Design Economics and Cost Planning Flashcards
Typical responsibilities of cost managers on construction projects?
Manage risk expenditure.
Avoid overspend.
Prepare pricing documents.
Evaluate tender bids.
Value CE’s.
Negotiate final accounts.
Produce cost estimates.
Which measurement rules represent industry best practice for capital building maintenance works?
NRM.
Name NRM documents?
NRM1 - for OCE and cost plans.
NRM2 - Detailed measurement for BoQs.
NRM3 - OCE and cost plans for maintenance.
NRM 1 structure?
1: General Intro.
2: Measurement rules for OCE.
3: Measurement rules for cost planning.
4: Tabulated rules of measurement for elemental CPlanning.
NRM 2 structure?
1: General intro
2: Detailed measurement of building works.
3: Rules of measurement for building works.
Structure of NRM 3?
1: Gen intro.
2: Measurement rules for maintenance works.
3: Measurement rules for OCE.
4: Cost planning of Maintenance works.
5: Calculation of annualised costs for Maintenance.
6: Elemental cost planning.
Is NRM mandatory for MRICS?
No, but if there are negligence allegations, then adjudicator would take account of guidance notes for competence.
Key elements of preliminaries identified in NRM2?
Site accomodation.
Site records.
Management and staff.
Temporary services.
Safety and environmental protection.
Mechanical plant.
Temporary works.
Cleaning.
Fees and charges.
Insurances.
What are the 4 risk categories under NRM?
Employer Change Risk.
Employer Other Risk.
Design Development Risk.
Construction Risk.
How does NRM define a “cost limit” for a project?
NRM1 - maximum expenditure a client is prepared to make.
How does NRM define the “base cost estimate” for a project?
Evolving estimate of known factors without allowances for risk or inflation.
What is an OCE?
An estimate based on benchmark data for similar projects based on client’s strategic definition or initial brief, to establish affordability.
When is an OCE produced?
RIBA 1 - Preparation and brief.
Difference between an OCE and a cost plan?
Estimate provides a possible cost based on employers requirements, often using m2 areas.
Cost plan is more detailed breakdown showing distribution of costs across the project.
Do you need a programme to complete a cost plan?
Preliminaries are presented as a weekly rate in developed plans. Some high-level dates are required.
NRM1 Elemental structure?
0 Facilitating works
1 Substructure
2 Superstructure
3 Internal Finishes
4 FFE
5 MEP
6 Prefabrications
7 Work to existing buildings
8 External Works
9 Prelims
10 Prelim OHP
11 Project/design team fees
12 Other development costs.
13 Risk
14 Inflation
How do you take account of project location in cost planning?
Factor applied based on location.
How would you calculate a total fee estimate, what component fees are included?
Consultant fees.
Contractor fees.
Others like planning permission.
How would you deal with an over budget cost plan?
Communicate the matter to the client and project team.
Identify areas for potential savings.
What are key reasons for cost overrun on projects?
Ambiguous client briefs or late changes.
Unrealistic estimates.
Uncoordinated design.
Unknown external factors.
Planning permissions.
What is BWIC?
Builders Work in Connection - allows other works to proceed such as MEP.
Why is VAT usually excluded from a cost plan?
Employers may incur different levels of VAT, finance team will deal with it.
What is wall-to-floor ratio?
Dividing the external wall area by GIFA.
How are subcontractor prelims captured in the cost plan?
Included in unit rates applied to sub-elements.
Define contractor OHP?
Profit is the money made after accounting for all costs.
Overheads are those not readily chargeable to one particular project.
What is a provisional sum?
Allowance included for not sufficiently defined elements.
Defined vs Undefined provisional sum?
Defined - contractor allows for programming and prelims.
Undefined - does not allow for those items, but can allow for them when works occur.
What are Prime Cost Sums?
Supply-only rate for materials or goods where precise quality is unknown.
Name some pricing documents used at tender stages?
BoQ.
Schedule of Rates.
Contract Sum Analysis.
Schedule of work.
Priced Activity Schedule.
What is a remeasurement contract?
Works carried out on pre-agreed unit rates.
Actual quantities carried out and then tendered rates applies to those quantities.
How would you determine whether contractor preliminaries are reasonable?
Length of contract.
Project type.
Overall build cost.
Temporary works needs.
Methodology of works.
Design responsibilities.
Types of contractor prelims considered abnormal?
Tower Cranes.
Out of hours working.
Road closures.
Difference between Tender inflation and Construction inflation?
Tender Inflation - allowance in OCE for fluctuations during period from estimate base date to date of tender return.
Construction inflation - allowance from date of tender return to mid-point.
What does TPI stand for?
Tender Price Indices.
Why would you use a BoQ instead of a schedule of work?
BoQ is more detailed than SoW.
BoQ means tenderers price same quantities.
Disadvantages of using a BoQ?
Expensive and time consuming.
Potential for errors.
Advantages of using a BoQ?
Ideal for post contract cost control.
Simple tender analysis.
Detailed and comprehensive.
Two types of BoQ?
Firm and Approximate.
No design changes mean a firm BoQ, while approx are subject to remeasurement on completion.
What is a cash flow projection?
Planning tool showing cash in and out of a project, typically forms an S curve.
Why are cash flow projections important in construction?
Planning expenditure and funding.
Plan for periods of cash shortage.
How would you measure a project being ahead or behind of schedule?
SPI - Schedule Performance Index
Greater than 1 means it is ahead of schedule.
How would you measure a project being ahead or behind on cost?
CPI - Cost Performance Index
Greater than 1 means it is under budget, or there is underspend.
Difference between cost and price?
Cost is the total of labour, plant, materials and management deployed in relation to building work.
Price is the amount the employer will ultimately pay.
Expense vs Payment.
What is life cycle costing?
Objective method for measuring and managing lifetime costs of project or asset.
Includes OpEx.
Disadvantages of LCC?
Components not always replaced due to end of life.
Defects cannot be predicted.
Discount rates affect accuracy.
Advantages of LCC?
Can be useful for value engineering.
Provides long term value.
How accurate is LCC?
Longer the period, the less accurate it may become.
What is an interim valuation?
Revaluation of the whole work, not just the work done since the last interim certificate or payment notice.
What is a vesting certificate?
Document evidencing ownership of goods or materials being transferred from one party to another upon payment.
What does “payment on account” mean?
Payment for item of work for which no instruction has been issued, but is anticipated.
What is “daywork”?
Used when work can’t be priced normally, recorded on a daywork sheet with labour, material and plant used.
What info is on a payment certificate?
Date of certificate.
Contract date.
Key payment timeline dates.
Party details.
Contract sum.
Retention.
Cumulative value.
Amount Due excl. VAT.
Signatures.
Payment timeline for the NEC ECC contract?
Assessment date.
7 days assessment period.
Due Date.
14 days.
Final date for payment.
Interim certificate issued 5 days after due date.
Pay less notice must be issued 7 days before final date for payment.
What happens if the employer doesn’t pay amount due before final date for payment?
Employer is liable for interest on amount due.
Contractor could suspend works.
What happens if the employer wishes to withhold payment but fails to issue a pay less notice?
They are obliged to pay notified sum without deductions.
What is SMM7?
Standard Method of Measurement 7, replaced by NRM.
What is a typical rate of m3 of concrete?
£100 per m3, varies.
What are some elements of the RICS code of measurement?
GIA
NIA
GEA
