Podcast
Questions and Answers
What is NOT one of the responsibilities of a project manager regarding cost information?
What is NOT one of the responsibilities of a project manager regarding cost information?
Architects should always confirm verbal cost information in writing.
Architects should always confirm verbal cost information in writing.
True
What percentage range of the construction cost estimate indicates when an architect is generally responsible for redesign at no cost to the client?
What percentage range of the construction cost estimate indicates when an architect is generally responsible for redesign at no cost to the client?
10% to 15%
The architect should maintain files containing reliable ______ data.
The architect should maintain files containing reliable ______ data.
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Match the following responsibilities with the corresponding actions:
Match the following responsibilities with the corresponding actions:
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What is the first principle of cost estimation?
What is the first principle of cost estimation?
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The Uniformat II format is primarily used for creating tenders and payment applications.
The Uniformat II format is primarily used for creating tenders and payment applications.
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What are the two widely accepted formats for presenting construction cost information?
What are the two widely accepted formats for presenting construction cost information?
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The success of any cost estimation method depends on the __________ of the raw historic data.
The success of any cost estimation method depends on the __________ of the raw historic data.
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Match each cost estimation principle to its description:
Match each cost estimation principle to its description:
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How does the breakdown of cost estimates benefit the estimation process?
How does the breakdown of cost estimates benefit the estimation process?
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Cash allowances and contingency reserves are not important in cost estimation.
Cash allowances and contingency reserves are not important in cost estimation.
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What is one significant advantage of hiring quantity surveyors?
What is one significant advantage of hiring quantity surveyors?
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Quantity surveyors often provide detailed cost information based on real-time costs.
Quantity surveyors often provide detailed cost information based on real-time costs.
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Who should be consulted for expert cost advice in construction projects if internal knowledge is limited?
Who should be consulted for expert cost advice in construction projects if internal knowledge is limited?
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The overall project budget justifies unusual or __________ costs.
The overall project budget justifies unusual or __________ costs.
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Match the disadvantages of quantity surveyors with their descriptions:
Match the disadvantages of quantity surveyors with their descriptions:
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Which factor is NOT mentioned as influencing construction costs?
Which factor is NOT mentioned as influencing construction costs?
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Inflation can lead to the escalation of construction costs.
Inflation can lead to the escalation of construction costs.
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What should architects include as a line item in the project budget?
What should architects include as a line item in the project budget?
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During periods of high demand, obtaining competitive _____ for a project can be challenging.
During periods of high demand, obtaining competitive _____ for a project can be challenging.
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Match each economic factor with its description:
Match each economic factor with its description:
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What should architects seek from the client regarding cost estimates?
What should architects seek from the client regarding cost estimates?
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Costs for construction tend to decrease permanently following a recession.
Costs for construction tend to decrease permanently following a recession.
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What should architects be aware of regarding inflation?
What should architects be aware of regarding inflation?
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The economic cycle influences construction costs due to _____ and market changes.
The economic cycle influences construction costs due to _____ and market changes.
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What happens to construction costs during times of high demand?
What happens to construction costs during times of high demand?
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Study Notes
Project Manager Responsibilities
- The Project Manager is responsible for preparing and controlling cost information
- They must manage team members to ensure that the work stays within the agreed-upon budget
- They set and adjust budget limitations
- Project managers exert maximum influence on decisions affecting costs
- Architects should use cost information with confidence, by expressing it in standard formats, being consistent and methodical, and avoiding ambiguity
- When publishing cost information, assumptions, constraints, and limitations should be listed clearly
- Architects should describe the factors considered in establishing the project contingency amount and confirm cost information provided verbally in writing
- It is recommended to include references and comparable projects alongside cost information
- It is recommended to have a cost information file for each project and keep it updated
- Analyze each project on completion and maintain files containing reliable historic cost data
- Historic cost data must be checked in detail to ensure comparability with the current project
Liability of the Architect
- In an architectural practice, liability for incorrect cost estimates cannot be avoided, whether or not the architect is the project manager
- The typical client-architect agreement will include a clause stipulating that the architect will be responsible for redesign at no cost to the client if the lowest bid exceeds the construction cost estimate by a predefined amount, often 10% to 15%
Cost Forecasting
- Cost forecasting is an important and rigorous activity that relies on historical data
- The original data must be carefully and methodically selected by experienced personnel
- The reliability of the raw historical data and the ability to adjust the data to suit the characteristics of the new project are crucial
- It is best to have a new project resemble examples from which data is drawn
- The success of cost forecasting depends on the extent to which the analysis is broken down into a large number of small components, instead of a few large unit headings
- Project uncertainty and risk should be accounted for with cash allowances and a contingency reserve
Formats of Cost Estimates
- There are two widely accepted formats for presenting construction cost information: Uniformat II and MasterFormat 2016
- Both formats relate through cross-referencing tables
- Uniformat II was developed for the purpose of cost estimation
- It consists of eight categories (A through G and Z), each divided into major systems, subsystems, and components using a cascading numbering system
- The breakdown allows for consistent presentation of cost estimation information
- The standard MasterFormat 2017 48-division system uses the trade and supplier headings used during construction
- This format is usually employed by contractors to prepare tenders and applications for payment
Factors Affecting Costs
- Several factors influence the construction industry and affect building costs, including inflation, market conditions, other economic factors, and the political and social climate
- Due to economic cycles, inflation and the consequent escalation of construction costs can vary
- Architects should always include an allowance for escalation as a line item in the project budget and be aware of inflationary trends
- Architects should indicate a reference date on all estimates and seek input from the client
- During periods of high demand, construction projects can become expensive
- Recessions often lead to decreased construction costs, particularly for non-union labor rates
- When developing the cost plan of a project, establish the basic cost of the building and justify theoverall project budget during the forecasting process.
Techniques and Consultants
- Unless the architect has developed cost analysis skills in-house, expert advice should be obtained from independent professional experts or those intimately involved in construction.
- Quantity surveyors provide professional services at hourly rates, fixed fees, or a percentage fee of the construction budget
- Quantity surveyors have independent professional status and their success is based on their track record of reliability in forecasting
- They usually supply information on comparable projects to establish credibility
- Some larger quantity surveying companies publish their own updated forecast information yearly
- Unit costs from quantity surveyors are usually historical and often not connected to real-time costs, making them less current than costs available from contractors or construction managers
- Detailed cost information may not be available because cost breakdowns are limited to major trade divisions
- This can lead to the substitution of inferior or inappropriate products, simply because they are cheaper
- The architect must be informed and advise the owner on the consequences of proposed changes
- The architect should document all changes in construction documentation requested by the owner and provide written comments and recommendations on all changes
- The architect should clearly describe the positive and negative aspects of the substitutions.
Embodied Energy Cost Analysis
- This type of cost analysis assesses the environmental impacts and energy consumption associated with the extraction, manufacture, delivery, installation, demolition, and recycling of building materials
- This field is often dominated by specialists
- Architects are well-equipped to develop knowledge and skills in this area of expertise, rather than relinquishing it to others
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Description
Test your knowledge on the responsibilities of a project manager, especially concerning cost information in construction projects. This quiz covers the key actions and duties that architects and project managers must uphold to ensure effective communication and budgeting.
