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APC REVISION > Design Economics and Cost Planning > Flashcards

Design Economics and Cost Planning Flashcards

1
Q

What is an order of cost estimate?

A

The purpose of an order of cost estimate is to establish affordability of a proposed development for a client.

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2
Q

What method of measurement would you use to prepare one?

A

In accordance with NRM1: Order of cost estimating and cost planning for capital building works

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3
Q

Name the three NRM documents?

A
  • NRM1 – Order of cost estimating and cost planning for capital building works
  • NRM2 – Detailed measurement for building works
  • NRM3 - Order of cost estimating and cost planning for building maintenance works
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4
Q

What are the New Rules of Measurement?

A

Published by the RICS, to provide a standard set of measurement rules for estimating, cost planning, procurement, and whole-life costing for construction projects - Helps avoid disputes

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5
Q

What does NRM2 do?

A

Establishes detailed measurement rules allowing the preparation of bills of quantities, quantified schedules of works and schedules of rates in order to obtain tender prices. Guidance is also provided on the content, structure, and format of bills of quantities.

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6
Q

How is risk dealt with under NRM?

A

It is recommended that risk allowances are not a standard percentage, but a properly considered assessment of the risk, considering the completeness of the design and other uncertainties such as the amount of site investigation done
Make allowances for the following risks;
1. Design development risks
2. Construction risks
3. Employer changes risks
4. Employer other risks

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7
Q

What are the four primary levels of standard elements in NRM?

A
  1. Group Element
  2. Element
  3. Sub Element
  4. Component
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8
Q

What is included within preliminaries list in NRM2?

A

1 PRELIMINARIES

1.1 EMPLOYER’S REQUIREMENTS
1.1.1 Site accommodation
1.1.2 Site records
1.1.3 Completion and post-completion requirements

1.2 MAIN CONTRACTOR’S COST ITEMS
1.2.1 Management and staff
1.2.2 Site establishment
1.2.3 Temporary services
1.2.5 Safety and environmental protection
1.2.6 Control and protection
1.2.7 Mechanical plant
1.2.8 Temporary works
1.2.9 Site records
1.2.10 Completion and post-completion requirements
1.2.11 Cleaning
1.2.12 Fees and charges
1.2.13 Site services
1.2.14 Insurance, bonds, guarantees and warranties

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9
Q

What is an order of cost estimate?

A

The purpose of an order of cost estimate is to establish affordability of a proposed development for a client.

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10
Q

What stage does an Order of Cost Estimate get carried out?

A

Stage 0 - Strategic Definition
Stage 1 - Preparation and Brief

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11
Q

How would you price professional fees in an order of cost estimate?

A

as a percentage

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12
Q

What’s the difference between a cost estimate and a cost plan?

A

Cost plan is an iterative process, updated and tracked as design progresses, to control the development of the design and ensure client achieves value

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13
Q

How would you prepare an estimate for M&E works?

A

Generally consult and MEP expert, otherwise I would use historic data and apply this to general items. For specialist works, I would seek advice

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14
Q

What is a provisional sum?

A

A provisional sum is an allowance (or best guess), usually estimated by a cost consultant, that is inserted into tender documents for a specific element of the works that is not yet defined in enough detail for tenderers to accurately price.

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15
Q

What is the difference between defined or undefined?

A

Defined provisional sums are those which have been described in sufficient detail that the contractor is expected to have made allowance for them in their programming, planning and pricing preliminaries.

Undefined provisional sums are less well described and so the contractor cannot be expected to make allowance for them in their programming, planning and pricing preliminaries.

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16
Q

How are they expended?

A

Instructed by CA - As provisional sums are replaced by valuations of the work actually done as the project progresses, the contract sum may increase or decrease. In addition, depending on the degree to which the works that the provisional sum relates to can be defined at the tender stage, the actual works that are undertaken may affect the contractor’s programming, planning and pricing preliminaries

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17
Q

What are the main tasks of the cost manager?

A
  • preparing cost budgets
  • managing tender processes
  • compiling contract documents
  • carrying out on site valuations
  • cost reporting
  • reviewing contractor variation claims
  • negotiating final accounts
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18
Q

What is the purpose of cost planning?

A
  1. To ensure that employers are provided with value for money on their building projects
  2. Employers and designers are aware of cost implications of their proposals
  3. Provide robust cost information upon the employer can make informed decisions
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19
Q

Define base cost estimate?

A

An estimate of all those items which are known, or a degree of certainty exists

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20
Q

What information is required to produce an order of cost estimate?

A

From the employer:
* Location and availability of site.
* Statement of building use and size.
* Any refurbishment requirements.
* Initial project/design brief.
* Enabling works details.
* Draft programme.
* Site conditions.
* Budget/cash flow constraints.
* Construction procurement options

From the architect:
* Design study sketches or drawings.
* Schedules of areas.
* Legislative constraints.
* Initial risk register.

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21
Q

What is an elemental cost plan?

A

They evolve through the life of the project, developing in detail and accuracy as more information becomes available about the nature of the design, and then actual prices are provided by specialist contractors, contractors, and suppliers.

The elemental method is an alternative approach for calculating the building works estimate. The elemental method considers the major elements of a building and provides an order of cost estimate based on an elemental breakdown of the building project. Ordinarily, the group elements and elements used in the elemental method are the same as those used in the elemental cost planning process

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22
Q

What methods can be used for cost planning?

A

Floor area method - The total GIFA of the building or buildings is measured and multiplied by an appropriate cost/m2 of GIFA.

Functional unit method - Functional units are a unit of measurement used to represent the prime use of a building or part of a building. It is essential that the functional unit is clearly identified when measurements are expressed in this way.

Elemental method - The elemental method is an alternative approach for calculating the building works estimate.
The elemental method considers the major elements of a building and provides an order of
cost estimate based on an elemental breakdown of the building project

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23
Q

What information is required to prepare a cost plan?

A

From client;
1. Location
2. Statement of building use
3. Spatial requirements
4. Requirements for refurbishment
5. Quality aspirations
6. Sustainability aspirations
7. Fit-out requirements
8. Details of enabling works
9. Programme
From Designers;
1. Floor plans
2. Specifications
3. Areas

24
Q

What are the elements within a cost plan?

A

0 – Facilitating works
1 – Sub-structure
2 – Superstructure
3 – Internal finishes
4 – Fittings, furnishings, and equipment
5 – Services
6 – Prefabricated buildings
7 – Works to existing building
8 – External Works
9 – Main Contractors Prelims
10 – Main Contractors OH&P

25
Q

Measurement rules for prelims?

A

As a % of total cost of building works

26
Q

Measurement rules for OH&P?

A

% based addition

27
Q

Measurement rules for project and design fees?

A

based on a percentage addition

28
Q

Measurement rules for risk allowances?

A

It is recommended that risk allowances are not a standard percentage, but a properly considered assessment of the risk, considering the completeness of the design and other uncertainties such as the amount of site investigation done
Make allowances for the following risks;
1. Design development risks
2. Construction risks
3. Employer changes risks
4. Employer other risks

29
Q

Measurement rules for inflation?

A

An order of cost estimate is to be prepared using rates and prices current at the time the
estimate is prepared. However, it is also necessary to consider possible future effects of inflation on these rates and prices over a period of time (i.e. from the estimate base date to construction completion). The rules divide inflation over a period of time into two categories:
* Tender inflation: the period from the estimate base date to the date of tender return.
* Construction inflation: the period from the date of tender return to the mid-point of the
construction period.
For order of cost estimates, a simple approach can be used to ascertain the amounts of tender inflation and construction inflation to be included

30
Q

Reporting of order of cost estimates

A
  • Project title
  • Project description
  • A statement of cost
  • Details of information and specifications
  • Statement of floor areas
  • Basis of cost estimate (assumptions)
  • Estimate base date
  • Summary of cost options
  • Inclusions/Exclusions
31
Q

What are the formal cost planning stages?

A

Formal Cost Plan 1 – Stage 2 (Concept Design)

Formal Cost Plan 2 – Stage 3 (Spatial Coordination)

Formal Cost Plan 3 – Stage 4 (Technical Design)

32
Q

What is the content of a cost plan?

A
  1. Exec summary
  2. Market conditions
  3. Total estimated construction costs
  4. Summary of movement in cost during the reporting period
  5. Risks
  6. Summary of cost plan
  7. Assumptions & Exclusions
33
Q

How do you take account of location of project and why?

A

You would need to apply a location factor which will be an addition or reduction in order to account for differences in construction prices in different locations

34
Q

What is a TPI?

A

Tender Price Index

35
Q

What do TPI’s show?

A

Current index of tender prices compared to predicted future index

36
Q

What methods of costing are you familiar with?

A
  1. BCIS
  2. Spons
  3. In house data
  4. Market testing
37
Q

What is BCIS?

A

Building Cost Information Service - the leading provider of cost and price information to the construction industry and anyone else who needs comprehensive, accurate and independent data

38
Q

How is TPI calculated?

A

It is calculated by comparing prices in accepted tenders against a base schedule

39
Q

What is CATO?

A

Causeway’s CATO cost planning suite provides a comprehensive solution for cost consultants, enabling cost advice and management to be provided quickly and consistently

40
Q

What would you change to CATO to improve the software?

A

Presentation of the document that it produced could be simplified

41
Q

What is a feasibility estimate?

A

Typically produced up to stage 1

While a feasibility estimate will consider the “end use” of a project, they will not account for any specific items such as type and quantity of materials since they are typically performed without any plans. Feasibility estimates are used to give clients a rough order of magnitude of the cost of the project. These estimates are intended to be a tool to help a customer decide to proceed on the articulated quote or scale the project up or down keeping in mind several feasibilities may be required before moving to the conceptual phase.

42
Q

What is BIM in construction?

A

Building Information Modelling (BIM) is a process that encourages collaborative working between all the disciplines involved in design, construction, maintenance, and use of buildings.

43
Q

What is life cycle costing?

A

Process of economic decision analysis, which helps taking decisions on investments in new construction. These decisions on investments are analysed for the payback over the life of the investment. This method is also known as life cycle costing technique in construction industry.

44
Q

What is the name of the RICS guidance note?

A

Lifecycle Costing, 1st edition

45
Q

What is considered when preparing LCC

A
  1. Construction costs
  2. Maintenance costs
  3. Operation costs
  4. Occupancy costs
  5. End of life costs
46
Q

What is Net Present Value (NPV)

A

Net Present Value (NPV) is the value of all future cash flows (positive and negative) over the entire life of an investment discounted to the present

47
Q

Give me an example of where it may be used?

A

When considering different types of windows for installation.
1. Timber frame
2. UPVC
3. Aluminium

48
Q

Whole Life Costing?

A

This is a methodology for the systematic economic consideration of all whole life
costs and benefits over a period of analysis, as defined in the agreed scope.

49
Q

What is Smartsheet and what is the benefit of this?

A

Smartsheet is an interactive tool used to manage projects and automate processes on one platform. Benefit of this tool is that live data can be shared and stored in one place as the “go to” place for someone needing information or data about a specific project.
- Lead in time of materials
- Potential for asbestos

50
Q

Define Value Management

A

Aims to maximise project value given the time, cost, and quality constraints. Value Management typically takes place earlier stages in the project; a broader process to explore how value could be provided at a strategic level by helping to develop the brief

51
Q

How does this differ from Value Engineering?

A

VM is a method of highlighting possible opportunities to create value within a project and subsequently managing those solutions to ensure value is continuously delivered.

Whereas VE is a method used to eliminate any unnecessary costs, in order to achieve value for money on a project. VE methods and techniques can be used throughout the life cycle of a project, from strategic definition (very early design) to handover and close out.

52
Q

Benefits of VM/VE

A
  1. To reduce project cost by focusing specifically on the functional requirements of the project and then considering what alternative approaches can be adopted
  2. Earlier consideration of design, buildability and maintainability can encourage the different project team members to discuss ideas in a structured way and seek more efficient or effective ways of achieving the required project outcomes, improving the subsequent asset management.
53
Q

Give me an example where you have implemented Value Management?

A

During the early design of an office building for 150 staff, the project was c£500k over budget. Design was based on 1 desk per employee, however following review of design, the client acknowledged that better use of IT & flexible working solutions meant that the function of the building could operate with 100 desks and 20 hot desks. This resulted in a smaller gross internal floor area and reduced fit-out costs.

54
Q

Define Value Engineering?

A

Value engineering is an exercise that involves most of the project team as the project develops. It is about taking a wider view and looking at the selection of materials, plant, equipment, and processes to see if a more cost-effective solution exists that will achieve the same project objectives

55
Q

Give me an example where you implemented Value Engineering?

A

KN – Number of changes impacted client contingency, therefore carried out a VE exercise to offset the cost increase. Target of £55k achieved by the following;
1. Alternative programme
2. Simplified partition types
3. Alternative Manufacturer for Ground Floor Acoustic Ceiling
4. Specification Change / Carpet
5. Alternative glass partition supplier

56
Q

Explain how alternative light fittings helped achieved Value Management on KN?

A

Specialist lighting designer advised a budget of £50k for lighting to the main reception area during the design stages. Following a review of the budget, I identified early this was a potential item which could be reviewed. As a result, a Delta light fitting was specified, which achieved a significant saving, whilst still achieving the design intent.

APC REVISION (26 decks)

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