Design Economics Flashcards
What is the difference between an order of cost estimate and a cost plan?
A cost estimate is prepared earlier on in the design process typically between RIBA Work Stages 0 to stage 2
This occurs when the level of design information is more limited and allows a cost estimate to be prepared on a cost per m2 or cost per functional unit so you would use
A cost plan is produced typically at each RIBA stage 2 onwards
As the design progresses more information can be included to eventually breakdown the estimated cost of the development elementally into each of its component’s parts such as substructure, roofing, superstructure
What is the difference between cost and price?
Cost is the sum of for example labour, plant, materials and prelims whereas a price is what the client will pay which is made up of cost + contractor’s overhead and profit
How do you proceed if the cost plan exceeds the project budget?
I would carry out a cost comparison and identify any element of work which is abnormally high against the order of cost estimate
When the reason for overspend is identified I would propose to implement value engineering options to my client and design team to bring the forecast back in line with the project budget
What is an order of cost estimate?
Under NRM this is described as the determination of the 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 process
What is the purpose of an order of cost estimate?
To establish if the proposed building project is affordable and to establish a realistic cost limit
The cost limit is the maximum expenditure that the client is prepared to spend on the proposed building project
What is the format of a feasibility estimate or order of cost estimate?
This can be presented as a cost per m2, elemental basis or function unit
It can also be presented as a range
What is a functional unit?
A functional unit is a unit of measurements that considers the prime use of a building. For example a school and desk may be presented as cost per student desk
Where would you get your rates from for a preliminary estimate?
Previous similar projects and historical cost data such as previous tender submission or a contract sum analysis
Other sources may include estimating price books such as Spons, BCIS
What information do you need to be able to carry out an order of cost estimate?
Building location,
Floor area or functional units,
Storey height,
Initial floor plans,
Site conditions
Details of professional fees, treatment of inflation
What is a cost plan?
The cost plan presents the estimated cost of the development into an elemental or functional format
It shows how the design team proposes to distribute the funds available on the different elements of the proposed building
What is the purpose of a cost plan?
It is used to control the development of the design
It identifies the client’s agreed cost limit and how the money is to be allocated to the different elements of the building
When would you do a cost plan?
A formal cost plan is typically issued between RIBA Work Stage 2 to Stage 4
At stage 2 the concept design is made available and the cost plan may be produced at a fairly high level
Stage 3 - Spatial coordination
Stage 4 - The technical design is made available and the cost plan updated to reflect the Architect and engineering technical designs
What are the principal components of a cost plan?
Direct construction costs,
Prelims
Contractor’s overhead and profit,
Contingency
Inflation
Assumptions
Exclusions
List of drawings and specifications
What is contingency?
A sum within the estimate to cover unknown expenses which might arise later on in the project
How is contingency assessed?
The amount of contingency should reflect the risks and unknown specific items associated with the project
During the early design stages 5-10% contingency estimate is sufficient.
As more design information becomes available a risk register can be compiled and each item assigned a probability and cost impact.
What are the stages of the RIBA Plan of Work?
Stages - to 7
0 - strategic defintion
1 preparation and brief
2 concept design
3 Spatial coordination
4 technical design
5 manufacturing and construction
6 handover
7 use
How do you take account of inflation when preparing a cost estimate?
I would look to use an inflation indices such as TPI to include for adjustments
What time period would Construction Inflation be included for?
I would allow a construction inflation from the anticipated start of the project to the mid-way point of the project
What time period would Tender Price Inflation be included for?
I would allow for TPI from the estimate base date to the anticipated tender return date
What is meant by the base date within a cost estimate?
The base date refers to the date on which rates and prices contained within a cost estimate are based on
These are included for the basis of calculations for example if adjusting the rates for inflation in the future, the base date can be used as a starting point from which inflation would be adjusted
What does TPI stand for?
Tender price indicies
What do TPIs show?
They reflect changes in the level of tender prices over a period of time
Where can you obtain Tender Price Index information from?
You can obtain it from BCIS or larger cost consultancies
Why do you need to take account of location?
Inflation needs to be accounted for to anticipate the changes in prices of labour, plant and material. We need t
What does BCIS stand for?
Building Cost Information Service
What is BCIS?
BCIS provides construction cost and price information through publications, online services and price books
Where do you get cost information from?
Previous tender submissions, benchmarks, BCIS, SPONS
What do you understand by the term VE?
Value engineering is an organised approach aimed at providing the necessary functions of the building taking into account the clients objectives at the lowest cost without detrimental affects to quality, reliability, performance or delivery
What do you understand by the term VM?
Value Management is the proactive process of defining what value means to the client and putting in procedures in place to ensure that maximum value is delivered for the client first time
What is value, what does value mean?
Value is a measure of worth taking into account the overall usefulness and benefits that are delivered in relation to cost being paid for it
Value is a complex concept and means different things to different
What happens during the VE process?
Why is VM needed?
Each construction client has theur own specific objectives and definition of what value means to their organisation
VM is needed to reach an agreement on what value is defined as and to reach a shared understanding on the objectives that are being sought
What are the advantages of life cycle costing?
Lifecycle costing allows consideration of the long term implications of a decision
It enables informed decisions to be made on material selection
Can be used to plan future maintenance requirements ensuring easier access and less disruption
What are life cycle costs?
The costs that will be incurred over a defined period of operating, maintaining a building or an asset including repair, maintenance, replacement, cleaning, decorating, services
What are the disadvantages of lifecycle costings?
It is hard to predict life spans, future inflation and maintenance requirements over long periods
The cost of defects caused by bad workmanship and design faults cannot be predicted
What costs should be considered in life cycle costing?
Capital costs
Operational costs
Maintenance costs
Replacement costs
Disposal
Where can you get information about maintenance costs?
Building maintenance cost infomration service (BMCIS)
From subcontractors and suppliers
How do you quantify risk?
Through a risk register, assign probabilities and cost to each
What is buildability?
Buildability is harnessing the contractor’s expertise and knowledge during the design stage to generate ideas for effective and efficient methods of construction
What are the advantages of buildability?
This can result in better programming, sequencing and construction methods
A quicker more efficient programme can be achieved
Quality in the finished building’s performance and maintenance can be improved
What is a wall to floor ratio?
This shows the relationship between wall area and floor area
It is used to show the cost efficiency of the building
The lower the ratio the cheaper the building is to construct as there is less external envelope to construct in comparison to the floor area
How would you prepare an estimate for M&E works?
What is a Section 106 agreement?
S106s are agreements between local authorities and developers that are negotiated in the context of granting planning consent
What is usually excluded from a cost estimate?
Professional fees
VAT
Inflation
Site acquisition costs
Section 106 agreement
Removal of asbestos
What is a CAT A fit out?
This provides generic fit out items to suit most developers for example life safety elements and basic fittings such as suspended ceiling tiles, raised floors, carpets, lighting and power distribtion to floor plates
What is construction to ‘shell and core’?
Shell and core in the basic structure, services and envelope of the building
This normally includes the fit out of landlord and common areas for example reception, toilets lifts and stair cores
Name the main elements of an elemental estimate
- Substructure
- Excavation
- Disposal
- Foundations
- Superstructure
- Frame
- Upper floors
- External Walls
- Roof
- Internal finishes
- Services
- External works
Why is VAT excluded?
Because different client will incur different levels of VAT, for example international clients
How does the payback period method work?
It judges investment in temrs of time period over which the invested sum is returned in cost savings
The increased expenditure on a higher quality component is viewed as the investment and the savings provided in the form of future costs is viewed as the revenue
What sort of materials is the payback period method used for?
This is usually used for assessing sustainable technologies
Why might a client accept higher capital costs?
Prestige reasons
You mentioned recognising primary factors influencing design economics, including construction quality, building functionality, and market conditions. Can you provide an example from your experience where considering these factors played a significant role in shaping the design to meet both capital and life cycle cost objectives?
In your understanding, cost planning serves as a benchmark for financial control during the design development stage. Could you elaborate on a specific project where effective cost planning was instrumental in managing project finances, minimizing the risk of budget overruns, and ensuring financial viability?
You mentioned awareness of diverse stages of cost planning and RIBA Plan of Works 2020 stages. Can you explain how you’ve applied cost planning at different stages of a project, from initial feasibility studies to detailed cost plans, and how this approach facilitated precise financial forecasting and adjustments?
You highlighted the importance of utilising reliable cost data from sources like BCIS and internal house data. Can you share an instance where accurate cost data played a crucial role in generating estimates and making informed financial decisions during the design and planning phase of a project?
You mentioned adjusting the contingency percentage from 15% to 40% based on your evaluation of potential uncertainties. How did your experience from previous projects inform this decision, and how did the increased contingency contribute to the financial security and resilience of the Mercury House project?
In the Mercury House project, you undertook a comprehensive reassessment of the initial cost plan. Can you elaborate on the challenges you encountered during this process, and how your proactive engagement with the market and specialists contributed to refining the estimates, particularly in the case of enabling works?
In preparing detailed cost forecasts for various project activities, like enabling works, you mapped out costs over the project timeline. Could you provide an example of how this detailed forecasting approach benefited the project, and how it facilitated effective collaboration with the project manager in understanding and managing costs?
Your role extended to monitoring and reporting actual costs against forecasts, analysing variances on a monthly basis. Can you share a specific instance where the analysis of variances between projected and actual costs led to actionable insights or adjustments in the project’s financial planning?
Talk me through how you revised a cost plan from 2.4m to 6.6m
At what stage did you review the cost plan?
What methods did you use to scrutinise figures?
On Spekeland road how did you identify what items to omit from scope?
