Design economics and cost planning Flashcards

1
Q

What is the difference between Prime cost sum and provisional sum?

A

Prime Cost Sum: Supplier/ Subcontractor is selected by client to carry out an element of the works and imposed upon the Main Contractor after Main Contractor Appointment. Excludes profit markup and Main Contractor attendances.

Provisional Sum: Allowances for specific elements of the works not yet defined in enough detail for the Contractor to price. No such thing in NEC Contracts.

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2
Q

What is the difference between an order of estimate and a cost plan?

A

A cost estimate is prepared earlier on in a design process typically between RIBA work stages 0 to 2.
This is when the level of design information is more limited and allows a cost estimate to be prepared on a cost per m2 or cost per functional unit basis.
A cost plan is produced typically at each RIBA work stage from stage 2 onwards.
As the design process progresses more information can be included to eventually breakdown the estimated cost of the development elementally into each of its components parts such as substructure, superstructure, services and professional fees into an elemental cost plan format.

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3
Q

What is the difference between cost and price?

A

The cost is the total cost of labour, plant materials and management deployed for a specific activity.
The price is the amount a purchaser or client will pay for an item or product and is made up of the cost plus the main contractors profit margin.

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4
Q

How do you proceed if the cost plan exceeds the project budget?

A

I would analyse the costs to assess where increases have come from and identify whether any element of work is abnormally high against the order of cost estimate.
When the reason for the overspend is identified I would then look to propose value engineering to the project team, working with the client and design team to propose VE options to bring the forecast costs back in line with the project budget.

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5
Q

What is buildability?

A

This is harnessing the contractor’s expertise and knowledge during the design stage to generate ideas for effective and efficient methods of construction.

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6
Q

What are the advantages of buildability?

A
  • Buildability can result in better programming, sequencing and construction methods.
  • A quicker more efficient programme can be achieved.
  • Reduced capital and life cycle costs of the building can be obtained.
  • The quality in the finished building’s performance and maintenance characteristics can be improved.
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7
Q

What is a wall to floor ratio?

A

This shows the relationship between the wall area and floor area.
It is used to show the cost efficiency of the building.
The lower the ratio, the cheaper the building is to construct as there is less external envelope to construct in comparison to the floor area.

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8
Q

What is the most efficient building shape?

A

In theory a building with a circular floor plate building would offer the most efficient design as there is less wall to floor ratio.
However a circular floor plate has a poor lettable floor area and is difficult to fit out therefore a square floor plate is considered more efficient overall.

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9
Q

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

A

I would ask an M&E specialist surveyor to undertake the estimate.
When preparing a feasibility estimate I would benchmark it and would include as a m2 or functional unit rate.

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10
Q

What is a Section 106 agreement?

A

S106s are agreements between local authorities and developers that are negotiated in the context of granting planning consent.

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11
Q

What is construction to shell and core?
(THINK MBS MUSEUM AND ANC)

A

Shell and core is the basic structure, services and envelope of the building.
This normally includes the fit out of landlord and common areas e.g. the reception, toilets, lifts and stair cores,
Base services are typically terminated at entry points to each of the lettable floor plates however life safety services infrastructure is normally provided.

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12
Q

What is a CAT A fit out?

A

CAT A is also known as developer’s fit out
This provides generic fit out items to suit most developers for example life safety elements and basic fittings such as suspended ceiling tiles
(TURN UPSIDE DOWN AND SHAKE NOTHING FALLS)

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13
Q

What is a CAT B fitout?

A

A CAT-B fitout overlays the CAT A provision with bespoke elements specific to the buildings user to allow the tenant to occupy and use the space.
(TURN UPSIDE DOWN AND SHAKE SO EVERYTHING FALLS)
Can include branding etc

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14
Q

Where can you find definitions for these?

A

The British Council of Offices (BCO) fitout guide

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15
Q

What is BWIC?

A

Builders Work in Connection and is usually set as percentage of the services cost.
BWIC accounts for the main contractor to perform any drilling, fixing, cutting and penetrations to enable the services installation.

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16
Q

What is an order of cost estimate?

A

Under NRM this is described as the determination of the possible cost of a building early in design stage in relation to the employer’s 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.

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17
Q

What is the purpose of an order of cost estimate?

A

To establish if the proposed building project is affordable and if affordable to establish a realistic cost limit
The cost limit is the maximum expenditure that the client is prepared to spend on the proposed building project.

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18
Q

What is the format of a feasibility estimate or order of cost estimate?

A

-This can be presented on a cost per m2, functional unit or elemental basis.
- It may also be presented as a range
may consist of element rates for the main elements of the building
any site abnormal costs or enabling works are also considered
Other inclusions are prelims, contingency, inflation and location factor adjustments

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19
Q

What is a functional unit?

A

A functional unit is a unit of measurement that considers the prime use of the building
eg cost per bed

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20
Q

Where would you get your rates from for a preliminary estimate?

A
  • Previous similar projects and historical cost data such as previous tender submissions, contract sum analysis
    Other sources may include estimating price books such as SPONS, BCIS (Building Cost Information Service) or specialist contractors
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21
Q

What information do you need to be able to carry out an order of cost estimate?

A
  • Building location
  • Type of building
  • Floor area or number of functional units
  • Storey height
  • Whether raised access floors or deep suspended ceilings are envisaged
  • Initial floor plans, roof plans, elevations and sections
  • Requirements for refurbishment to existing buildings and enabling works
  • Indication of specification and equality
  • Indicative programme, procurement and contract strategy
  • Budget and cash flow constraints
  • Site conditions, probable ground conditions
  • Indicative M&E design intent, availability of utility services and the sustainability strategy
  • Details of prof fees, development costs, VAT and inflation
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22
Q

What is a cost plan?

A

This presents the estimated cost of the development into an elemental or functional format
It shows how the design team proposes to distribute the funds available on the different elements of the proposed building.

23
Q

What is the purpose of a cost plan?

A

It is used by the cost consultant to control the development of the design within the client budget.
It identifies the client’s agreed cost limit and advises how the money is to be allocated to the different elements.

24
Q

When would you produce a cost plan?

A

A formal cost plan is typically between RIBA Stage 2 and 4
At stage 2 (CONCEPT DESIGN), an initial concept design is made available and the cost plan may be produced to a fairly high level. The cost plan may be broken down into the different elements of the building based on outline specs and arch conceptual drawings
At stage 3- (SPATIAL COORDINATION) is undertaken and the schedule of accommodation may be adjusted and the cost plan is updated to reflect this.
At stage 4 (TECHNICAL DESIGN) - Cost plan updated to reflect updated designs, specialist subcontractor designs may be available to support

25
Q

NRM1 CATEGORIES

A
26
Q

When issuing a cost plan what are the components?

A

Title Page
Contents
Exec Summary
Summary/Overview of project
Project Description
Construction Costs
Preliminaries
Contractors OH&P
Contingency
Inflation
Inclusions/Assumptions
Exclusions
Area Schedule
List of drawings and specifications adopted

27
Q

RIBA STAGES

A

STAGE 0 STRATEGIC DEFINITION
STAGE 1 PREPARATION AND BRIEF
STAGE 2 CONCEPT DESIGN
STAGE 3 SPATIAL COORDINATION
STAGE 4 TECHNICAL DESIGN
STAGE 5 MANUFACTURING AND CONSTRUCTION
STAGE 6 HANDOVER
STAGE 7 IN USE

28
Q

What is usually excluded in a cost estimate?

A

VAT
Professional Fees
Client Direct Costs
Loose Fixtures and Fittings
Inflation
Site acquisition costs
Section 106 Agreement
Removal of asbestos

29
Q

Why is VAT excluded?

A

Different clients will incur different levels of VAT
We would not be in the position to know the correct rate unless advised of it

30
Q

What is contingency?

A

A sum included within the estimate to cover unknown expenses or unmitigated risks during the project

31
Q

How is contingency assessed?

A

The amount include should reflect the risks and unknown specific items associated with the project
During the early design stages a contingency allowance can be included as an overall percentage of the cost estimate at around 5-10%
As more design information becomes available a risk register can be compiled and each item assigned a probability and cost impact (worst case). The total cost of risk register items can then be included as the project contingency.

32
Q

How do you account for inflation when preparing a cost estimate?

A

I take into account inflation through the use of Tender Price Indices and include adjustments for Construction inflation and tender price inflation

33
Q

What time period would construction inflation be included for?

A

I would allow for construction inflation from the anticipated start of the project to the mid way point of the project
The midpoint of a construction project is used as a reference point for construction inflation because it’s where the balance point for spending usually falls. This is typically around 50–60% into the construction schedule.

Construction inflation is an allowance for fluctuations in the 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.

34
Q

What is meant by the base date within a cost estimate?

A

The base date refers to the date on which rates and prices contained within a cost estimate are based on.
These are included for the basis of calculations e.g. inflation.

35
Q

What is TPI?

A

Tender Price Index

36
Q

What do TPIs show?

A

They reflect changes in the level of tender prices over a period of time.
The price adjustments take into account the level of inflation depending on current and forecast market conditions.

37
Q

Where can you obtain Tender Price Index Information from?

A

BCIS
Larger cost consultancies can produce their own in-house tender price forecasts

38
Q

Why do you need to take account of location?

A

This is because rates fluctuate across locations so this has to be accounted for (use BCIS)

39
Q

What is BCIS

A

Building Cost Information Service
This provides construction cost and price information through publications, online services and price books.

40
Q

Where do you get cost information from?

A

-Previous tender submissions
- Previous CSA
- Benchmarks
- BCIS
- Building cost models
- SPONS and other price books
- Specialist subcontractors

41
Q

What do you understand by the term VE?

A

VE: Value Engineering
It is an organised approach aimed at providing necessary functions of the building taking into account the clients objectives at the lowest cost without detrimental effects to quality, reliability, performance or delivery

42
Q

What do you understand by the term VM?

A

VM: Value Management
This is the proactive process of defining what value means to the client and putting procedures in place to ensure that maximum value is delivered for the client.
In comparison, VE forms one of the processes under VM and is a reactive procedure to bring the anticipated cost of the development back in line with the budget.

43
Q

What is meant by value?

A

Value is a measure of worth taking into account the overall usefulness and benefits to the client in relation to the cost being paid for it.

44
Q

What happens during a VE process you have been involved in (UoB NDCH)

A

The design team is brought together for a VE meeting and contractor if involved at that stage.
The team pool together expertise and suggest different VE proposals
The chair person logs these and monitors these against the client’s objectives regarding value.
It is the chair person and teams responsibility to deliver increased value for money by offering cost effective solutions solutions without compromising the overall usefulness of the building when considering the clients objectives.

45
Q

What are the phases of the VE process?

A

Information phase
Speculation phase
Evaluation phase
Development phase
Presentation phase

46
Q

Why is VM needed?

A

Each construction client has their own specific objectives and definition of what value means to their organisation
Client organisations are sometimes made up of different working groups with contrasting priorities
If agreements concerning the definition of value are not reached then chances of perceived failure of the project increases.
VM is needed to reach an agreement on what value is defined as and to reach a shared understanding on the objectives that are being sought.

47
Q

What are life cycle costs?

A

The costs that will be incurred over a defined period of operating and maintaining a building or an asset including repair, maintenance, replacement, cleaning, decorating, services provision and disposal

48
Q

What are the advantages of life cycle costing?

A

Life cycle costing allows consideration of long term implications of a decision
It enables informed decisions to be made on material selection
Life cycle costing can result in lower operational, maintenance and replacement costs
It can also be used to plan future maintenance requirements ensuring easier access and less disruption to the operation of the building.

49
Q

What are the disadvantages of life cycle costing?

A

Future costs are optional and costs of maintenance can always be defined.
Components are not always replaced due to end of life which is impossible to assess at design stage.
The cost of defects caused by bad workmanship and design faults cannot be predicted.
It is hard to predict life spans, inflation and maintenance requirements over long periods.

50
Q

What costs should be considered in life cycle costing?

A
  • Operational
  • Capital
  • Maintenance
  • Replacement
  • Disposal
51
Q

Where can you get information about maintenance costs?

A

Building maintenance cost information service (part of BCIS)
From subcontractors and suppliers

52
Q

How does the payback period method work?

A
  • It judges an investment in terms of the time period over which the invested sum is returned in cost savings
  • The increased expenditure on a higher quality component is viewed as the ‘ investment’ and the savings provided in the form of future costs is viewed as the ‘revenue’
    The best option would be the one that repaid the investment in the shortest time
53
Q

What sort of materials is the payback period method used for?

A

This is to evaluate the options for incorporating sustainable technologies
It is considered suitable for elements that have a high initial capex cost but will pay back over the period of time with reduced running costs

54
Q

Why might a client accept higher capital costs

A

For prestige reasons
When considering that the replacement or repair might be inconvenient even if the solution is cheaper