Design Economics & Cost Planning Flashcards
What is the difference between an order of cost estimate and a cost plan?
Cost estimate is prepared earlier on in the design process typically between RIBA stage 0-2. This is when level of design information is more limited and allows a cost estimate to be prepared on a cost per m2 or cost functional unit basis.
A cost plan is produced typically at RIBA 2 onwards. As the design progresses more information can be included to eventually breakdown the estimate cost the development elementally into each of its component’s parts such as substructure, superstructure, services and professional fees into an elemental cost plan format.
What is the difference between cost and price?
Cost is the total of labour, plant, materials and management deployed for a specific activity.
The price is the amount of purchaser or client will pay for an item or product and is made up of the cost plus the main contractor’s profit margin.
How do you proceed if the cost plan exceeds the project budget?
- I would analyse the costs to assess the source of the increase whether any element of work is abnormally high against the order of cost estimate.
- I would benchmark against other projects (comparing the m2/rate) to see if the project is high cost, or the budget is unreasonable.
- I would discuss with the client and manage their expectations; we would propose options to ensure the user requirements are still meet and within budget (e.g. Bov removing the ATDU new build from the project and refurb instead).
- Conduct VE workshops and propose VE options that will bring the forecast back in line with the project
What is the most efficient shape?
A circle BUT this is not the most practical shape as it has a poor lettable floor area – difficult to fit out THEREFORE a square is the best.
How would you prepare an estimate for M&E works?
I would ask an M&E specialist surveyor to undertake the estimate.
For feasibility estimates the M&E amount would be included in the m2/functional unit rate.
I would use the typical cost data I go to at early feasibility stage, e.g. BCIS, past projects and Spons pricing book.
What is section 106 agreement?
Section 106s - planning obligations
* They are typically agreements between local authorities and developers negotiated in the context of granting planning consent.
Aka
* Are agreements between local authorities and developers that are negotiated in the context of granting planning consent.
What is construction to ‘shell and core’?
- The basic structure, services and envelope of the building AND the fit out of landlord / common areas
- E.g. reception, toilets, lifts, cores, base services are terminated at breakout points to floors, life safety services infrastructure
What is a CAT A fit out?
Also known as a ‘developer’s fit out’
Provides the generic requirements to suit most developers
E.g. life safety elements and basic fittings - suspended ceiling tiles, raised floors, carpet, lighting, power distributed to floor plates
What is a CAT B fit out?
Overlays the CAT A provision with bespoke elements particular to the needs of the building user to enable the tenant to occupy and use the space
E.g. partitions, power distributed to floor boxes, data cabling, artwork and branding, upgrading CAT A finishes and toilet finishes etc
Where could you find the definitions for these (CAT A and CAT B Fit out)?
British Council of Offices (BCO) fit out guide
What is BWIC?
BWIC stands for Builders Work In Connection and is usually set as a percentage of the services cost.
Depending on the size of the job and complexity will determine the percentage of BWIC.
BWIC accounts for any drilling, fixing, cutting etc… that the builders do whilst undertaking the services.
BWIC can be measured in accordance with NRM2 when doing a BOQ’s.
What is buildability?
Buildability is harnessing the contractor’s expertise and knowledge during the design stage to generate ideas for effective and efficient methods of construction.
The ability and ease with which a project can be built efficiently in terms of time, cost and quality
Buildability is a pre-construction exercise that assesses designs from the perspective of those that will manufacture, install components and carry out the construction works.
What are the advantages of buildability?
- Buildability can result in better programming (quicker & more efficient programme), sequencing and construction methods. Reduced capital and life cycle costs of the building can be obtained.
- buildability should assess elements of the design in relation to:
- Achieving the desired final quality;
- Meeting the programme requirements;
- De-risking perceived problems, and
- Achieving optimum value for money.
What is an order of cost estimate?
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 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.
What is the purpose of an order of cost estimate?
To establish if the proposed 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.
What is the format of a feasibility estimate or order of cost estimate?
- This can be presented of a cost per m2, functional unit or elemental basis, or as a range e.g. £700-£850/m2.
- This may consist of element rates for the main elements of the building for example Substructure, Frame, External Walls, Upper Floors & Roof
- Any site abnormal costs or enabling works are also considered.
- Other inclusions are Preliminaries, Contingency, Inflation and location factor adjustments.
Where would you get your rates from for a preliminary estimate?
Previous similar projects and historical cost data such as previous tender submissions or a contract sum analysis.
Other sources may include pricing books (SPONS), BCIS and client issued cost data (CPAC).
What information do you need to be able to carry out of order of cost estimate?
What is optimism bias?
proven tendency for appraisers to be over-optimistic about key project parameters, including capital costs,
When people think that things will be favourable for them. In construction ‘that wont happen to us’ thought. Therefore benchmarking should be taken in the earliest stages to ensure a reasonable budget is established.
Clearly documenting the minimum and maximum values for benefits and costs is required for effective decision-making and financial planning. Motts use a 3-point estimate in cost plan to show the min, max and ml. The more uncertainty on the cost data the larger the range (quantity of the cost data achieved quality of the cost data, specification information)
What is a cost plan?
The cost plan 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.
What is the purpose of a cost plan?
Used by the cost consultant to control the development of the design.
Identifies the client’s agreed cost limit and how the money is to be allocated to the different elements of the building.
When would you do a cost plan?
2: Concept Design
3: Spatial Coordination
4: Technical Design
* Formal cost plan is typically issued between RIBA work Stage 2 to Stage 4.
* At stage 2 the Concept Design is made available, and the cost plan may be produced at a fairly high level. The Cost Plan may be broken down into the different elements of the building based on an outline specification and architectural concept drawings.
* At stage 3 the Spatial Co-ordination of the building is undertaken, the schedule of accommodation may be adjusted, and the cost plan is updated to reflect accordingly.
* At stage 4 the technical design is made available, and the cost plan updated to reflect the architect and engineering technical designs. Specialist subcontractor designs may also be made available to support with refinement of the project costs.
* The cost plan at stage 4 will typically be the basis of a pre-tender estimate to compare the tender submission against although this is no longer referenced within the RIBA plan of work.
What are the principal components of a cost plan?
Construction costs
Preliminaries
Contractors OH&P
Contingency
Inflation
Assumptions
Exclusions
Area Schedule
List of drawings of specification adopted.
Name the main elements of an elemental estimate?
0 Facilitating works
1 Substructure
2 Superstructure
3 Internal Finishes
4 Fittings, Furnishings and Equipment
5 Services
6 Prefabritcated buildings and building units
7 Work to existing buildings
8 External Works
9 Main Contractor’s Preliminaries
10 Main Contractor’s overheads and profit
11 Project/design team fees
12 Other development/project costs
13 Risks
What is usually excluded from a cost estimate?
- Professional fees
- VAT
- Client decant costs
- Loose Fixtures and fittings
- Inflation
- Site Acquisition costs
- Section 106 agreement
- Removal of asbestos.
Why is VAT usually excluded from a cost estimate?
Different clients will incur different levels of VAT, e.g. charities may not be subject to VAT.
We would not be in a position to know the correct rate unless informed of it.
What is wall to floor ratio?
This shows the relationship between the wall area and the 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.
What is a Functional Unit
FUNCTIONAL UNIT METHOD
* Unit of measurement used to represent the prime use of a building or part of a building
* Number of functional units is multiplied by the cost per functional unit
* Functional unit includes all circulation necessary
What is Floor Area Method?
FLOOR AREA METHOD
* GIA is multiplied by an appropriate cost/m².
* Each building to be measured and shown separately.
* Each user function / use within a mixed use project is to be measured and shown separately (centre line of party wall to be used to delineate functions).
* Quantities for external works should be based on the site area (total of the site within the site boundaries) less the footprint of any existing buildings.
What is Elemental Method?
A budget setting technique which considers the major elements of a building and provides an order of cost estimate based on an elemental breakdown of a building project.
Elemental breakdown can also be used for the purpose of cost analysis and benchmark analysis.
What is an element?
Where, ‘group element’ means: ‘…the main headings used to describe the facets of an elemental cost plan (i.e. Substructure; Superstructure; Internal finishes; Fittings, furnishings and equipment; Services; Complete buildings and building units;Work to existing buildings; External works; Facilitating works; Main contractor’s preliminaries; Main contractor’s overheads and profit; Project/design team fees; Other development/project costs; Risks; and Inflation).’
