Design Economics Flashcards
What is BIM?
a. Building information modelling
b. Shared management approach to the use of shared, structured data to design, deliver & use buildings
What are the benefits of BIM?
a. De-risks construction phase for the contractor / client
b. Built in £D before real = coordination improvements = SAVINGS
c. Incorporate construction materials & models to confirm buildability
d. Visualisation facilitates effective collaboration
e. Modelling efficiencies
f. Automated updates on drawings which impact measures, rates etc. with no further input from user
What is a cost plan?
a. A critical breakdown of the cost limit for the building into cost targets which would typically be organised elementally and issued at the key RIBA stages.
b. Guides the design team to distribute the available budget among the elements of the building
What are the challenges with BIM?
a. Cost of software & training
b. New way of working for all
c. Availability & quality of information
d. Change control & quality control
e. Design liability issues
f. Working protocols required
g. Supply chain integration & collaboration
How is BIM going to influence you as a QS?
a. Efficiencies in working
What are capital allowances?
a. Form of tax relief that can be claimed against capital expenditure on certain types of fixed asset
b. Reduce purchase price of asset & boost tax yield on investment
c. Types include land remediation tax relief (cleaning / preventing / containing contamination of land), research & development
What are the levels of BIM?
a. Level 0 - unmanaged CAD
b. Level 1 - managed CAD in 2D & 3D
c. Level 2 - managed 3D environment with data attached, but created in separate models
d. Level 3 - single, online, project model with construction sequencing (4D), cost information (5D) and life cycle management (6D)
Can you describe some non-physical aspects of a cost plan?
a. Main contractor prelims
b. Main contractor OH&P
c. Project / design team fees
d. Development costs e.g. insurance, planning fees, section 106
e. Risk allowances
f. Inflation
g. Capital allowances / land remediation
What is a cost estimate?
a. Can be carried out any time to provide the client or design team with a high level budget (e.g. variation)
What is a formal cost plan stage?
What is a formal cost plan stage?
What are the MC OH&P?
a. MC costs associated with head office administration & return on capital investment which is apportioned to the building contract
What are preliminaries?
a. Expenses the contractor will incur during construction, which are directly related to the running of the project and have not been included in the materials,
labour or overheads
What are estimating methods for building works in a cost estimate?
a. Floor area
b. Functional Unit method
c. Elemental Method
What is the purpose of a cost plan?
a. Ensure that employers are provided with value for money
b. Ensure all parties are aware of cost consequences of their desires
c. Provide advice to designers to enable them to make informed decisions
d. Keep to cost limit
e. Provide robust cost information for client to make informed decisions
What are the formal cost planning stages?
a. Stage 2 - Concept Design
b. Stage 3 - Spatial Coordination
c. Stage 4 - Technical Design
d. Employer is required to sign off each cost plan before authorising commencement of next stage
What occurs at stage 2?
a. Scope of works fully defined
b. Condensed list of elements & sub elements
c. Where inefficient information GIFA method used
d. Alternative concept design considered
e. Specification purely indicative
What occurs at stage 3?
a. Progression of design
b. Developed by checking cost of significant cost targets for elements as more information received
c. Schematics / spec
What occurs at stage 4?
a. Based on technical designs, spec & detailed information for construction
b. Provide reference for appraising tenders
What information do you need to form a cost plan?
a. Building tenure
b. Location
c. When is it being built / indicative timeline
d. Area schedule
e. Storey height / number of stories
f. Level of fit-out
How did you produce a cost plan?
a. Measurement of elemental areas using NRM
b. Costing - unit rates, inflation / benchmarking, if design limited used floor area
c. Apply on costs & risk allowance (MC prelims 11-16%, DD contingency 3-5%, Client other 3-5%
d. Present costs in elemental breakdown
How did you deal with risk in your cost plan?
a. Evaluating the project with risk management
b. Mechanisms to deal with risk (e.g. risk register, monte carlo techniques, central limit theorem)
What are the different types of cost data for a cost plan?
a. BCIS data
b. Previous estimate
c. Budget cost plans
d. Research papers
e. Price books
What are typical inclusions for a cost plan?
a. Exec summary / client brief
b. Area schedule
c. Elemental cost breakdown
d. Prelims
e. Basis of estimate & base date
f. Assumptions, inclusions, exclusions
What are typical cost plan exclusions?
a. VAT
b. Fees
c. Statutory authorities
d. FFE
e. Land costs
f. Capital allowances
g. Client contingency
h. Building regulations
What are typical adjustments you would make to your cost plan?
a. Size
b. Specification
c. Location
d. Timeframe
e. Market conditions (COVID / Brexit)
f. TPI - measures inflation across tender submissions & updates a tender sum to tender date of choice
g. BCI - measures inflation across building costs - does not include market conditions
What affects currency fluctuations?
a. Interest rates
b. Trade deals
c. Political stability
d. Inflation
e. Current account status
Which packages are traditionally most influenced by currency fluctuations?
a. Façade
b. Stone
What is the BCIS?
a. Building Cost Information Service
b. Online resource by RICS for cost analyses, indices, studies & forecasts
c. Calculate inflation now by gaining peoples opinions rather than calculating
ADV of BCIS
i. Good resource for early cost advice from option appraisals to cost planning
ii. Large amount of data useful for benchmarking
DISADV of BCIS
i. Lag in information update
ii. Anyone can add information so cant test validity or accuracy
What is TPI?
a. Tender price indices
b. Reflect fluctuations in the tender market
c. Used to cost between date of cost plan / PTE & actual tender date
d. Allowances for fluctuations in basic prices of labour, plant, equipment & materials
e. Take account of inflation - reflect changes in level of pricing contained in the lowest accepted tenders for new work
What is the location indices?
a. Tender price indices
b. Reflect fluctuations in the tender market
c. Used to cost between date of cost plan / PTE & actual tender date
d. Allowances for fluctuations in basic prices of labour, plant, equipment & materials
e. Take account of inflation - reflect changes in level of pricing contained in the lowest accepted tenders for new work
What is the location indices?
a. Take into account price levels varying across region
b. London / SE most expensive
c. Different market conditions mean variances in cost of materials, labour etc.
What factors affect the accuracy of a tender estimate?
a. Availability of design information
b. Amount, type & quality of cost data that is accessible
c. Project size
d. Number of bidders
e. Stability of market
What is the building cost indices?
a. Measures the increase / decrease in cost to the contractor & based on materials, labour, plant, overheads
What is construction inflation?
An allowance included for fluctuations in basic prices of labour, plant, equipment & materials during the period from the date of tender return to the midpoint of the construction period
Why the mid-point of construction?
a. Midpoint of the S-curve in the cashflow
b. Best place to inflate price as this is where most packages would be affected / packages effectively all procured
What is a fixed priced tender?
a. Not variable & no adjustments for inflation / fluctuations
What is a firm price tender?
a. Contractor must allow for changes in cost from the tender date to the end of the contract period
What is a fluctuation?
a. An irregular rising or falling in number or amount
How does the contract deal with fluctuation?
a. 3 fluctuation clauses; options A, B C
i. A - contribution, levy & tax fluctuations
ii. B - labour, material costs & tax fluctuations
iii. C - formula adjustments changes in relevant building cost indices (BCI)
Would a client usually prefer to report cost plan figures at tender date or current price?
Current day construction cost as they are using current day rental / sales rates to calculate revenue
What are the difference information sources for inflation?
a. Arcadis market view
b. Construction news
c. BCIS
d. Building Magazine
e. Important to note importance of regional factors
What periods do inflation / deflation cover?
a. Between the date of cost plan & start on site
b. During construction of the works & period on site
How do you deal with inflation in the rates you use?
a. When using rates from benchmark data, should be adjusted to current prices at time of estimate
b. Remove any allowances for future inflation
What is VAT?
a. Value added tax is tax added to the cost of certain goods & services
b. Don’t advise on VAT we advise clients speak to a specialist to ensure correct rates are applied
What does your liability to pay tax depend on?
a. Jurisdiction
b. Nature of project
c. Prevailing VAT rules
What should we advise clients to speak to specialists about?
a. VAT
b. LDs
c. Capital allowances
d. Land remediation
e. Grants
How do you calculate inflation?
a. Current day estimate
b. Construction date minus base date / base date x 100% = inflation allowance x current day estimate
What are interest rates?
a. The proportion of a loan that is charged as interest to the borrower, typically expressed as an annual % of the loan outstanding
How do interest rates affect the construction industry?
a. Increases risk & expense of construction project
b. COVID19 / Brexit
c. Cost of borrowing may increase or decrease
What is inflation?
a. A sustained increase in the general price level of goods and services in an economy over a period of time
What is net to gross ratio?
a. Proportion of NIA against GIA (usable against total internal)
b. Residential 78-84%
c. Commercial 75%
d. Simplified core increases efficiencies
How do you improve a net to gross in a residential building?
a. Reduction in wall thickness
b. Rationalise column layouts to include within external / party walls
c. Reduction in corridor / circulation space e.g. by bookending buildings
d. Increase number of apartments per core
e. Relocate core to reduce size
How do you improve wall-floor ratio?
a. Reduce articulation (changes in façade depth)
b. Utilise bolt on balconies instead of inset
c. More efficient building shape (circle is the best)
d. Reduce storey height
e. Wall to floor height typically below 3m
What is wall to floor ratio?
a. The amount of facade area to internal area (GIA)
b. 0.4 is realistic
Why is a low wall-floor ratio important?
a. Façade generally one of the more expensive packages
b. Reducing the ratio increases the value of the building
c. Can be 20-25% of shell & core costs
What is solid to glazed ratio?
a. The proportion of solid façade to glazed
b. The more solid there is, the lower the cost & the lower the solar gain
What are the issues with a 90-95% Net-gross?
a. May indicate there is an error
b. Might not be enough circulation space for access / escape
c. Might not be enough space for plant / cables / pipes
What are the differences between urban & rural?
a. Urban
i. Higher capital costs
ii. Lower energy/ pollution costs
iii. Use of public transport
iv. More transport options / less parking
b. Rural
i. Lower capital costs
ii. Higher energy / pollution costs
iii. Fewer transport options
What are the comparisons between low / high density?
a. low density
i. Small buildings
ii. High capital costs
iii. High energy consumption
b. High density
i. Larger buildings
ii. Low capital costs
iii. Low energy consumption
What is a good plot density ratio?
a. Measure of the total permitted floor area of a building in relation to the total area of the plot
What factors can impact the design of a building?
a. Location
b. Density
c. Orientation / daylight
What is solar gain?
a. Heating of a building via solar radiation
Raising floor temperature has an impact on cooling/heating services of a building, meaning more AC or natural ventilation needed to maintain optimum
temperature
What impact would increasing the glazing in my façade have?
a. Increase costs to overcome solar gain e.g. solar shading or AC
b. Glazing more expensive than brick
What are some solar gain solutions?
a. Blinds
b. brie soleil
c. AC
What is floor plate efficiency?
a. Depth between window to window
b. Max light = shallow floor plate & reduced building efficiency
c. Max floor depth = increased building efficiency & decreased natural light = increased cost for artificial lighting
What are the features of a narrow plate?
a. Natural ventilation
b. Natural lighting
c. Lower energy consumption
d. Lower running costs
What are the features of a wide plate?
a. Mechanical ventilation
b. Artificial lighting
c. Higher energy consumption
d. Higher running costs
What is the Merton rule?
a. Planning policy that requires new developments to generate 10% of their energy needs from onsite renewable energy equipment
What some cost drivers on different projects you’ve been involved in?
a. Commercial
i. Location
ii. Building layout - orientation, net:gross, wall:floor
iii. Facade - planning requirement (PartL)
What are life cycle costs?
a. Costs associated with constructing and operating a building
b. Capital expenditure, maintenance & operational, replacement / dismantling / recylcing
c. Repair, maintenance, replacement, cleaning
What are whole life cycle costs?
a. Summation of entire costs over the life of a building
b. Costs from land acquisition to demolition of completed building
c. Income of building etc.
What types of client are interested in LCC?
a. Government clients - concerned with overall value for money
b. PFI projects
c. Owner - occupiers
d. Clients aiming to incorporate sustainable tech
Where can you get information about maintenance costs?
a. BMCIS
b. NRM3
c. Inhouse date
d. From subcontractors
What is net present value?
a. Where future costs are discounted to present values
How does net present value work?
a. Involves comparison of the net present value of alternative opinions
b. Future LCC - useful at design stage
Would you recommend LCC alongside cost planning?
a. Yes - helps decide between materials
b. Encourages DT & client to consider future
What variable would affect the outcomes of the NPV?
a. Time periods assumed for replacement
b. Assumed maintenance & replacement cost
How accurate is LCC?
a. A lot of assumptions must be made on time, period , costs, trends, inflation
b. Accuracy relies on accuracy of assumptions
c. Sensitivity analysis - adjust different variables - time, cost
What factors impact LCC?
a. Quality - higher quality area may require more replacement / cleaning / maintenance
b. Density / usage - additional maintenance / replacement for areas used by lots of people or used 24/7
c. Location - impact of hot / cold weather - cladding type / M&E
What is risk?
a) An uncertain event or circumstance that, if it occurs, will affect the outcome of a programme or project
b) The likelihood of an event of failure occurring and its consequences
c) Best practice to mitigate risk is to proactively approach it
d) Has a likelihood of occurring
e) Has an impact if it occurs
.What is risk allowance?
a) The amount added to the base cost estimate for items that cannot be precisely predicted to arrive at the cost limit
What is a risk register?
a) A schedule of identified risks
What is Design Development Risk?
a. Risk allowance for use during design process
b. Change in estimating data
c. Design development
d. 3rd party risks e.g. planning, legislation
e. Delays in tendering e.g. DT taking too long to freeze design
What is construction risk?
a. Risk allowance for use during construction
b. Site conditions (access restrictions, existing buildings)
c. Ground conditions (contamination, soil bearing capacity)
d. Existing services (delays in statutory undertakers)
What is Employer Change Risk?
a. Risk allowance during design & construction
b. Change to scope, brief, quality, time
What is Employer other risk?
a. Early handover
b. Postponing
c. Acceleration
d. Availability of funds
What are the 3 publications of NRM?
a) NRM1 - order of cost estimating & cost planning for capital building works
b) NRM2 - detailed measurement for building works
c) NRM3 - order of cost estimating & cost planning for building maintenance works
What are preliminaries?
a) Define the scope of works including project particulars, list of drawings, description of the site
b) Costs that cannot be attributed to specific items of work
What should be considered when assessing prelim levels?
a) Length of contract
b) Location (accessibility, space restrictions)
c) Type of project
d) Size of project
e) Temporary works
f) Security
g) Sectional completion
h) Limitation on method / sequencing of works
What is the NRM?
a) Published set of best practice guidelines by RICS to provide a standard set of measurement rules for members involved in the cost management of construction
What are the benefits of NRM1?
a) Best practice document
b) Provides basis for improved accuracy of estimating & helps establish more effective cost control systems
c) Uniform approach to measurement, quantification, estimating
d) More transparency
e) Provides opportunity to provide additional services to those not traditionally provided by a QS
What is NRM2?
a) Detailed rules of measurement for purpose of obtaining tender prices
b) Preparation of BOQ, schedule of rates
c) Closer breakdown to how contractors will price your tender information - industry standard
What is NRM3?
a) Used for whole life cycle costing
b) Would be used if we were employed post contract for a PRS building
c) Carried out & used by whole life-cycle cost estimators
What does NRM1 provide guidance on?
a) Order of cost estimates
b) Elemental cost plans
c) Cost analyses
d) Benchmark analysis
What is a base cost estimate in NRM1?
a) Estimate without any allowances for risk & uncertainty / inflation
What is a building works estimate?
a) From substructure to external works/professional fees, prelims
b) All costs
What is the cost limit in NRM1?
a) Maximum expenditure the client is prepared to make in relation to the completed building
b) The authorised budget
How do you estimate prelims, OH&P, design fees for OCE in NRM1?
a) I used a percentage addition based on a properly considered assessment of benchmark data from similar projects
What are other development costs under NRM1?
a) Works not necessarily directly associated with works but from cost of total project
b) Insurances
c) Planning fees
d) Land acquisition
e) QS doesn’t usually have visibility of these
How is risk managed?
a) Avoid - change way project is delivered - unacceptable levels of risk
b) Transfer - move risk from one party to another e.g. insurance
c) Mitigate - reduce impact of risk or the probability of it occurring
d) Accept - risk will happen so monitor & ensure impact does not change (contingency)
What are the types of risk reduction?
a) VE or redesign
b) More detailed design/site investigation
c) Different materials
d) Different method of construction
e) Change contract strategy
What is an order of cost estimate?
a. A high level exercise to assess a budget for a scheme
b. Accuracy based on quality of information
c. Defines the client appraisal by providing key cost items that inform the estimate
What information is needed for estimate?
a. Type (function of building)
b. New build or extension
c. Location
d. Size / storey heights
e. Indication of quality
f. Ground conditions
g. Design
h. Area schedule
i. Programme / key dates
What are typical exclusions from order of cost estimate?
a. VAT
b. Inflation beyond estimate
c. Land acquisition costs
d. Professional fees
e. Section 106s
f. Special FFE
What are typical assumptions for an order of cost estimate?
a. Procurement route
b. Tender strategy
c. Base date for estimate
d. Interest rate allowances
e. Design information used
f. MC prelims / OH&P
What are the principal components of OCE
a. Construction cost
b. Preliminaries
c. Contractors OH&P
d. Risk
e. Inflation
f. Assumptions e.g. programme
g. Exclusions
h. Area schedule (from architect)
i. Basis of estimate
What would you expect to find in order of cost estimate?
a. Floor area method (£/m2, GIA)
b. Function unit method (£/key)
c. Elemental method (£/ft2)
How can you ensure good or accurate cost estimating?
a. Work goes through stringent QA process
b. Check against benchmarked data
What are the RIBA Plan of Work (2020) stages?
a. Stage 0 - Strategic Definition
b. Stage 1 - Preparation & Brief
c. Stage 2 - Concept Design
d. Stage 3 - Spatial Coordination
e. Stage 4 - Technical Design
f. Stage 5 - Manufacturing & Construction
g. Stage 6 - Handover
h. Stage 7 - Use
What are the changes from the RIBA 2013 to the RIBA 2020?
a. Now includes sustainability project strategy actions at each stage
b. Stage 3 no longer developed design. Encourages lead designer to manage information until building is fully coordinated, ready for planning at stage 4
c. Stage 5 now manufacturing & construction as opposed to just construction
d. Contains guide for designers to check their design works earlier
e. Reflects increasing requirements for sustainability & BIM
At which stages are different cost estimates used?
a. Order of cost estimate - stage 0-1
b. Elemental cost plans - stage 2-4
c. Pre tender estimate - stage 2,3,4 depending on procurement route
Where would you find guidance on what is required at each stage?
a. NRM1 - Order of cost estimating & cost planning for capital building works
What is CIL?
a. Community infrastructure Levy
b. Planning charge introduced by Planning Act 2008 to help local authorities deliver infrastructure to support development
What is the purpose of RICS code of measuring practice?
a. Purpose is to provide succinct definitions to permit the accurate measurement of buildings & land
What is GEA?
a. Gross external area
b. Area of a building measured externally at each floor level
What is GIA?
a. Gross internal area
b. Area of a building measured to internal face of perimeter walls at each floor level
What is NIA?
a. Net internal area
b. The usable area within a building measured to the internal face of the perimeter walls at each floor level
What are typical exclusions in GEA?
a. External balconies
b. Canopies
c. Voids over or under structural, raked or stepped floors
d. Greenhouses
What are typical exclusions in GIA?
a. Perimeter wall thickness
b. Same as GEA
What are typical exclusions in NIA?
a. Toilets
b. Corridors / circulation areas
c. Lift rooms / plant
d. Internal structural walls, columns etc.
e. Space occupied by permanent ACU
f. Vehicle parking areas
What is value engineering?
a. Value engineering should look to improve the value function of a product where value = benefits (output) / cost or effort (in put)
b. Value in context of case study is the ratio between benefit (outputs) and the cost or effort (inputs) required to achieve it
c. Element or product rather than entire project
What is value management?
a. Exploring how value can be provided at strategic level
b. Used effectively it can reduce design & construction time
c. Gives project clear path to create value through understanding of client objectives
What is a VE workshop?
a. Mechanism to group project team together to identify alternative solutions to a given problem
b. Intensive work on design proposals
c. Best used proactively rather than reactively
What are the limitations of VE?
a. Assumes all parties have common understanding of functions being provided
b. Assumes all feasible design alternatives provide some level of functional performance - focus becomes on cost rather than value
Why is VM needed?
a. Shared understanding of design objectives
b. Reach shared agreement of nature of project & value
c. Decisions are supported by data & made on the basis of defined performance criteria
d. Accountability increased
e. Alternative solutions are sought and considered
What is value?
a. Complex concept that resonates differently with anyone
b. Measure of worth, a relative measure of usefulness of something in relation to cost paid for it
Give me an example of where you’ve advised on value engineering?
30-33SS aerogel insulation to rockwell
What are some value management techniques?
a. Functional analysis systems technique (FAST)
i. technique to develop a graphical representation showing the logical relationships between the functions of a project, product, process or service based on the questions “How” and “Why”
b. Value drivers
c. Value benchmarking
What is earned value management?
a. Measure the progress of a project in a defined & objective matter & assess whether the resources are being used effectively
b. Used to see if project is behind or ahead of its budget for time/cost
c. compares:
i. Planned value of works over time
ii. Earned value of works completed
iii. Actual cost of works completed
What are the benefits of good VM/VE?
a. Lower capital costs
b. Faster programmes
c. More suitable design
d. More complete tender information
e. Improved collaboration
f. Fewer defects
g. Lower life-cycle costs
What are some VE techniques
a. Brainstorming
b. Cost and feasability option
c. LCC techniques
