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
