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RICS APC - CJDO > Design Economics and Cost Planning > Flashcards

Design Economics and Cost Planning Flashcards

1
Q

Typical responsibilities of cost managers on construction projects?

A

Manage risk expenditure.
Avoid overspend.
Prepare pricing documents.
Evaluate tender bids.
Value CE’s.
Negotiate final accounts.
Produce cost estimates.

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2
Q

Which measurement rules represent industry best practice for capital building maintenance works?

A

NRM.

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3
Q

Name NRM documents?

A

NRM1 - for OCE and cost plans.
NRM2 - Detailed measurement for BoQs.
NRM3 - OCE and cost plans for maintenance.

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4
Q

NRM 1 structure?

A

1: General Intro.
2: Measurement rules for OCE.
3: Measurement rules for cost planning.
4: Tabulated rules of measurement for elemental CPlanning.

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5
Q

NRM 2 structure?

A

1: General intro
2: Detailed measurement of building works.
3: Rules of measurement for building works.

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6
Q

Structure of NRM 3?

A

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.

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7
Q

Is NRM mandatory for MRICS?

A

No, but if there are negligence allegations, then adjudicator would take account of guidance notes for competence.

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8
Q

Key elements of preliminaries identified in NRM2?

A

Site accomodation.
Site records.
Management and staff.
Temporary services.
Safety and environmental protection.
Mechanical plant.
Temporary works.
Cleaning.
Fees and charges.
Insurances.

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9
Q

What are the 4 risk categories under NRM?

A

Employer Change Risk.
Employer Other Risk.
Design Development Risk.
Construction Risk.

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10
Q

How does NRM define a “cost limit” for a project?

A

NRM1 - maximum expenditure a client is prepared to make.

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11
Q

How does NRM define the “base cost estimate” for a project?

A

Evolving estimate of known factors without allowances for risk or inflation.

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12
Q

What is an OCE?

A

An estimate based on benchmark data for similar projects based on client’s strategic definition or initial brief, to establish affordability.

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13
Q

When is an OCE produced?

A

RIBA 1 - Preparation and brief.

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14
Q

Difference between an OCE and a cost plan?

A

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.

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15
Q

Do you need a programme to complete a cost plan?

A

Preliminaries are presented as a weekly rate in developed plans. Some high-level dates are required.

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16
Q

NRM1 Elemental structure?

A

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

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17
Q

How do you take account of project location in cost planning?

A

Factor applied based on location.

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18
Q

How would you calculate a total fee estimate, what component fees are included?

A

Consultant fees.
Contractor fees.
Others like planning permission.

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19
Q

How would you deal with an over budget cost plan?

A

Communicate the matter to the client and project team.
Identify areas for potential savings.

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20
Q

What are key reasons for cost overrun on projects?

A

Ambiguous client briefs or late changes.
Unrealistic estimates.
Uncoordinated design.
Unknown external factors.
Planning permissions.

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21
Q

What is BWIC?

A

Builders Work in Connection - allows other works to proceed such as MEP.

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22
Q

Why is VAT usually excluded from a cost plan?

A

Employers may incur different levels of VAT, finance team will deal with it.

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23
Q

What is wall-to-floor ratio?

A

Dividing the external wall area by GIFA.

24
Q

How are subcontractor prelims captured in the cost plan?

A

Included in unit rates applied to sub-elements.

25
Q

Define contractor OHP?

A

Profit is the money made after accounting for all costs.
Overheads are those not readily chargeable to one particular project.

26
Q

What is a provisional sum?

A

Allowance included for not sufficiently defined elements.

27
Q

Defined vs Undefined provisional sum?

A

Defined - contractor allows for programming and prelims.
Undefined - does not allow for those items, but can allow for them when works occur.

28
Q

What are Prime Cost Sums?

A

Supply-only rate for materials or goods where precise quality is unknown.

29
Q

Name some pricing documents used at tender stages?

A

BoQ.
Schedule of Rates.
Contract Sum Analysis.
Schedule of work.
Priced Activity Schedule.

30
Q

What is a remeasurement contract?

A

Works carried out on pre-agreed unit rates.
Actual quantities carried out and then tendered rates applies to those quantities.

31
Q

How would you determine whether contractor preliminaries are reasonable?

A

Length of contract.
Project type.
Overall build cost.
Temporary works needs.
Methodology of works.
Design responsibilities.

32
Q

Types of contractor prelims considered abnormal?

A

Tower Cranes.
Out of hours working.
Road closures.

33
Q

Difference between Tender inflation and Construction inflation?

A

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.

34
Q

What does TPI stand for?

A

Tender Price Indices.

35
Q

Why would you use a BoQ instead of a schedule of work?

A

BoQ is more detailed than SoW.
BoQ means tenderers price same quantities.

36
Q

Disadvantages of using a BoQ?

A

Expensive and time consuming.
Potential for errors.

37
Q

Advantages of using a BoQ?

A

Ideal for post contract cost control.
Simple tender analysis.
Detailed and comprehensive.

38
Q

Two types of BoQ?

A

Firm and Approximate.
No design changes mean a firm BoQ, while approx are subject to remeasurement on completion.

39
Q

What is a cash flow projection?

A

Planning tool showing cash in and out of a project, typically forms an S curve.

40
Q

Why are cash flow projections important in construction?

A

Planning expenditure and funding.
Plan for periods of cash shortage.

41
Q

How would you measure a project being ahead or behind of schedule?

A

SPI - Schedule Performance Index
Greater than 1 means it is ahead of schedule.

42
Q

How would you measure a project being ahead or behind on cost?

A

CPI - Cost Performance Index
Greater than 1 means it is under budget, or there is underspend.

43
Q

Difference between cost and price?

A

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.

44
Q

What is life cycle costing?

A

Objective method for measuring and managing lifetime costs of project or asset.
Includes OpEx.

45
Q

Disadvantages of LCC?

A

Components not always replaced due to end of life.
Defects cannot be predicted.
Discount rates affect accuracy.

46
Q

Advantages of LCC?

A

Can be useful for value engineering.
Provides long term value.

47
Q

How accurate is LCC?

A

Longer the period, the less accurate it may become.

48
Q

What is an interim valuation?

A

Revaluation of the whole work, not just the work done since the last interim certificate or payment notice.

49
Q

What is a vesting certificate?

A

Document evidencing ownership of goods or materials being transferred from one party to another upon payment.

50
Q

What does “payment on account” mean?

A

Payment for item of work for which no instruction has been issued, but is anticipated.

51
Q

What is “daywork”?

A

Used when work can’t be priced normally, recorded on a daywork sheet with labour, material and plant used.

52
Q

What info is on a payment certificate?

A

Date of certificate.
Contract date.
Key payment timeline dates.
Party details.
Contract sum.
Retention.
Cumulative value.
Amount Due excl. VAT.
Signatures.

53
Q

Payment timeline for the NEC ECC contract?

A

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.

54
Q

What happens if the employer doesn’t pay amount due before final date for payment?

A

Employer is liable for interest on amount due.
Contractor could suspend works.

55
Q

What happens if the employer wishes to withhold payment but fails to issue a pay less notice?

A

They are obliged to pay notified sum without deductions.

RICS APC - CJDO (24 decks)

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