BUIL 2021 Construction Cost Planning PDF

10/09/2024 BUIL 2021- Construction Cost Planning Week 8 - Cost planning process – stages & pricing Dr Thilini Jayawickrama Image Source: https://www.silverleafwealth.com/blog/time-create-budget 1 Cost planning -...

10/09/2024 BUIL 2021- Construction Cost Planning Week 8 - Cost planning process – stages & pricing Dr Thilini Jayawickrama Image Source: https://www.silverleafwealth.com/blog/time-create-budget 1 Cost planning - definition “Cost Planning is a systematic application of Cost Management to the design process between Brief Stage Cost and pre-tender estimated with the purpose of establishing, regulating and reconciling the Project Cost.” - Australian Cost Management Manual Volume 1 (2022) 1 2  10/09/2024 3 Cost Plans – stages The four Stages in the Cost Planning process; Stage A – Based on the Client’s Brief Stage B – Based on Outline Proposals Stage C – Based on Sketch Designs Accuracy of Estimate Stage D – Based on “Complete” Documentation Level of Information 2 4  10/09/2024 recap Brief Stage Cost (BSC) “A first cost indication to the client based on an outline statement of the client's needs.” The indicative cost is intended only as a guide for feasibility and planning purposes; it is not an estimate and should not be quoted as such. The BSC is related to Pre-construction Cost Management Stage A. - Australian Cost Management Manual Volume 1 (2022) Not necessarily a “Cost Plan” but, gives an estimated cost 5 Textbook Figure 7.2 Cost planning stages summary document (course page) 3 6  10/09/2024 Stage A - Brief Stage Cost (indicative cost) Basis/Documents Client’s Brief Any available sketches and information Drawings are not available at this stage, but there is information that we can use; ⁻ Type of building (identify the function) ⁻ Space requirements – number of functional units, lettable office area, floor area (useable or gross) functional area schedule (common industry practice in Australia) ⁻ Quality of Building – premium, A grade, 5 or 6 star ⁻ Location – CBD, city fringe, suburban country ⁻ Purpose – Investment, owner-occupier 7 Stage A - Brief Stage Cost contd. This should be a representation of the total project cost. The basis of the costings shall be clearly stated and identify any items of uncertainty (risk). Prepared based on benchmark rates and any available project-specific information. Escalation costs from the time of preparation to the tender date must be separately identified with the allowed percentage. Decides whether to continue with cost planning 4 8  10/09/2024 Stage B – Outline Proposal Cost (Preliminary Estimate) Basis/Documents Based on Outline Proposals Indication of the scope of the works related to size, type, location, plan, shape of the building etc. It is likely that several outline proposals prepared by the Architect will be available at this stage. These proposals can be included alternative proposals for building configuration, form, wall-to- floor ratio, and area efficiency e.g., a number of low-rise building Vs one large multi-storey building If the design information is unavailable, appropriate allowances shall be made in close consultation with the design team, and assumptions shall be stated. OUTLINE PROPOSAL COST is the cost of the selected proposal, which will be the basis for the next stage 9 Stage C – Sketch Design Cost (Limit of cost estimate) Basis/Documents Based on Sketch Designs In this stage, the design development will be carried out and the following will be available ⁻ Site layout including contours, extent of roads, paths, landscaping, service mains, covered ways, fencing etc. ⁻ Final dimensioned sketch plans, Elevations, Sections ⁻ Structural sketches with dimensions of members indicated ⁻ Schedule of finishes ⁻ Specification notes ⁻ Building services design and specs 5 10  10/09/2024 Stage C – Sketch Design Cost contd. Ensure optimum cost solutions are available to the design team when making decisions. Cost advice on different construction methods and materials will be available. Elemental basis with specific construction, finishes, and services stated for each element. Where possible, identify individual components separately with element unit rates, element quantities and elemental costs. e.g., different floor finishes, number of and type of doors Building services and specialist services shall be included elementally. Final Cost Budget Document is prepared if required 11 Stage D - Tender Document Cost Plan (Tender estimate) Basis/Documents Based on the final working drawings and specifications Carry out cost checks on each Element. Comparing with Stage C cost plan and reporting on variances by accompanying Reconciliation Statements. Make the design team aware of the cost implications of the design to ensure the completed design is contained within the agreed Cost Limit. Interim cost plans may be provided only if requested. It can be required when there have been significant changes in the design. TENDER DOCUMENT COST PLAN Accompany with Reconciliation statement 6 12  10/09/2024 Tender Document Cost Plan (TDCP)/Tender estimate TDCP can be prepared on Elemental or trade basis as per the client’s requirements. Tender estimate shall be prepared prior to the closing of tenders by pricing Bill of Quantities if available. If BQ is unavailable, TDCP costs shall be adopted as the tender estimate. Tender estimate enables tender evaluation and aims at the lowest acceptable tender. BQ is not Cost Planning which is produced later but, pricing the BQ is a good final check on the cost and the expected Builder’s tender. 13 When performing cost planning The latest documents and information will be used. Basis of the cost plan should be clearly stated. Exclusions should be clearly stated. Absence of the necessary information should be notified to the client. Ensure the cost is within the agreed Cost Limit. Whether adjustment for the Cost Limit is allowed or not will depend on the client’s requirements. Such adjustments may include an update to the time of tender (use Building Cost Index – BCI) which generally determine the level of available funds at this time. Ensure that the available funds are commensurate with the lowest acceptable tender. 7 14  10/09/2024 Textbook Section 7.2 – sample cost plans 15 Pricing building services 8 16  10/09/2024 Engineering Services “Engineering advice to be obtained from respective disciplines” - extracts from the Australian Cost Management Manuals In practice, however, the various engineering disciplines are very seldom appointed, or even selected, during Stages A and B and sometimes not until late in Stage C. This means that the Cost Planner uses his own knowledge and historical data to establish costs for these elements. 17 Pricing Engineering Services The QS/Cost Planner can use historical data to establish a realistic budget before any detailed engineering design has commenced. This data can comprise: - 1. Square metre cost estimates ($/GFA) 2. Functional unit or functional area cost($/FA) 3. Treated area cost estimates($/TA) 4. Cost per fitting or outlet ( $ per point, etc.) 5. Cost based on bill of either full or approximate quantities if available 9 18  10/09/2024 Pricing Engineering Services contd. By the time that 4. and 5. in the previous slide, there is a high probability that a Services Engineer has been appointed and will provide estimates of the costs of the services. This could be in the form of $/m2 GFA, $/m2 Functional Area (FA) or $/m2 Treated Area (TA). Normally, the QS/CP would still measure the areas. Alternatively, the QS/CP may give the Services Engineer the areas which they will use for their costings. 19 Pricing Engineering Services contd. Each engineer is responsible for costing those elements relative to the engineer’s specific discipline. Drawings and Schedules from Engineers. If necessary remedial action may need to be taken to keep the costs within budget. This may be by considering the widest possible range of alternative systems 10 20  10/09/2024 Problems in Cost Planning Engineering services consultants are often brought late into projects and are reluctant to commit themselves to detail at an early stage. Small changes to building design can have a disproportionate effect on the design and cost of engineering services. Service consultants are designers and not cost managers – their fee structures do not generally allow them to provide detailed cost planning or the costing of alternative solutions The approach to tendering engineering services by obtaining a lump sum with little or no breakdown results in a lack of detailed feedback for cost analysis 21 Problems in Cost Planning contd. More rapid technological change brings newer products, frequent changes to standard fittings and equipment for which price information is lacking Specialist engineering contractors will tender on: a) drawings (often only schematic) b) specifications (listing minimum performance specifications, but not specific equipment details) c) schedules of fittings and fixtures that are difficult to source and may be altered in lieu of substitute fittings and equipment 11 22  10/09/2024 Problems in Cost Planning contd. There are fewer specialist sub-contractors in some areas making the market for specialist work volatile Lack of competition and volatility of market can lead to higher than usual deviations from historical data This is not such an issue these days as the number of specialist contractors has increased 23 Finally 1. Role for a specialist M&E Cost Planner or Cost Planner (Engineering Services) 2. Close consultation by Architects, Services engineering consultants and cost planners is VITAL 3. As a Cost Planner, it is sensible to build working relationships with Services Engineers, Builders and the Specialist Sub-Contractors 4. Technology advancements continue and as energy costs rise even greater emphasis on the type of installations that go with a building will occur 4. It is probable that the %BC of the services elements will increase as buildings become more “hi-tech” and sophisticated 5. The Cost Planner needs to keep up with such developments 12 24  10/09/2024 Pricing preliminaries 25 Preliminaries items examples Portable offices Advertising Fencing https://www.welcomesite.com.au/portable-site-offices-crib-rooms/ https://www.classichire.net.au/equipment/fencing-hire-perth/ https://www.frontsigns.com/blog/everything-about-hoarding-advertising- main-types-and-benefits/ 13 26  10/09/2024 Preliminaries items examples contd. Scaffolding Access roads https://www.meadplantandgrab.co.uk/groundwork/temporary- access-roads/ https://hillsleyscaffolding.com.au/scaffolding-hoarding-services/ 27 Pricing Preliminaries When comprehensive details are not available, The Preliminaries are split between the Building and the External Works and Services and put into the relevant section. An allowance can be expressed as a cost per m2 of GFA. A percentage allowance is applied to other elemental costs. Some Cost Planners apply different percentages for the Building Work and the External Works and Services. When comprehensive details are available, Once the true scope/extent of works, the form of contract, timeframes and other relevant preliminaries information can be established, a more accurate assessment of preliminaries can be made. 14 28  10/09/2024 Escalation calculation 29 recap Escalation There are three components of escalation when preparing a Cost Plan: 1. Escalation from the date that the Cost Plan is based on to the date of the new Cost Plan 2. Escalation from the date of the new Cost Plan to the start of construction 3. Escalation from the start of construction to its completion 1 2 3 15 30  10/09/2024 Keep the cost plan up-to-date Use cost indices – should be from the same source Base date index and current/future date index for the location Calculate the increase/decrease Apply the locality index Apply to the cost 31 16