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BUILDING ECONOMICS 344

BUILDING ECONOMICS 344. Lecturer: Mr Willie Swee. COST PLANNING. A. What is a cost plan? 1. A method of determining the estimated cost of the project. i.e. architect's design in financial terms. 2. A more superior method compared with other methods.

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BUILDING ECONOMICS 344

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  1. BUILDING ECONOMICS 344 Lecturer: Mr Willie Swee

  2. COST PLANNING A. What is a cost plan? 1. A method of determining the estimated cost of the project. i.e. architect's design in financial terms. 2. A more superior method compared with other methods. i.e. supposed to produce a more accurate estimate. 3. A technique by which the budget is allocated to the various elements of an intended building project to provide the design team with a balanced cost framework within which to produce a successful design.

  3. continue…COST PLANNING B. Why undertake a cost plan? 1. To find out what the cost of a proposed project would be. 2. To ensure that the client's maximum amount of money to be spent on the project is not exceeded. CP is equating the design requirements with the cash available. 3. To ensure that the tender sum could be within the budget of the client. This will avoid the project being aborted. It would save time in trimming the design after tender sum is known so that there is enough money for the project.

  4. continue…COST PLANNING 4. To have a balanced design. Every element in the building is allocated the appropriate amount of money. 5. To ensure there is value for money. 6. Cost planning is done: a) to ensure that the client receives an economical and efficient project in accordance with the agreed brief and budget. b) to make the design process more efficient thus reducing the time needed to produce a successful design. c) to ensure that all work arising from the client's brief to the design team is included in coming up with the budget.

  5. continue…COST PLANNING C. Advantages of cost plan 1. Tender sum is likely to be closer to the estimate derived from the cost plan. 2. Less likelihood of revising the design. 3. Ensure cost-effectiveness and value for money design is obtained. 4. Ensure a balanced distribution of expenditure. A more rational design would be obtained. 5. Design would have greater cost considerations because of QS's involvement. A basis to compare this project with others.

  6. continue…COST PLANNING D. Disadvantages of cost plan 1. Time consuming to prepare. 2. Insufficient information. Architect has not firmed up on the specifications. Thus, architect has to draw more details and make design decisions earlier for the QS to perpare the cost plan. 3. QS must have a large data bank of alternative cost information to advise the designer.

  7. continue…COST PLANNING E. Essential features of a cost plan 1. CP should enable as accurate a prediction of the contract sum to be made possible. 2. CP should facilitate progressive estimation of costs of item as parts of the design are completed. 3. CP should enable comparison of proposed projects with known ones. 4. CP should reasonably easy and simple to prepare 5. The components of a CP are the same as the BCIS Elemental Cost Analysis format. 6. That any agreed budget or cost limit is seen as the maximum cost, and the QS should at all times work with the other design team members to satisfy the client at a lower cost if possible.

  8. continue…COST PLANNING 7. If at any time sums have been included in the approved budget for site abnormal costs, for example, which subsequently are found to have been wholly or partially unnecessary, the consequential saving should always be notified to the client.

  9. continue…COST PLANNING F. Ingredients to prepare a cost plan The following information is needed before a cost plan can be prepared : 1. Drawings - plans, elevations in sketch form. 2. Design brief, if available. 3. Specification or an indication of the materials to be used and the standard of finishing to be expected. 4. Cost analysis of a previous similar project. 5. Index at the time tenders were called for the previous project. 6. Index at the time the tenders would be called for this proposed project.

  10. continue…COST PLANNING 7. Factors affecting costs such as • method of securing tenders, • contract period, • probable start date, • market conditions at the time of tendering and • location factors. 8. Some cost data such as rates for work item, etc.

  11. continue…COST PLANNING G. Sources of data to prepare cost plan 1. Spon’s Price Books a) Building b) Mechanical and Electrical c) Landscaping 2. Laxton’s Price Book 3. Griffith’s Price Book 4. Blue and Buff books (Building Materials Market Research) 5. “Building” Journal 6. Cost data file for the Building Industry (BWS Ltd)

  12. continue…COST PLANNING 7. In-house cost analyses. 8. Specialist suppliers quotation.

  13. continue…COST PLANNING H. Sources of Published Indices 1. PWD Building and Roads cost indices. 2. BCIS Tender Indices and Cost Studies on Regional Variations. 3. DOE (Housing and Construction Statistics) 4. NEDO 5. Architects Journal 6. “Building” journal 7. CIDB journal

  14. continue…COST PLANNING I. Factors to consider when using the above cost data to prepare cost plan 1. Cost data from UK and overseas countries not applicable to Singapore. 2. Differential rates of inflation on various aspects/elements of the building. 3. Acute shortages in specific trades at different times. 4. Regional variations. 5. Market conditions of analyses. 6. Careful consideration of external published information. 7. Consideration of tender period and its relationship to the tender period of the analysis

  15. continue…COST PLANNING 8. High levels of inflation demand constant checking of rates and prices. 9. Assumption that cost information in cost analysis is tendered price information, when a significant amount could be prime cost or provisional sums. 10. Initial quotation from specialist suppliers, etc are likely to be low. 11. Building regulations can be statutorily amended. Care must be taken to ensure that the analysis used is consistent with current building standards. 12. Firmed priced or fluctuating contracts. 13. Special planning conditions applying either to the analyses or to current project.

  16. continue…COST PLANNING J. Methods of obtaining the cost of an element within a cost plan Method 1 : Approximate quantity method 1. Obtain quantity of the element, Q by measuring from drawings. 2. Obtain rate of the element, R by consulting cost data base, checking with suppliers or contractors, checking from BQs of past projects or build up rate from first principles. 3. Cost of element = Q x R 4. This method is the first method to be considered as it is also the most accurate. 5. Only can be used if approximate quantities can be measured from drawings and the rates of the items measured are known. 6. Besides using actual rates, composite rates, built-up from BQ rates can also be used.

  17. continue…COST PLANNING 7. The quantities measured would be change to tally with the composite rates. Method 2 : Element Unit Rate method 1. Obtain element unit quantity, A from drawings 2. Obtain the element unit rate, B from a past similar project. 3. Update the rate to current prices, B1. 4. Cost of element = A x B1 5. This method is the second method to be considered. 6. Only can be used if the element unit quantity [as defined in the BCOS cost analysis format] is known.

  18. continue…COST PLANNING 7. The element unit rate of the past project must also be relevant to the new project Method 3 : By proportion 1. This method is used when ratios obtained from design data can improve the quality of the estimated cost of the element. 2. Ratios are usually used in vertical elements eg walls. The wall to floor ratio is then used to make the estimate more accurate. 3. Total cost of element of new project = new wall / floor ratio past wall / floor ratio X cost/m2 GFA of past project X GFA of new project X other adjustment factors

  19. continue…COST PLANNING OR 4. Total cost of element of new project = new wall / floor ratio past wall / floor ratio X EUQ of past project X EUQ of new project X other adjustment factors

  20. continue…COST PLANNING Method 4 : Cost/m2 of GFA method 1. Obtain gross floor area of the project, GFA from drawing or design brief. 2. Obtain the cost/m2 of gross floor are, W from a past similar project. 3. Update the rate to current prices, W1. 4. Cost of element = GFA x W1 5. Actual method to be used depends on the availability of information for the particular element.

  21. continue…COST PLANNING K. Adjusting the cost analysis 1. When undertaking the CP for a new project, the CA of a past similar project is used as the base. 2. Some adjustments need to be made to the past CA. These adjustments are made to cater for : a) changes in quality eg standard of finish is changed. b) changes in construction method and materials. c) specific additions of some new items in the new project or some item in the past project is now not used in the new project. d) inflation-movement in index to update the data of the past project. e) location factor eg. More expensive to undertake works in Sentosa as compared with mainland Singapore. f) other adjustments as may be necessary to accommodate the new project.

  22. COST ANALYSIS • WHAT IS COST ANALYSIS? • A systematic grouping of costs of many items in a project obtained from the successful tender. cost • To obtain useful cost data on a project in which the contract has been awarded has been awarded. The “useful cost data” is stored and used to estimate the cost of other project in future. • Cost analysis is undertaken to aid cost planning. • Cost analysis provides data for comparisons to be made between the cost of various building functions in one project with that of equivalent functions in other projects. • Cost analysis is usually prepared after the tender/contract has been awarded.

  23. continue…COST ANALYSIS Types of Cost Analysis • Trade sections of bills of quantities or breakdown cost of each trade section is expressed as a percentage of the total. • Labour and material content. • Single rate cost analysis • Elemental cost analysis, Most accurate and most useful of the 4 methods. • Rates for each item. • Composite rates.

  24. continue…COST ANALYSIS Sources of Cost Analysis • Building Cost Information Service [BCIS] from RICS, UK. • Overseas professional journals such as Chartered Quantity Surveyor, Architects Journal, Building, etc. • Local professional journals such as PWD Cost Information Quarterly. • Quantity surveying firm’s in-house cost analyses of previous projects.

  25. continue…COST ANALYSIS Elemental Cost Analysis (ECA) • ECA is based on BCIS format so as to ensure a single format presentation. • ECA is analysis of building cost in terms of elements • ECA can be prepared from priced BQ or FA.

  26. continue…COST ANALYSIS TOOLS TO PREPARE THE ELEMENTAL COST ANALYSIS (ECA) • Priced BQ of successful tenderer. • One set of tender drawings comprising of plans, elevations and other information. • BCIS list of elements and rules of analyses.

  27. continue…COST ANALYSIS PREPARING THE ELEMENTAL COST ANALYSIS (ECA) • Step 1 : Fill in project information • Step 2 : Fill in Design/Shape information • Step 3 : Distribute the cost of each item in the BQ to the appropriate element. • Step 4 : Derive the following information from data in Step 3 above : • a) Total cost of element • b) Cost per square metre of gross floor area • c) Element unit quantity • d) Element unit rate • Step 5 : Calculate the group element cost by adding up the individual cost of elements within the group. • Step 6 : Complete the BCIS form to present the CA

  28. continue…COST ANALYSIS ECA TERMINOLOGY • Total cost of building • Total cost of element / elemental cost Elemental cost varies from buildings due to difference in quantities, quality, market price levels, types of tender, conditions of contract and others. E.g. element : Roof ; sub-elements within element are : Roof drainage - $10,000 Roof coverings - $55,000 Roof structure - $25,000 Roof lights - $ 5,000 The total cost of roof element is $95,000

  29. continue…COST ANALYSIS ECA TERMINOLOGY (continue) • Cost per square metre of gross floor area (or Element Rate) Total cost of element / gross floor area of building e.g Total cost of element roof : $ 95,000 Gross floor area (GFA) : $1000m2 Cost of element per m2 of (GFA) = $95 • Element unit quantity (EUQ) This is the quantity of the element derived from BQ or measured from drawings. E.g. element : roof, the EUQ is the area measured over all the roof surfaces. • Element unit rate (EUR) Total cost of element or elemental cost / EUQ

  30. continue…COST ANALYSIS ECA TERMINOLOGY (Continue) • Total cost of group element Each group of element cost and the item that made up this cost must correspond with the list of element given in the BCIS. e.g. group element : Superstructure Elements within superstructure group element are : frame, upper floors, roof, stairs, external walls, windows and external doors, internal walls and partitions, internal doors.

  31. continue…COST ANALYSIS TYPES OF ECA • Group ECA Costs are allocated to 6 mains group elements : a) substructure b) superstructure c) internal finishes d) fittings and furnishings e) services f) external works e.g. roof covering cost would be allocated to superstructure • ECA Costs are allocated to individual elements. e.g. roof covering cost would be allocated to the element ‘roof’

  32. continue…COST ANALYSIS TYPES OF ECA (Continue) • ACA Sub-elemental cost analysis. Very detailed. Cost of each sub-element shown, where appropriate.

  33. continue…COST ANALYSIS PRINCIPLES OF UNDERTAKING ECA • Each building within a project shall be analysed separately. • Professional fees shall not form part of the cost analysis. • Contingency sums to cover unforseen expenditure shall not be included in the analysis but shown separately. • Preliminaries can be : • a) shown separately, or • b) apportioned into the elements

  34. continue…COST ANALYSIS ESSENTIAL CONSTITUENTS OF ECA • Cost • ECA benefit client and Architect more than Builder because Client’s cost and not Builder’s cost are analysed. • Costs analysed are usually Tender costs and not FA costs. • Elements • ECA relate cost of functional component of buildings common to all buildings • Costs in BQ are re-allocated to produce an elemental cost analysis • Element is a building functional component (e.g. roof ;walls) not a user’s functional unit eg. Classroom • Elements such as Preliminaries; Contingencies are not components but fulfill the same functions during design & construction of different buildings. • Each element must clearly specified the items included.

  35. continue…COST ANALYSIS ESSENTIAL CONSTITUENTS OF ECA(Continue) • Yardstick • Adopt a method of expressing costs which allows sensible comparison between building of different sizes and uses. • No use to compare the cost of the building directly unless you take into account the difference in size and capacity of a building • Cost/m2 of floor area is the usual yardstick. Cost/m3 are impractical. • Cost/m2 are attractive because : - • prefer floor area than volume • height of storey not as important as floor area • costs more proportional to floor area than volume • cost not affected much by height increase than area increase • Costs are expressed in $/m2 to two decimal places. • A perfect yardstick would allow comparison between building of : - • different uses • same value • similar design, quality, tender date • different size

  36. continue…COST ANALYSIS ESSENTIAL CONSTITUENTS OF ECA(Continue) • Cost/m2 is not a perfect yardstick because building differ in size are not proportional to floor area.

  37. THE END !

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