Cost advice

 

Topics in the member's section include the following HD video presentations;

  • Preparation of cost estimates

  • Preparation of cost plans

  • NRM1

  • Life cycle costs

  • Approximate estimating

 

The quantity surveyor has the responsibility for providing accurate and timely cost advice throughout the duration of a project to a variety of stakeholders and design team members including the client and architect.

Cost advice is required at all stages of a construction project from the feasibility stage right through to site operations and occupation. The feasibility stage is the most tricky as often little detailed information is available and yet cost targets and overall budgets need to be set.

It would be reasonable to assume that estimates and cost plans are prepared to an industry standard, but that is not the case, leaving clients to work out for themselves what items are included in the estimate or cost plan and what items have been excluded. Traditionally, the accuracy of cost advice has been called into question because of many high profile projects going over budget and time the latest being; HS2 and Crossrail.

For the first time the RICS New Rules of Measurement 1 (NRM1) provides surveyors with a standard set of rules and formats for the measurement and presentation of estimates and cost plans.

Cost estimating techniques

 

NRM1 suggests three methods for preparing cost estimates and cost plans as follows;

 

(a) floor area method or m2 method;

(b) functional unit method (e.g., per bed space, per house type and per m2 of retail area); and

(c) elemental method (i.e., individual elements).

 

Floor area or m2 method

 

The superficial method is a single price rate method based on the cost per square meter of the building. The use of this method should be restricted to the early stages of the design sequence and is probably the most frequently used method of approximate estimating. Its major advantage is that most published cost data is expressed in this form. The method is quick and simple to use,

 

  • All measurements are taken from the internal face of external walls. No deduction is made for internal walls, lift shafts, stairwells, etc. – gross internal floor area.

  • Where different parts of the building vary in function, then the areas are calculated separately.

  • External works and non-standard items such as piling are calculated separately and then added into the estimate. Figures for specialist works may be available from subcontractors and specialist contractors

 

Functional unit method

 

The unit method is a single price rate method based upon the cost per functional unit of the building, a functional unit being, for example, a hotel bedroom. This method is often regarded as a way of making a comparison between buildings to satisfy the design team that the costs are reasonable in relation to other buildings of a similar nature. It is not possible to adjust the single rate price and therefore is very much a ballpark approach. Suitable for clients who specialist in one type of project; for example, hotel or supermarket chains, where it can be surprising accurate.

 

Other examples where unit costs may apply are;

 

  • schools – cost per pupil

  • hospitals – cost per bed space

 

Elemental method

 

The elemental method requires the calculation of element unit quantities (EUQ) and element unit rates (EUR) using the detailed rules of measurement contained in NRM1 by its very nature this approach requires a higher degree of detailed information than the previous two methods.

 

Other credible approaches to approximate estimating that are available to the quantity surveyor are;

 

Approximate quantities

 

Regarded as the most reliable and accurate method of estimating if there is sufficient information to work on. Depending on the experience of the surveyor, measurement can be carried out fairly quickly using composite rates to save time. The rules of measurement are simple, although it must be said, not standardised and tend to vary slightly from one surveyor to another.

 

  • One approach involves grouping together items relating to a sequence of operations and relating them to a common unit of measurement, unlike the measurement for a bill of quantities, where items are measured separately.

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Builder's Quantities

 

Builder’s quantities are quantities measured and described from the builder’s viewpoint, rather than in accordance with a set of prescribed rules, such as NRM2. There can be quite a big difference between the builder’s quantities and approximate quantities. For example, earthwork support may be required to be included, whereas in practice this may be omitted from the site operation with the sides of the excavation being battered back instead. The more pragmatic approach being reflected in the measurement and pricing of builder’s quantities.

 

Elemental cost planning

 

A cost plan is an estimate presented in a standard elemental format. The industry norm is the BCIS list of elements 4th Edition. The estimate is based on a cost analysis of a previous project that is adjusted to suit the new project. The characteristics of elemental cost planning are as follows:

 

  • costs are related to elements of the building, a feature that is not possible achieve using other methods of estimating that produce a lump sum estimate,

  • the elemental cost allocation is of use to the client and the design team as it is possible to see from an early stage in the design sequence how much of the project budget has been allocated to various aspects and elements of the project,

  • the estimate increases in detail as the design development progresses. Initial cost is allocated over the BCIS groups of element;

 

  • facilitating works

  • substructure

  • superstructure

  • internal finishes

  • fittings

  • services

  • prefabricated buildings and building units

  • work to existing buildings

  • external works

  • main contractor’s preliminaries

  • main contractor’s overheads and profit

  • design team fees

  • other development costs

  • client risk

  • inflation estimate

 

Other approaches are often cited, most notably; cubic meter and storey enclosure methods but the accuracy of these approaches is somewhat dubious and there are seldom used in practice for construction projects and are not considered here.

 

Life cycle costs

The acquisition or initial capital costs associated with a building are just a fraction of the total ownership costs.It has been suggested that for every £1 spent on initial capital costs an additional £3 - £4 will be spent during the life cycle of a building for; maintenance, repairs and running costs. Life cycle cost calculations allow informed decisions to be taken on the choice of materials or components based on life cycle performance and costs.

Duncan Cartlidge Online gives 24/7 access to a series of clear video tutorials from the author of the best-selling pocketbooks.

 

Each video explains the process of producing estimates and cost plans from basic principles based on the Building Cost Information Service guidance. The advantages and disadvantages of the various approaches to cost advice at a variety of stages is explained as well as how to prepare approximate quantities.

Extensive experience both in practice and in education allows Duncan Cartlidge to address the common problems encountered when giving cost advice. Each video contains a set of self-assessment questions to gauge progress and a question and answer facility is available to subscribers.

A range of cost/m2 for a variety of building types is available to subscribers under the resources tab.

 

 

 

 

 

 

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