Design Economics and Quantification and Costing Flashcards
(105 cards)
1
Q
What sources of cost information are available when preparing a new estimate or cost plan?
A
- BCIS
- Pricing Books
- Previous project information
- In house cost data
- Direct contact with supply chain
- Rate books, eg - DfE projects
2
Q
What is benchmarking?
A
The use of historical project data from projects of similar size and scope, to provide a cost per functional unit or m2
3
Q
How would you undertake a benchmarking exercise?
A
- Produce a comparison document to compare schemes, of similar scope and size, broken down elementally
- Identify any project anomalies and omit, in order to determine a cost per functional unit or m2
4
Q
Give me some examples of capital costs
A
- Cost of construction
- Land acquisition
- Consultant fees
5
Q
Give me some examples of operational costs
A
- Maintenance costs
- Utilities usage
- Repair or replacement costs
6
Q
How could you dramatically reduce the capital cost of a building?
A
- Reduce GIA
- Reduce building height
- Reconsider design solutions, for example, concrete frames may require more substantial substructures due to the weight of the frame
7
Q
Can you tell me what the NRM series are?
A
NRM 1 - Order of cost estimating and planning for building capital works (used for RIBA 0-2)
NRM 2 - Detailed measurement for building works (used for RIBA 3-4)
NRM 3 - Order of cost estimating and planning for building maintenance works (used for LCC)
8
Q
What are the different methods for cost estimating?
A
- cost per m2
- Cost per functional unit
- Using the elemental method, eg stairs per nr
9
Q
What are the different ways you can build up a cost plan?
A
- Prime cost sums
- Provisional sums
- Cost for design works, in terms of elemental components
10
Q
What are provisional sums?
A
- An allowance to undertake works that are not sufficiently designed in detail
- Can be defined or undefined
11
Q
What is the difference between defined and undefined provisional sums?
A
- Defined provisional sums = the sum for the works inclusive of preliminaries and programme
- Undefined provisional sums = the sum of works excluding preliminaries and programme allowances
12
Q
How are provisional sums expended?
A
- Contract Administrator issues an instruction to spend
- Add and omit exercise undertaken to include for actual cost of works
13
Q
How does NEC deal with provisional sums?
A
- Unamended NEC does not allow for provisional sums
- NEC approach is if works can’t be properly defined, they should be excluded until they can be
- In my experience, if a provisional sum has been included, it is dealt with under the compensation event process
14
Q
What is inflation?
A
The general increase of prices over a set period of time
15
Q
How would you rebase time and location for a cost plan or estimate?
A
- Using BCIS indices
- Inflate for tender (up to the start of construction)
- Inflate for construction (up to the midpoint)
- Inflate for location (ensuring the correct location factor has been applied)
16
Q
What indices would you use for Tender Inflation and Construction Inflation, and for location?
A
All in Tender Price Index (TPI)
Location factors on BCIS
17
Q
What would you include in a cost plan or estimate?
A
- Cover letter
- Executive summary
- Assumptions and exclusions
- Grand Summary (construction cost estimate, MC preliminaries, MC OH&P, Risk allowances, professional team fees, inflation)
- Elemental breakdown
- Inflation calculation
- Cash flow, if required
18
Q
Give me some examples what you might assume in a cost plan
A
- Current substation doesn’t need replacing
- No asbestos in building
- Internal wall height
- No works to existing infrastructure required
19
Q
Give me some examples of items you might exclude from a cost estimate or plan
A
- Land acquisition fees
- Legal fees
- VAT
- Insurances
20
Q
Why do you exclude VAT from a cost plan or estimate?
A
- Employers may incur different levels of VAT
- VAT should be calculated by a tax advisor / specialist
21
Q
Do you need a programme to complete a cost estimate or plan?
A
- I wouldn’t need a full programme but at least indicative dates are required to inform preliminaries, OH&P and inflation
22
Q
How does good cost planning benefit the client?
A
- Confirms viability of scheme
- Allows client to make informed financial decisions
23
Q
If you saw a project was giving an early indication of overspend, how could you recommend your client bring the scheme back into budget?
A
- Look at areas for value engineering
- Look at over and above scope and where works could be omitted, if not required
- Look at securing additional funding
24
Q
What do you write about in your market conditions report?
A
- Looks at local supply chain availability
- looks at trends in construction in the local region
- Inflation analysis, labour availability and material prices news
- Reviewing external factors, such as Red Sea Attacks on material imports and Russia-Ukraine war and effects of prices and availability of materials
25
How can external factors affect the construction industry?
- Production in factories could come to a halt, especially during lockdowns
- War, and effect on supply of materials
- Import taxes increase due to brexit
- Red Sea attacks and long lead-in times
26
The BCIS indices are the most current, industry renowned way of uplifting cost data. Why do you think BCIS indices were not reflective of the market conditions?
At this point in time, steel prices were only being held for a day, so BCIS could not keep up with the receipt, analysis and submission of the material cost impact the market was seeing.
That’s why in my market report, I advised clients to consider additional contingencies for volatile work packages
27
What percentage of additional contingency did you recommend clients retain for volatile work packages?
For steel packages, I recommended clients add an additional 10% contingency to provide extra protection against the market volatility.
I reviewed the BCIS indices against costs we were receiving back from the market, and on average, steel prices were 8% higher than our expectations, so I recommended 10%.
I also caveated my advice by stating this may differ for various projects, and some schemes may benefit from economics of scale, so clients should always consult their cost advisor for further advice
28
In your opinion, what are some of the key reasons we have cost overrun on projects?
- Ambiguous client brief
- Unrealistic cost estimates
- Project risks not effectively managed
- Unknown external factors, for example wars and pandemics
- Inflationary pressures or changing market conditions
29
How have you been managing inflation on your schemes?
Kingsway - contractors liability under the contract. CE’s have been issued to include for inflation due to the risk of it occurring. The BCIS indices have been used where subcontractors have not allowed for inflation in their quotations.
Gosford Hill - used BCIS indices as per the DfE template to inflate cost plans and estimates as this is what is agreed under their template and with contractors.
30
How would you price something if there was no available cost information?
First principles.
For example, a door:
Materials - door, hinges, ironmongery
Labour - Rate for joiner per hour
Plant - screwdrivers, drills etc
31
What is cost per functional unit? When might it be used?
Generally used in feasibility studies to price an element of a building. For example, hospitals could be priced per bed, car parks per space, or schools per student
32
When did NRM come into effect?
1st Dec 2021
33
What is IPMS?
- The international property measurement standard
- Provides guidance for the measurement of buildings in part or whole
34
What are the different documents within IPMS?
IPMS 1 - External measurements for whole or part of buildings
IPMS 2 - Internal measurements for whole or part of buildings
IPMS 3.1 - External measurements required for exclusive occupation
IPMS 3.2 - Internal measurements required for inclusive occupations
IPMS 4.1 - Internal measurements for selected areas including internal walls and columns
IPMS 4.2 - Internal measurements for selected areas excluding internal walls and columns
35
Can you provide some examples of terms under IPMS for measurements?
- Internal dominant face = more than 50% of lowest 2.75m is classified as the IDF
- Demising wall = wall that partitions two occupational areas
- Notional boundary = non physical boundary, eg - door threshold
36
What is ICMS?
- International Cost Management Standards
- 3rd edition
- Provides global consistency for Construction Life cycle costs and carbon emissions
37
How would you structure your grand summary in a cost estimate or plan?
Using the NRM 1 format to ensure everything has been captured:
0 - Facilitating Works
1 - Substructure
2 - Superstructure
3 - Internal finishes
4 - FF&E
5 - Services
6 - Prefabricated buildings
7 - Works to existing buildings
8 - External Works
9 - Main contractor preliminaries
10 - Main contractor OH&P
11 - Professional fees
12 - Other project costs
13 - Risks
14 - Inflation
38
What is life cycle costing?
Life cycle costing is an exercise that can be undertaken to demonstrate the holistic cost of the building from construction to end of life.
Life cycle costing elements can be remembered using CROME:
Construction
Renewal
Operation
Maintenance
End of life
39
What is whole life costing?
Whole life costing considers all costs associated with a building, including land acquisition, construction, operation, maintenance, demolition, and even income from the building throughout its life
40
Who are the BCIS?
Building Cost Information Service
The BCIS are an organisation that collect, collate, and analyse historical cost information. They provide forecasts for inflation and prices too.
41
What types of life cycle cost reports are you aware of?
Elemental Life cycle cost reports
- Usually completed before end of RIBA 2 to inform design solutions
- Default period for appraisal is 60 years, as outlined by BCIS, but I’m aware this could be informed by the client
- Used to analyse what the cost of a design solution would be over the life of the building
Componential life cycle cost reports
- To be completed end of RIBA 4
- Reviews and compares the cost of various elements against one another to inform design solutions, for example carpet tiles vs vinyl, double glazing vs triple glazing
42
What considerations may you give when undertaking an LCC?
- Scope of maintenance required
- Replacement periods for different elements
- Time period of appraisal
- Method of economic evaluation, for example, net present value
43
What is net present value?
The sum of the discounted future cash flows.
Present value = future cost x discount factor
44
What can you tell me about NRM 3?
NRM 3 is used for cost estimating and planning of building maintenance works
NRM 3 would usually be utilised in RIBA 6/7 for post construction maintenance estimates, and can be adopted in earlier RIBA stages to estimate or plan pre-construction estimates for LCC reports
45
How did you prepare your LCC for the Endoscopy project?
- I used the Gleeds standard template, which I am aware incorporates principles from NRM 3 and ICMS 3
- I inputted the data from my elemental cost plan which formulated the cost of replacement for certain elements over the period of analysis (which in this case was 60 years as per standard BCIS)
- This then gave me the Real Cost of the works over a set period of time, which did not allow for inflation or deflation (this was excluded from the LCC)
46
For Oak house, why did you suggest the roof lights to be omitted?
- There for wellbeing purposes only
- Cost to make them bullet resistant was excessive and increased the cost significantly
- Easy target for value engineering
47
Are you aware of any guidance for Whole Life costing or Life Cycle costing?
- Life cycle costing RICS guidance note
- ICMS 3 for global consistency of presenting life cycle costs
- NRM 3 for order of cost estimating and planning of Building Maintenance Works
48
What is the difference between value management and value engineering?
- Value management = Exploring how value can be provided for a project at a strategic level, in order to save time and money through the design process; a constant review of the schemes value to ensure client is receiving VFM
- Value engineering = utilising an alternative materials and design solutions to reduce the cost but still provide the same function and feature of that originally proposed (“if we can’t get the material then we must get the function”)
49
What do value engineering and value management have in common?
- Both focus on eliminating unnecessary costs from projects
- Both work to improve the ratio between cost and benefits
50
What are the benefits of Value Management and Value Engineering?
- Can reduce the cost to ensure it remains viable, without compromising the quality
- Optimises the overall project value by eliminating unnecessary cost and getting the scheme aligned with the clients brief
51
What RIBA stages would you do various cost estimates and plans at?
- RIBA 0: Rough OCE / Feasibility
- RIBA 1: OCE
- RIBA 2: FCP1
- RIBA 3: FCP2
- RIBA 4: FCP3 / PTE / PostTE
- RIBA 6-7: FCP4 (using NRM3 for facilities maintenance)
52
What are the advantages and disadvantages of using SPONS?
Advantages:
- Provides an indicative rate for materials and labour
- Can be used for benchmarking rates to demonstrate comparability
Disadvantages:
- It is a snapshot in time, so does not consider market conditions or volatility
- It can be considered inaccurate if incorrect rates for works are used
53
Can you name some assumptions you would include within your cost plan?
- Works are sequential
- Assume no requirement for substation
- Assume wall height
54
Can you name some exclusions you would highlight within your cost plan?
- Excludes VAT
- Excludes land acquisition
- Excludes professional fees (if requested by Client)
55
What information would you require for an Order of Cost Estimate?
- Spatial requirements (i.e floor area or number of functional units)
- Programme (to inform preliminaries)
- Sustainability / Quality aspirations
- Details for enabling works, or decanting
- Any site information, eg sloping site, ground contamination
- Details of restraints, eg listed building (for retained facade)
- Indicative drawings (eg external walls, GIA's, sections, floor plans)
56
What information would you require for a Stage 2 cost plan?
- Design will be further progressed, but may not be fully defined
- Programme
- Risk allowances (preferably built up through risk register if available, or if not %)
- Inflationary allowances
- Site information (for cut and fill, ground contamination)
- Site constraints
57
For Gosford Hill, how many weeks longer was Option 1 than Option 2?
15 weeks longer
58
What information would you require for a Stage 3 cost plan?
- Technical designs, specifications and detailed construction information
- Programme
- Risk allowances (preferably built up through risk register)
- Inflationary allowances
- Site information (for cut and fill, ground contamination)
- Site constraints
59
How much more expensive is it to construct in London than Cardiff? What is the % uplift?
- SCAPE provides circa 5.5% uplift between Cardiff and London
- BCIS shows a 10% uplift from Cardiff to London
60
In your market research for your report, why did you feel BCIS was not reflective of the current market conditions?
- BCIS is only as good as the information it is receiving
- The volatility in the market was showing so much fluctuation that at one point, steel prices were only being held for a day
- BCIS could not update quick enough to be a reflective picture of the market
61
From your market conditions report, how much were you recommending Clients uplift volatile work packages by?
- Taking steelwork as an example, looking at the previous trends over the last few quarters, it is apparent that the raw material price of steel is settling slowly, however, uncertainty remains around whether other external factors, such as the red sea attacks, may affect the price or availability
- I therefore advised my client that an additional 10% for volatile work packages would be appropriate to include as additional contingencies for these works
- I caveated this highlighting some projects may benefit from economies of scale, and also, Gleeds are not liable for any unknown price increases that could occur
62
What is NRM?
- New Rules of Measurement
- Used to provide a standard set of rules of cost estimating and planning that provides consistency and clarity of financial information
63
What are the benefits of using NRM?
- Provides consistency and clarity
- Provides a structure for a cost estimate or plan that ensures nothing is missed out
- If the cost estimate or plan was ever required for professional negligence claim against the company, they would see whether I acted competently and used professional guidance set out by the RICS
- Can be understood and followed by anyone who picks it up
64
How would you define the "cost limit" under NRM?
- The total maximum cost the client can pay for a scheme
- Is inclusive of professional fees, risk, other project costs, and construction
- Can be inclusive or exclusive of inflation
65
How does NRM define the "base cost estimate"?
- The total cost of construction less risks, inflation and VAT
66
When measuring with CostX, how do you scale the drawing?
- Look for a scale bar
- Check the scale against the scale bar, and test on a named measurement on the drawing
- If no named measurement, can check the width of a door, which would typically be around 900mm for a single door
67
What is the difference between CESMM and NRM?
- NRM breaks down the detail of building elements to fully capture the cost
- CESMM takes a more inclusive approach to measurements, which is suitable for civil engineering works due to large quantities of similar items, i.e concrete
- Whichever rule is used, it is crucial to read and understand the measurement rules, and ensure it is stated in the cost plan what rules of measurement has the cost estimate or plan been built up using
68
How would you clarify what form or rules of measurement you have used to compile a cost plan?
- Clarify in the executive summary
69
Can you name some of the key headings for contractor preliminaries?
- Site accommodation
- Management and staff
- Temporary services
- Mechanical plant
- Temporary works
- Site records
- Cleaning
- Fees and charges
- Insurances
- Bonds and warranties
70
When assessing contractor preliminaries at tender, what are some of the key considerations to determine whether they are fair and suitable?
- Length of contract
- Amount of resource
- Cost of project
- Extent of contractor responsibilities, eg design
71
What could be considered abnormal preliminaries?
- Tower cranes
- Weekend working
- Road closures
- Permits for closing train lines
72
What might you allow for contractor OH&P in your cost plan? What considerations would you have?
- Size of project
- Length of programme
- Market conditions
- Project value
73
What would you allow for contractor OH&P in your cost plans?
- In my experience, most contractor OH&P are received between 3-6%
- For CiNER Glass, OH&P was 1.95% due to project being in excess of £400m
74
What fees might be included in a fee estimate, from a contractor?
- Design fees
- Framework fees
- Management and staff fees
75
For CiNER Glass, what did you contribute to the stage 2 and 3 cost plans?
- External wall measurements
- Internal finishes
- External works
76
For Oak House, what cost analyses did you carry out?
- I carried out a cost analysis on the different available options for raising the external floor level
- Civil engineer produced two ideas; one being ramp with retaining structure and the other being raising the levels locally in the car park
- I used previously tendered rates and market quotations to compile my options
- I made assumptions on the requirements of the ramp, eg hand rail
77
For your Oak House cost analysis on raising the external levels, what was the outcome?
- The ramp with retaining structure was the most economical solution initially
- However, I was informed that the glazing parallel to the ramp would have had to be fire resistant up to 1.2m
- I revised my cost analysis by adding the uplift for the fire resistant glazing, in which I contacted the market for, and then option 2 for raising the levels locally was the most efficient method of raising the external level
78
What is the RICS code of measuring guidance?
Provides guidance for measurement of GEA, GIA and NIA
79
What would you exclude from Gross External Area (GEA)?
- Canopies
- Open vehicle parking areas
- Greenhouses, fuel stores
80
What would you exclude from Gross Internal Area (GIA)?
- Perimeter wall thicknesses
- External open-sided balconies
- Voids
81
What would you exclude from Net Internal Area (NIA)?
- Toilets
- Lift rooms
- Stairwells
- Corridors and other circulation areas
- Internal walls
- Areas with headroom less than 1.5m
82
What is net to gross ratio?
Provides a ratio for the amount of area that is lettable in comparison to the overall area (GIA) of the building
Can be used to assess how efficiently the building has been designed to maximise lettable space
Ratio = (Gross - Net) / Net
83
What would you expect for a good net to gross ratio?
For office buildings, anywhere between 70-85% would be considered a good net to gross area
84
What is wall to floor ratio?
- Used to determine whether a buildings envelope is economically designed or not
- If Building A had 1.5 wall to floor area, and Building B had 0.6, it would demonstrate Building B is more efficient as it requires less external wall to enclose the space
- Calculated by dividing External Wall Area by GIA
- Circular buildings have the best Wall to Floor ratio, but the premium that comes with building a circular building would offset the lower ratio
85
On Oak House, what was the discrepancy between your cost plan and the contractors return?
- My cost plan was 30% lower than what was returned from the market
- Quite a bit higher due to the market conditions at the time, steel prices were only being held for a day which made it difficult to cost plan
- Caveated this with a statement in my cost plan detailing the volatility of the market conditions and my cost plan was a snapshot in time reflective of the market, and prices could be subjected to increases
86
For Oak House you mentioned there was extreme volatility in the market when you were reviewing the tender returns. What was driving the extreme volatility?
- External factors, such as Covid, halted production and caused a backlog in deliveries
- Price of raw material was fluctuating which cause the prices to be inconsistent
87
On Oak House, why do you think the tender return was received 30% higher than your cost plan?
- Market volatility was rife and unpredictable
- Cost plan was submitted in a time where steel prices were only being held for a day
- Small amount of steel could have attracted a premium due to subcontractor books being full
88
On Oak House, how did you deal with this 30% increase in prices? What did you tell your Client?
- I knew steel was volatile, so I started by caveating all my previous OCE's and CP's with a statement demonstrating the market conditions were unpredictable and prices may be subject to fluctuations
- When the scheme was undergoing the second stage of tender, I kept my client up to date, on a monthly basis, the movements in the market and key volatile packages, such as steelwork, masonry and plasterboard. I provided a written statement, informed by Gleeds' material price indices, to show them how volatile the market was
89
For Oak House, did the Client accept the 30% increase in steel prices?
- Yes
- Their programme was their key driver and they required the works to start when possible, and I advised them of the ramifications of going back out to the market to obtain a price, for example further fluctuations in price, possibly won't obtain another quotation and cause unnecessary delays, and based on my market research, I didn't believe the Client would obtain a better price due to the small quantum of works
90
For Oak House, what could you have done to reduce the cost of the steel work package, if the Client did not want to accept the price?
- Could request contractor obtain the minimum 3 quotations, but I understood the scarcity of the market
- Could look into procuring the materials through one of the clients incumbent suppliers directly
- Could look at an alternative design solution
91
For the Kingsway basement wall, what works were being claimed within their £2.38m compensation event?
- Cutting down top of retaining wall to meet FFL
- Dowelling into slab from existing basement walls
- Structural alterations
- Patch repairs & making good
- Contractor time related preliminaries for delay
- Subcontractor time related preliminaries due to delay
92
For the Kingsway basement wall, why was the risk of the basement wall not passed onto the contractor?
- The works associated with the basement walls, at the point of contract, were unknown
- Contractor explicitly said they were not willing to take this risk on as a fixed price and therefore the client thought it was best to retain it
93
For the Kingsway, what could you have done for the basement wall to pass the risk to the contractor?
- Risk transferred, but Client would likely pay a high premium for the contractor to take this risk
- Risk avoidance - could have picked a different site
- Could have incorporated a provisional sum, but still works would not be defined and therefore provisional sum would essentially be an allowance
94
For the Kingsway basement wall, how much did the contractor include for their time related costs?
- About half the cost was associated with delay
- £1.2m for 16 weeks was initially claimed from Contractor
- £950k was associated with subcontractor delays, eg site management for CB
95
For the Kingsway basement wall, why did the Client want to pay the contractor for these works?
- Contractor approached client directly requesting the client pay these costs in the next valuation
- Client was not aware of the risks of paying these costs early (prior to agreement), therefore I informed them should anything happen to the contractor these costs would be paid in advance of the works and would not be recovered
96
For the Kingsway basement wall, what could you have done to support the contractors cash flow?
- Advanced payment could have been incorporated into the contract
- Advanced payment bond could then be sought to ensure the Client's money was secure
97
For Gosford Hill, what additional costs would come using a phased construction approach?
- remobilising, which would decrease efficiencies thus increasing programme & prelims
- may be additional risk allowances for interdependancy of other phases being completed, so subcontractor could be on standby (may not finish on time)
98
When compiling a cost plan, apart from creating the cost plan, what other tasks would you be doing?
- liaising and collaborating with design team
- possibly undertaking cost analyses and optioneering to inform design
- presenting the cost report to the client
- setting the cost limit at each stage
- Value engineering
99
What is a prime cost sum?
- A cost and quantity included within the cost plan where the specification is not yet defined
- architect would then select a specific material within that price range
- PC specified in description but rate included is inclusive of labour and materials (i.e PC sum for Tiling - Tiles PC sum @ £40/m2, but rate included £100/m2 to included for labour / plant)
- PC sums used instead of Prov Sum as can be defined more than prov sum (i.e we have a quantity)
100
Who is the biggest shareholder in BCIS?
- Lloyd’s Bank
101
How would you measure a door? What would be your considerations?
- Vision panel
- Height
- Width
- Thickness
- Kick boards
- Ironmongery
- Thermal
- Acoustic
- Fire rating
- Finishes
102
Where would you find guidance for what is needed to compile an order of cost estimate or cost plan?
- NRM 1 Appendix B and C for Cost Estimates and Plans respectively
103
How could site logistics affect costs / prelims?
- Additional traffic management
- Possible out of hours for deliveries
(could work out 5% higher ish)
104
How can the cost manager help control the design to keep the project within budget?
- Speak to design team and explain where cost sits against client budget
- Explain how changes will affect budget
- Contribute to VE
- Set the cost limit at each stage to ensure the scheme remains viable
- Identify and communicate areas where design may not be economical
105
