Design Economics Flashcards
What is the difference between an estimate and a cost plan?
Estimate is a prediction of the resources required to achieve an agreed scope of work.
Cost Plan is an estimate based on a specific design, usually broken down elementally. Far more detail than an estimate.
What is a lifecycle cost?
The costs that will be incurred over a defined period of operating and maintaining a building/asset.
Construction costs, maintenance costs, operation costs, occupancy costs, end of life costs.
What are whole life costs?
Will include life cycle costs as well as other factors such as non-construction costs such as land acquisition.
Construction costs, maintenance costs, operation costs, occupancy costs, end of life costs, non-construction costs, income, externalities.
What sections have you included in your cost plans?
- Executive Summary
- Market Conditions & Movements from previous cost plan
- Facilitating Works
- Estimated Construction Cost (elemental breakdown)
- Main Contractor prelims and OH&P
- Consultant Fees
- Risk update
- Inflation Estimate
- Assumptions and Exclusions (VAT, Insurance and Inflation).
What is value engineering?
- Aims to improve the value of the works, this will either maintain cost and improve function or maintain function and reduce costs.
What is value management?
The process of determining the function and performance criteria required by the client for the project to deliver value for them, and identifying products and services to meet the criteria. This is not solely about cost, its about giving value for the client.
What is a functional unit?
A unit of measurement used to represent the prime use of a building/project or part of it. E.g. per bed space, per parking space, per m2 retail area. Includes all associated circulation space etc.
Multiplying the total required function (number) by the functional unit rate gives total building works estimate (minus prelims and fees).
How do you calculate tender inflation?
Inflation from the date of the base estimate to the tender date, a likely inflationary amount that will have increased the priced received at tender stage.
Calculate using the BCIS All in Tender Price Indices.
What is construction inflation?
Inflation on materials, plant and labour from the tender date until the mid point of construction.
What is the BCIS and what would you find on the BCIS website?
BCIS is the Building Cost Information Service of the RICS. BCIS includes the following tools: • Over 20,000 cost analyses • Twelve sets of Indices (including building cost and tender price indices) • Average £/m2 building prices • Construction duration calculator • Daywork rates • Contract percentages • Tender price studies
Can you tell me about a hot topic that is impacting the price of construction at the moment?
Ban on red diesel from 1st April 2022. Means construction needs to use white diesel which does not receive a rebate. This has led to additional 46p per litre of fuel used.
Inflation on materials. Between 2021-22 inflation hit 40 year highs and materials increased by as much as 65% (structural steel). BCIS materials cost index is at 40 year high.
What is a base cost estimate and what is a works cost estimate?
Base Cost - All items known or a degree of certainty exists for.
Works Cost - Works + Prelims + OH&P
