Past paper answers Question 01, I. How does a traditional estimate differ from a cost plan?

A traditional estimate is a prediction of the cost of a design, and is specific for a particular design. The cost plan is a flexible overall allowance permitting changes in the design without needing constant revision The cost plan is a statement of how design team proposes to distribute the money available on elements of the building, and is formulated so as to postpone firm decisions on detail design and specification until a later stage. Thus, it is a flexible target allowing such flexibility is not specific for a particular design. Once the estimate is prepared, it is seldom referred to until the time comes to compare it with the tender. The cost plan is referred to continually throughout the design process. In contrast, the cost plan is used continuously throughout the subsequent documentation ( Detail design) stage as a method of checking that the detail design is constrained within the cost limit. The cost plan s therefore a frame of reference . the cost plan helps the design team to detail the design within a cost framework.

II.

Name the six stages (plus one) required by the RIBA

Pre stage A Establishing the need Work stage A Options appraisal Work stage B Strategic briefing Work stage C Outline proposals Work stage D Detailed proposals Work stage E Final proposals Work stage F Production information

III. Briefly describe the cost planning aim of each stage named I above 1. Pre stage A- client has to establish client management team, appoint client representative, appoint cost consultant, identify objectives, physical scope of

project, standard of quality of building (s) and services, time frame and establish budget

2. Work stage A identify clients requirements. Possible constraints on development, prepare cost and value management studies to enable client to decide whether to proceed, cost of preferred solution, select the probable procurement method, instruct development of preferred solution to strategic briefing stage, prepare out line business case 3. Work stage B Strategic briefing prepare strategic brief, confirm key requirements and constraints, identify procedures, organizational structure and range of consultants and others to be engaged for the project, target cost and cash flows, whole life costing 4. Work stage C Outline proposals evaluate strategic brief with a consideration of time, cost and risk and environmental issues, establish design management procedures, prepare initial cost plan, project program, cash flow. Develop project brief, estimates of cost prepared. 5. Work stage D Detailed proposals evaluate outline proposals, complete and agree user studies, complete and sign off on project brief, receive design and cost input from team and develop detailed design solution, firm cost plan and cash flow projection, development control submission, review procurement advice 6. Work stage E Final proposals sanction and complete final layouts, coordinate all components and elements of the project, cost checks design against cost plan, decide on procurement method, receive design and cost plan, prepare submission for statutory approvals, design is now frozen 7. Work stage F Production information prepare all-co-ordinated production information including location, assembly and component drawings, schedules and specification;, applications for statutory approvals completed, provide all information for final cost checks of design against cost plan

Question 02 I. Explain the each methods of above approximate estimating a) floor area or superficial method it is similar to the unit method and uses as a single rate technique ( cost per square meter) of estimating to calculate the cost of the building. The superficial method is one of the most popular methods of estimating and is commonly used during the early stages of a project. By necessity, the method can only be used when the floor area of the building can be assessed or measured reasonably accurately from drawings; even if only in an outline form. It is a simple technique where the GFA of the building in square meters is multiplied by a suitable rate per square meter. b) Unit method This method is also known as the cost per functional unit method. It is one of the simplest and coarsest in application. It consists of selecting a suitable standard functional unit use for the project, and multiplying the projected number of units by an appropriate cost per functional unit. The functional unit shall be expressed as net usable floor area (offices, factories, public houses, etc.) or as a number of units of accommodation (seats in churches, school places, persons per dwelling, etc.) c) Elemental cost planning method This method relies upon the availability of suitable cost analyses and other cost data together with an elemental breakdown of the estimated project. It also relies upon the use of approximate quantities and range of ratio and other adjustments for quantity and quality adjustments from the cost databases, analyses to the cost plan II. Discuss the advantages and disadvantages of above mentioned estimating methods Superficial area method Advantages The unit of measurement (GFA) is generally meaningful to all the parties- especially the client and the architect Most published cost data is expressed in costs per square meter

Estimates are prepared quickly and are simple, but beware of the methods inherent simplicity. The accuracy is conditional upon choosing a rate from a project with similar characteristics

Disadvantages Difficult to make adjustments to the estimate for differences in plan shape, storey height, site conditions, construction techniques, quality and quantity. On a practical note, always check whether the estimate calculation is for buildings only. Most of the published building price books indicate whether they include amounts for major service installations such as lifts, airconditioning and fire protection. Separate and additional allowances often have to be made for items considered to be above the average or stated standard and for work beyond the external face of the building ( or within 3.0 m of it). Such items excluded form the cost per square meter GFA may exclude external landscaping, external services, special earthworks and foundation.

Unit method Advantages It provides timely and fitting cost advice to the design team at an early stage of the design process that closely matches the development of information in the design brief Decision on the type and extent of functional space in the preliminary project design are reflected in the more accurate costs that this technique brings to these activities The technique provides the opportunity for the cost planner to become more intimately involved in design decision making during the early crucial stages when the shape, extent and form of the project are still fluid This technique promotes greater interaction and integration with the client and between design team members

Disadvantages It is time and data intensive in tis development stages It requires a strong commitment on the part of the client body, the design team and the cost planners to collect, analyze and present data in a suitable form for future projects. Such commitment can only be warranted

where the client body is involved in a continuous and consistent program of building projects. Elemental method Advantages Can be used with suitable adjustment at all stages Easy to understand by all parties client, design team members, contractor, subcontractors and users, if necessary Comparisons between projects and between elements can be made rapidly, and each element can be adjusted individually Elemental cost plans allow the design team members to gain elemental costs and to ascertain the cost implications during the early stages of the project

Disadvantages Require more time and effort in their preparation, but this investment should give better returns in aiding decision making Extensive cost databases are required to ensure accuracy of costs High levels of ability and expertise are required if elements are to be properly evaluated and adjusted

III.

Based on the given information, calculate the approximate cost of the following building by using floor area technique. Clearly mention any assumptions u made. Assumptions External landscaping and services are excluded from the total cost Major service installations eg. Electrical, mechanical equipments are excluded for the factory workshop building cost Low rise A/Cs are concerned for offices

Total area of the factories - 22 x 60 = 1320 m2 Cost per m2 of the factory workshop = 700 Total cost for factory workshop = 1320 x 700 = 924,000 Total area of offices = 4 x 60 = 240 m2

Cost per m2 of offices with low rise A/C = 1000 Total cost for offices = 240 x 1000 = 240,000 Total cost of the building = 924,000+240,000 = 1,164,000

Question 03 I. Define following terms a) Life cycle cost analysis (LCCA) LCCA is the collection and analysis of historic data on the actual costs of occupying comparable building, having regard to running costs and performance.

b) Life cycle cost management (LCCM) LCCM is derived from life cycle cost analysis. It identities those areas in which the costs of using the building as detailed by life cycle cost analysis can be reduced, assist clients to compare building costs in a meaningful way and assessing and controlling occupancy costs throughout the life of a building to obtain the greatest value for the client.

c) Life cycle cost planning (LCCP) Considered as part of life cycle cost management and constitutes the prediction of total costs of a building, part of a building or an individual building element, taking account of initial capital costs, subsequent running costs and residual values, if appropriate, and expressing these various costs in a consistent and comparable manner by applying discounting techniques. It also includes planning the timing of work and expenditure on the building, and should also take into account such factors as the effect of performance and quality. The selecPlan should be reasonably flexible and updated as necessary to encompass changing conditions, including n changes, particularly when formulating a full functional life plan.

II.

Explain difficulties in assessing life cycle costing A. The difficulty of accurately assessing the maintenance and running costs of different materials, processes and systems. There is great scarcity of reliable historical cost data and predicting the liver o materials and components is often fraught with dangers. B. They are three types of payments initial, annual and periodic, and these all have to be related a common basis for comparison purposes. C. Tax has a bearing on maintenance costs and needs consideration, as it can reduce impact of maintenance costs. Taxation rates and allowances are subject to considerable variation over the life of the building. D. The selection of suitable interest rates for calculations revolving periods of up to sixty years is extremely difficult. E. Inflationary tendencies may not affect all cost in a uniform manner, thus distorting significantly the result of life cycle costing calculations; particularly maintenance work has a higher labor component than new work. F. Where projects are to be sold as an investment on completion, the building client may show little interest in securing savings in maintenance and running costs. G. Where the initial funds available to the building client are severely restricted, or his interest in the project is of quite short- term duration, it is of little consequence to him to be told that he can save large sums in the future by spending more on the initial construction. H. Future costs can be affected by changes of taste and fashion, changing statutory requirements for buildings and the replacement of worn out components by superior updated items. I. The lives of different types of building are difficult to forecast with accuracy.

III.

Discuss in detail the practical problems which affect Life cycle costing a) Change in the basic prices of materials, components, energy, labour and capital are difficult to forecast with accuracy and will affect all use costs, especially the costs of fuels for heating and labour for cleaning. Over the life of a building these costs can change dramatically. Sophisticated cost models incorporating many assumptions can soon be rendered invalid by

b)

c)

d)

e)

f)

changes in basic prices, which are unlikely to be uniform across the different components Changes in government policies, the way in which people live and work and their expectations, can also have far reaching effects on future needs and costs. Social, economic and technological changes are bound to have a significant effects on the costs incurred throughout a buildings life and are all unpredictable at the time of preparing the life cycle costing plan. Emergency repairs and maintenance, arising from such factors as unforeseeable design faults or bad workmanship, which together constitute a significant proportion of maintenance costs, display a random pattern in both timing and extent which calls for a probability approach based upon statistical observation and research. While the phenomenon can be reasonably well identified by examining the failure patterns of building in use, the associated disruption costs can only be assessed in a very approximate form. With foreseeable maintenance work such as cleaning and redecoration, which together form a major part of total user costs, the actual decisions as to the timing of work depends to a considerable extent on management policy. Redecoration and cleaning costs are normally planned to follow regular set cycles and therefore their estimation appears uncomplicated, but once again there is a general lack of costing data ( although cleaning and painting contractors hold it in abundance), and the set cycles are not always adhere to in practice. In particular, redecoration cycle can vary significantly as shorter cycles may introduced to meet changing tastes and fashions, to implement a new colour scheme or an unexpected change of occupancy, while at the other extreme, work may be carried out in a piecemeal manner over a longer period to reduce disturbance to the occupants. Longer period to reduce disturbance to the occupants leading to deferment of repainting and increasing substantially the cost of the eventual work. Major maintenance, replacement and modernization works are linked not only to the life of the particular building elements, but also to economic, social and technological changes, and even possible obsolescence, which is difficult to predict with any accuracy. Although some works of refurbishment can be forecast with greater accuracy than others as, for example, those to in-town enclosed shopping centers, which are often carried out about 15 years interval. Many variable factors contribute to the real cost of maintenance work making it very difficult to assess with accuracy. For example, varying rates of productivity arising from the scale and relative difficulty of individual

maintenance and replacement tasks compare with the initial installation, the cost of renewing and/or making good the fabric in order to carry out other works, and the cost of disturbance and disruption to the occupier. Disruption and disturbance can be very costly and can only be assessed by reference to the amount of floor space occupied when carrying out the repair/ replacement work, the cost of temporarily removing furniture and equipment and associated factors, which may not truly reflect the cost to the occupier. g) A CLC study cannot cater satisfactorily for the way in which the building is used. Work may be carried out which is not essential for the upkeep of the building, to suit individuals or to meet changing tastes and fashions. For example by Pickle 1982, a new department head requires his room carpeted in preference to the existing PVC tiling. This unexpected cost was increased since the electric under floor heating was adversely affected, and the room required a heater for winter use; neither of these costs could have been foreseen at the design stage. The different ways in which buildings are used by the occupants could be one of the main causes of the wide variations which can occur in the maintenance and running costs of very similar type buildings. h) One of the main problem experienced in the evolution of both costs in use and life cycle costing has been the lack of adequate data in a suitable format and f adequate quantity to support a total cost approach to buildings, unfortunately much of the information made available from other sources is often inconsistent, and interpretation of data is made difficult as the standards of maintenance can vary widely between different buildings, efficiency of operation can vary between apparently similar tasks and is not related to cost input, and exceptionally high figures can result from pat neglect arising from policy decisions to cut spending. Recording and assimilating maintenance data may also be carried out in a variety of ways causing difficulties in making comparisons.

Question 04

I.

State the minimum six reasons for the client commissioning value management 1. Clients concern about the escalation of estimated costs 2. Clients concern at tenders received in excess budget 3. Client losing confidence in the design team and/or project, arising from such factors as planning delays, external factors or lack of competence 4. Client requires an independent audit or appraisal of the project before it is submitted for sanctions 5. Client seeks to minimize capital and/or operational costs and maximize effort 6. Client must achieve capital and / or operational savings to make a profit 7. Client wishes genuinely to seek an innovative/better solution to his project 8. Client wishes to experiment with a new technique that he has discovered 9. A consultant recommends a new technique to the client

II.

Explain the six phases of value management strategy 1. Phase 01 the information stage it covers the assembly of all relevant information appertaining to the project under review and the assimilation and analysis if this information. A cost benefit analysis of objectives should be undertaken, having regard to the clients or end users method of calculating values, as for example through function analysis techniques and construction of cost models and FAST ( Function Analysis System Technique) diagrams. 2. Phase 2 the creativity or speculation stage which comprises the generation of suggestions as to how the required functions can be performed or improved. Group creative techniques should be introduced such as synetics: the art of producing a greater end result than the sum of the individual parts. 3. Phase 3 the evaluation or analysis stage consist of the evaluation of ideas generated in the creativity phase, for example by collective or individual rating systems. It also entails the rejection of any unproductive, speculative ideas, of which there are inevitably a high number 4. Phase 4 the development stage where the ideas considered at the evaluation stage to have merit are examined and potential savings are costed, with consideration being given to both capital cost and the effect of

operational and maintenance cost (life cycle costing). There is considerable scope for the use of cost models and computer aided calculations. Any ideas which either cost more than the original or are found to reduce quality are discarded 5. Phase 5 the presentation or proposal stage comprising the presentation of the refined ideas considered to be worth implementing, supported by drawings, calculations and cost. 6. Phase 6 the implementation/feedback stage where the ideas agreed to be worthwhile are then implemented. Feedback from the sponsors of the VM exercise should ideally be passed back to the VM team to complete the learning cycle.

III.

Explain in detail Functional analysis as a Value Management technique Functional analysis is a powerful technique in the identification of the principal functional requirements of a project. In general the function of an item or system can be expressed as a concise phrase, often consisting of a verb followed by a noun, as this provides a precise and readily understandable description of the function. Useful active words include amplify, change, control, create, enclose, establish, improve, increase, prevent, protect, rectify, reduce, remove and support. It should be recognized that it is not usually possible to seek alternatives to a technical solution without first identifying the functional definition. For example, light id required in a room (functional definition), and to install a component which emits light is a technical solution. A functional definition is frequently obtained by first seeking a technical solution and then defining the functional performance of that solution. Functions can be sub divided into primary or basic and secondary. Primary functions are those without which the project would fail or the task would not be accomplished, whereas secondary functions are a characteristic of the technical solution selected for the primary function and may be non-essential, although both need identifying to fully understand the problem. Kelly and Male (1993) give the example of an electric filament lamp which satisfies the primary function of emitting light but is also accompanied by unwanted secondary functions, such as generating heat, including glare and looking unattractive , and these secondary functions would include compliance with the Building Regulations. Norton (1992a) has described how for function analysis purposes, most secondary functions have zero use value, but some secondary functions may be

essential to the basic (primary) function, in which case they are termed required secondary functions and are allocated a value. Cost and worth are allocated to each function. The cost is the amount derived from the cost estimate while worth is the lowest possible cost at which the function can be performed. In practice, worth is generally derived by the value management team making an evaluation based on comparison of standards of the design component, historical cost data and/or experience. The total cost and worth of the components functions are calculated and converted to a cost/worth ratio. Generally, when a cost/worth ratio is 2.00 or above, the component is likely to be adopted for its cost reduction effect. Worth of secondary, non-essential functions is taken as zero. The first areas to examine for savings are those that perform secondary functions that can be reduced or deleted entirely without affecting the basic function of the component. (Norton, 1992a)

Question 05 a. Advice client on selecting windows for this house using Life Cycle Costing principle Soft wooden window

= 250 x 1/(1+0.05)30 = 57.87 Decoration PV =

=300x(1+0.05)10-1/0.05x(1+0.05)10 =473.65

=300x(1+0.05)20-1/0.05x(1+0.05)20 =784 =300x(1+0.05)30-1/0.05x(1+0.05)30 =1291 Total = 473.65+784+1291 = 2549 Cleaning = 75 x 30 = 2250 Removing existing window = A t x 1 / (1+d) t = 150 x 1/(1+0.05)30 = 35

Total LC for wooden window = 57.87+2549+2250+35 = 4891.87 For 8 windows = 4891.87 x 8 = 39134.96

Plastic window

=400x1/(1+0.05)25 =118.34 Decoration cost for 25 years

=150x (1+0.05)15-1/0.05(1+0.05)15 = 302 =150x (1+0.05)10-1/0.05(1+0.05)10 = 803.08 Total = 1105.08 Cleaning = 75 x 25 = 1875 Removing existing window = A t x 1 / (1+d) t = 150 x 1/(1+0.05)30 = 35

LCC = 118.34 + 1105.08+1875+35 = 3133.42 For 8 windows = 8x 3133.42 = 25,067.36 Comparing to wooden window life cycle cost is less for plastic window. as per the results plastic window will be preferred for this house and also life time of the wooden window is 30 years and the window should be replaced after 30 years and comparing to the life of the house of 50 years if the window has been removed there would be 10

years of unused period has taken into account. When the building is disposed this should be either sold or disposed. As far as the plastic window is concerned its life if 25 years and while considering the buildings life of 50 years it has to be replaced 2 times of buildings life and can be easily disposed without any commitments.

b. List any factors, other than those given above, which should be taken into account before deciding on which window type to be used 1. Location of the window internal or external 2. Size of the window 3. Shape of the building or faade where window is going to be fixed 4. Fixing method 5. Replacement cost 6. Good appearance 7. If it is external weather proof or not 8. Durability of the window