Design Economics and Quantification and Costing Flashcards
What sources of cost information are available when preparing a new estimate or cost plan?
- BCIS
- Pricing Books
- Previous project information
- In house cost data
- Direct contact with supply chain
- Rate books, eg - DfE projects
What is benchmarking?
The use of historical project data from projects of similar size and scope, to provide a cost per functional unit or m2
How would you undertake a benchmarking exercise?
- Produce a comparison document to compare schemes, of similar scope and size, broken down elementally
- Identify any project anomalies and omit, in order to determine a cost per functional unit or m2
Give me some examples of capital costs
- Cost of construction
- Land acquisition
- Consultant fees
Give me some examples of operational costs
- Maintenance costs
- Utilities usage
- Repair or replacement costs
How could you dramatically reduce the capital cost of a building?
- Reduce GIA
- Reduce building height
- Reconsider design solutions, for example, concrete frames may require more substantial substructures due to the weight of the frame
Can you tell me what the NRM series are?
NRM 1 - Order of cost estimating and planning for building capital works (used for RIBA 0-2)
NRM 2 - Detailed measurement for building works (used for RIBA 3-4)
NRM 3 - Order of cost estimating and planning for building maintenance works (used for LCC)
What are the different methods for cost estimating?
- cost per m2
- Cost per functional unit
- Using the elemental method, eg stairs per nr
What are the different ways you can build up a cost plan?
- Prime cost sums
- Provisional sums
- Cost for design works, in terms of elemental components
What are provisional sums?
- An allowance to undertake works that are not sufficiently designed in detail
- Can be defined or undefined
What is the difference between defined and undefined provisional sums?
- Defined provisional sums = the sum for the works inclusive of preliminaries and programme
- Undefined provisional sums = the sum of works excluding preliminaries and programme allowances
How are provisional sums expended?
- Contract Administrator issues an instruction to spend
- Add and omit exercise undertaken to include for actual cost of works
How does NEC deal with provisional sums?
- Unamended NEC does not allow for provisional sums
- NEC approach is if works can’t be properly defined, they should be excluded until they can be
- In my experience, if a provisional sum has been included, it is dealt with under the compensation event process
What is inflation?
The general increase of prices over a set period of time
How would you rebase time and location for a cost plan or estimate?
- Using BCIS indices
- Inflate for tender (up to the start of construction)
- Inflate for construction (up to the midpoint)
- Inflate for location (ensuring the correct location factor has been applied)
What indices would you use for Tender Inflation and Construction Inflation, and for location?
All in Tender Price Index (TPI)
Location factors on BCIS
What would you include in a cost plan or estimate?
- Cover letter
- Executive summary
- Assumptions and exclusions
- Grand Summary (construction cost estimate, MC preliminaries, MC OH&P, Risk allowances, professional team fees, inflation)
- Elemental breakdown
- Inflation calculation
- Cash flow, if required
Give me some examples what you might assume in a cost plan
- Current substation doesn’t need replacing
- No asbestos in building
- Internal wall height
- No works to existing infrastructure required
Give me some examples of items you might exclude from a cost estimate or plan
- Land acquisition fees
- Legal fees
- VAT
- Insurances
Why do you exclude VAT from a cost plan or estimate?
- Employers may incur different levels of VAT
- VAT should be calculated by a tax advisor / specialist
Do you need a programme to complete a cost estimate or plan?
- I wouldn’t need a full programme but at least indicative dates are required to inform preliminaries, OH&P and inflation
How does good cost planning benefit the client?
- Confirms viability of scheme
- Allows client to make informed financial decisions
If you saw a project was giving an early indication of overspend, how could you recommend your client bring the scheme back into budget?
- Look at areas for value engineering
- Look at over and above scope and where works could be omitted, if not required
- Look at securing additional funding
What do you write about in your market conditions report?
- Looks at local supply chain availability
- looks at trends in construction in the local region
- Inflation analysis, labour availability and material prices news
- Reviewing external factors, such as Red Sea Attacks on material imports and Russia-Ukraine war and effects of prices and availability of materials
How can external factors affect the construction industry?
- Production in factories could come to a halt, especially during lockdowns
- War, and effect on supply of materials
- Import taxes increase due to brexit
- Red Sea attacks and long lead-in times
The BCIS indices are the most current, industry renowned way of uplifting cost data. Why do you think BCIS indices were not reflective of the market conditions?
At this point in time, steel prices were only being held for a day, so BCIS could not keep up with the receipt, analysis and submission of the material cost impact the market was seeing.
That’s why in my market report, I advised clients to consider additional contingencies for volatile work packages
What percentage of additional contingency did you recommend clients retain for volatile work packages?
For steel packages, I recommended clients add an additional 10% contingency to provide extra protection against the market volatility.
I reviewed the BCIS indices against costs we were receiving back from the market, and on average, steel prices were 8% higher than our expectations, so I recommended 10%.
I also caveated my advice by stating this may differ for various projects, and some schemes may benefit from economics of scale, so clients should always consult their cost advisor for further advice
In your opinion, what are some of the key reasons we have cost overrun on projects?
- Ambiguous client brief
- Unrealistic cost estimates
- Project risks not effectively managed
- Unknown external factors, for example wars and pandemics
- Inflationary pressures or changing market conditions
How have you been managing inflation on your schemes?
Kingsway - contractors liability under the contract. CE’s have been issued to include for inflation due to the risk of it occurring. The BCIS indices have been used where subcontractors have not allowed for inflation in their quotations.
Gosford Hill - used BCIS indices as per the DfE template to inflate cost plans and estimates as this is what is agreed under their template and with contractors.
How would you price something if there was no available cost information?
First principles.
For example, a door:
Materials - door, hinges, ironmongery
Labour - Rate for joiner per hour
Plant - screwdrivers, drills etc
What is cost per functional unit? When might it be used?
Generally used in feasibility studies to price an element of a building. For example, hospitals could be priced per bed, car parks per space, or schools per student
When did NRM come into effect?
1st Dec 2021
What is IPMS?
- The international property measurement standard
- Provides guidance for the measurement of buildings in part or whole
What are the different documents within IPMS?
IPMS 1 - External measurements for whole or part of buildings
IPMS 2 - Internal measurements for whole or part of buildings
IPMS 3.1 - External measurements required for exclusive occupation
IPMS 3.2 - Internal measurements required for inclusive occupations
IPMS 4.1 - Internal measurements for selected areas including internal walls and columns
IPMS 4.2 - Internal measurements for selected areas excluding internal walls and columns
Can you provide some examples of terms under IPMS for measurements?
- Internal dominant face = more than 50% of lowest 2.75m is classified as the IDF
- Demising wall = wall that partitions two occupational areas
- Notional boundary = non physical boundary, eg - door threshold
What is ICMS?
- International Cost Management Standards
- 3rd edition
- Provides global consistency for Construction Life cycle costs and carbon emissions
How would you structure your grand summary in a cost estimate or plan?
Using the NRM 1 format to ensure everything has been captured:
0 - Facilitating Works
1 - Substructure
2 - Superstructure
3 - Internal finishes
4 - FF&E
5 - Services
6 - Prefabricated buildings
7 - Works to existing buildings
8 - External Works
9 - Main contractor preliminaries
10 - Main contractor OH&P
11 - Professional fees
12 - Other project costs
13 - Risks
14 - Inflation
What is life cycle costing?
Life cycle costing is an exercise that can be undertaken to demonstrate the holistic cost of the building from construction to end of life.
Life cycle costing elements can be remembered using CROME:
Construction
Renewal
Operation
Maintenance
End of life
What is whole life costing?
Whole life costing considers all costs associated with a building, including land acquisition, construction, operation, maintenance, demolition, and even income from the building throughout its life
Who are the BCIS?
Building Cost Information Service
The BCIS are an organisation that collect, collate, and analyse historical cost information. They provide forecasts for inflation and prices too.
What types of life cycle cost reports are you aware of?
Elemental Life cycle cost reports
- Usually completed before end of RIBA 2 to inform design solutions
- Default period for appraisal is 60 years, as outlined by BCIS, but I’m aware this could be informed by the client
- Used to analyse what the cost of a design solution would be over the life of the building
Componential life cycle cost reports
- To be completed end of RIBA 4
- Reviews and compares the cost of various elements against one another to inform design solutions, for example carpet tiles vs vinyl, double glazing vs triple glazing
What considerations may you give when undertaking an LCC?
- Scope of maintenance required
- Replacement periods for different elements
- Time period of appraisal
- Method of economic evaluation, for example, net present value