Cost Planning

Project Kaleidoscope Drury University 2003

Larry Gleason CPMI

Cost Management Cycle

Planning & Preliminary Budgeting

Post Construction

Pre-Design & Programming

Design & Construction

Timing of Decisions
Planning Pre-Design Design Construction

Balancing Interests
BUDGET ADVOCATES

PROGRAM ADVOCATES

DESIGN ADVOCATES

SCUP Survey Results

Key Issues/Concerns n Lack of reliable data n Lack of standardized formats for budget estimates n Confusion regarding description, identification and calculation of hard and soft costs n Lack of understanding as to how to effectively monitor and control budgets

Benefits of Cost Planning

n Greater

satisfaction with end results n Better value for money n Improved building quality and performance n Budget and value accountability n Improved relationships between all project participants n Design problems identified and solved earlier n Early identification of high-cost elements

Factors in Successful Cost Planning

n Confirm

that all project team members are speaking, and understand, a common language n Manage expectations. Acknowledge change is inevitable and establish contingencies and escalation in cost planning

Factors in Successful Cost Planning

n Establish

and document a solid base of prioritized needs n Study as many feasible site and building alternatives as possible n Establish well defined, manageable project schedules n Insure the budget has the confidence and acceptance of all project team members

The Tower of Babble

Reaching common ground for communicating cost data
n Confirm

that all project team members are speaking, and understand, a common language n Failure in cost management is often a failure in communication rather than a failure in application

The Tower of Babble

Reaching common ground for communicating cost data
n Life

Cycle Cost v. Non-Building Cost v. Building Cost n Estimating v. Cost Management n Types and Levels of Estimates n Project Budget Chart of Accounts n Contingencies and Escalation

Life Cycle Cost v. Non-Building Cost v. Building Cost

Operation Maintenanc e Replacements Site De velopment Architectural Building Sys tems Alterations Financing Taxes Non-Building Costs Structural Building Sys tems Building Cos ts Adminis tration Financing Legal Surveys Land Purc has e Fee s Furniture & Equip. Contingencies Etc . Mec hanic al Building Sys tems Elec tric al Building Sys tems Building Cos ts Life Cyc le Cos ts Non-Building Costs

The Tower of Babble

Reaching common ground for communicating cost data
n Life

Cycle Cost v. Non-Building Cost v. Building

Cost n Estimating v. Cost Management n Types and Levels of Estimates n Project Budget Chart of Accounts n Contingencies and Escalation

The Tower of Babble

Reaching common ground for communicating cost data
n Life

Cycle Cost v. Non-Building Cost v. Building

Cost n Estimating v. Cost Management n Types and Levels of Estimates n Project Budget Chart of Accounts n Contingencies and Escalation

Types and Levels of Estimates

n Order

of Magnitude (Ballpark) Estimates n Cost Plan Estimates n Preliminary Estimates n Interim Detailed Estimates n Final Detailed Estimates

Types and Levels of Estimates

n Order

of Magnitude (Ballpark) Estimates

Based on Planning/Programming criteria. Measurement of occupancy content or gross floor areas. Priced with unit or square foot costs based on historical data Expected level of accuracy in a range of 20 25%

Types and Levels of Estimates

n Cost

Plan Estimates

Based on Planning/Programming criteria. Measurement of shell/functional areas or the development of cost models. Priced with unit or square foot costs, based on historical data, in Elemental format Expected level of accuracy in a range of 15 20%

Sources for cost data

n Cost

information from within the institution n Costs from similar institutions n Independent cost information services n Price books and manuals n Newsletters and magazines n Published indices n Consultants, Contractors, Suppliers / Manufacturers

The Tower of Babble

Reaching common ground for communicating cost data
n Life

Cycle Cost v. Non-Building Cost v. Building

Cost n Estimating v. Cost Management n Types and Levels of Estimates n Project Budget Chart of Accounts n Contingencies and Escalation

Project Budget Chart of Accounts

n

Land/Building Preparation (Non-Building Cost except as noted) Acquisition Cost Land Surveys Hazardous Materials Surveys Geotechnical Investigations Environmental Impact Historic Preservation Demolition (Building Cost) Clearing and Grubbing (Building Cost)

Project Budget Chart of Accounts

n

Administration (Non-Building Cost) Appraisal Fees Internal Staff Costs Advertising Printing Legal Fees Building Permits Builders Risk Insurance Finance Costs Construction Contingency Ground Breaking

Project Budget Chart of Accounts

n

Professional Consulting Services (Non-Building Cost except as noted) Architectural/Engineering Fees and Reimbursables Preconstruction CM Fees and Reimbursables Programming Fees Special Inspections Soil and Material Testing (Building Cost)

Project Budget Chart of Accounts

n

Construction (Building Cost) Sitework Foundations Floor System Columns Roof System Exterior Wall Exterior Glazing Interior Wall Doors Specialties Equipment Conveying Systems

Plumbing Fire Protection Heating, Ventilating & Air Conditioning Electrical General Conditions, Overhead and Profit Management Fees Design Contingency Escalation

Project Budget Chart of Accounts

n

Occupancy Costs (Non-Building Cost) Movable Fixtures, Furnishings and Equipment Artwork Relocation Cabling not included in Electrical Occupancy Permit Open House/Dedication

The Tower of Babble

Reaching common ground for communicating cost data
n Life

Cycle Cost v. Non-Building Cost v. Building

Cost n Estimating v. Cost Management n Types and Levels of Estimates n Project Budget Chart of Accounts n Contingencies and Escalation

Contingencies and Escalation

Sample Continge ncies

18% De sign Contingenc y Cons truction Contingency De sign Conc ept Sc hematic De ve lopme nt Contract Documents Cons truction 13% 8% 3%

Predesign: Charting the Course

n Study

as many feasible site and building alternatives as possible n Establish well defined, manageable project schedules n Establish and document a solid base of prioritized needs n Insure the budget has the confidence and acceptance of all project team members

Predesign: Charting the Course

n Too

high a budget will kill a project now too low a budget will kill it later

Predesign: Charting the Course

n Predesign

process and product n Operational planning in Predesign n Architectural/Engineering Program n Planning alternatives - Predesign or Design? n Risk factors: Schedule and timing, planning without design, market factors

Predesign process and product

n Predesign

is highly focused project planning intended to improve the outcome of design and construction n Predesign follows strategic and operational planning by users and precedes design n The result of predesign is a Program that also may include conceptual planning alternatives n Predesign can typically be accomplished for 0.5% or less of the design and construction cost

Predesign process and product

A/E Program
n Problem

seeking, not problem solving n An organized process identifying prioritized space and quality needs n Different levels of detail depending on how the information is to be used n The foundation upon which concepts and analysis are based

A/E Program
Steps in systematic facilities programming n Orientation n Initial Data Collection and Analysis n Space Standards n Building Design Criteria n Preliminary Evaluation/Reconciliation n Adjacency Requirements n Final Summaries and Documentation

Predesign: Charting the Course

n Predesign

process and product n Operational planning in Predesign n Architectural/Engineering Program n Planning alternatives - Predesign or Design? n Risk factors: Schedule and timing, planning without design, market factors

Predesign: Charting the Course

n Predesign

process and product n Operational planning in Predesign n Architectural/Engineering Program n Planning alternatives - Predesign or Design? n Risk factors: Schedule and timing, planning without design, market factors

Cost Management Cycle

Planning & Preliminary Budgeting

Post Construction

Pre-Design & Programming

Design & Construction

Design & Construction: Staying

the Course
n Establish

clear responsibilities among the owner, users and designers and require that adherence to program and budget be a team effort n Use quality control of contract documents and management of change during construction

Design & Construction: Staying

the Course
n n n n n n n n n

Design within program boundaries Cost control procedures and decisions Interim detailed estimates Cost checking and feedback - value management Quality control procedures Design schedule impact on cost management Construction delivery methods Construction economics Cost Management during Construction