DESIGN ECONOMICS & COST PLANNING Rev 2 Flashcards
What is NRM?
New Rules of Measurement
What is NRM1 called?
Order of cost estimating and cost planning for capital building works
What is NRM2 called?
Detailed measurement for building works
What is NRM3 called?
Order of cost estimating and cost planning for building maintenance works
What RIBA stage would you start NRM cost planning?
RIBA Stage 2 - Concept design stage
What are the RIBA stages?
0 - Strategic Definition
1 - Preparation and Briefing
2 - Concept design
3 - Spatial Coordination
4 - Technical Design
5 - Manufacturing and construction
6 - Handover
7 - Use
What is the 12 month TPI look ahead
4Q 2024 to 4Q 2025 - 3.65%
What has happened in the construction industry in the past few years?
- AR TPI Forecast suggests 2025 - 3.5% to increase to 4.35% in 2028
-Building safety act 2022 is causing problems in regards to project sign offs.
-High levels of contractor insolvencies which are making projects take longer.
-Suppliers are concerned about the current market in regards to supply, energy prices, interest rate increases & late payment
How do you benchmark?
Compare tender rates from legacy schemes and uplift the legacy scheme based on location and time factors and compare new rates.
How is benchmarked data flawed?
You need the detailed information to understand the size, scope & quality of the scheme to ensure it is similar in nature. It also must be uplifted in terms of time and location.
What would be your typical exclusions from an estimate?
VAT
Archaeological findings
Site acquisition costs
Road closure costs
Survey and investigations
What is whole life costing?
WLC - is the improved understanding of true lifetime financial impact of investment in a building asset.
up to 80% of lifetime cost are determined at the early stages of design (concept/spatial)
What are the main 3 elements that a client must consider at the outset of a project?
Time, cost & quality
What is the differences between estimate and cost plan?
a. Cost Estimates
It is a high level exercise carried out at Stage 1 based on limited information
- Used for a business case
- Setting budget
b. Cost Plans
More detailed estimate carried out during RIBA stages 2,3&4. this is a plan to show how the funds will be allocated against developing deign
When do you issue a cost plan or estimate?
Cost Estimate - RIBA stage 1
Cost Plan - RIBA stage 2, 3 & 4
How do you allow for OH&P, Prelims & Contingency?
Within our estimates:
Prelims - 13%-15%
OH&P - 8-10%
Design contingency - 5-10%
Professional Fees - 10-15%
For housing schemes we pro-rata the construction build rate to calculate the Nr of weeks and apply a weekly run rate for prelims based on legacy schemes.
What is Whole life costing?
Improved understand of true life time financial impact from site acquisition to demolition.
Up to 80% of costs can be determined by the early design stages.
What is life cycle costing?
Life Cycle Costing shows all costs that an through the construction and maintenance of a building.
It includes the initial investment and any further investment such as operating cost, maintenance, repair, and upgrades
What is the impact of the Building Safety Act 2022 had on construction projects?
- Introduced Fire Safety
- Higher standards and legislation
- More expensive materials
- More time consuming within planning stages
- Higher insurance premiums
What is a typical shape of a cash flow forecast and why is it this shape?
- S Shape
-The least amount of works take place at the start and end of the project. - The majority of work packages take place in the middle.
- Less works at the start and end mean less payment compared to the middle.
What are the key headings for contractor prelims in NRM 2
Employer Requirements & Contractor Cost Items
Name examples of ERs cost items under NRM 2
- Site Accommodation
- Site Records
- Completion and Post completion requirements
Name examples of contractor prelims under NRM 2
-Management and staff
-site establishment
-temp services & works
-control and protection
-Plant
- cleaning
- Insurances & bonds
Name all 4 risk categories under NRM 4
- Employer Change Risk
- Employer Other Risk
- Design Development Risk
- Construction Risk
NRM Definition of cost limit?
Max expenditure that the employer is prepared to make in relation to the completed building.
What should be included in the base cost estimate?
-Evolving estimate of known factors
- Allowances for risks, uncertainty and inflation
- Professional Fees
- Other development cost
How are professional fees presented in the order of cost estimate?
- Lump sum if known
- % of cost estimate
Info that should accompany an order of cost estimate?
-Cover Letter
- Exec Summary
-Cost Limit
- Spec Notes
- Assumptions
- Exclusions
- Drawings
-Risk Reg
- Cashflow
All benefits of a cost plan
- Projects final cost
-Informs design decisions and implications - Informs Commercial decisions
Do you need a programme for an estimate?
-Yes, for prelims
What is a cost plan structure based on?
NRM 1 Appendix G - Elemental Template Table
How to deal with a cost plan which is over budget?
- Communicate to Client
- Identify VE opps and savings
Key considerations for assessing prelims
- Lenght of contract
-Type of project - Size of project
-Temporary Works
-Security needs
Examples of abnormal contractor prelims
-Tower Crane
-OOH working
- Road Closures\Traffic Management
Employer vs contractor cashflow
- Contractor - construction work only
-Employer - Broad view including fees etc
Benefits of cashflow
-Allows appropriate planning of expenditure for future payments.
