COST MANAGEMENT / COST CONTROL. Bill Ibram, FRICS
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1 COST MANAGEMENT / COST CONTROL Bill Ibram, FRICS
2 Cost awareness Which one cost the most? Why? Gherkin, London Lake View, Warrington
3 Cost awareness Who sets the budget (cost limit)? The Client
4 Cost awareness Why, when and how are cost limits set? Why? Affordability / profitability / accountability / value When? Preparation and briefing stage (RIBA Plan of Work) How? Development appraisal / cost limits and allowances
5 Cost awareness Building development costs Land costs Acquisition Fees Construction Costs Fees Professional Planning, surveys etc Financing costs VAT
6 Cost awareness Factors affecting development costs Market conditions Land acquisition Construction costs Fees Financing costs / availability
7 Cost awareness Factors affecting development costs Construction Costs Form of Procurement Traditional Design & Build Management Contracting Construction Management Method of tendering Tendering Negotiation Site constraints Design variables
8 Cost awareness Factors affecting development costs Risk = RISK MANAGEMENT Identify risks produce a risk register Analyse the risks Probability / impact Manage the risks Shrink Accept Distribute (transfer / share) Eliminate
9 Cost awareness Cost implications of design variables Size Plan shape wall to floor area ratios Circulation space Storey height Total height / number of floors Column spacing / floor spans Floor loadings Specification
10 Cost awareness Cost implications of design variables Plan shape - wall to floor area ratios Floor area for both A and B is 244m2 Perimeter length of external wall Building A = 100m Building B = 70m Assuming a 3m storey height, wall to floor ratios:- Building A = 1.23 (100m x 3m) = 300m2/244m2 Building B = 0.86 (70m x 3m) = 210m2/244m2
11 Cost management / control Who? Normally the Quantity Surveyor takes the lead Multi party collaborative approach
12 Cost management / 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
13 Cost management / control How? Estimating and cost planning Cost checking Pre tender estimate Tender analysis Cost control reports during construction stage Final account & FEEDBACK Value Engineering
14 Cost management / control When? RIBA Plan of Work Cost Control tasks 0 Strategic Definition 1 Preparation and Brief Order of Cost Estimate 2 Concept Design 3 Developed Design 4 Technical Design Formal Cost Plans (1,2,3) Cost Checking Pre Tender Estimate Tender Analysis 5 Construction Cost Control Reports 6 Handover and Close Out Final Account 7 In Use Cost Control tasks
15 Cost management / control Estimating and cost planning what? Estimate determination of possible cost of building Cost plan critical breakdown of the cost limit for the building (provides a statement of how the design team proposes to distribute the available budget among the elements of a building)
16 Cost management / control Estimating and cost planning when? RIBA Plan of Work Cost Control tasks 0 Strategic Definition 1 Preparation and Brief Order of Cost Estimate 2 Concept Design 3 Developed Design 4 Technical Design Formal Cost Plans (1,2,3) Pre Tender Estimate Tender Analysis 5 Construction Cost Control Reports 6 Handover and Close Out Final Account 7 In Use Cost Control tasks
17 Cost management / control Estimating and cost planning how? Estimate Floor Area method Functional Unit method Elemental method Cost plan Elemental method
18 Cost management / control Estimating and cost planning how?.other considerations Shape Storey heights Location Contingency / risk Inclusions / exclusions
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23 Cost management / control Tender analysis what? Analysing & checking tender price(s) submitted
24 Cost management / control Tender analysis why? Errors Obvious errors in pricing Arithmetical errors Loading of price Consistency and competitiveness Dealing with errors?
25 Cost management / control Tender analysis when? RIBA Plan of Work Cost Control tasks 0 Strategic Definition 1 Preparation and Brief Order of Cost Estimate 2 Concept Design 3 Developed Design 4 Technical Design Formal Cost Plans (1,2,3) Pre Tender Estimate Tender Analysis 5 Construction Cost Control Reports 6 Handover and Close Out Final Account 7 In Use Cost Control tasks
26 Cost management / control Tender analysis how? Compare to pre tender estimate / last cost plan Tender Report
27 Cost management / control Construction stage cost control what? Cost control Forecasting and anticipating final cost at regular intervals Accounting for variations Controlling and not merely reporting Variations Additional work Omitted work Change in specification Correction of error in contract documents
28 Cost management / control Construction stage cost control why? Cost control Variations Keep client updated on anticipated costs Assists with decision making Variations Change of mind Errors briefing / design / quantities Fashion Technology Business trends
29 Cost management / control Construction stage cost control when? RIBA Plan of Work Cost Control tasks 0 Strategic Definition 1 Preparation and Brief Order of Cost Estimate 2 Concept Design 3 Developed Design 4 Technical Design Formal Cost Plans (1,2,3) Pre Tender Estimate Tender Analysis 5 Construction Cost Control Reports 6 Handover and Close Out Final Account 7 In Use Cost Control tasks
30 Cost management / control Construction stage cost control how? Cost control reports.regularly!
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37 Cost management / control Final Account Adjusted contract sum, adjustment of provisional sums and prime cost sums and for loss and /or expense Variations Adjustment of provisional sums Adjustment of prime cost sums Loss and expense FEEDBACK
38 Cost management / control Value Engineering (VE) Cost limit being exceeded prevention better than cure Options Accept (obtain additional funding) Reject o Identify and implement savings On element over cost limit On other remaining elements By deferring certain works
39 Cost management / control Value Engineering (VE) Aim - Deliver better value in terms of clients objectives o More for less How? VE Workshops the earlier the better MUST be multi disciplinary MUST be properly facilitated MUST NOT pursue changes which detract from the projects required or basis functions
40 Cost management / control Value Engineering (VE) VE Workshop Information phase o Function analysis needs & wants cost v worth Creative phase o Alternative solutions and ideas - brainstorming Evaluation phase o Assess the merits of ideas - championing Development phase o Develop ideas time consuming technical input Presentation phase o Present team s proposals to the client reresentatives plan of action
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