Design Economics & Cost Planning Flashcards
Tell me about the cost plans you have produced, what were the headings?
Commentary – including an outline scope of the project noting any major assumptions or exclusions, level of fit out, etc., whether the costs are current or include inflation, if inflation is included what are the programme assumptions, anticipated procurement method and any other relevant comments required to put the cost plan into context.
Executive Summary – total cost of the works, showing sub-totals for major work sections or phases. On-costs such as Preliminaries, Overheads & Profit, Contingencies, Inflation, Fees or VAT should generally be shown separately. Gross internal floor area and important functional units such as work spaces, bedrooms, etc. should be shown stating the cost per area or unit.
Elemental breakdown (Composite Rates) – work items stating quantities and rates in a level of detail appropriate to the design information available and giving totals for each BCIS element. The breakdown should reflect the items and elements given in the RICS New Rules of Measurement 1.
Assumptions and Exclusions – this should note any assumptions and exclusions that have been made due to a lack of information or decisions, eg. asbestos removal, together with exclusions that will be required but for which the client is expected to hold a separate budget or are the responsibility of other parties, eg. loose furniture or tenant fitout.
Schedule of Areas – floor by floor breakdown of gross internal area and net lettable/saleable area if appropriate. In addition, a breakdown of functional areas, should also be given if the relevant information is available, eg. offices, retail, circulation, plant, reception.
Information on which the cost plan is based – this will usually be drawings, specifications, schedules, etc issued by designers. Each item should be listed including any reference numbers and revisions, stating who it was produced by.
When cost planning, where do you get your information from?
Information used is generally:
- Architects drawings and specification
- Site specific information from the client/PM.
- Cost information is usually internal data. Where certain bits are unavailable, I would either market test or not available look to external sources such as SPONS or BCIS.
- Inflation and location data is usually pulled from reputable external sources such as BCIS/SPONS.
How would you explain to the client the need for the inclusion of inflation when compiling a cost plan?
I would explain that inflation was required due to the fact that often the cost plan or other estimate is compiled months or even years before construction starts, and as such costs that are relevant at the date of compilation may be out of date by the time construction starts.
How would you calculate the contractor prelims, on-costs and mark ups when cost planning?
I would use benchmark schemes and I always tend to aim towards the higher end of the scale, to give an appropriate amount.
How have you allowed for professional fees in your cost plans?
In most of the cost plans I have compiled, the professional fees are known and can be included below the construction total.
Where they aren’t known, i would use benchmark figures.
Can you give me 3 risks that remain with the client in a cost plan?
Scope creep - the gradual expansion and alteration of the scope beyond its original objectives, often without proper authorization or adjustments to time, cost, and resources.
Inflation - The inflation of the project will at the cost planning stage lie with the client.
Ground/Site Conditions - The client is more often that not responsible for the ground conditions at the cost planning stage.
What would you typically exclude from a cost plan and why?
VAT - not VAT specialists
Legal fees
Land costs
Financing costs
You would exclude these to get an accurate assessment of just the construction costs.
What role does a QS play at the different RIBA stages?
0 - Rough order of cost estimate
1 - Order of cost estimate / Elemental cost estimate
2 - Formal cost plan 1
3 - Formal cost plan 2
4a - Formal cost plan 3
4b - Pre tender estimate / Pricing document / Post tender estimate
5/7 - Monitoring
What is ICMS?
ICMS stands for the International Construction Measurement Standards. It is a global standard for measuring and reporting construction project costs. The aim of ICMS is to provide consistency and transparency in the way construction costs are reported, making it easier to compare costs across different projects and regions.
What do the guidance notes, ‘ Cost analysis and bench marking’ and ‘Lifecycle costing’ say?
Cost analysis and benchmarking - Provides best practice and cost analysis and benchmarking.
Lifecycle costing - This summarises what is meant by LCC and whole life costing (WLC) service for both new construction works and for the refurbishment of existing assets.
What is RICS cost prediction?
RICS cost prediction refers to the standards and guidelines set by the Royal Institution of Chartered Surveyors (RICS) for predicting and managing construction project costs. These standards aim to ensure accuracy, consistency, and transparency in cost prediction across different projects and regions.
Integration with ICMS: Aligns with the International Construction Measurement Standards (ICMS) to facilitate consistent classification, analysis, and presentation of construction cost data
What is lifecycle costing?
Lifecycle costing (also known as whole life costing) is a method used to evaluate the total cost of ownership of an asset over its entire lifespan. This approach considers all costs associated with acquiring, operating, maintaining, and disposing of the asset. The goal is to provide a comprehensive view of the financial impact of the asset, helping stakeholders make informed decisions.
Key Components of Lifecycle Costing:
Initial Costs: These include the purchase price, installation costs, and any other expenses incurred at the beginning of the asset’s life.
Recurring Costs: Operating expenses, maintenance costs, repair costs, and any other ongoing costs throughout the asset’s life.
Disposal Costs: Costs associated with the disposal or decommissioning of the asset at the end of its useful life.
Residual Value: The estimated value of the asset at the end of its useful life, which can offset some of the total costs
What is the difference between a RIBA stage 2 and 3 from a cost planning perspective?
Stage 2: Concept Cost Plan - Preliminary, broad estimates based on initial design concepts.
Stage 3: Detailed Cost Plan - Accurate, comprehensive estimates based on refined and coordinated design
How did you calculate design development risk?
What are the NRM1 risk categories?
Design Development Risk - an allowance for use during the design process to provide for the risk associated with design development, changes in estimating data, third party risks, procurement methodology and delays in tendering.
Construction Risk - an allowance for use during the construction process to provide for the risks associated with site conditions (e.g. access restrictions/limitations, existing buildings, existing occupants), ground conditions, existing services and delays by statutory undertakers.
Employer change risks - an allowance for use during both the design process and the
construction process to provide for the risks of client driven changes (e.g. changes in scope of
works or brief, changes in quality and changes in time).
Employer other risks - an allowance for other client risks (e.g. early handover, postponement,
acceleration, availability of funds, liquidated damages or premiums on other contracts due
to late provision of accommodation, unconventional tender action and special contract
arrangements).
How did you cost items in the risk register?
Most of it was through EMV.
Costing the impact, agreeing the likelihood of the risk with the rest of the project team. For instance, if the frame contractor went bust, this could add 12 weeks to the programme, so I would cost the time related costs to this such as additional prelim/finance costs £250k.
This would then be multiplied by the likelihood, i.e. a 5% risk of occurring.
£250k x 5% = £12,500 contingency.
What is the format of NRM1?
NRM1 comprises four parts: Part 1 sets out the context and definitions. Part 2 explains how to prepare an order of cost estimate. Part 3 explains how to prepare an elemental cost plan. Part 4 provides tabulated rules of measurement for the preparation of cost plans.
You mentioned producing cost plans and utilising the NRM structure, please advise what the benefits is of using NRM?
Clear guidance.
Uniformity within the industry.
You produced options appraisal regarding the Wings Academy, what considerations did you need to make when using previous cost data for benchmarking?
- Location
- Inflation
- Similarity of project – size/function
- Date
What do you need to consider when using quotes as a source of cost data?
The current market conditions.
Inclusions/exclusions.
T&C’s.
Currency and timelines.
How would you provide accurate MEP cost advice?
Dependant on the stage of the project and the advice required, i.e. general costs at an early stage, I could provide £ per m2 or function based on benchmark data.
However, as design and the level of advice required, my ability to provide competent service would diminish and I would direct them to a specialist MEP QS.
What advice have you given to a client regarding value engineering on a project?
I have contributed during the brainstorming phase in coming up with potential solutions based on previous experience.
I have also provided cost based advice around potential solutions, checking their viability and providing feedback.
What are some of the limitations of value engineering?
- As design progresses, ability to VE decreases and implementing changes increases.
- It can prioritise short term cost saving over long term, i.e. decreased capital cost but may result in higher maintenance or shorter product lifespan.
- Can shift focus too much on cost, potentially compromising on quality.
What are the benefits of value engineering?
- Cost reduction.
- Can improve efficiency by eliminating unnecessary expenditures.
- Can improve project team collaboration.
How would you assess whether the client was obtaining value for money?
- Bench marking
- Market testing.
In your documentation, you state that you have undertaken both cost estimate and cost planning exercises. Can you please advise how your approach to producing a cost estimate differed from producing a cost plan?
- Cost estimates often inform budgets, cost plans are more often related to managing the budget.
- Cost estimate relies on less information, so more assumptions need to be made.
- Potentially different pricing approach, in an estimate I might use function or £/m2 to price, where as in a cost plan I would typically price the works elementally.
How have you dealt with a cost plan that has exceeded the client’s budget?
Brent Cross as an example.
- Review procurement strategy.
- Value engineering sessions.
- Seek further funding if possible.
- Scope review.
