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Design Process Terminology

COST CONTROL

COST PLANNING (Estimate can occur at any stage of this process)

AGREED OUTLINE COST PLAN
COST LIMIT COST PLAN COST ANALYSIS
FINAL COST CHECKS
PRELIMINARY COST ADVICE COST CHECKS

SCEME DESIGN

INFORMATION
PRODUCTION

COMPLETION

TERMINOLOGY
OPERATIONS
FEASIBILITY

MANAGEMENT
QUANTITIES
PROPOSALS

FEED BACK
INCEPTION

PLANNING

HANDBOOK
BILLS OF
OUTLINE

PROJECT
TENDER
ACTION
DESIGN
DETAIL

R.I.B.A.
SITE

M
G

K
A

D
B

L
F

TERMINOLOGY
PREPARE COST PLAN OF POSSIBLE SOLUTION

SKETCH

USUAL
BRIEFING WORKING DRAWINGS SITE OPERATIONS
PLAN

DETAIL DESIGN
OUTLINE DRAWINGS
CONTRACT RECORD
DESIGN PILOT DETAILS DRAWINGS DRAWINGS 2
PLANS
CONFIRMATION SCHEME PRODUCTION
OF COST LIMIT DESIGN INFORMATION QS TASKS IN COST PLANNING
PLANS DRAWINGS PROCESS
RIBA Outline Plan of Work 2020 3
 QS TASKS IN COST PLANNING PROCESS : RIBA 2020

COST CONTROL

COST PLANNING (Estimate can occur at any stage of this process)

COST LIMIT COST CHECKS COST ANALYSIS

COST PLAN FINAL COST CHECKS
PRELIMINARY COST ADVICE

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 Summary of Cost Planning
METHOD
DESIGN SEQUENCE PROCESS DUTY
USED

1 Inception Cost Planning Cost Range Interpolation

2 Feasibility “ Feasibility Study “

3 Outline Proposals “ Confirm Cost Limit Single Price Estimating

4 Scheme Design “ Cost Plan “

5 Detail Design Cost Control Cost Checking Approximate Estimating

6 Production Information “ Specification -

7 Bills of Quantities “ Bills of Quantities -

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Elemental Breakdown of
8 Tender Action “ Cost Analysis
Tender
• ‘Maximum expenditure’.

• Is a statement of the limit of cost for clearly

defined client requirement beyond which a client is
not prepared to enter into a building contract.

• It is that part of the client’s brief which having

specified the quantity of the requirement, direct the
architect to obtain an acceptable tender within the
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limit of certain sum money.

 COST LIMIT
• The cost limit will be very much
influenced by:-
i) The floor space required
ii) The standard of accommodation
iii) The function of the building
iv) Either client type:-
a) Client – prescribed accommodation requirement but unaware
of cost implication
b) Client determines both be accommodation requirement and
cost limit through past experience
c) Client prescribed a cost limit, design team to produced 7

standard accommodation that can be provided for this sum

 COST LIMIT
Methods of Cost Limit
1. Financial method
‘Developer equation’
Established by means of the developer budget
This method is used only in the private sector where profit making is the
sole motive of any development and this consideration determines the
permissible cost of a building
2. Interpolation method
type Comparison with cost of similar buildings by cost/m2 GFA adjusted
for space, standard and use 8

Assessed from a comparative study of known costs of similar building

COST LIMIT
Procedure of Interpolation Methods
• Collect all available cost analysis for buildings of similar
use, update and compile histogram. Example:
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No. of Buildings

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Common range
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200 300 400 500 600 700 800 9

Cost/m2 GFA
Result: Most buildings – the range is between RM 400 – 600/m2 GFA
COST LIMIT
Procedure of Interpolation Methods
• Select/choose ONE cost analysis closest to proposed building in
QUALITY.
• Isolate major difference between proposed building and cost analysis
chosen.
Differences:
1. GFA
2. Tender date
3. Items shown in analysis but NOT REQUIRED in proposed building
4. Item REQUIRED in proposed building but not provided in cost
analysis
5. Significant differences in preliminaries and contingencies. 10
 COST LIMIT
SUMMARY
(Preparation of ‘First Estimate’ by ‘Interpolation Method’)
1. A range of ‘Cost analysis’ of the same ‘type’ of building as the proposed building is
assembled.
2. This range is examined to find the ‘cost analysis’ of the building whose ‘quality’
approximates most closely to that desired by the client.
3. The initial brief of the proposed building and ‘all’ of the information given in the cost
analysis are studied in order to ‘isolate’ the ‘major differences’ between the two
building.
4. ‘Allowances’ are made for each of these ‘major differences’ (including, of course,
differences in floor area and general market level).
5. Finally, an allowance is made as a reserve against price rises between the general
market price level at the date of ‘preparation’ of the ‘first estimate’ and 11the
‘contractor’s’ price level of the tender.
 COST LIMIT
PRICE AND DESIGN RISKS
In preparing cost limit and/or outline cost plan, an allowance should be made for
unforeseen difficulties, which may come to light later in the design process, and price
rises between the preparation of the cost limit and the receipt of tender and between
receipt of tender to the completion of project.
Design contingencies
A percentage allowance should be allowed for changes that can occur for unforeseen
problems during the design period and the construction period. Normally a well thought
design scheme would carry a small percentage than one where many problems have to
be solved by the design team. As the scheme progresses through the various stages of
design development, it can be expected that the percentage will fall to reflect the greater
certainty of the design decisions.
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 COST LIMIT
PRICE AND DESIGN RISKS
Contract contingencies (differences in contract particulars)
The magnitude of contract contingencies generally reduces as the design progresses. In
normal circumstances, the percentage may range from around 5% in the early stages to fall
to possibly as low as 1% in the tender document stages, subject to assessments of the
possibility of unforeseen problems. A repetitive design on a normal site, the percentage may
be lower.
Price risks – escalation to tender date, contract cost adjustment
Prices are expected to move between the preparation of outline cost plan and the receipt of
tender and between the date of tender and the completion of the project. If the contract
includes price fluctuation, then this amount will be paid during the progress of the works in
progress payment. If the contract does not allow for price fluctuation, a percentage
allowance should be given by predicting the construction market from tender to completion
of project. The allowance made will be related to the length of construction time for the
project and the risk involved. It will increase the longer the time needed to complete13the
works.
PRICE AND DESIGN RISKS (SUMMARY)
Price Risk
• Adjustments of the cost analysis figure by multiplying the appropriate figure by an index.
• Related to market condition
Example:
High inflation of 24% per annum
Costs are rising at 2% per annum
• An estimate prepared in January for tender in may will need to add 10% just to cover for
inflation.
Design Risk
• An allowance must be made for uncertainties in the (as yet) for from finished design.
• Larger % of design needs to be added to cover design risk at inception than at much later
stages during design process.
• % depends on:
i) Client
ii) Type of project
iii) General familiarity of each consultant
• Almost negligible to some project but at certain circumstances may represent 30 – 40% 14
of
estimates cost.
 COST LIMIT
PRICE AND DESIGN RISKS (SUMMARY)
‘Price and design risk’ is allowed to take account:
• Type and complexity of design
• Nature of client
• Price trends
• Delay prior to receipt of tenders
Percentage adjustments on price and design risk depend on the
experience of the designer and the QS familiarity with the cost
planning procedure. 15
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Steps:

Cost of analysed building

Omit: Items not required
Update using index
Divide with GFA for analysed building = Cost/m2 GFA

Cost/m2 GFA x new GFA

Add: Items required
Add: External works (update using index)
Add: Preliminaries & contingencies (update using index)
Add: Price and Design Risks (% of Building Works only)
Total Cost Limit of Proposed Building

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END OF COST LIMIT

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