=100 scotland

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15
Q

why would you not use TPC/CPI to calculate the inflation of a specific construction cost

A

TPI/CPI not specific to a construction cost, they relate to the overall movement

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16
Q

what are the key steps in benchmarking

A
  • data collection
  • data comparison
  • data analysis
  • action
  • repeat
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17
Q

why is bench marking useful

A

creates targets for similar projects, trying to improve on previous

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18
Q

aside from total construction cost, what other factors can be bench marked

A
  • cost/net m2
  • cost/gross m2
  • cost/bed
  • cost/pupil
  • co2 emissions
  • sustainability rating
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19
Q

with regards to confidentiality, what consideration should you make before presenting in house benchmarking data

A
  • ask employ’s permission to use the data

- do not lable source of data, e.g title the costs as ‘Project A’ -West London School

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20
Q

why is it good to show a range of benchmarks rather than just those closest to the mean

A

it is good to show the potential risk

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21
Q

what is the link between cost analysis and bench marking

A
  • -cost analysis are required for the benchmarking process

- cost analysis are collected/compared/ analyzed tp reveal the best in class- benchmarking

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22
Q

what is a feasibility estimate

A

a high level exercise to assess whether a project is financially viable and to set an outline budget for the scheme

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23
Q

what is the format of a feasibility budget estimate

A

A rate per m2 or function unit

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24
Q

what information do you need to carry out a feasibility estimate

A
  • function of building (office, hospital)
  • type of build (new or refurbishment)
  • location
  • size
  • quality
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25
Q

what is the percentage error of a feasibility generally

A

10%

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26
Q

what in an order of cost estimate

A

stage 0, stage 1
-a means of the determination of possible cost of a building early in design stage in relation to the employer’s fundamental requirements.
This takes place prior to preparation of a full set of working drawings or bills of quantities and forms the initial- build-up to the cost planning process

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27
Q

what are the principle components of an order of cost estimate

A
  • construction costs
  • prelims
  • OH and P
  • Contingency
  • Assumptions
  • Exclusions
  • Area Schedule
  • basis of estimate
28
Q

what is generally excluded from an order of cost estimate

A
  • professional fees
  • VAT
  • Client direct costs
  • FF&E
  • Inflation
  • Asbestos removal
29
Q

why would VAT be excluded

A

Different VAT applies to different clients. We wouldn’t know unless informed

30
Q

how would you assess the amount required in the contingency

A
  • Risk contingency, apply costs to each risk item

- Risk contingency should decrease as design develops and design becomes more certain

31
Q

what is the purpose of a cost plan

A

it’s used by the cost consultant to control the development of the design

32
Q

what’s the different between a cost estimate and a cost plan

A

An estimate is a forecast of costs, whereas a cost plan is a detailed build up that evolve as the design develops

33
Q

what is RPI

A

Retail Price Index
Measures inflation, including all household goods and services as well as mortgage payments, council tax, etc.
Always a higher rate than CPI, used for student loans
2.7% Jan 2019

34
Q

what is CPI

A

Consumer Price Index
Measures inflation of all household goods and services, excluding mortgage payments etc.
2% Jan 2019

35
Q

what are the design factors that have the biggest commercial implications on a project

A

-shape of a building (simpler is cheaper also improves wall-floor ratio)
-size of building (economies of a scale, lift core shared over larger spaces improves net gross ratio)
-height (up to 3 stories, extra stories get cheaper due to shared footprint) Above 3 stories, price increases due to foundation requirements; larger core decreasing net:gross
circulation (less circulation means more lettable space) which is good, however too little jeopardizes fire safety & comfort

36
Q

what is the base rate?

A

The official interest rate set by the bank of england

0.75% Jan 2019

37
Q

what is the construction PMI

A

Purchasing Managers Index
Above 50 suggests the construction industry is expanding
Jan 2019 52.8

38
Q

construction output recorded an all-time level hhigh in Nov 2018. What were the main drivers?

A

Strong growth in private new housing
private new commercial new work, and public housing repair and maintennace, which increases by 3.1%, 2.3% and 5.8% respectively

39
Q

what is the format of a cost plan

A

-executive summary
-financial summary
-reconciliation
-benchmarking data
-graphical analysis
-assumptions and exclusions
0 facilitating works
1 substructure
2 superstructure
3 internal finishes
4 FFE
5 MEP
6 Prefab
7 Works to existing
10 OHP
11 Project/ design fees
12 Other/development/ project costs
13 Risk

40
Q

what are the key design factors that influence the costs of a building

A
  • size
  • building density
  • shape
  • height
  • circulation space
  • wall to floor ratio
41
Q

what non design factors can affect the cost of construction

A
  • inflation
  • location
  • economic environment
  • accessibility
  • availability of skilled labour/supplies
42
Q

what is value management

A

A method of highlighting possible opportunities to create value within a project. Proactive, strategic level, early in project timeline
VM gives each and every project a clear path to create value through the understanding of client objectives as well as the needs and wants of stakeholders (functionality/cost/time)
Estimate unnecessary cost from a strategic level

43
Q

what is value engineering

A

VE is a method used to eliminate any unnecessary costs at a technical level, in order to achieve value for money on a project
VE methods and techniques can be used throughout the life cycle of a project, from strategic definition (very early design) to handover and close out. Generally formal cost plan 1,2,3

44
Q

how is the construction PMI derived

A

surveys are sent out to construction firms

45
Q

what does the construction PMI show us

A

The health of the construction industry, if the number is above 50, the industry is expanding, below 50 the industry is contracting

46
Q

what’s the base rate and who sets it

A

0.75% bank of england

47
Q

who is the governor of the bank of england

A

Mark Carney (Jun 2019)

48
Q

what is the RPI

A

Retail Price Index

3% Jun 2019

49
Q

what’s the difference between CPI and RPI

A

CPI Official
RPI seen as more useful, unofficial. Includes housing costs e.g council tax and mortgages
Calculated differently

50
Q

when do you find definition of order of cost estimate

A

NRM1

51
Q

When would you use a cost plan

A

Stage 2,3,4

52
Q

Name the RIBA stages and what would be included

A

0- Strategic definition: identify business case/strategic brief. Establish project programme
1- Preparing and brief: develop project brief, project budget. Develop programme
2-Concept Design: Issue final project brief, architectural and MEP concept designs, Stage 2 Cost Plan. Develop programme, sustainability strategies
3- Developed Design: Issue architectural, structural and MEP developed designs, stage 3 cost plan. Responsibilities matrix. Develop programme, sustainability strategies.
4- Technical Design: issue architectural, structural and MEP developed designs, Stage 3 Cost Plan, Responsibilities matrix. Develop programme, sustainability strategies.
5- Construction: off-site and on-site construction, resolution of design queries, agree variations, valuations and issue interim payments certs
6-Handover: close-out; hand ppssession of site over to client. hand over , DLP begins
7-In use: After 1 year if all snags made good issue certificate of MGD and release retention

53
Q

how do you market test design components

A

get specification. Give supplier details and measures. Subcontractors for installation rate

54
Q

What is a Contract Sum Analysis

A

Part of a tenderers submission breaking down the contractors price. Typically used in a DB

55
Q

what assumptions would you use in a Cost Plan

A

Lead, asbestos, ground information, procurement strategy, programme, design information, quantities, OH works

56
Q

what would be typically excluded from Cost Plan

A

VAT, inflation, legal fees. We do not advise on VAT

57
Q

how would you describe value

A

The usefulness to the client. Value can therefore vary between clients
Clients may value quality, sustainability, cost and status.

58
Q

List some standard design queries when tenders have been received

A
  • confirm cost is in line with spec

- firm up psums if possible

59
Q

how would you manage value engineering

A
  • QS review costs
  • discuss what is pushing costs up w/in design team
  • DT workshop, discuss options
  • send over to client
60
Q

define contingency

A
  • design development
  • construction risk
  • employer risk
61
Q

compared defined vs undefined provisional sums

A

defined=work not completely designed, but nature of work is known, how and where work is to be fixed to building, quantity that indicates the scope of work known, and specific limitations identified
undefined =work not completed designed, information required for PSUM to be defined not available. No allowance has been made in Contractor’s prelims or programme for undefined PSUMs

62
Q

define shell and core

A

Vertical distribution. landlord areas (core and external), base plant, building substructure and superstructure

63
Q

define Cat A

A

Shell and core+ horizontal service distribution, surface finishes, RAF; suspended ceiling and blinds

64
Q

Define Cat B

A

Cat A + partitions, IT/AV, further FCUS, tea points, final finishes, branding, reception areas, feature lighting,, something furniture

65
Q

what would client direct generally include

A

Chairs, desks

66
Q

what is a cost target

A

the recommended total expenditure for an element. The cost target for each element is likely to be derived from a number of sub-elements and components

67
Q

what are the types of risk that you would allow for in an order of cost estimate/cost plan

A
  • design development risk
  • construction risk
  • employer change risk
  • employer other risks

RICS-SY (17 decks)

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