Design Economics and Cost Planning Flashcards
What is a cost plan?
A structural breakdown of the cost limit in to cost targets for each element
Shows how the design team proposes to distribute the funds available on the elements of the proposed building
What is the purpose of a cost plan?
To control the development of the design
Identifies the clients agreed cost limit and how the money is to be allocated to the different elements of the building
Keep expenditure within cost limit approved by client (budget)
Ensure clients are provided value for money
Make employer/design team aware of cost consequences of their proposals
To assist the designers in providing design solutions which are within the clients cost limit
Provide robust cost information
What is the difference between a Cost estimate & a Cost plan?
An estimate is a forecast of construction costs which identifies the client’s budget
A cost plan is a breakdown of the cost limit in to cost targets for each element
What is the % error on a cost plan?
- 10-15% at the early stages
- 5% at the later stages
What is a PTE? What is it used for?
Pre-Tender Estimate
Final estimate of likely costs of the works before tendering
Provides a final budget that the client can use to confirm If they have sufficient funds
Basis for assessing and comparing tender returns
What is an Elemental Cost Plan?
Breakdown of the cost limit into cost targets for each element.
Provides a statement of how the design team proposes to distribute the available budget among the elements.
Base cost estimate
An estimate without any allowances for risk and uncertainty, or element of inflation. The base cost estimate is the sum of the works cost estimate, the project/design team fees estimate and the other development/project costs estimate.
Base date of cost data
The date on which rates and prices contained within cost analyses or benchmark analyses are taken as a basis for calculations
Building works estimate
the sum of the cost targets for group elements 1 to 8; excludes facilitating works estimate and on costs
Component
a measured item that forms part of an element or a sub-element
Construction inflation
an allowance included in the order of cost estimate or cost plan for fluctuations in the basic prices of labour, plant and equipment, and materials during the period
from the date of tender return to the mid-point of the construction period
Cost checks
take place during all design stages and are concerned
with comparing current estimated costs against cost targets previously set for elements or sub-elements of the building
Cost limit
the maximum expenditure that the employer is prepared to make in relation to the completed building; is the base cost estimate + risk allowances
Cost target
the recommended total expenditure for an element deriving from a number of sub-elements and components
Deflation
a downward movement in the average level of prices and or costs
Element
a major part of a group element; separate cost targets can be established for each element as well as group elements
Element unit quantity
a unit of measurement that relates solely to the quantity of the element or sub-element itself e.g. the area of external walls
Element unit rate
Total element cost divided by total element quantity
What budget setting techniques are you aware of?
What estimating methods do you use to produce order of cost estimates?
- Area method
- Functional unit method
- Elemental method
Estimate base date
The date on which the cost limit (excluding inflation) is established as a basis for calculating inflation, changes or other related variances.
Facilitating works
all components measured and incorporated in group element 0
E.g. demolition works, diversion of services
Functional unit method
a rough budget-setting technique which consists of selecting a suitable standard functional unit of use for the project, and multiplying the projected number of
units by an appropriate cost per functional unit
Gross external area (GEA)
the area of a building measured externally (i.e. to the external face of the perimeter walls) at each floor level.
Gross internal floor area (GIFA)
the area of a building measured to the internal face of the perimeter walls at each floor level.
Group element
the main headings used to describe the key parts of an elemental cost plan
Inflation
an upward movement in the average level of prices and or costs
Main contractor’s overheads and profit
- head office administration
- return on capital investment
Main contractor’s preliminaries
e items which cannot be allocated to a specific element, sub-element or component
Include:
- management and staff
- site establishment
- temporary services
- security
- temporary works
How did you apply subcontractor preliminaries?
As these costs are separate to the main contractors preliminaries, I included subcontractor preliminaries in the unit rates applied to the building works
Net internal area
the usable area within a building measured to the internal face of the perimeter walls at each floor level
OGC Gateway Process
are key decision points within the OGC Gateway Process
Option cost
an estimate of the cost of alternative design solutions to achieve the employer’s objectives
Order of cost estimate
The determination of possible cost of a building(s) 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 planning process.
Other development/project costs
costs that are not necessarily directly associated
with the cost of constructing the building, but form part of the total cost of the building project to
the employer (e.g. land acquisition costs, fees for letting agents, marketing costs and contributions
associated with Section 106 Agreements).
Price stability
the boundary between inflation and deflation
Prime cost sum
a sum of money included in a unit rate to be expended on materials or goods from suppliers when the specification of the material is unknown
PC sums are material only, exclude all other costs
Project/design team fee(s)
project team and design team consultants’ fees for
pre-construction, construction and post-construction related services
Retail area
the net internal area (NIA)
RIBA Plan of Work
A logical structure for building projects, starting with the brief and ending with post-occupancy evaluation
Summarises the deliverables required under each RIBA Work Stage
Risk allowance
the amount added to the base cost estimate for items that cannot be precisely predicted to arrive at the cost limit
Tender inflation
An allowance included in the order of cost estimate or cost plan for fluctuations in the basic prices of labour, plant and equipment, and materials during the period from the estimate base date to the date of tender return.
Works cost estimate
the combined total estimated cost of the building works estimate, the main contractor’s preliminaries and the main contractor’s overheads and profit prepared using prices current at the time the estimate is prepared (or updated).
What are some examples of functional rates?
- £/m2 (GIFA / NIA)
- Cost per key (Hotel)
- £/Kw (Data Centres)
- £/Per bed (Hospitals)
- Cost per seat (Church)
- Cost per child (School)
- Cost per unit (Residential)
What might you typically exclude from a cost plan?
- Inflation
- Professional Fees
- VAT
- Decant costs
- Statutory Fees
- Artwork costs
- AV/IT
- FF&E
- Whitegoods
- Asbestos removal
What would you usually see in a cost estimate aside from the costs?
- Project Title
- Building type
- Type of work
- Client
- Dates
- Site conditions
- Floor area
- Number of units
- Number of storeys
- Functional units
- Building accreditation scores e.g. sustainability
- Drawings/Specification used
What are the typical sections of a cost plan?
- Executive summary
- Breakdown of costs
- Information used
- Area schedules
- Assumptions, clarifications and exclusions
