How To Benchmark For More Money

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1 MORE FOR YOUR MONEY -APPENDIX 1 North West Construction Hub Project Delivery Cost Benchmarking This Appendix is to be read in conjunction with the 'More for your Money' document Published October 2014

2 Table of Contents A benchmarking exercise has been undertaken, it consists of the following outputs: Background 3 Context of the 'More for Your Money Report' 4 Adjustment Factor Relevant to Traditionally Procured Buildings 6 Comparison of NWCH Primary School Projects with the NIEP, NACF & BCIS 7 Primary Education - NWCH Cost Benchmarking Summary 8 Primary Education - Average Cost Per Pupil Place Comparison 9 Primary Education - Net Cost Benchmarking Summary 10 Primary Education - Gross Cost Benchmarking 11 Higher and Further Education - Net Cost Bencmarking Summary 12 Higher and Further Education -Gross Cost Bencmarking Summary 13 NWCH EFA Free Schools/ UTC/Studio Schools- Net Cost Bencmarking Summary 14 NWCH Gross EFA Free Schools/ UTC/Studio Schools Gross Cost Bencmarking Summary 15 NWCH Bluelight Projects Net Cost Bencmarking Summary 16 NWCH Bluelight Projects Gross Cost Bencmarking Summary 17 NWCH Leisure Projects (Buildings) Gross Cost Bencmarking Summary 18 NWCH Leisure Projects Gross (Buildings) Cost Bencmarking Summary 19 NWCH Leisure Projects ( Parks ) Net Cost Bencmarking Summary 20 NWCH Leisure Projects ( Parks )Gross Cost Bencmarking Summary 21 NWCH Other Projects NetCost Benchmarking Summary 22 NWCH Other Projects Gross Cost Benchmarking Summary 23 2

3 Background The study was carried out by the North West Construction Hub (NWCH), it publishes the results of a regional cost benchmarking exercise for various projects procured through the NWCH. A standard form of cost analysis has been completed on each of the sample projects. This data has then been collated at a common price base, in order to compare the projects on level terms. In order to normalize the data and create a level playing field, costs have been adjusted for location to the UK national average 100 using the BCIS regional factors and for inflation using the Public Sector Tender Price Indices of 1st Quarter The 'Net Construction Cost' represents the tendered Contract Sum or Agreed Maximum Price (AMP), it excludes (where applicable) for external works, contingencies, abnormals and professional fees but are inclusive of percentage additions of preliminaries,overheads and profit. Gross Cost Per m² is the Agreed Maximum Price (AMP) or tendered Contract sum. It includes external works, contingencies, professional fees and abnormal costs. The figures shown exclude Statutory fees, survey costs, loose furniture and equipment, client costs including programme management fees and charges, legal and land acquisition costs. The Study comprises of projects categorized into the following groups - CATEGORY SAMPLE Primary Education 27 Higher Education/ Further Education 10 Education Funding Agencies 9 Leisure 7 Blue Light 3 Other 10 Total 66 3

4 Context of the report More for Your Money - Appendix 1 NWCH spanned a timeframe where capital finance moved from 'plentiful' at the outset, especially relating to schools, to 'meagre' towards the end of that period, again especially relating to schools, most notably the 'Free' school programmes. This dynamic needs to be understood and appreciated when viewing data in this document. On some projects, clients had more funding and specified higher scope /quality. These projects, not unreasonably, evidence a higher /m2 GFA. On other projects, clients had less funding and expected lower scope / quality. These projects, reasonably, evidence a lower /m2 GFA. The above facts are a reality, and represent the NWCH being able to offer 'flexibility' in terms of client's needs. This is particularly evidenced in the table below, which shows Client Satisfaction scores from the five highest and five lowest cost projects procured through NWCH. Client Satisfaction KPI Score Client Satisfaction KPI Score Top 5 - High Cost Product Service Top 5 - Low Product Service Projects National National Cost Projects National National Score* Score Score* Score Benchmark Benchmark Benchmark Benchmark Byley 9 87% 9 93% Kingsley % % Ladybarn % % Cherry Grove % % Acorns % % Heald Place % % Aston by Sutton 9 87% 9 93% JH Godwin % % 10 Mickle Trafford % % Acresfield % % 8 6 Average % % Average % % 3 Cost Control High Cost Specific Questions - Average Scores Financial Outcome Construction Quality Overall Product Satisfaction Cost Control Low Cost Specific Questions Average Score Financial Outcome Constructi on Quality Overall Product Satisfaction 1 0 Score Matrix Totally Satisfied Mostly Satisfied Neither Satisfied nor Dissatisfied Mostly Dissatisfied Totally Dissatisfied This question is not applicable

5 Irrespective of the cost being high or low, client satisfaction is consistently high. The clients are getting what they want in the context of specific funding / budget availability. Bernard Core, Education Programme Manager for Manchester City Council, stated the following when reflecting on Ladybarn and Heald Place schools: "The procurement of education schemes via the NWCH over the last four or five years has demonstrated the flexibility of the hub. For example, at times when budgets were generous we have been able to demand high design and quality standards, producing excellent educational facilities. At the same time, when budgets were restricted, as of late, we have secured very good education schemes but meeting reduced design briefs / specifications." Furthermore, projects delivered at whatever the specific project costs were, have also delivered high levels of 'added value' as clearly articulated and evidenced in the main 'More for your Money' report, of which this document is a supporting appendix. Also, NWCH Framework's streamlined 2-stage Target Cost / Agreed Maximum Price procurement approach provides two other principle benefits over traditional single stage tendering on individual project tendering: Client procurement costs for each call-off project are drastically lower when using NWCH, especially if procuring a 'programme of work' through a single mini-competition process. Clients get certainty of exit cost using a Target Cost / Agreed Maximum Price procurement approach on NWCH, which is not the case when using a traditional single stage tendering approach. The above two bullet points are evidence of other cost / time / cost certainty benefits that are above and beyond the basic project costs. 5

6 Adjustment Factor Relevant to Traditionally Procured Buildings Traditionally Procured Projects Findings BCIS 'cost per m2' data are tender costs not outturn costs, where as NWCH and NIEP 'cost per m2' data are maximum outturn costs. This 'average' adjustment has been made to make figures more comparable. Project % Increase Contract Sum (Award) Final Account Difference From a total of 62 traditionally procured projects the average difference from the Contract Sum to Final Account No. / Decrease was 7.42%. This figure was then used to uplift BCIS 'cost per m2' data where used as a comparator with NWCH and NIEP data. 1 6,456,000 5,950, ,000-9% 2 6,473,000 6,084, ,000-6% From our findings we have also found: 3 11,331,000 10,808, ,000-5% 4 9,400,000 9,033, ,000-4% 5 1,860,000 1,802,000-58,000-3% 80% of projects saw an increase from Tender cost to Final Account - of which, 6 2,878,000 2,799,000-79,000-3% 7 6,275,000 6,130, ,000-2% 58.1% saw an increase of over 5% from the contract value 8 12,298,000 12,032, ,000-2% 32.3% saw an increase of over 10% from the contract value 9 10,375,000 10,328,000-47,000 0% 19.4% saw an increase of over 15% from the contract value 10 13,685,000 13,637,000-48,000 0% 11.3% saw an increase of over 20% from the contract value 11 7,926,000 7,905,000-21,000 0% 12 7,150,000 7,148,000-2,000 0% From these figures, only 1 in every 5 projects, procured through a traditional tender process, saw a decrease in the 13 9,457,000 9,557, ,000 1% 14 10,782,000 10,900, ,000 1% final account compared to the Contract Value. 15 9,322,000 9,456, ,000 1% 16 9,018,000 9,170, ,000 2% 17 2,824,000 2,873,000 49,000 2% 18 3,614,000 3,678,000 64,000 2% 19 22,984,000 23,550, ,000 2% 20 3,600,000 3,690,000 90,000 2% 21 4,042,000 4,154, ,000 3% 22 8,735,000 9,010, ,000 3% 23 20,135,000 20,929, ,000 4% 24 18,237,000 18,991, ,000 4% 25 16,091,000 16,788, ,000 4% 26 7,097,000 7,425, ,000 4% 27 6,510,000 6,830, ,000 5% 28 1,100,000 1,173,000 73,000 6% Summary of Results 29 1,972,000 2,105, ,000 6% 30 2,600,000 2,790, ,000 7% 31 5,836,000 6,275, ,000 7% Average difference from Contract 32 3,100,000 3,344, ,000 7% Sum to Final Account 33 5,716,000 6,188, ,000 8% 7.42% 34 4,340,000 4,710, ,000 8% 35 10,912,000 11,859, ,000 8% 36 1,088,000 1,185,000 97,000 8% 37 7,602,000 8,292, ,000 8% % Increase No. of Projects 38 8,836,000 9,685, ,000 9% % 39 7,620,000 8,372, ,000 9% % 40 3,030,000 3,332, ,000 9% % 41 3,491,000 3,851, ,000 9% % 42 5,383,000 5,942, ,000 9% 43 5,497,000 6,123, ,000 10% 44 1,262,000 1,407, ,000 10% Overall Average 520, ,300,000 10,400,000 1,100,000 11% Average Overspend 694, ,762,000 4,227, ,000 11% Average Underspend - 204, ,566,000 5,206, ,000 12% 48 12,501,000 14,400,000 1,899,000 13% 49 8,407,000 9,780,000 1,373,000 14% Ratio 1:5 50 4,184,000 4,890, ,000 14% 51 3,280,000 3,842, ,000 15% 52 2,300,000 2,700, ,000 15% 53 3,300,000 3,900, ,000 15% 54 19,516,000 23,564,000 4,048,000 17% 55 1,013,000 1,242, ,000 18% 56 7,956,000 9,888,000 1,932,000 20% 57 5,015,000 6,241,000 1,226,000 20% 58 2,516,000 3,135, ,000 20% 59 2,701,000 3,380, ,000 20% 60 3,968,000 5,084,000 1,116,000 22% 61 5,887,000 8,000,000 2,113,000 26% 62 7,060,000 10,300,000 3,240,000 31% Categories by % of Difference % of projects in categories -5 to to to to to to % of projects increase & decrease Total: 435,172, ,469,000 32,297, % Average difference from Contract Sum 6

7 Comparison of NWCH Primary School Projects with the NIEP, NACF & BCIS The cost of new build NWCH primary school projects excluding any refurbishments or alteration costs have been compared with that of projects procured through the National Improvement Efficiency, Partnership (NIEP), National Association of Construction Frameworks (NACF), and the Building Construction Information Service (BCIS). Figure 2 below demonstartes our findings. The spatial measure adopted in this section is the /m² whilst the functional measure has been taken as the / pupil. New Build Primary Schools Cost Benchmarking Project Gross Total Project Cost per m2 20th Percentile Average 80th Percentile Average Net Cost per m2 20th Percentile 80th Percentile Average Cost / Pupil 20th Percentile 80th Percentile NWCH 2,477 2,188 2,233 1,988 13,277 12,457 2,756 2,517 14,094 Primary Schools NIEP 2,757 2,531 1,742 1,615 10,344 8,289 2,981 1,910 12,818 NACF 2,587 2,325 1,655 1,474 14,848 11,169 2,869 1,825 17,491 BCIS Information not available* 1,627 1,341 10,058 4,824 1,801 13,016 Figure 2: Cost Comparison of New Build Primary School Projects GROSS TOTAL PROJECT COST PER M2: NET COST PER M2: COST / PUPIL: using BCIS Regional Location Factor to accord with the UK Mean 100. This cost is further adjusted for inflation using BCIS TPI to provide costs to 1st Quarter overheads and profits adjusted for location and inflation to 1st Quarter Net cost data divided by the number of Pupils in the school, data has also been adjusted for location and inflation using BCIS Regional Location Factor to accord with the UK Mean 100. This cost is further adjusted using BCIS TPI to provide costs to1st Quarter * BCIS 'cost per m2' data are tender costs not outturn costs, whereas NWCH and NIEP 'cost per m2' data are maximum outturn costs. This 'average' adjustment of 7.42 % (see page 4 for calculation) has been made to make figures more comparable. 7

8 Primary Education - NWCH Cost Benchmarking Summary The sample of Projects below includes for projects where 85 % or more of the works are new build, this includes extensions it does not include for projects that are 100 % new build which are included in figure 2 below. NWCH Primary Schools Cost Benchmarking Gross Total Project Cost per m2 Net Cost per m2 Cost / Pupil Project Primary Schools Average 20th Percentile 80th Percentile Average ` Average 20th Percentile 80th Percentile ,500 1,500-2,250 2,405 2,709 2,330 2,112 1,635 1,382 2,959 6,912 2,916 2,035 10,053 2,516 2,038 1,758 6,937 2,938 2,413 8,808 10,188 2,123 1,945 1,621 10,528 2,538 2,275 11,052 11,576 2,250-3,000 Insufficient Data 3,000-3,750 Figure 1: Cost Benchmarking Summary Tables for All New Build NWCH Primary School Projects includes elements of alteration / extension GROSS TOTAL PROJECT COST PER M2: using BCIS Regional Location Factor to accord with the UK Mean 100. This cost is further adjusted for inflation using BCIS TPI to provide costs to 1st Quarter NET COST PER M2: overheads and profits adjusted for location COST / PUPIL: Net cost data divided by the number of Pupils in the school, data has also been adjusted for location using BCIS Regional Location Factor to accord with the UK Mean 100. This cost is further adjusted for inflation using BCIS TPI to provide costs to 1st Quarter

9 Primary Education - Average Cost Per Pupil Place Comparison The cost per pupil place was also compared, the findings are outlined below: 16 / PER PUPIL PLACE COST COMPARISON Thousands NWCH NIEP NACF BCIS Per Pupil 13,277 14,610 14, Cost Benchmarking Summary - Cost Per Pupil Place Comparison COST/ PUPIL: Net cost data divided by the number of Pupils in the school, data has also been adjusted for location using BCIS Regional Location Factor to accord with the UK Mean 100. This cost is further adjusted for inflation using BCIS TPI to provide costs to 1st Quarter

10 Primary Education - Net Cost Benchmarking Summary The sample of Projects below includes for projects where 85 % or more of the works are new build, this includes extensions it does not include for projects that are 100 % new build which are included in Graph 1 below. NWCH Primary Schools 85 % new build contains elements of alterations - Net Construction Cost /m2 2,500 2,400 2,300 2,200 2,100 2,000 Cost per m² (GIFA) 1,900 1,800 1,700 1,600 1,500 1,400 1,300 1,200 1,100 1, ,000 1,500 2,000 2,500 3,000 3,500 4,000 GIFA (m²) Net Construction Cost ( /m2) adjusted to BCIS Q Linear (Net Construction Cost ( /m2) adjusted to BCIS Q1 2014) NET COST / PUPIL: Net cost data divided by the number of Pupils in the school, data has also been adjusted for location using BCIS Regional Location Factor to accord with the UK Mean 100. This cost is further adjusted for inflation using BCIS TPI to provide costs to 1st Quarter ` 10

11 Primary Education - Gross Cost Benchmarking NWCH Primary Schools 85 % new build contains elements of alterations Gross Cost- /m2 GIFA 3,250 3,000 2,750 2,500 2,250 2,000 1,750 1, ,000 1,500 2,000 2,500 3,000 ` Gross Cost ( /m2) adjusted to BCIS Q Linear (Gross Cost ( /m2) adjusted to BCIS Q1 2014) NET 11

12 Higher and Further Education - Net Cost Bencmarking Summary NWCH Higher and further Education Projects Net Cost Benchmarking - /m2 GIFA 3,250 3,000 2,750 2,500 2,250 2,000 1,750 1,500 1,250 1, ,000 1,500 2,000 2,500 3,000 3,500 4,000 Net Construction Cost ( /m2) adjusted to BCIS Q Linear (Net Construction Cost ( /m2) adjusted to BCIS Q1 2014) NET 12

13 Higher and Further Education -Gross Cost Bencmarking Summary NWCH Higher and further Education Projects Gross Cost Benchmarking - /m2 GIFA 3,250 3,000 2,750 2,500 2,250 2,000 1,750 1,500 1,250 1, ,000 1,500 2,000 2,500 3,000 3,500 4,000 Gross Construction Cost ( /m2) adjusted to BCIS Q Linear (Gross Construction Cost ( /m2) adjusted to BCIS Q1 2014) NET 13

14 NWCH EFA Free Schools/ UTC/Studio Schools- Net Cost Bencmarking Summary NWCH EFA Free Schools/ UTC/Studio schools - Net /m2 GIFA 5,100 4,600 4,100 3,600 3,100 2,600 2,100 1,600 1, ,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 Net Construction Cost ( /m2) adjusted to BCIS Q Linear (Net Construction Cost ( /m2) adjusted to BCIS Q1 2014) NET 14

15 NWCH Gross EFA Free Schools/ UTC/Studio Schools Gross Cost Bencmarking Summary NWCH EFA Free Schools/ UTC/Studio Schools - Gross /m2 GIFA 5,100 4,600 4,100 3,600 3,100 2,600 2,100 1,600 1, ,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 Net Construction Cost ( /m2) adjusted to BCIS Q Linear (Net Construction Cost ( /m2) adjusted to BCIS Q1 2014) NET 15

16 NWCH Bluelight Projects Net Cost Bencmarking Summary NWCH BLUELIGHT PROJECTS- Net /m2 GIFA 2,100 1,600 1, ,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 Net Construction Cost ( /m2) adjusted to BCIS Q Linear (Net Construction Cost ( /m2) adjusted to BCIS Q1 2014) NET 16

17 NWCH BLUELIGHT Projects Gross Cost Bencmarking Summary NWCH Bluelight Gross- /m2 GIFA 3,100 2,600 2,100 1,600 1, ,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 Gross Construction Cost ( /m2) adjusted to BCIS Q Linear (Gross Construction Cost ( /m2) adjusted to BCIS Q1 2014) NET 17

18 NWCH Leisure Projects (Buildings) Gross Cost Bencmarking Summary NWCH LEISURE PROJECTS (buildings) Net /m2 GIFA 2,100 1,600 1, ,500 2,500 3,500 4,500 5,500 6,500 7,500 8,500 9,500 Net Construction Cost ( /m2) adjusted to BCIS Q Linear (Net Construction Cost ( /m2) adjusted to BCIS Q1 2014) NET 18

19 NWCH Leisure Projects Gross (Buildings) Cost Bencmarking Summary NWCH LEISURE PROJECTS-(Building ) Gross /m2 GIFA 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1, ,500 2,500 3,500 4,500 5,500 6,500 7,500 8,500 9,500 Gross Construction Cost ( /m2) adjusted to BCIS Q Linear (Gross Construction Cost ( /m2) adjusted to BCIS Q1 2014) NET 19

20 NWCH Leisure Projects ( Parks )Gross Cost Bencmarking Summary NWCH LEISURE PROJECTS (Parks) Net /m2 GIFA , , , , , ,000 Net Construction Cost ( /m2) adjusted to BCIS Q Linear (Net Construction Cost ( /m2) adjusted to BCIS Q1 2014) NET 20

21 NWCH Leisure Projects (Parks) Gross Cost Bencmarking Summary NWCH LEISURE PROJECTS (Parks) - Gross /m2 GIFA , , , , , ,000 Gross Construction Cost ( /m2) adjusted to BCIS Q Linear (Gross Construction Cost ( /m2) adjusted to BCIS Q1 2014) NET 21

22 NWCH Other Projects Cost Benchmarking Graph 4 -NWCH Other - Net /m2 GIFA 2,100 1,600 1, ,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 Net Construction Cost ( /m2) adjusted to BCIS Q Linear (Net Construction Cost ( /m2) adjusted to BCIS Q1 2014) NET 22

23 NWCH Other Projects Gross Cost Benchmarking Summary NWCH Other - Gross /m2 GIFA 6,600 6,100 5,600 5,100 4,600 4,100 3,600 3,100 2,600 2,100 1,600 1, ,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 Gross Construction Cost ( /m2) adjusted to BCIS Q Linear (Gross Construction Cost ( /m2) adjusted to BCIS Q1 2014) NET 23