Quantification and costing (of construction works) (L1)

Question 1

What is cost planning?

Answer 1

• It is a budget distribution technique implemented during the design stage
• It involves a breakdown of the the client’s budget for the building into cost targets for each element of the building
• These cost targets are the recommended expenditure for each element (e.g. substructure, frame, upper floors and roof)
• The resulting elemental cost plan is a statement of how the project team proposes to distribute the available budget among the elements of the building
• This provides a frame of reference from which to develop the design and maintain cost control
• Elemental cost planning is an iterative process, performed in steps of increasing detail as more design information comes available

Question 2

What is the purpose of cost planning?

Answer 2

• Keep expenditure within client budget
• Ensure clients are provided with value for money
• Make clients and designers aware of the cost consequences of their requirements
• Provide advice to designers that enables them to arrive at balanced designs within budget
• Provide robust cost information with which the client can make informed decisions

Question 3

What are the formal cost plan stages?

Answer 3

• RIBA Stage 2 Concept Design – Formal Cost Plan 1
• RIBA Stage 3 Spatial Coordination – Formal Cost Plan 2
• RIBA Stage 4 – Technical Design – Formal Cost Plan 3

Question 4

What are the constituent parts of a cost plan under NRM?

Answer 4

• Facilitating works estimate
• Building works estimate
• Main contractors preliminaries estimate
• Main contractors overheads and profit
• Project Design Fees estimate
• Other project costs estimate
• All of which equal the Base Cost Estimate which should exclude allowances for risk or inflation as these are separate constituents that are added to the Base Cost Estimate

Question 5

What are standard methods of measurement?

Answer 5

• They are guidelines and protocols used in the measurement and quantification of construction works.
• They provide a structure for the information that should make up descriptions
• Defines units of measure for each item i.e. m, m2, m3, etc
• Provides rules as to what is included in each item

Question 6

What are the benefits of standard methods of measurement?

Answer 6

• Consistency enabling reliable comparisons and benchmarks.
• Accuracy leading to more accurate cost estimates
• Reduces potential for disputes
• Transparency fostering trust among clients and contractors

Question 7

What are the risks of deviating from a standard method of measurement?

Answer 7

o Inconsistency across projects – makes benchmarking and using historical data difficult
o Inaccurate cost estimates – due to increased risk of inaccurate measurement which can cause incorrect pricing
o Miscommunication and disputes – due to different interpretations can lead to misunderstanding and disagreement
o Loss of transparency – which may lead to reduced trust if deviations lead to cost and time overruns

Question 8

What standard methods of measurement exist?

Answer 8

• New Rules of Measurement (NRM)
• Civil Engineering Standard Method of Measurement (CESMM)
• Rail Method of Measurement (RMM)

Question 9

What are New Rules of Measurement?

Answer 9

• NRM provides a standard set of measurement rules for construction projects and maintenance works
• The NRM suite comprises three separate volumes
• NRM 1: Order of cost estimating and cost planning for capital building works
• NRM 2: Detailed measurement for building works
• NRM 3: Order of cost estimating and cost planning for building maintenance works

Question 10

What is NRM 1?

Answer 10

• NRM 1 is used during the feasibility and early design stages of a project specifically for producing order of cost estimates and cost plans for capital building works.

Question 11

When is NRM 1 used?

Answer 11

NRM 1 is used during feasibility and early design stages to produce:

• Initial Cost Estimates to establish if a project is financially viable
• Cost Plans during the design development to guide the design process by ensuring that the project stays in budget

Question 12

How many group elements are there in NRM 1 and can you give me some examples?

Answer 12

• There are 15 group elements 0-14
• Group element 0 is Facilitating Works
• Group element 1 is Substructure
• Group element 2 is Superstructure

Question 13

How is NRM 1 set out?

Answer 13

• The rules are tabulated and are based on 4 levels.
• Level 1 to 3 relate to the actual work items and are split into group element, element and sub-element e.g. Superstructure, Frame, Concrete
• Level 4 is the rule of measurement for the each component of the sub-element i.e. columns and beams

Question 14

What is NRM 2?

Answer 14

• NRM2 is used during the procurement and construction stage specifically for detailed measurement and quantification of building work.
• They provide a standardised approach for producing bills of quantities

Question 15

When is NRM 2 used?

Answer 15

NRM 2 is used during the procurement and construction stage to:

• Prepare the Bill of Quantities for Tendering and Procurement and to
• Manage and monitor costs throughout the construction phase, including valuing work done, processing payments, and handling variations.

Question 16

How many work sections are there in NRM 2 and can you give me some examples?

Answer 16

• There are 41 work sections
• Work section 11 is In-situ concrete works
• Work section 12 is Precast/ composite works
• Work section 13 is precast concrete

Question 17

How is NRM 2 set out?

Answer 17

Each work section is structured as follows.
- The first section sets out the drawing information required to enable measurement
- The First column represents the Item or work to be measured.
- The Second column, lists the unit of measure
- The Third column, Level one lists the information that should be included in the description e.g. dimensions
- The Fourth and Fifth column, Level two and Level three list additional information requirements
- The Sixth column, Notes explains the work included and the measurement approach

Question 18

What is NRM 3?

Answer 18

• NRM3 is used for order of cost estimating and cost planning for building maintenance works.
• They provide a standardised approach for measuring and estimating the costs of maintenance, repair, and renewal work in existing buildings.

Question 19

What is CESMM 4?

Answer 19

• The Civil Engineering Standard Method of Measurement 4 (CESMM4) is used for the preparation of bills of quantities in civil engineering projects.

Question 20

How many work classes are there in CESMM4 and can you give me some examples?

Answer 20

There are 26 main classes of work
- Class J is Pipework – pipes
- Class K is Pipework – fitting and valves
- Class L is Pipework – manholes and pipework ancillaries

Question 21

How is CESMM4 set out?

Answer 21

o There are 26 main work classes
o Each work class comprises up to 3 divisions to classify work at greater levels of detail E.g. Work Class I – Pipework – Pipes contained 3 divisions of classification
* The first classifies the different types of pipe e.g. clay, concrete, etc
* The second classifies different pipes by their diameter and the
* Third by if they are laid in trenches or not and if so the depth
o Each division also has measurement, definition, coverage and additional description rules

Question 22

What are measurement rules under CESMM4?

Answer 22

Set out conditions and method of how work will be measured and quantified e.g. centre line for pipes

Question 23

What are definition rules under CESMM4?

Answer 23

They define the extent and limits of the class of work

Question 24

What are coverage rules under CESSM4?

Answer 24

They state what is included in the measure

Question 25

What are additional description rules under CESMM4?

Answer 25

o It is where a separate item shall be stated were work comprises of different additional features e.g different specifications for pre-cast units

Question 26

What is SPONS?

Answer 26

SPONS is a series of 4 pricing books covering the most frequently specified items in
- Building Works
- External and landscaping works
- Civil engineering and highway works
- M&E works

Question 27

What is BCIS?

Answer 27

The BCIS is an independent provider of cost and price information for the construction industry which can be used for the purposes of benchmarking

Question 28

What is a Bill of Quantities

Answer 28

• It is a list of items and quantities of the work
• Usually prepared by the clients consultants and
• Priced by the Contractor
• Client holds the risk that the quantities are accurate and for any errors in their preparation against the stated measurement rules

Question 29

What are the objectives of a Bill of Quantities:

Answer 29

o To provide information on the type and quantity of work to enable tenders to be prepared and compared and
o Manage and minitor costs during the construction stage, including valuing works done, processing payments and hanfling variations

Question 30

What are cost checks?

Answer 30

• They take place during the design stages and
• Involve comparing the current estimated costs against the cost targets previously set for the elements of the building

Question 31

What are the different sources of cost data?

Answer 31

• BCIS
• SPONS
• In-house cost data
• Previous projects
• Specialist sub-contractors and suppliers

Question 32

What factors may necessitate adjustment of the prices/ cost data?

Answer 32

o Time to account for inflation between the base date of cost data and the current estimate base date
o Location
o Specification if necessary
o If in-house cost data (i.e. cost analyses and benchmark analyses) has been used for unit rates they should be adjusted to reflect prices current at the estimate base date (i.e. adjusted to remove construction inflation allowances made by the main Contractor)

Question 33

Why do you need to adjust the prices/ cost data for time?

Answer 33

o To account for inflation between the base date of cost data and the current estimate base date

Question 34

How do you adjust the prices/ costs date for time?

Answer 34

o This can be done through the use of Tender Price Indices to account for inflation between the base date of costs data and the current estimate base data
o The TPI at the base data of cost data is deducted from the TPI at the estimate base date which is then divided by the estimate base date TPI which is then multiplied by 100.

Question 35

How would you take account of inflation when preparing a cost estimate/ cost plan?

Answer 35

• Through the use of Tender Prices Indices to account for construction inflation and tender price inflation

Question 36

Why does inflation need to be accounted for when preparing a cost estimate/ cost plan?

Answer 36

o To account for
 Tender inflation – between the estimate base date and tender return date and
 Construction inflation – between the tender return date to mid-point of the construction period

Question 37

What is meant by the base date within in a cost estimate?

Answer 37

• The base date refers to the date on which rates and prices contained within a cost estimate or cost plan are based on

Question 38

What are the typical items to be included in a cost plan report?

Answer 38

• Project title
• Project Description
• Status of cost plan
• Statement of cost (i.e. estimate)
• Details of drawings, specifications and other information on which cost plan was based
• Cost plan summary (elemental breakdown)
• Inclusions and exclusions
• Estimate base date ( i.e. to which inflation has been applied)
• Reasons for changes to previous cost targets
• Value engineering proposals
• Recommendations
• Completed cost plan as an addendum to the cost report

Question 39

What are indices?

Answer 39

• Construction indices are tools used to measure and track changes in the cost of construction, labour, materials and other expenses over time.
• They provide valuable information to contractors, clients and government to understand and manage the economic dynamics of the construction sector

Question 40

What is a contract sum analysis?

Answer 40

o It is an alternative pricing document to a Schedule of Works or Bill of Quantities
o Generally prepared by the Contractor as part of their tender on a Design and Build project (e.g. Activity Schedule)
o It breaks down the Contractors price into a form allowing the client to analyse it and to compare it to other tenders
o May then be used to as a basis for calculating interim payments

Question 41

What is a pricing document?

Answer 41

o It is used in the tendering process
o It breaks down the costs associated with the project
o Serves as the basis for determining the contract sum and comparing tenders
o The type of pricing document depends on the form of contract and chosen procurement route e.g. traditional, JCT SBC – Bill of Quants

Question 42

What different forms of pricing documents are you aware of?

Answer 42

o Activity Schedule
o Bill of Quantities
o Contract Sum Analysis
o Schedule of works/ rates

Question 43

What is a provisional sum?

Answer 43

o A sum of money (usually estimated by the cost consultant) for an item of work that cannot be described and given in quantified terms.
o A provisional sum will either be ‘Defined’ or ‘Undefined’

Question 44

What is a defined provisional sum?

Answer 44

o A defined provisional sum is a sum of money for an item of work which is not completely designed, but information in regards to the nature and extent of the work can be provided
o A defined provisional sum is also accounted for within the contractor’s price (for preliminaries) and programme

Question 45

What information is needed for a provisional sum to be considered defined?

Answer 45

o Nature and extent of the work
o Statement of how and where work is fixed to the building
o Quantity that indicates extend of work and
o Any limitations

Question 46

What information is needed for a provisional sum to be considered defined?

Answer 46

o Nature and construction of the work
o Statement of how and where work is fixed to the building
o Quantity that indicates extend of work and
o Any limitations

Question 47

What is an undefined provisional sum?

Answer 47

o An undefined provisional sum is a sum of money for an item of work which is not completely designed and the information required for a defined provisional sum cannot be provided.
o An undefined provisional sum is not accounted for in the contractor’s price and programme which means that the client is taking the risk for the whole works and the contractor maybe entitled to an extension of time and additional payment

Question 48

What is the difference between defined and undefined provisional sums?

Answer 48

o Defined provisional sum is accounted for within contractor price (for preliminaries) and programme
o Undefined provisional sum is not accounted for in the contractors price (for preliminaries) and programme
o Define is used when information in regards to the nature and extend of work can be provided
o Undefined is when information in regards to the nature and extend of work cannot be provided

Question 49

What is the reason for the Contractor revising the Activity Schedule?

Answer 49

• If the Contractor changes a planned method of working at his discretion and the activities on the Accepted Programme no longer relate to the operations on the Activity Schedule

Question 50

What are the reasons for a Project Manager not accepting a revised Activity Schedule?

Answer 50

*It does not comply with the Accepted Programme
* any changed Prices are not reasonably distributed between activities and
* the total of the Prices is changed

Question 51

Please list 5 preliminaries items?

Answer 51

*Temporary accommodation
*Plant
*Fencing and security
*Temporary works
*Temporary utilities (e.g. power and water )