COST STUDIES OF

BUILDINGS
THIRD EDITION
AllAN ASHWORTH M.Se., ARies
Formerly an I [\\1 (Her Majesty's Inspector)
of conmuction with the Department for Educllion,
\\ith paniC\Jb.r for suneying eduCl(ion.
the professor in quantity sun C) ing
at UNITEC, New Zealand .
..... Pearson Education
Honow. EngIInd london New Yorl. M.UKhuo.etu Sin f.lfKlSCO 1......,10 Don M ..... Onl.no SydM)'
Totyo Iiong Kong Tlope; c.p. T.-n M.ond Meu:o CtIJ ArnSlOflUm' Munoc" ,....

CONTENTS
Preface to the third edition
Preface to the second edition
Preface to the first edition
Acknowledgements
SECTION 1 COST CONTROl
INTRODUCTION
learning objectives
1.1 What this book is about
1.2 The purpose of cost conlrol
1.3 The importance of cost control
1.4 Cost, price and value
1.5 Cost advice
1.6 Contractual arrangements and their effects on costs
1.7 Construction economics
1.B Economic analysis objectives
1 .9 Design method
1. 10 Building economic theories
1.11 Environmental impact of the construction project
Self assessment questions
Bibliography
2 HISTORY OF BUILDING ECONOMICS
learning objectives
2.1 Introduction
2.2 Building economics
2.3 Standard texts
2.4 Trends in building economics
2.5 Reasons for change
2.6 Historical context
Self assessment questions
Bibliography
'"
X"
xv,
XVIII
3
3
3
4
5
6
6
7
9
11
12
16
16
1 B
1 B
19
19
19
20
20
22
24
24
29
29
n Gosl Sludin of Buildings
3
THE CONSTRUCTION INDUSTRY
30
learning objectives
30
3.1 Introduction
30
3.2 The importance of the construction industry
31
3.3 The construction industry as an economic regulator
33
3.4 The development process
34
3.5 Construction firms
35
3.6 The professions
36
3.7 Research and development
38
Self assessment questions
38
Bibliography 39
SECTION 2 COST INFORMATION
4 COST DATA
43
Learning objectives
43
4. 1 Introduction
43
4.2 Characteristics of cost data
45
4.3 The hierarchical structure of cost data 45
4.4 Accuracy and consistency 48
4.5 Cost feedback 49
4.6 Price books
52
4.7 Public sector price guides 57
4.8 Monthly cost information 57
4.9 Priced bills of quantities
58
4.10 Price analysis
60
4. 11 Cost analysis
60
4. 12 The building cosl information service
67
4. 13 The 8C/S Quarterly Review of Building Prices
69
4.14 BUilding Maintenance Information
69
4.15 Internotional comparison of construction costs
70
Self assessment questions
75
Bibliography
75
5 DESIGN ECONOMICS
76
learning objedives
76
5. 1 Introduction
76
5.2 Client's requirements 77
5.3 Value for money 78
5.4 factors to consider
79
5.5 life-cycle costing
91
5.6 Element evolution
91
5.7 Conclusions
93
Self assessment questions
93
Bibliogrophy 94
Contents VII
6
THE ECONOMICS OF QUALITY
95
learning obiectives
95
6.1
Introduction
95
6.2
What is quality?
96
6.3
Quality systems
97
6.4
Quality control
99
6.5
The 'M' factors affecting quality 100
6.6
Quality standards
101
6.7
Categories of quality costs
102
6.8
Economic assessment 103
6.9 Quality considerotions 106
Conclusions 107
Self assessment questions 107
Bibliography 108
7
INDICES AND TRENDS 109
learning obiectives 109
7.1
Introduction 109
7.2
Constructing an index 110
7.3
Uses of index numbers 110
7.4 laspeyre's and PaaKhe's indices 112
7.5 Difficulties in the use of indices 112
7.6 Cost and price indices 114
7.7 Other published indices 117
7.8 Regional variation 119
7.9 Measuring trends 120
Self assessment questions 125
Bibliography 125
8 COST ANALYSIS 127
learning obiectives 127
8.1 Introduction 127
8.2 Definitions 129
8.3 Preparation of a cost analysis 130
8.4 Principles of analysis 131
8.5 Elemental cost studies 132
8.6 Preliminaries 133
8.7 Substructure 134
8.8 Superstructure 138
8.9 Internal finishes 159
8.10 Fittings and furnishings 162
8.11 Engineering services 163
8.12 External works and drainage 169
Conclusions 170
Self assessment questions 170
Bibliography 171
-
viii Cbll Stud/iS 0/ Buildmgs
9
TAXATI ON, GRANTS AND INVESTMENT 172
learning objectives 172
9.1 Taxation 172
9.2 Value-added tax 173
9.3 Corporation tax 17.
9,4 Financial assistance for development 181
9.5 The effects of toxation and grants on cash flow 185
9.6 Investment 185
9.7 Property investment and equities 187
9.8 Property investment 188
Self assessment questions 190
Bibliography 191
10 COST RESEARCH AND INNOVATION 192
Learning objectives 192
10. 1 Introduction 192
10.2 Cost research philosophy 193
10.3 Collaboration with practice 19.
10,4 Developments in quantity surveying 195
10.5 The research process 196
10.6 Research methods 200
10.7 Research organisations 10 the construction industry 203
10.8 Research dissemination 205
10.9 The future 206
Conclusions 208
Self assessment questions 209
Bibliography 209
SECTION 3 COST PRACTICE
11 DEVELOPMENT APPRAISAL 213
learning objectives 213
11.1 Introduction 213
11.2 Development value 21.
11.3 General determinants of value 21.
11.. Investment appraisal 215
11.5 Methods of valuation
216
11.6 Valuation tables 219
11.7 Developers' budgets 226
11.8 Conventional methods of investment appraisal 23.
11.9 Discounting methods 237
11.10 Optimal investment criterion 238
11. I I Sensi tivity analysis 238
11. 12 Cost-benefit analysis 239
Self assessment questions 2.2
Bibliography 2.3
Cuntmts
"
12
PRETENDER PRICE ESTIMATING 244
learning objectives 244
12.1 Introduction 244
12.2
Estimote classificotion 245
12.3
Methods 245
12.4 General considerations 255
12.5
Other factors 257
12.6
Preparing the estimate 264
Conclusions 268
Self assessment questions 268
Bibliography 268
13
COST PLANNING 270
learning objectives 270
13. 1 Introduction 270
13.2 History and development 272
13.3 The cost planning process 273
13.4 Cost limits 278
13.5 Elemental cost synthesis 282
13.6 Example of a cost plan 286
13.7 Construction budget 303
Self assessment questions 303
Bibliography 303
14 COST MODelLING 305
learning objectives 305
14. 1 Introduction 305
14.2 Types of cost models 308
14.3 Purpose of cost models 309
14.4 Classification of cost models 310
14.5 Trends in cost modelling 311
14.6 Empirical methods 311
14.7 Regression analysis 312
14.8 Simulation 315
14.9 Heuristics 321
14.10 Expert systems 323
14.11 Value-for-money considerations 325
14.12 Development of models 326
Conclusions 326
Self assessment questions 328
Bibliography 328
15
lIFECYCLE COSTING 1: FACTORS TO CONSIDER 330
learning objectives 330
15. 1 Introduction 330
15.2
The importance of long-term forecasting 332
,
COsl SlUd.lS of Bui/dml f
15.3
Buildings' life 332
15.4 Deterioration and obsolescence 334
15.5 Physical deterioration 336
15.6 Obsolescence 338
15.7 Component life 341
15.8 Problems with component life doto 345
15.9 Inflation 347
15.10 Discount rote 349
15.11 Role of interest 351
15. 12 Taxation 352
Self ossessment questions 352
Bibliography 352
16 lIFECYCLE COSTING 2, PRACTICE 354
learning objectives 354
16.1 life-cyde costing applications 354
16.2 life-cyde cost pion 357
16.3 358
16.4 Calculations 362
16.5 Forecasting change 377
16.6 Historical perspectives 379
Conclusions 380
Self assessment questions 381
Bibliography 381
17 VALUE MANAGEMENT 383
learning objectives 383
17.1 Introduction 383
17.2 Origins of value engineering 384
17.3 Terminology 384
17.4 Methodology 386
17.5 Value management workshops 387
17.6 Cost-value reductions 388
17.7 The what scenarios 388
17.8 Unnecessary cost!. 390
17.9 Creativity 391
17.10 Other issues to consider 393
Self assessment questions 394
Bibliography 395
18 RISK ANALYSIS AND MANAGEMENT 396
learning objectives 396
18. I Introduction 396
18.2 Risk and uncertainty 396
18.3 The risk management process 397
18.4 Types of risk 399
18.5 Dealing with risk
18.6 Some techniques for dealing with risks and uncertainty
18.7 Risk analysis using probabilities
Conclusions
Self assessment questions
Bibliography
19 POST CONTRACT COST CONTROL
Learning objectives
Introduction 19.1
19.2
19.3
19.4
19.5
19.6
19.7
19.8
19.9
19. 10
Measurement contracts
Cosl-feimbursoble contracts
Budgetary control
Client's financial reports
Client's cash Row
Contractor's cost control
Contractor's cosh flow
Cost comparison
Project cosh flow
Self assessment questions
Bibliography
20 fACILITIES MANAGEMENT
Learning objectives
20. 1 Introduction
20.2 Overview of facilities management
20.3 Relevance of building costs
20.4 Operations management
20.5 Space management exomple
Index
Conclusions
Self assessment questions
Bibliography
COn/tnlS Xl
400
401
404
406
406
406
408
408
408
409
411
412
413
416
417
419
421
422
423
424
425
425
425
426
428
430
437
441
441
441
442
INDEX
method 218
AocuT1Icy 23, )97, 260, 307, 321
Added Vll[uc 23
Aesthetics IJ, 338, 341
Air conditioning 165
Appnigl101, 213, 32:4, 425
Approximate cscimatin[l: 197, 322,
Approximate quantities 2-M, 151, 283, 284
Architect 249, 415
AReO.\t 205
Assets 178, m
AvcT1lge rate ofrcrurn 236
Balancin!! allowances 175
BClS 23, 46, 69, 118, 128, 197,305
Bidding strategy 197
Bills of quantities SS, 197, 306
8.\1113,69,197,343
Brainslonning 402
BRE 203, 306, ]43
Break-e\'cn analysis 103, 405
Budget 226, 245, 260, 268, 303, 324, 411
Buildabilil} 23,8Il
Building cost index 114, 116
Building economies 16, 19
Building indicatur 119
Buildings 175, 332, 428
Busine<>s 207
C.apacity Hi
Capital 174
Capital allowanL'CS 175
Cash fluw 309, 372, 416, 419, 422
Ceiling finishes 162, 299
Certificate 409
442
Chcdlisting 393
OH 22, 203
ORIA 204
Daims 415
Deaning 72, 361, 434
Dient 77, 131,270,398,413,416
CNBR206
Collabontion 193
Commissioning 331
Communications 169,429,434
CompanliH' method 21i
Component life .14 1, 365
Compound interest 219
Computers 259, 323, 324, .127, 432
Condition 438
Conference estimate H6
Consen-anon 357
Construction H, 134, 356. 398
ConstructIon .It:tails 89
ConstructIon economics 9
ConstructIon firms .15
Construction industry 30
Contingencies 232
Contract parl1cuiars 7, 61, 255
Contractor 23,197,417,419
Contrador's method 217
ContTal:tual arrangements 7
ContraL"tual claim 411
Corpontion W 174
Cost 6, 77, i8, 228, 378, 388, 390, 393, 425,
428
Cost ad \-i 6
Cost analYSIS 60, 61, 67, 68, 71, 127. 129,
130,289
Cost benefit analysis 23, 239
=
Cost checking 277
Cost comJnrison 276, 421
Cost control 4, 23, 271, 274, 278, 408, 417
Cost data 23, 43, 197
Cost engineering 23, 30, 246, 253
C.ost limits 278, 280
Cost modelling 23,197,254,305,308, lW,
322,326
Cost planning 110, 197, 246, no, 273, 286,
292, 357, 405
Cost reimbur;cment 411
Coststudics3, Ill , 132
Costs-in-usc 23, 34, 155, 197, 330, 332, 337,
356,358
Creati,-ity 391
Cube rub 146, 249
Data CQ-Qrdinarion 23, 197
Data requirements 259
Day\\orl. 410
Decision making 379
Decision 402
Delphi technique 393
Demolition 34
Depreciation 178, 334
Design 12,34,95,255,309,331, 355,
398
Design CC()nomics 255
Design risk 257
Detn-ior:nion 3.14, 335, 336
Devdoper's budget 226
Developer's profit 229
Devdopmcm 2 1.1
De,dopme:m pr()COS 34
De,elopmcm ,alue 227
Disunmte:d flow 105, 237, 349
Di, ersifil.'lItion 206
Drainage: 169,302
of care 8
Economic 11, 103, 34{1
Economic rcgulator 33
EfflCicncy 81, 438
Electricl1 167,301
62, 63, 91, 114, 128, 129, 1J2, 252
Element e:,olution 91
Elemental cst1mating 246, 252, 272, 275
Empirical mcthods 31 1
Employmcm 31, 206
/ndtx 443
f':nergy 164,357,361,433
Engineering SCT\'ices 163, 256, 431
EOI'ironmcmal 16,429
EPSRC 203
Equiti es 187, IB9
Estimate 245
Estimating 23, 47.197,245,262,31.1,322
Europe 184
Exclusions 256
Expert systems 21,197,324
Enemal doors 153, 296
Extemal scrvices 302
External walls ISO, 295
External works 169,256,301
Facilitics management 23, 197.425
Failure costs 103
Fashion 378
FAST 391
Feedback 49, 306, 313, 323
Fec:s 229
Final account l2B, 197,410
Finance 230
Financial assistance 1B I
Financial method 2-46, 247
Financial reports 414
Fire fighting ItlS
Finings 162, 299
Floor finishes 160, 298
FluClUatioll"l54,410
Forecasting 111
Formula method 119
Framcs 138
Function 12.339
162, 299
GIFA 62, 82,136,137,142,152,2]1,233,
265,275,285
GO"emmem 32
Grants 172
Green buildi ngs 17
Grouping of buildings 87
HClIlth 437
Hcat1l1 g I(H, 300, ]67
Hedonic modelling 218
lieight B5, 137, 140, 151,251
HCUTlstics 321
Hi StOT) 19, .179
4+t Cost of Buildings
Inception 34, 355
Increased cost 266, 268, 410
Indices 109, 143
Innalton 347, 376
Information tcchnology 24, 206
Inland Rc\"cnuc 173
InnO\'1IIlion 192
Installation 331
Instructions 413
Insurancc 362
Interest 219, 351, 366, 376
Interim parmCnl 409
lnternal doorli 158, 2%
Internal finishes 159, 297
Internall"llltc of relUrn 238, 374
Internal 'nlls 156,2%
International 33, 70, 207
32, 172, 185,187,215,2 18
Inlestmcnt mcthod 218
Inl'estmcnt rield 227
150900098
Job plan 386
Koo\\ ledgc 24
l.abourcosts#, 55, 113,411
Lispeyre 112
Lcpl8, 264, 327, 338, 341
Letting 232
Life 332, 365
Life cycle costs 23, 27, 91, 161, 197, 309,
325, 330, 332, 354
Lifts 167,301
Locnion 54, 61,131
Machincry 176
Maintenance 331, 345, 347, 360, 429
345, 397, 430, 437
conditions 55, 61, 100, 111,255,398
Market sharc 139
44,55,95, 100, 114, 139,412
Measurement 283, 409
Modification 331
MOnle Carlo 315
Moving nCl"lllge 121
Necessity 237
Net prcscnl value 237, 363
Obsolescence 334, 335, 338
Occupation 356
Optimisation 104, 238, 309
Outputs 51
Ol"crheads 44, 55
Paasche 112
Partitions 156, 296
Payback 234
Performance 77
Planning RI, 398
Plan shape 83
Planl 176, 429, 432
Plumbing 163, 300
Policy 346, 379
Ponfolio (hoor) 403
Post contract 278, 40R
Postponabi lity 237
Practice 194
Prelirnirur.ries 58, 133
Pretendcr estimaring 197, 244, 4M
Pre,'ention costs 102
Prime LUSt 411
Prime U>St sum 410
Probability 316, 402, 4tH
Procurement 23, 197,324,355,394,409,
4"
Profits method 218
Pro}cct management 23, 197
Pro,"isional sum 410
Pril;C 6, 112
Pril;C analysis 60
Pril;C books 23, 52, 53, 57
Prilr risl H7
Professions 36
Profit 44, 55, 422
Programnlc 266
Proper} 185, 186, 187, 188, 189
Qw.lity 23, 95,197,207,255,283,368,435
Qw.ntity factor 129
sun"eying 195, 197
sun"eror 6, 9, 21, 26,128,195,197,
326, 409, 415
Remrds 418
Refurbishment 90
Regional initiatives 183
Rcgionall'ariation 119

Rt:gression analysis 123, 255, 308, 310
Rt:insutemem method 218
R("placem("nI 33 1
Resarch 23, 26, 38, 192, 272
Rest:areh methods 200
Rt:St::.treh org-.I.nisations 203
Resa.reh process 1%, 198
ResidUllI method 217
Resource analysis 246, 253, 308
Rt:tailprieeindex 116, 117
174
RICS 204, 306, 342
Risk 197,257,345,3%,399
Roofs 144, 293
Running COSts 280
Safety 436
Saniury appliance; 300
Seasonal adjustmt:nt 123
Securi ty 169,433
Sensi!i,i!y analysis 238, 368, 373, 403
Scale 31
S(;t:nario analysis 4(H
Xun(" 420
Shape 83,136,151,152,251
Simple interest 219
Simulation 255, 309, 315, 403
Silt: 79, 301, 398
Size 54, SO, 136, 140, 1-43, 151
Social life 340
Space 429, 436
Spaee management 430
Specifkation 65, 95, 268, 331
Staff .... elfarc 435
St'aircascs 150, 294
Statistical measures 264
Storey enclosure method 2-46, 250
Storey height 87, 251
Storeys 83, 137
Indu +45
Substructure 134, 288
Superficial area method 246, 248
Superficial perimcter method 246, 249
Superstructure 138
Syncclics 402
Tax;.uion 172, ISO, 185, 352, 372
Tcchl'lOlog) 13,339,377
Tcnder 278, 309
' I'cnder price index 115, 116
Theori es 16
Time 77, 78, 324, 39-\
Time series analysis 125
TQr.I99
Trcnds22, 109, 120,31 1
Uncenainty 396
Unit method 246, 247
Unit nlle-\4
Upper noor:s 142, 293
Utilisation .. B8
Valuation 216, 421
Valuation tables 219
Value 6, 214, 247, 378, 388
Value added tax 172
Value enginec:ring 23, 197,383
Value for money 5, 23, 26, 78, 271, 280, 325
Value management 24, 197,383
Variation order 415
Ventilation 165,300
Wall finishes 162, 297
Wall-to-floor ratiu 16, 84, 2-\9
Water insullations 300
Wilderness 23, 26
Windows 153, 296, 364
Workshops 387
Writing down allowance 175