David Watkins
RIBA Part 3 Course 2014
Cost Control and Management
Cost
Cost
Management
Control andand
Management_dhw_2014
Control_dhw_2014
For which of you, desiring to put up a
For
which
ofnot
you,first
desiring
to put up a
tower,
does
give much
tower,
notprice,
first give
thoughtdoes
to the
if hemuch
will have
thought
to
the
price,
if
he
will have
enough to make it complete?
enough to make it complete?
For fear that if he makes a start and is
For
he with
makes
a start
and all
is
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ablethat
to goif on
it to
the end,
not
towill
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thehim
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whoable
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And
saying,
man
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building
andthis
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building
completeand is not able to make it
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Luke Chapter 14 verses 28-30
Luke Chapter 14 verses 28-30
Cost Control and Management
Cost Control and Management_dhw_2014
Buildings lie at the heart of our everyday lives
Buildings cost money ……….and usually lots of it
To build well you must first plan
Project budgets are established for buildings to be delivered to projected cost and programme
There is often a spotlight on Public Sector projects and strong emphasis on meeting the budget
Financial difficulties results in public (taxpayers) and media becoming unsympathetic and vocal
£10-£40m £200m
£50m
£827mm
£110m
Steelwork
£414m
Programme
No Cost PlanContractual
Disputes
Poor procurement
route
Cost Control and Management
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The construction industry and the environment in which it operates have changed significantly
•
•
•
•
•
•
•
•
New and varied ways of buying design and construction
Fragmentation of the industry with increased in specialist trade contracting
Demise of direct employment
Growth of labour-only and fixed term contracts
Fee competition for consultancy services
Introduction of partnering
More conflict and less trust
Clients wanting more value for money
Business cycles hit peaks and lows with consultants and contractors having to cope with increasing
pressure for :
Faster construction
Higher quality
Lower costs
What has not changed is the need for effective cost control from inception to completion
Cost Control and Management
Cost Control and Management_dhw_2014
Clients want :
Certainty of price
Projects constructed and delivered within budget
Completion on time
The best quality possible for the price
Value for money
No surprises
Contractors and Consultants want :
A reasonable return for the risks they take
Payment on time
Clients who do not keep changing their minds
Satisfied clients
Positive feedback, enhanced reputation and glowing references
Repeat commissions and business
Cost Control and Management
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The Architect needs to have Budget and Financial Awareness
SETTING COST LIMITS
Why?
Affordability, Profitability, Accountability and Value
When?
Throughout all stages RIBA Plan of Work
How?
Project Appraisal, Project Development and Allowances
What?
Budgets and Cost Plans
Who?
Client then Project Team and Stakeholders/External Funders
Where?
Project Team and Design Team Meetings
BUILDING DEVELOPMENT COSTS
Land/Building Costs
Acquisition and Fees
Construction Costs
Normal and Abnormal Costs
Fees
Surveys and Investigations, Professional Team, Statutory Submissions
Financing Costs
Bank loans and interest (temporary and permanent arrangements)
Financial Status
VAT
Cost Control and Management
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FACTORS AFFECTING BUILDING DEVELOPMENT COSTS
Forms of Procurement
Traditional
Design and Build
Management Contracting
Construction Management
Method of Tendering
Competitive tender
Negotiated tender
Risk
Identify and Evaluate the risks as a Project Team
Establish a Risk Register and monitor
Manage the risk and use register as a dynamic document
Reduce the risk
Accept the risk
Mitigate the risk by transfer or share
Eliminate the risk
Cost Control and Management
Cost Control and Management_dhw_2014
Cost Control and Management
Risk Management
Cost Control and Management_dhw_2014
COST IMPLICATIONS OF DESIGN VARIABLES
Interested parties
Heritage and conservation groups, archaeological groups, local
history societies, Local Authority, resident groups, ecology groups…..
Site conditions
Location, access, topography, infrastructure, contamination, ground
bearing capacity, location and diversion of services, etc……………….….
Legislation
Built environment issues to include land searches, restrictive
covenants, land registration, Building Regulations, CDM, consents……
Future proofing
Changes in operation and technology may necessitate requirement
for alternative layout, accommodation, M&E systems which if
planned for would minimise disruption. Life cycle cost exercises………
Environmental
Client policies will identify attitude towards environmentally-friendly
inclusions/considerations such as pollution, dirt, dust, noise, smoke,
traffic, travel, chemicals, sustainability in regard to waste and energy
Redundant performance
and circulation areas
Not primary function spaces – car parking areas, corridors, foyers,
stairwells, balconies, lift shafts, plant rooms, operating plant…………..
Building Shape
Plan shape and the geometry created has a direct influence on the cost
to construct - square, rectangular, irregular with right angles, circular
Cost Control and Management
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If each building is 5m high and 400 sqm floor area
Perimeter wall areas as follows:
Plan 1
Perimeter area 20 x 4 x 5 = 400sqm
Plan 2
Perimeter area 40 x 2 + 10 x 2 = 100 x 5 = 500sqm
Plan 3
Perimeter area 60 +10+25+10+10+10+25+10 = 160 x5 = 800sqm
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Storey Height
Numbers of levels requires consideration – low rise and high rise
Modulation
Repetition in regard to productivity and programme
Buildability
Ease or complexity of physical construction
Environmentally-friendly
Adoption of passive measures – insulation standards, air tightness,
rainwater harvesting, electrical generation, solar heating, etc…………..
Life cycle costs
Capital cost to install versus benefit gained through the occupational
life of the building
So who can prepare the costs at the appropriate stages, incorporate the various aspects
and elements and monitor continually?
Cost Control and Management
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Cost monitoring and Control
Quantity Surveyor takes the lead
Design Team approach – collaborative working
Project Team approach – collaborative working
Pre-conceived impressions ??
The Image of the Quantity Surveyor
Cost planning should be perceived as a positive
disciplinary process to enable a building to be
constructed to a perceived amount
Listen, integrate, estimate,
record and view big picture
By the Architect
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Cost monitoring and Control – Why?
• Ensure employers are provided with value for money
• Make employers and designers aware of the cost consequences of their desires
and/or proposals
• Provide advice to designers to enable them to arrive at practical and balanced
designs within cost limits
• Keep expenditure within cost limits approved by the employer
• Provide robust cost information upon which the employer can make informed
decisions - cost predictability
Cost Control and Management
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Cost monitoring and Control – How?
• Estimating and cost planning
• Cost checking
• Pre-tender estimate
• Tender analysis
• Cost control reports during the construction stage at regular intervals
• Final Account and Feedback
• Value Engineering
Cost Control and Management
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0
1
2
3
4
5
6
7
Strategic
Definition
Preparation
and Brief
Concept
Design
Developed
Design
Technical
Design
Construction
Handover
and
Close Out
In Use
Core
Objectives
Business Case
And Strategic
Brief
Develop
Project
Objectives
Project Brief
Prepare
Concept
Design
Final Brief
Prepare
Developed
Design
Building
Co-ordination
Prepare and
co-ordinate all
technical
design
Off site
manufacturing
and on site
construction
Handover of
building and
contract
completion
In use
activities and
feedback
Cost
Input
Estimate(s)
Estimate(s)
Cost Plan(s)
Cost Plan(s)
Cost
Checking
Pre-tender
Estimate
Tender
Analysis
Cost
Control
Financial
Statements
Cost
Control
Financial
Statements
Final
Account
and
Feedback
RIBA Plan of Work
Input at Key Development Stages – continual
Cost Control and Management
RIBA Plan of Work
Cost Control and Management_dhw_2014
Cost monitoring and control - How
Estimate
Determination of possible cost of building
• Floor Area Method
• Functional Unit Method
• Elemental Method
Cost Plan
Critical breakdown of the cost limit for the building (provides a statement of how the
Design Team propose to distribute the available budget among the elements of the
building
• Elemental Method
Contingency - Design/Construction/M&E
Inclusion and Exclusions
Cost Control and Management
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Cost
Input
0
1
2
3
4
5
6
7
Strategic
Definition
Preparation
and Brief
Concept
Design
Developed
Design
Technical
Design
Construction
Handover
and
Close Out
In Use
Estimate(s)
Estimate(s)
Cost Plan(s)
Cost Plan(s)
Cost
Checking
Pre-tender
Estimate
Tender
Analysis
Cost
Control
Financial
Statements
Cost
Control
Financial
Statements
Final
Account
and
Feedback
RIBA Plan of Work
Input at Key Development Stages – continual
Cost Control and Management
RIBA Plan of Work : Strategic and Concept Stages
Cost Control and Management_dhw_2014
Cost Control and Management
Budget Estimate
Cost Control and Management_dhw_2014
Don’t be tempted or drawn into giving cost estimates
Cost Control and Management
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Cost monitoring and control – Tender Analysis
Pre-tender Estimate
Tender Analysis and report in respect of submitted tenders
Errors
Obvious Mistakes in Pricing
Arithmetical Errors
Qualifications
Make-up and breakdown of price
Consistency and Competitiveness
Dealing with Errors and Qualifications
Cost Control and Management
Budget Estimate
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0
1
2
3
4
5
6
7
Strategic
Definition
Preparation
and Brief
Concept
Design
Developed
Design
Technical
Design
Construction
Handover
and
Close Out
In Use
Contract awarded
Tenders submitted
Cost
Input
Estimate(s)
Estimate(s)
Cost Plan(s)
Cost Plan(s)
Cost
Checking
Pre-tender
Estimate
Tender
Analysis
Cost
Control
Financial
Statements
Cost
Control
Financial
Statements
Final
Account
and
Feedback
RIBA Plan of Work
Input at Key Development Stages – continual
Cost Control and Management
RIBA Plan of Work : Technical Design
Cost Control and Management_dhw_2014
Cost monitoring and control – What?
Cost Control
Forecasting and anticipating final cost at regular intervals
Accounting for variations
Controlling and Reporting – Regularly and Comprehensively (Design Team Input)
Variations
Additional work
Omissions
Change in specification
Correction of Errors in contract documents
Cost Control and Management
Cost Control and Management_dhw_2014
Cost monitoring and control – Why?
Cost Control
Variations
Keep Client updated on financial situation/anticipated costs
Inform to allow decisions to be taken
Variations
Change of mind
Errors – brief/design/quantities/specification
Fashion
Technology
Business Trends
Cost Control and Management
Cost Control and Management_dhw_2014
Cost
Input
0
1
2
3
4
5
6
7
Strategic
Definition
Preparation
and Brief
Concept
Design
Developed
Design
Technical
Design
Construction
Handover
and
Close Out
In Use
Estimate(s)
Estimate(s)
Cost Plan(s)
Cost Plan(s)
Cost
Checking
Pre-tender
Estimate
Tender
Analysis
Cost
Control
Financial
Statements
Cost
Control
Financial
Statements
Final
Account
and
Feedback
RIBA Plan of Work
Input at Key Development Stages – continual
Cost Control and Management
RIBA Plan of Work : Fabrication and Construction
Cost Control and Management_dhw_2014
Cost Control and Management
RIBA Plan of Work : Technical Design
Cost Control and Management_dhw_2014
Cost Control and Management_dhw_2014
Cost Control and Management_dhw_2014
Cost Control and Management_dhw_2014
Cost monitoring and control – Final Account
Final Account
Adjustment of contract sum, Provisional Sums, PC Sums and loss/expense
Variations
Feedback
Cost Control and Management
Cost Control and Management_dhw_2014
Cost
Input
0
1
2
3
4
5
6
7
Strategic
Definition
Preparation
and Brief
Concept
Design
Developed
Design
Technical
Design
Construction
Handover
and
Close Out
In Use
Estimate(s)
Estimate(s)
Cost Plan(s)
Cost Plan(s)
Cost
Checking
Pre-tender
Estimate
Tender
Analysis
Cost
Control
Financial
Statements
Cost
Control
Financial
Statements
Final
Account
and
Feedback
RIBA Plan of Work
Input at Key Development Stages – continual
Cost Control and Management
RIBA Plan of Work : Final Account and Feedback
Cost Control and Management_dhw_2014