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RICS APC QS > Design Economics & Cost Planning > Flashcards

Design Economics & Cost Planning Flashcards

1
Q
  1. What types of estimate are there?
A

a) Budget / feasibility /Order of Cost Estimate
b) Cost estimate
c) Cost plan

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2
Q
  1. What is an order of cost estimate?
A

The determination of possible cost of a building(s) early in design stage in relation to the employer’s fundamental requirements.

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3
Q
  1. What is the format of an order of cost estimate?
A
  • Rate per m2, per functional unit or elemental method
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4
Q

When would you prepare an order of Cost Estimate?

A

RIBA Stage 0 - Strategic Definition + RIBA Stage 1 - Preparation and Briefing

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5
Q

What is typically included in an order of cost estimate?

A 
Facilitating Works
Building Works
Main Contractor Overhead + Profit
Project/Design Team Fees
Risk Allowance
Inflation
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6
Q

What are the types of Risk?

A

Design Development Risks
Construction Risks
Employers Change Risk
Employer’s Other Risk

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7
Q

What is a functional unit?

A
  • The ‘factors which express the intended use of the building better than any other’
  • E.g. number of bedrooms in a hotel, number of beds in a hospital
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8
Q
  1. What are the principal components of a cost estimate?
A
  • Construction cost
  • Preliminaries
  • Contractor’s OH&P
  • Contingency/risk allowance
  • Inflation
  • Assumptions - programme
  • Exclusions
  • Area Schedule
  • Basis of Estimate – drawings / specifications list
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9
Q
  1. What is a cost estimate?
A
  • A forecast of the possible cost of a building based on historical data
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10
Q
  1. What is usually excluded from a cost estimate
A
  • Professional fees
  • VAT
  • Client decant costs
  • Loose fixtures and fittings
  • Inflation
  • Site acquisition costs
  • Section 106s
  • Removal of asbestos
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11
Q
  1. Why is VAT excluded from a Cost Estimate?
A
  • Because different clients will incur different levels of VAT, might not be applicable
  • We would not be in a position to know the correct rate unless informed of it
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12
Q
  1. What is contingency/risk allowance?
A
  • A sum included in the estimate to cover unknown expenses or unmitigated risks during the project
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13
Q

How is Contingency/Risk Allowance assessed

A
  • The amount included should reflect the risks and unknowns specific to the project
  • During early estimates when little information is available it is common to include a %
  • This should reduce as more information becomes available and the unknowns decrease
  • % will differ based on the type of project
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14
Q
  1. What are preliminaries?
A
  • They define the scope of works
  • Include the project particulars, lists of drawings, description of the site, scope of work, details of management arrangements
  • Often contain items for pricing which are general items needed by the contractor to carry out the work that cannot be attributed to specific items of work
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15
Q
  1. Where do you find the guidelines to prepare preliminaries?
A

NRM1

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16
Q
  1. Name some preliminaries sections
A
  • management and staff
  • site establishment,
  • temporary services,
  • security,
  • safety and environmental protection,
  • control and protection,
  • plant,
  • temporary works,
  • the maintenance of site records,
  • completion and post-completion requirements,
  • cleaning,
  • fees and charges,
  • sites services and insurances,
  • bonds,
  • guarantees
  • warranties.
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17
Q
  1. What should be considered when assessing preliminaries levels?
A

a) Length of contract
b) Location – accessibility, space restrictions, accommodation possibilities etc
c) Type of project – new build / refurb, tower / one story etc
d) Size of project
e) Need for temporary works
f) Need for security
g) Limitations on method and sequencing of works, working hours – supervision requirements
h) Sectional completion
i) Availability of services
j) Level of contractor’s designed works

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18
Q
  1. What information do you need to be able to carry out an order of cost estimate?
A
  • Location
  • Building use
  • Floor Area
  • Indicative Programme
  • Site Conditions
  • Any exclusion of inclusion requirements (EG design team fees)
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19
Q
  1. How do you take account of inflation when benchmarking / cost estimating?
A
  • Through the use of TPIs
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20
Q
  1. What does TPI stand for?
A
  • Tender Price Index
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21
Q
  1. Where can you get TPI information from?
A
  • BCIS

- In house forecasts

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22
Q
  1. How do you take account of location?
A
  • Through the application of location indices
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23
Q
  1. Why do you need to take account of location?
A
  • Different market conditions in different locations

- Different cost of materials, different wage rates etc – impact on tender levels

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24
Q
  1. What does BCIS stand for?
A
  • Building Cost Information Service
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25
Q

What is the BCIS?

A
  • Provides construction cost and price information through publications, online services and price books
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26
Q
  1. What is an elemental cost plan?
A
  • Presents the estimated cost into a structural elemental or functional format
  • It shows how the design team proposes to distribute the funds available on the elements of the proposed building.
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27
Q
  1. What is the purpose of a cost plan?
A
  • It is used by the cost consultant to control the development of the design
  • It identifies the client’s agreed cost limit and how the money is to be allocated to the different parts of the building.
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28
Q
  1. What is the difference between a cost estimate and a cost plan?
A
  • Cost plan is a plan of costs for the works in preparation for turning into a cost report to check against.
  • Estimate is a forecast of construction cost
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29
Q
  1. What is buildability?
A
  • Harnessing the contractor’s expertise and knowledge during the design stage
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30
Q
  1. What are the advantages of buildability?
A
  • Better programming, sequencing and construction methods – a quicker construction time
  • Lower capital and life cycle costs
  • Improved quality in the finished building’s performance and maintenance characteristics
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31
Q
  1. What is a wall to floor ratio?
A
  • This shows the relationship between wall area and floor area
  • It is used to show the cost efficiency of the building
  • The lower the ratio the cheaper the building as there is less external wall area per m2 of floor area
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32
Q
  1. What is the most efficient building shape?
A
  • A circle (best wall to floor ratio)
  • BUT this is not the most efficient shape as it has a poor lettable floor area – difficult to fit out
  • THEREFORE a square is the best
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33
Q
  1. What is the difference between cost and price?
A
  • Cost is the total of labour, plant, materials and management deployed for a specific activity
  • Price is the amount a purchaser / client will pay for an item or product – it is cost plus profit
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34
Q
  1. What information would you expect the design team to provide at RIBA stage 3?
A
  • Detailed design information approaching that of tender documentation.
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35
Q
  1. How would you prepare an estimate for M&E works?
A
  • 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
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36
Q
  1. What is GEA?
A
  • Gross External Area

- This is the area of the building measured externally at each floor level

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37
Q
  1. What is GIA?
A
  • Gross Internal Area
  • This is the area of the building measured to the internal face of the perimeter wall at each floor level
  • Excludes external open sided balconies, fire escapes, canopies, external walls, fuel stores
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38
Q
  1. What is NIA?
A
  • Net Internal Area
  • This is the area of usable space measured to the internal face of the perimeter wall at each floor level
  • Excludes the above and internal structural walls and columns, spaces with headroom less than 1.5m, corridors and circulation space used in common, permanent lift lobbies, toilets, cleaners cupboards, plant rooms
39
Q
  1. Where are NIA, GEA and GIA defined?
A
  • The Code of Measuring Practice, 6th Edition, published by the RICS
40
Q
  1. What is the purpose of the Code of Measuring Practice?
A
  • Provides precise definitions to permit the accurate and consistent measurement of buildings
41
Q
  1. What would you expect the percentage of NIA to GIA / GEA to be?
A

 It depends on the type of project being undertaken (school, hospital, office etc…)
 If it were an office build I would expect the NIA to GIA to be in the region of 70-85%, where 70% is not good and 85% is excellent.

42
Q
  1. Where do you get cost information from?
A

a) In house historic data
b) Benchmarks
c) BCIS
d) Building cost models
e) SPONS and other price books
f) Sub contractors and suppliers

43
Q
  1. What do you measure in accordance with?
A

NRM

44
Q

What does NRM stand for?

A

New rules of measurement

45
Q

What is the full title of NRM 1?

A

Rules for Order of Cost estimating + Cost planning for Capital Building Works

46
Q

What is NRM 1?

A

Best Practice Guidance Note offering guidance on the preparation of -

  • Order of Cost Estimates
  • Elemental Cost Models
  • Cost Plans
  • Cost Analyses
  • Benchmark Analyses
47
Q

What is the full title of NRM 2?

A

Rules for detailed measurement of building works

48
Q

What is NRM2?

A

Best Practice Guidance Note offering guidance on the preparation of Bills of Quantities

49
Q
  1. What is a Section 106 agreement?
A
  • They are also referred to as planning obligations
  • They are typically agreements between local authorities and developers negotiated in the context of granting planning consent
50
Q

What is Section 106 Money spent on?

A
  • Affordable housing
  • New open space or environmental improvements
  • New roads and transport capacity
  • Health and education facilities
51
Q
  1. What is construction to ‘shell and core’?
A
  • 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
52
Q
  1. What is a CAT A fit out?
A
  • 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
53
Q
  1. What is a CAT B fit out?
A
  • 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
54
Q
  1. Where could you find the definitions for Fit Outs?
A

British Council of Offices (BCO) fit out guide

55
Q
  1. What is BWIC?
A

 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.

56
Q

What are the RIBA Stages?

A 
0 - Strategic Definition
1 - Preparation & Brief
2 - Concept Design
3 - Spatial Co-ordination
4 - Technical Design
5 - Manufacturing + Construction
6 - Handover
7 - Use
57
Q

What are the OGC Gateways?

A 
GR0- Strategic Assessment
GR1 - Business Justifications
GR2 - Delivery Stage
GR3 - Investment Decision
GR4 - Readiness for Service
GR5 - Operational Review + Benefits Realisation
58
Q
  1. What do you understand by the term VE?
A
  • Value Engineering
  • An organised approach aimed at providing the necessary functions at the lowest cost, without detrimental affect to Quality, reliability, performance or delivery
59
Q
  1. What do you understand by the term VM?
A
  • Value Management:
  • Assesses the broader concept of value for the whole project and ensures it meets the clients objectives.
  • Requires input at inception phase from all stakeholders
  • This will ensure right decisions are made and the right design is chosen
60
Q
  1. What is value, what does value mean?
A
  • Complex concept
  • Measure of worth
  • A relative measure of uselfulness of something in relation to the cost paid for it.
61
Q
  1. When does the VE/VM process occur?
A
  1. Concept- VM Workshop 1
  2. Feasibility- VM Workshop 2
  3. Scheme design- VE
  4. Detailed Design- VE
62
Q
  1. What happens during the VE process?
A
  • Design team brought together: QS, Arch, Eng, Contractor
  • Pool expertise, guided by a team leader
  • Higher chance of identifying and solving problems at an earlier stage- better value for money
  • Not a cost cutting exercise, this leads to reduced quality and value.
63
Q
  1. What are the phases of the VE process?
A
  • Information phase: Functional analysis of component: FAST diagram
  • Speculation phase: creative thinking techniques: BRAIN STORMING
  • Evaluation Phase: Evaluate solutions (Cost and Feasibility) List of Options
  • Development Phase: Detailed development of surviving ideas and interfaces: LCC techniques
  • Presentation Phase: Best solution identified and recommendation made: Written/ oral report.
64
Q
  1. What is a VE workshop?
A
  • Can be 40hr (working week) workshop or series of mini workshops or 2 day workshops.
  • 40hr: Entire team/ neutral venue/ intensively work on design proposals
  • Mini: facilitator joins DT at briefing stage & remains throughout.
  • 2 day: Most common in UK
  • NOTE: Detailed development work better tackled outside workshop
65
Q
  1. What are the limitations of VE?
A
  • Assumes all parties have a common understanding of functions being provided.
  • Assumes all feasible design alternatives provide same level of functional performance
  • THEREFORE assessed on basis of cost alone.
66
Q
  1. Why is VM needed?
A
  • Aim is to reach agreement of exactly what the nature of the problem is.
  • A shared understanding of what is being sought: Design objectives.
  • Construction clients are different groups with different priorities: If agreements are not reached on exact requirements then chances of project perceived as a failure increase.
67
Q
  1. Can you explain to me the VM process?
A
  • Workshops held where Client must make important decisions
    1. VM 1- concept: The need to build, clear objectives set that are structured in a value tree
    2. VM2- Feasibility: Outline brief complete, outline brief costed.
    Review schemes and score against weighted objectives
    Assess capital cost to determine options for best value for money.
68
Q
  1. What is a value tree?
A
  • BRAINSTORM showing everything that is required to ensure a certain level of value is obtained.
  • Lists primary Objectives followed by sub objectives
  • Members need to agree that the value tree is a fair representation of design objectives.
  • Weights applied to each branch of the tree.
69
Q
  1. Can you give me some benefits of VM?
A

i. Need for new investment is always verified and project goals are clearly defined.
ii. Objectives and decisions are openly discussed and explicitly stated.
iii. The Evaluation and re-evaluation frameworks are structured, rigourous and rational
iv. Decisions are supported by data and made on the basis of defined performance criteria
v. Accountability is increased
vi. Alternative solutions are always sought and considered
vii. Business decisions are made with greater confidence
viii. Potential for increasing value for money
ix. Communication, understanding and teamwork can be improved and disseminated throughout the organisation.
x. Participation by all key stakeholders increases the likelihood of satisfaction with the end product.
xi. Opportunities for long term profitability and continuous improvement are enhanced.

70
Q
  1. What is life cycle costing?
A
  • Techniques to evaluate life cycle costs
71
Q
  1. What are life cycle costs?
A
  • The costs that will be incurred over a defined period of operating and maintaining a building e.g. repair, maintenance, replacement, cleaning, decorating, services provision
72
Q

How do Life Cycle Costs differ from Whole life costs?

A
  • It is on a whole building level rather than looking at individual elements
  • The collation of all the capital and life cycle costs for individual elements plus their end of life costs and the related project non-construction costs (site / finance) as well as the revenues associated with the project
73
Q
  1. What sort of clients might be particularly interested in life cycle costing?
A
  • Government clients – concerned with overall value for money
  • PFI projects
  • Owner-occupiers
  • Clients aiming to incorporate sustainable technologies
74
Q
  1. What are the advantages of life cycle costing?
A

a) Allows consideration of the long term implications of a decision
b) Enables informed decisions to be made on material selection
c) This can result in lower operational, maintenance and replacement costs
d) Can be used to plan future maintenance requirements – flexible spaces, easier access
e) Can be used to judge sustainability in money terms

75
Q
  1. What are the disadvantages of Life Cycle Costing?
A

a) Future costs are optional and the costs of maintenance can always be deferred
b) Components are not always replaced due to end of life – style, fashion etc instead – almost impossible to assess this at design stage
c) Costs of defects caused by bad workmanship / design faults cannot be predicted
d) Uncertainty of available data – hard to predict life spans, future inflation and maintenance requirements over long periods
e) The client may be selling the building after it is constructed
f) Choosing the wrong discount rate can render the exercise totally useless

76
Q
  1. What costs should be considered in life cycle costing?
A

a) Capital costs
b) Operational costs
c) Maintenance costs
d) Replacement costs
e) Disposal costs

77
Q
  1. What information is needed to be able to calculate the life cycle costs?
A

a) Capital cost of the element
b) Maintenance requirements of the element
c) Life span of the element – when it will be replaced
d) Replacement cost of the element
e) Disposal costs of the element

78
Q
  1. Where can you get information about maintenance costs?
A

a) Building Maintenance Cost Information Service (BMCIS) – part of BCIS
b) From sub contractors
c) From in house data

79
Q
  1. What sort of information does BMCIS provide?
A
  • It is a historic body of information on maintenance costs
  • It publishes quarterly cost briefings on current trends
  • It publishes indices for redecoration, cleaning and maintenance costs
80
Q
  1. What techniques can be used to evaluate life cycle costs of different materials?
A
  • Net present values

- Payback period

81
Q
  1. What is net present value?
A
  • Where future costs are discounted to present values
82
Q
  1. How does the net present value method work?
A
  • It involves the comparison of the net present value of alternative options
  • It is useful at the design stage
  • Future life cycle costs – on maintenance / replacement etc – are discounted to present values
83
Q
  1. What variable would affect the outcome of the NPV method?
A
  • The time periods assumed for replacement
  • The assumed maintenance and replacement costs
  • The discount rate used
84
Q
  1. 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 revenue
  • 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
85
Q
  1. What sort of materials is the payback period method used for?
A
  • Often used to evaluate the options for incorporating sustainable technologies
  • Generally for elements that have a very high initial capital cost but will ‘pay back’ this initial investment over a period of time in terms of reduced running costs
86
Q
  1. How accurate is life cycle costing?
A
  • A lot of assumptions have to be made – on time periods, costs, trends, inflation etc
  • Its accuracy relies on the accuracy of the assumptions
  • As the time period considered grows, the accuracy is likely to fall
87
Q
  1. Why might a client accept higher capital costs?
A

a) Prestige reasons

b) Replacement or repair may be inconvenient even if cheaper

88
Q
  1. Would you recommend the use of life cycle costing alongside traditional cost planning?
A
  • Yes
  • It will provide an idea of future costs
  • Helpful in deciding between different materials
  • Even if the level of accuracy may not be that high it encourages the client and design team to consider future costs and maintenance requirements, including accessibility and ease
  • BUT should be used cautiously, would not want to base all of your decisions on it
89
Q
  1. What would you include in a financial report?
A

a) Contract sum
b) Instructed CE’s
c) Potential future variations as advanced warnings
d) Claims
e) Anticipated final account total
f) Total of certified payments

90
Q
  1. What is the purpose of a financial report?
A
  • To report against budgeted values and act as a working cost check on the project budget.
  • To give the Client an understanding of any savings or additional monies required.
  • To report on contract progress against pre-contract predictions.
91
Q
  1. How would you create a cashflow forecast?
A
  • Need to know the construction programme and contract value

- Or by attributing costs to a construction programme.

92
Q
  1. Your construction budget was £2.5m and proposed construction period was 25 weeks; that’s £100,000 per week. How do you substantiate this being realistic?
A
  • Not very realistic as you will pay for work done.

- In reality this will form an s-curve and payments will be irregular.

93
Q
  1. What’s the benefit of cashflow forecast?
A
  • Allows employer to gain an understanding of financial requirements over the duration of the project duration.
  • Also acts as a check against valuations – early indication of financial difficulties
94
Q

What is a cost plan?

A

A Cost plan is used as a way of controlling the estimated costs during the design and construction phases of a project.

RICS APC QS (15 decks)

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