Order of Cost Estimating and Elemental Cost Planning

Transcription

1 RICS New Rules of Measurement Order of Cost Estimating and Elemental Cost Planning Black Book Warsaw, May 20 th 2009 Introductory Seminar Iain Leyden, RICS Polska Management Board Member

2 Program - 20 th May 2009 NRM Introduction - what do the NRM cover? (30 minutes) An overview of the document s purpose Structure of the document Use of document Understanding how the NRM are linked to RIBA work stages and RICS new rules OGC Gateway processes Estimating and cost planning process as defined by the NRM (40 minutes) Overview of the types of estimates and cost plans and how they fit into the RIBA Plan of Work and OGC Gateway Process Defining the purpose of an order of cost estimate (OCE) Information Required for OCE OCE Format Defining the purpose of elemental cost planning Information Required for Formal Cost Plans (FCP) Measurement rules for Building Work Benefits of regulating cost estimating and cost planning (10 minutes) Question and Answer Session (10 minutes) of measurement Order of cost estimating and elemental cost planning

3 Purpose of NRM Best Practice Guidance and Standardizing Measurement Rules Understandable by Employer and all parties to construction project Direction on how to describe and deal with cost allowances not reflected in measurable building work Based on UK Practice with Worldwide Application

4 Structure of the Document Part 1 Places cost estimating and elemental cost planning in context of RIBA Plan of Work and the OGC Gateway Process Part 2 Describes Order of Cost Estimate and its contents, sets out rules for measurement and reporting Part 3 Describes Elemental Cost Planning, defines its constituents and how to prepare an elemental cost plan Part 4 Tabulated Rules of Measurement Appendices

5 Use of RICS new rules of Measurement: Order of cost estimating and elemental cost planning Represent the essentials of Good Practice Structured basis for measuring building work Consistent approach from inception to completion of each project

6 NRM in Context of RIBA Plan of Work and OGC Gateways

7 Purpose of an order of cost estimate Establish Affordability for the Employer Set Cost Limit Set Cost Limit - ( during RIBA Work Stages A: Appraisal and B: Design Brief or OGC Gateway 1 (Business Justification) and 2 (Delivery Strategy)

8 Information requirements for OCE preparation From Employer Location and availability of site Statement on use of Building Initial Project/Design Brief Details of enabling works, decanting or other specific requirements Indicative programme/time Schedule Details of particular constraints to be imposed by the employer, statutory or government bodies Details of Site Conditions Budget/Cashflow Constraints Initial views on Procurement Life span of the building MEP Particular requirements Treatment of Project/Design team fees Approach to other development/project costs Treatment of inflation Treatment of VAT Other considerations

9 Information requirements for OCE Preparation From Architect t Design Study Sketches for development options if possible floor plans; roof plan; elevations; and sections to suitable scale Schedule of GEA, GIFA, NIA, SA Minimum Storey Height Schedule of Accommodation Car Parking Spaces Design Intent or indicative specification Indicative environmental/sustainability strategy d Advice on likely site constraints Advice on likely l Planning Constraints t Definition of fit-out Initial risk register/log

10 Information requirements for OCE Preparation From Mechanical and Electrical l Engineer Indicative design intent/specification for building services Indicative environmental strategy/sustainability strategy Advice on availability and/or adequacy of utilities services connections to site Initial risk register/log From Structural Engineer Advice on Probable ground conditions Indicative specification/design intent for structure Initial risk register/log

11 Constituents of an order of cost Constituent 1 Building Works estimate 2Main Contractor's preliminaries estimate 3Sub total [(3)=(1)+(2)] 4Main Constractor's overheads and profit 5 Works cost estimate [(5)=(3)+(4)] 6 Project/Design team fees estimate 7Sub total [(7)=(5)+(6)] 8 Other development/project costs estimate 9 Base cost estimate [(9)=(7)+(8)] 10 Risk allowance estimate [(10)=(10(a))+(10(b))+(10(c))+(10(d))] )( ())( ())( ())( ())] 10 (a) Design development risk estimate 10 (b) Construction risk estimate 10 (c) Employer's change risk estimate 10 (d) Employer other risk estimate 11 Cost Limit (excluding inflation) [(11)=(9)+(10)] 12 Tender Inflation Estimate 13 Cost Limit (excluding construction inflation) [(13)=(11)+(12)] 14 Construction inflation estimate 15 Cost Limit (including inflation) [(15)=(13)+(14)] VAT Assessment

12 Constituents of an order of cost Constituent 1 Building Works estimate 2Main Contractor's preliminaries estimate 3Sub total [(3)=(1)+(2)] 4Main Contractor's overheads and profit 5 Works cost estimate [(5)=(3)+(4)] 6 Project/Design team fees estimate 7Sub total [(7)=(5)+(6)] 8 Other development/project costs estimate 9 Base cost estimate [(9)=(7)+(8)] 10 Risk allowance estimate [(10)=(10(a))+(10(b))+(10(c))+(10(d))] )( ())( ())( ())( ())] 10 (a) Design development risk estimate 10 (b) Construction risk estimate 10 (c) Employer's change risk estimate 10 (d) Employer other risk estimate 11 Cost Limit (excluding inflation) [(11)=(9)+(10)] 12 Tender Inflation Estimate 13 Cost Limit (excluding construction inflation) [(13)=(11)+(12)] 14 Construction inflation estimate 15 Cost Limit (including inflation) [(15)=(13)+(14)] Floor Area Method Building Works estimate = 5 Works cost estimate [(5)=(3)+(4)] GIFA x cost/m² Functional Unit Method Building Works estimate = Number of functional units x cost per functional unit Elemental Method Building Works estimate = Sum of element cost targets Cost target (for element) = element unit quantities EUQ x element unit rate EUR VAT Assessment

13 Constituents of an order of cost Cost estimate for main contractor s preliminaries Constituent 1 Building Works estimate 2Main Contractor's preliminaries estimate 3Sub total [(3)=(1)+(2)] 4Main Contractor's overheads and profit 5 Works cost estimate [(5)=(3)+(4)] 6 Project/Design team fees estimate 7Sub total [(7)=(5)+(6)] 8 Other development/project costs estimate 9 Base cost estimate [(9)=(7)+(8)] 10 Risk allowance estimate [(10)=(10(a))+(10(b))+(10(c))+(10(d))] 10 (a) Design development risk estimate 10 (b) Construction risk estimate 10 (c) Employer's change risk estimate 10 (d) Employer other risk estimate 11 Cost Limit (excluding inflation) [(11)=(9)+(10)] 12 Tender Inflation Estimate 13 Cost Limit (excluding construction inflation) [(13)=(11)+(12)] 14 Construction inflation estimate 15 Cost Limit (including inflation) [(15)=(13)+(14)] At this stage in the process is [( )( ())( ())( ())( ())] expressed as a percentage of the building works estimate VAT Assessment

14 Constituents of an order of cost Constituent 1 Building Works estimate 2Main Contractor's preliminaries estimate 3Sub total [(3)=(1)+(2)] 4Main Contractor's overheads and profit 5 Works cost estimate [(5)=(3)+(4)] 6 Project/Design team fees estimate 7Sub total [(7)=(5)+(6)] 8 Other development/project costs estimate 9 Base cost estimate [(9)=(7)+(8)] 10 Risk allowance estimate [(10)=(10(a))+(10(b))+(10(c))+(10(d))] 10 (a) Design development risk estimate 10 (b) Construction risk estimate 10 (c) Employer's change risk estimate 10 (d) Employer other risk estimate 11 Cost Limit (excluding inflation) [(11)=(9)+(10)] 12 Tender Inflation Estimate 13 Cost Limit (excluding construction inflation) [(13)=(11)+(12)] 14 Construction inflation estimate 15 Cost Limit (including inflation) [(15)=(13)+(14)] Cost estimate for main contractor s overheads and profit [( )( ())( ())( ())( ())] At this stage in the process is expressed as % of sub-total 3 VAT Assessment

15 Constituents of an order of cost Risk Allowance given more significance at this stage. Acknowledgement of the rise of risk management within the industry and the need to properly identify, assess, monitor and control risks during the project cycle Constituent 1 Building Works estimate 2Main Contractor's preliminaries estimate 3Sub total [(3)=(1)+(2)] 4Main Contractor's overheads and profit 5 Works cost estimate [(5)=(3)+(4)] 6 Project/Design team fees estimate 7Sub total [(7)=(5)+(6)] 8 Other development/project costs estimate 9 Base cost estimate [(9)=(7)+(8)] cycle 10 Risk allowance estimate [(10)=(10(a))+(10(b))+(10(c))+(10(d))] )( ())( ())( ())( ())] 10 (a) Design development risk estimate 10 (b) Construction risk estimate 10 (c) Employer's change risk estimate 10 (d) Employer other risk estimate 11 Cost Limit (excluding inflation) [(11)=(9)+(10)] 12 Tender Inflation Estimate 13 Cost Limit (excluding construction inflation) [(13)=(11)+(12)] 14 Construction inflation estimate 15 Cost Limit (including inflation) [(15)=(13)+(14)] VAT Assessment

16 Constituents of an order of cost Tender inflation and Construction Constituent inflation 1 Building Works estimate 2Main Contractor's preliminaries estimate Both expressed as a percentage 3Sub total [(3)=(1)+(2)] which can be computed using 4Main Contractor's overheads and profit 5 Works cost estimate [(5)=(3)+(4)] published indices such as: 6 Project/Design team fees estimate Retail price index 7Sub total [(7)=(5)+(6)] 8 Other development/project costs estimate Tender price index 9 Base cost estimate [(9)=(7)+(8)] Building cost indices (BCIS) 10 Risk allowance estimate [(10)=(10(a))+(10(b))+(10(c))+(10(d))] )( ())( ())( ())( ())] 10 (a) Design development risk estimate 10 (b) Construction risk estimate 10 (c) Employer's change risk estimate 10 (d) Employer other risk estimate 11 Cost Limit (excluding inflation) [(11)=(9)+(10)] 12 Tender Inflation Estimate 13 Cost Limit (excluding construction inflation) [(13)=(11)+(12)] 14 Construction inflation estimate 15 Cost Limit (including inflation) [(15)=(13)+(14)] VAT Assessment

17 Order of cost estimate reporting Minimum content a) Project Title b) Project description c) Statement of cost (including cost limit) d) Details of the information and specification on which the cost plan was prepared e) A statement of floor areas f) Basis of cost estimate (i.e. assumptions) g) Estimate base date (to which inflation has been applied) h) Estimated costs of and request for decision on any alternative proposals i) Inclusions and exclusions

18 Purpose of elemental cost planning To provide advice to designers to enable a practical and balanced design within budget To provide robust cost information upon which the employer can make informed decisions Keep expenditure within cost limit approved by the employer ensure that employers are provided with value for money To develop employer and designers awareness of cost consequences of desires and proposals

19 Information requirements for Formal Cost Plan 1 From Employer Confirmation of the cost limit Confirmation of the project/design brief Confirmation of Programme/Time Schedule Procurement Strategy Contract Strategy Phasing Facilitating works Treatment of project/design fees Insurances Approach to dealing with other development/project costs e.g. Tree Cutting Treatment of Employers risk, inflation, VAT, and other considerations Post Completion requirements Authority to commence RIBA Work Stage or OGC Gateway Approval

20 Information requirements for Formal Cost Plan 1 From Architect t Concept drawings to a suitable scale including GA plans, General Elevations, General Sections, external landscaping, plan of key building functions, detailed elevations, sketches showing key details, concept design for rooms common areas and site constraints plan. Schedule of GEA, GIFA, NIA, SA Outline Specification Room Data Sheets Schedule of Key FFE Strategies for environmental/sustainability, car parking, vertical movement, IT, Fire, Acoustics, Disabled Access, window cleaning, refuse/waste disposal, security Topographical survey and desktop studies Definition of fit out Risk Register/log

21 Information requirements for Formal Cost Plan 1 From Mechanical and Electrical Engineer Concept Design Drawings to a suitable scale Outline Specification information Strategies for environmental/sustainability, vertical movement, removal/decommissioning of existing plant and or equipment Underground services survey Details of utilities connections Methodology of facilitating works Risk register/log From Structural Engineer Reports on environmental contamination, geotechnical properties Concept drawings to a suitable scale Environmental risk assessment Advice on ground conditions Formation and excavation levels Outline specification information Estimates of reinforcement content and mass of steelwork in framing Methodologies of facilitating the work Risk register/log

22 Constituents of an elemental cost plan Constituent 1 Building Works estimate 2Main Contractor's preliminaries estimate 3Sub total [(3)=(1)+(2)] 4Main Contractor's overheads and profit 5 Works cost estimate [(5)=(3)+(4)] 6 Project/Design team fees estimate [(6=(6(a))+(6(b))+(6(c))] (())(())(())] (a) Consultants' fees (b) Main contractor's pre construction fee estimate (if applicable) (c) Main Contractor's design fee estimate (if applicable) 7Sub total [(7)=(5)+(6)] 8 Other development/project costs estimate 9 Base cost estimate t [(9)=(7)+(8)](7)+(8)] 10 Risk allowance estimate [(10)=(10(a))+(10(b))+(10(c))+(10(d))] 10 (a) Design development risk estimate 10 (b) Construction risk estimate 10 (c) Employer change risk estimate 10 (d) Employer other risk estimate 11 Cost Limit (excluding inflation) [(11)=(9)+(10)] 12 Tender Inflation Estimate 13 Cost Limit (excluding construction inflation) [(13)=(11)+(12)] 14 Construction inflation estimate 15 Cost Limit (including inflation) [(15)=(13)+(14)] VAT Assessment

23 Constituents of an elemental cost plan Constituent 1 Building Works estimate 2Main Contractor's preliminaries estimate 3Sub total [(3)=(1)+(2)] 4Main Constrictor's overheads and profit 5 Works cost estimate [(5)=(3)+(4)] 6 Project/Design team fees estimate [(6=(6(a))+(6(b))+(6(c))] (())(())(())] Quantities for building works shall be determined in (a) Consultants' fees accordance with Part 4:Tabulated Rules of 7Sub total [(7)=(5)+(6)] Measurement for elemental 9 Base cost estimate t [(9)=(7)+(8)] (7)+(8)] cost planning (i.e. group elements 1 to 9) (b) Main contractor's pre construction fee estimate (if applicable) (c) Main Contractor's design fee estimate (if applicable) 8 Other development/project costs estimate 10 Risk allowance estimate [(10)=(10(a))+(10(b))+(10(c))+(10(d))] 10 (a) Design development risk estimate 10 (b) Construction risk estimate 10 (c) Employer change risk estimate 10 (d) Employer other risk estimate 11 Cost Limit (excluding inflation) [(11)=(9)+(10)] 12 Tender Inflation Estimate 13 Cost Limit (excluding construction inflation) [(13)=(11)+(12)] 14 Construction inflation estimate 15 Cost Limit (including inflation) [(15)=(13)+(14)] VAT Assessment

24 Group elements for estimating building works Group Element 1 Group Element 2 Group Element 3 Group Element 4 Group Element 5 Group Element 6 Group Element 7 Group Element 8 Group Element 9 Substructure Superstructure Internal Finishes Fittings, furnishings and equipment Services Completed Buildings and building units Work to existing buildings External works Facilitating works

25 Other Group elements Group Element 10 Group Element 11 Group Element 12 Group Element 13 Group Element 14 Group Element 15 Main contractor s preliminaries Main contractor s overheads and profit Project/design team fees Other development/project costs Services Completed Buildings and building units

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27 Benefits of regulating cost estimating and cost planning Provides a common and consistent basis on which to measure areas and building works items for new works and rehabilitation works Presents a clear framework that facilitates a systematic approach to compiling cost estimates and cost plans Establishes formal cost estimating and cost planning stages that are aligned to both the RIBA Plan of Work and the OGC Gateway Process Covers modern construction methods including modular units and complete buildings Defines preliminaries that can be used for any procurement or contract strategy (including prime contracting and PFI) Defines categories of risk, dispensing with the term contingency Promotes the view that risk allowances should not be a standard percentage, but a properly considered assessment of the risk

28 Benefits of regulating cost estimating and cost planning Helps with value engineering Gives transparency to cost estimates and cost plans Acts as an aide memoir Helps with improving the accuracy of cost estimates and cost plans Promotes clear and effective communication between the employer and project team members and ensure that risks associated with the project are identified, analysed and responded to Provides a method for codifying elemental cost plans so that they can be converted to works packages for procurement and cost management during the construction stage Provides robust basis for capturing historical cost data in the form required for future cost estimates and cost plans, thereby completing the cost management cycle Can be integrated into an organisation s quality management system.

29 RICS New Rules of Measurement: Order of cost estimating and elemental cost planning RICS Books NRM RICS new rules of measurement Order of cost estimating and elemental cost planning RICS Books ISBN: Item Code: Pages Paperback Mar 2009 Price: 45.00

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