Cost Planning

Question 1

What is the definition of Cost in the building context?

Answer 1

context the total of the cost of Labour, Plant and Material used in the construction of a project

Question 2

What is the definition of Value in the building context?

Answer 2

Worth, Desirability, Utility
Cost exceeds value – Client will not commission the project
Value exceeds cost – Client will commission the project

Question 3

What is the definition of Estimate in the building context?

Answer 3

The predicted cost of carrying out a project –
Includes:
Preliminaries ( Onsite Staff and facilities required to carry out the project)
Labour = Cost of Employing Labour x Output,
Plant = Cost of Owning/Hiring Plant x Output
Material = Cost of Buying , Transporting, Storing and Waste
Company Overheads ( Head Office and Staff Costs)

Question 4

What is the definition of Tender in the building context?

Answer 4

The amount a contractor is willing to build the project for.

Question 5

What are the main issues/benefits of VFM(Value for Money)

Answer 5

All clients seek VFM
Clients will all however gauge VFM differently.
Low cost does not equate to VFM!
VFM factors
Benefit obtained from an investment compared to making alternative investments. 
Fitness for purpose
Quality commensurate with function
Elemental estimating helps achieve VFM!

Question 6

What factors effect building costs?

Answer 6

Design economics
The site
The plan shape
Overall building size
Enclosing building envelope
Story height

Question 7

What is Location Variance

Answer 7

This reflects the micro economics of each geographical area.
Variance accommodated by geographical index numbers calculated and published by the BCIS.
An index number is a ratio that expresses the relative change in a factor from one period in time (the base) to another (today/ tomorrow) and is usually related to a base value of 100.
The BCIS publish national and regional location index numbers (see Moodle)

Question 8

What is Tender Date Variance

Answer 8

Tender prices reflect what is happening in the economy (international/ national/ regional).
Variance adjusted by index number – tender price index – again calculated and published by BCIS.
There are a wide range of TPI published for different types of project/ client.

Question 9

What is quality variance?

Answer 9

This relates to the specification or quality of the building.
Quality is to some extent subjective.
It is also usually related to building function.
The most difficult of factors to make adjustment for.
Variance adjusted by professional judgement (judgement comes from learning from your mistakes).

Question 10

What is in the Estimate Report?

Answer 10

Range of estimated costs
Estimated at current cost (if you were to build today)
Give scope of what is included within the estimate.
Give scope of what is not included within the estimate.