Commercial Management/Design Economics Flashcards
where can QS find guidance on benchmarking
RICS Practice Standards UK-Cost Analysis and Benchmarking, 1st edition 2011
what is cost analysis
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
what main cost analysis be used for
- estimating costs for similar buildings
- estimating costs for construction elements
- comparing the cost of design option at elemental level
- cost modelling design solutions
what is benchemarking
The process of collecting and comparing data internally and externally to identify the ‘best in class’
what is an elemental cost plan
- 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
what is the purpose of cost planning
- to ensure the client can afford the project
- to ensure the client is getting value for money
what are the benefits of recording historic cost data
- 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)
what information you would expect to find with a historic cost analysis
- contract details
- description of project
- GIA;NIA
- Contract Sum
- Base Date
- Location
what is the BCIS
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
what does standardising the cost analysis format provide?
what are the two key parameters that will influence construction costs
- location
- the state of the construction economy at the time (date)
why may construction costs be different for different locations
- 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
what parameters does BCIS offer
- location
- time
- build type (new build, refurbishment)
- building use (school, residential, offices)
- AC/noAC
- basement
when is the BCSI base date for TPI
1985=100 all in TPI
2010=100 scotland
why would you not use TPC/CPI to calculate the inflation of a specific construction cost
TPI/CPI not specific to a construction cost, they relate to the overall movement
what are the key steps in benchmarking
- data collection
- data comparison
- data analysis
- action
- repeat
why is bench marking useful
creates targets for similar projects, trying to improve on previous
aside from total construction cost, what other factors can be bench marked
- cost/net m2
- cost/gross m2
- cost/bed
- cost/pupil
- co2 emissions
- sustainability rating
with regards to confidentiality, what consideration should you make before presenting in house benchmarking data
- 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
why is it good to show a range of benchmarks rather than just those closest to the mean
it is good to show the potential risk
what is the link between cost analysis and bench marking
- -cost analysis are required for the benchmarking process
- cost analysis are collected/compared/ analyzed tp reveal the best in class- benchmarking
what is a feasibility estimate
a high level exercise to assess whether a project is financially viable and to set an outline budget for the scheme
what is the format of a feasibility budget estimate
A rate per m2 or function unit
what information do you need to carry out a feasibility estimate
- function of building (office, hospital)
- type of build (new or refurbishment)
- location
- size
- quality
what is the percentage error of a feasibility generally
10%
what in an order of cost estimate
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
what are the principle components of an order of cost estimate
- construction costs
- prelims
- OH and P
- Contingency
- Assumptions
- Exclusions
- Area Schedule
- basis of estimate
what is generally excluded from an order of cost estimate
- professional fees
- VAT
- Client direct costs
- FF&E
- Inflation
- Asbestos removal
why would VAT be excluded
Different VAT applies to different clients. We wouldn’t know unless informed
how would you assess the amount required in the contingency
- Risk contingency, apply costs to each risk item
- Risk contingency should decrease as design develops and design becomes more certain
what is the purpose of a cost plan
it’s used by the cost consultant to control the development of the design
what’s the different between a cost estimate and a cost plan
An estimate is a forecast of costs, whereas a cost plan is a detailed build up that evolve as the design develops
what is RPI
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
what is CPI
Consumer Price Index
Measures inflation of all household goods and services, excluding mortgage payments etc.
2% Jan 2019
what are the design factors that have the biggest commercial implications on a project
-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
what is the base rate?
The official interest rate set by the bank of england
0.75% Jan 2019
what is the construction PMI
Purchasing Managers Index
Above 50 suggests the construction industry is expanding
Jan 2019 52.8
construction output recorded an all-time level hhigh in Nov 2018. What were the main drivers?
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
what is the format of a cost plan
-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
what are the key design factors that influence the costs of a building
- size
- building density
- shape
- height
- circulation space
- wall to floor ratio
what non design factors can affect the cost of construction
- inflation
- location
- economic environment
- accessibility
- availability of skilled labour/supplies
what is value management
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
what is value engineering
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
how is the construction PMI derived
surveys are sent out to construction firms
what does the construction PMI show us
The health of the construction industry, if the number is above 50, the industry is expanding, below 50 the industry is contracting
what’s the base rate and who sets it
0.75% bank of england
who is the governor of the bank of england
Mark Carney (Jun 2019)
what is the RPI
Retail Price Index
3% Jun 2019
what’s the difference between CPI and RPI
CPI Official
RPI seen as more useful, unofficial. Includes housing costs e.g council tax and mortgages
Calculated differently
when do you find definition of order of cost estimate
NRM1
When would you use a cost plan
Stage 2,3,4
Name the RIBA stages and what would be included
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
how do you market test design components
get specification. Give supplier details and measures. Subcontractors for installation rate
What is a Contract Sum Analysis
Part of a tenderers submission breaking down the contractors price. Typically used in a DB
what assumptions would you use in a Cost Plan
Lead, asbestos, ground information, procurement strategy, programme, design information, quantities, OH works
what would be typically excluded from Cost Plan
VAT, inflation, legal fees. We do not advise on VAT
how would you describe value
The usefulness to the client. Value can therefore vary between clients
Clients may value quality, sustainability, cost and status.
List some standard design queries when tenders have been received
- confirm cost is in line with spec
- firm up psums if possible
how would you manage value engineering
- QS review costs
- discuss what is pushing costs up w/in design team
- DT workshop, discuss options
- send over to client
define contingency
- design development
- construction risk
- employer risk
compared defined vs undefined provisional sums
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
define shell and core
Vertical distribution. landlord areas (core and external), base plant, building substructure and superstructure
define Cat A
Shell and core+ horizontal service distribution, surface finishes, RAF; suspended ceiling and blinds
Define Cat B
Cat A + partitions, IT/AV, further FCUS, tea points, final finishes, branding, reception areas, feature lighting,, something furniture
what would client direct generally include
Chairs, desks
what is a cost target
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
what are the types of risk that you would allow for in an order of cost estimate/cost plan
- design development risk
- construction risk
- employer change risk
- employer other risks
