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 is 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 basis.
What is the difference between cost and price?
The cost is the total cost of labour, plant, materials and management deployed for a specific activity.
The price is the amount a purchaser or client will pay for an item or product and is made up of the cost plus the main contractor’s profit margin.
How do you proceed if the cost plan exceeds the project budget?
I would analyse the costs to assess the source of the increase and identify whether any element of work is abnormally high against the order of cost estimate.
When the reason for the overspend is identified I would then look to propose value engineering options to my client and design team to bring the forecast back in line with the project budget.
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 is a wall to floor ratio?
It is calculated by dividing the external wall area by the gross internal 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.
0.45-0.50 considered a good ratio.
How would you prepare an estimate for M&E works?
I would ask an M&E specialist surveyor to undertake the estimate.
If they are unable to price the works due to other commitments, I would issue the drawings to M&E subcontractors and ask them to price the works.
For feasibility estimates the M&E amount would be included in the m2 or functional unit rate.
What is construction to ‘shell and core’?
Shell and core is the basic structure, services and envelope of the building.
This normally includes the fit out of landlord and common areas for example the reception, toilets, lifts & stair cores.
What is BWIC?
BWIC stands for Builders Work In Connection and is usually set as a percentage of the services cost.
BWIC accounts for the Main Contractor to perform any drilling, fixing, cutting and penetrations to enable the services installation.
Where would you get your rates from for a preliminary estimate?
Previous similar projects and historical cost data such as previous tender submissions or a contract sum analysis.
Other sources may include estimating price books such as SPONS or the Building Cost Information Service or specialist contractors.
What information do you need to be able to carry out an order of cost estimate?
Location of site
Statement of floor area
Floor plans
Roof plan
Elevations
Sections
Storey heights
Initial risk register
Details of professional fees, development costs, VAT and treatment of inflation.
What is a cost plan?
The cost plan presents the estimated cost of the development into an elemental or functional format.
A formal cost plan is typically issued between RIBA Work Stage 2 to Stage 4 when the design information is further developed. The detail progresses through the RIBA stages.
What is an order of cost estimate?
NRM 1 definition:-
An estimate based on benchmark data for a similar type of project based on the clients strategic definition or initial brief. Its purpose is to establish affordability of a proposed development for a client.
What are the principal components of a cost plan?
Construction costs.
Preliminaries.
Contractor’s OH&P.
Contingency.
Inflation.
Assumptions.
Exclusions.
Area Schedule.
List of Drawings & Specifications adopted.
Name the main elements of an elemental estimate?
Substructure:-
Excavation.
Disposal.
Foundations.
Superstructure:-
Frame.
Upper floors.
Roof.
Stairs.
External walls.
Windows and external doors.
Internal walls and partitions.
Internal doors.
Internal finishes.
FF&E
Services.
External works.
What is usually excluded from a cost estimate?
Professional fees.
VAT.
Loose fixtures and fittings.
Inflation.
Site acquisition costs.
Section 106 Agreement.
Removal of asbestos.
Why is VAT excluded?
Because different clients will incur different levels of VAT, for example charities may not be subject to VAT.
What is contingency?
A sum included within the estimate to cover unknown expenses or unmitigated risks during the project.
How is contingency assessed?
The amount included should reflect the risks and unknown specific items associated with the project.
During the early design stages a contingency allowance can be included as an overall percentage of the cost estimate at around 5%-10%.
What are the stages of the RIBA Plan of Work?
Stage 0 - Stategic Definition
Stage 1 - Preparation and Brief
Stage 2 - Concept Design
Stage 3 - Spatial Coordination
Stage 4 - Technical Design
Stage 5 - Manufacturing and Construction
Stage 6 - Handover
Stage 7 - Use
How do you take account of inflation when preparing a cost estimate?
I take into account inflation through the use of Tender Price Indices and include adjustments for Construction Inflation and Tender Price Inflation.
What time period would Construction Inflation be included for?
I would allow for Construction inflation from the anticipated start of the project to the mid-way point of the project.
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.
What does TPI stand for?
Tender Price Indices.
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?
The service I use to obtain Tender Price Indices is the Building Cost Information Service.
Why do you need to take account of location?
Inflation needs to be accounted for to anticipate the changes in the prices of labour, plant and materials, based on location.
What does BCIS stand for?
Building Cost Information Service.
What is BCIS?
Building Cost Information Service.
The BCIS provides construction cost and price information through publications, online services and price books.
What do you understand by the term VE?
VE is an organised approach, looking at alternative product or material without compromising the overal quality or funtionality of the project.
Where do you get cost information from?
Previous Tender Submissions.
Previous Contract Sum Analysis.
BCIS.
SPONS and other price books such as Laxtons.
Specialist sub-contractors and suppliers.
What do you understand by the term VM?
Value Management is the proactive process of defining what value means to a client and putting procedures in place to ensure that maximum value is delivered for the client.
In comparison, Value Engineering forms one of the processes under Value Management and is a reactive procedure to bring the anticipated cost of the development back in line with the project budget when a potential overspend is identified.
What happens during the VE process?
The design team will typically be brought together in a meeting including the Client, Quantity
Surveyor, Architect, Engineers and potentially the Main Contractor and specialist subcontractors.
The team will pool together their expertise and suggest different value engineering proposals.
The team will aim to deliver increased value for money by offering cost
effective solutions without compromising the overall usefulness of the building when considering the clients objectives.
Why is VM needed?
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 life cycle costs?
The costs that will be incurred over a defined period of operating and maintaining a building or an asset including repair, maintenance, replacement, cleaning, decorating, services provision and disposal.
What are the advantages of life cycle costing?
It enables informed decisions to be made on material selection.
Life cycle costing can result in lower operational, maintenance and replacement costs.
It can also be used to plan future maintenance requirements ensuring easier access and less disruption to the operation of the building.
What are the disadvantages of life cycle costing?
Future costs are optional and the costs of maintenance can always be deferred.
Components are not always replaced due to end of life which is impossible to assess at design stage.
The cost of defects caused by bad workmanship and design faults cannot be predicted.
It is hard to predict life spans, future inflation and maintenance requirements over long periods.
