Preliminary Estimating &

Cost Planning of Buildings

Prasanna Pushpajith
MSc, DipSurv., FRICS, FAIQS, AIQS(SL)
Senior Cost Control Manager
ASTAD Project Management - State of Qatar
Chartered Quantity Surveyor & RICS Award
Winning APC Panel Chairman in year 2009 & 2010
RICS Award Winning APC Mentor in year 2010 &
2011
and Chaired more than 125 RICS – APC Interview
Panel
Email: prasannacqssl@gmail.com Mobile: 33698440
 Preliminary Estimates

 Why we do preliminary estimates?

 Preliminary Estimates

 To understand Clients’ financial

commitments at the early stage of the
project.

 Preliminary estimates also enables the

designer (Architect) to design within the
available budget in a controlled manner.
 OUTLINE OF COST PLANNING PROCEDURE
Inception

Design Stage Feasibility

A Outline
Proposals
B Scheme
Design
C Detail
Design
D Production
Information
E Bills of
Quantities
F Tender
Action
G
H

Prepare Prepare Prepare Cost Cost Final Analysis

QS Cost Control Tasks feasibility cost plans outline checks checks cost of costs
studies of possible cost plan check
solutions Develop
detailed
cost plan

Deliverable Reports

Budget Outline cost Detailed Cost

plan cost analysis
plan
Key Decision
Stages Conform Conform Confirm
limit of outline detailed
expenditure cost plan cost plan
RIBA Work Stages and OGC -Gateway
Budget

 Budget is the total expenditure

authorized by the client which is the
responsibility of the design team at
the end of the feasibility stage.
Methods of preliminary estimates
 Conference estimate
 Financial methods
 Unit method
 Superficial area method
 Cube method
 Elemental method (this is really an
extension of the superficial method)
 Approximate quantity method
 Conference estimate
 This method is based on collective view
of a group of individuals.
 For the best results, the group must
have relevant experience of estimating
of similar projects.
 This method is used in circumstances
where historical cost data may not be
appropriate.
 Financial Methods

 This method is used to determine

cost limits or the building costs in
developer’s budget.

 Financial methods fix a cost limit on

the building design, based on
selling or rental value.
 Unit Method
 This method is based upon the cost per
place, and / or based on the cost of a
building and the number of functional
units within a building

 Historic cost data is collected from the

previously completed similar projects in
the form of total costs and the number of
places.
 Unit method – Cont:
Historical data
 Look at how much similar buildings have
cost in the past

 Adjust for:-
– Time – using tender price indices:
multiply by index for proposed project
divided by index for analysis
– Location – using regional indices : as
above
 Unit method – Cont:
 When can we use unit method ?
 In the early brief stage of a project because a
client may have only an idea of the number of
units or number of places.

 For which type of buildings can we use unit

method ?
 Hotels - cost per bed/guest room
 Schools - cost per place
 Cinema theatres - cost per seat
 Hospital - cost per bed
 Car park – cost per space
Superficial area method
 This method is very popular method of
estimating during the very
very early
early stages
stages
of a project.
 The costs per square meter of
gross internal
gross internalfloor
floorarea
area (gifa) are
readily available from previously
completed projects.
 Why is this very popular method of
estimating ?
Because it relates cost to an easily-
understood quantity.
Superficial area method-Cont:

 What is gifa ?
Gross Internal floor area is the area of a
building measured to the internal face of
the external wall at each floor level.

 Therefore, the superficial area of the

building should be measured between
the inside faces of external walls with no
deductions for partitions, stairwells, lifts
etc.
Superficial area method-Cont:

 When can we use ?

At the early stage of a project.

 What information is required ?

– At least Gross internal floor area
– Cost data from previously completed similar
project
– Available rates need to be adjusted as required
 Cube method
 This is the traditional method and is now rarely
used in practice.

 The costs per cubic meter from previously

completed projects are used to calculate the
costs of future projects.

 External works are normaly added as aseparate

item and other abnormal item like piling, lifts,
escalators etc.

 This method was very popular at one time but

has largely been replaced by the superficial
method
 Cube method – Cont:
 The volume of the building is
calculated using the rules set out by
the RIBA.
The rules are :
a) The length and width are measured over all
external walls.
b) The height is measured:
I. from the top of the foundations to half-way
up the slope in the case of a normal pitched
roof.
II. from the top of foundations to 0.61 m above
the roof in the case of a flat roof.
 Elemental Method

 As this method is an extension to

superficial method, it could be used to
create an initial cost plan based on
information provided.

 This form of estimating is used as the

basis of elemental cost planning
before any drawings are available
Elemental Method-Cont:

 This method can be used to

calculate a reasonable sum to be
spent on a project.

 Also various parts of the project,

without relation to a particular
design.
 Elemental Method-Cont:
 The basis of the elemental method lies
in the use of elemental cost analysis.

 What is cost analysis ?

A cost analysis is a systematic
breakdown of cost to facilitate
examination
 Elemental Method-Cont:
 A cost analysis used for building works is
general to:

 Analyse the cost of the project in terms of

functional elements. (Eg: foundations, external
walls, roof ) by reference to the priced bill of
quantities.

 Breakdown the total cost of each element and

express it as a cost per square metre of gross
internal floor area.
Elemental Method-Cont:

 The gross internal floor area is used as a

yardstick because:
– It represents something useful to the client
( a near approximation to the amount of
accommodation provided in the building);

– It provides a convenient comparative measure

between similar projects;

– It is relatively easy to measure on all jobs

irrespective of their size, shape or construction
 Elemental Method-Cont:
 The total cost of each element divided by the floor
area is called the “elemental cost per square metre”

 “Quantity factor” for the element or

“Elemantal Unit Quantity” or “EUQ” is the total
quantity of each element.

 The total cost of the element divided by the quantity

factor is called the “elemantal unit cost”.
 Elemental Method-Cont:

 When a preliminary estimates is

required, the analysis of previously
completed projects should be
studied and one or two chosen
which most closely represent the
new project
Elemental Method-Cont:

 The costs in the chosen analyses

are then adjusted to for the basis
of a new cost plan.
Elemental Method-Cont:
 Look at how much similar buildings have cost
in the past
 Adjust for:-
– Time - using tender price indices: multiply
by index for proposed project divided by
index for analysis
– Location - using regional indices : as above
– Quantity - using elemental quantities:
measured from drawings
– Quality – by assessment
Elemental Method-Cont:
 Elements
1.0 Substructure
2.0 Superstructure
3.0 Internal Finishes
4.0 Fittings and furnishings
5.0 Services
6.0 External works
Preliminaries
Contingency
 Elemental Method-Cont:
To prepare the estimate the analysis figures
are first brought up to date by using price
indices and adding:

Adjusting unit rate using indices

Cost sq.m GIFA in cost analysis = 50.00
Indices for this scheme = 250
Current Indices applicable to propsed scheme
= 300
Adjusted rate = 50.00 x 300 = 60.00
250
 Elemental Method-Cont:

 The percentage difference between

the two rates can be calculated as
follows:

 Percentage change = (60 – 50) x 100

50
= +20%
Approximate quantites method

 Still most favoured by Quantity

Surveyors
 Similar method used in preparing a
bill of quantities.
 Most reliable method of all forms of
preliminary estimating.
 Always used when cost checking
during the detail design stage.
 End of Methods of
Preliminary Estimates
Cost Planning of Buildings
 OUTLINE OF COST PLANNING PROCEDURE
Inception

Design Stage Feasibility

A Outline
Proposals
B Scheme
Design
C Detail
Design
D Production
Information
E Bills of
Quantities
F Tender
Action
G
H

Prepare Prepare Prepare Cost Cost Final Analysis

QS Cost Control Tasks feasibility cost plans outline checks checks cost of costs
studies of possible cost plan check
solutions Develop
detailed
cost plan

Deliverable Reports

Budget Outline cost Detailed Cost

plan cost analysis
plan
Key Decision
Stages Conform Conform Confirm
limit of outline detailed
expenditure cost plan cost plan
Cost Planning and Pre-contract
Cost Control
A pre-contract cost control
system, to be effective,must
operate throughout the whole
design process from the inception
of a project through to the tender
analysis.
Cost control mechanism

Plan

Adjust Monitor

Review
 Cost Planning

 The full cost planning process

which is basicaly designed to
achieve a balanced expenditure
and control the design so that the
client’s financial commitments are
met.
 Cost Planning
The aims of cost Planning must be:

 To ensure that the sum of money

which the client sets out to spend on
the project is not exceeded.

 To ensure the client obtains good

value for money.
 Cost Planning
 The Process can basically be divided
into three main parts:

To set a realistic cost limit

To decide how this money is to
be spent
To check that the money is being
spent as intended
Cost Planning
 There are two main forms of cost
palnning:

1) Elemental (designing to a cost)

2) Comparative (Costing a design)

But in practice the method used
may be a mixture of the two
Elemental Cost Planning

 An elemental cost plan states the

architect’design intentions in sums of money
and this is the design budget.

 Throughout the design period the QS should

check the cost of the architects’ selection
against the pre determined budget.
NRM
Volume 1 – Order of Cost Estimating and Elemental Cost
Planning (Released March 2009)
 Estimating- RIBA Work Stages A (Appraisal) & B (Design Brief); and
OGC gateways 1(Business Justification) & 2 (Delivery Strategy)
• Cost planning- Elements- RIBA Work Stages C(Concept) D (DD) , E (Tech. Design);
 OGC Gateways 3A(Design Brief Concept Approval), 3B (DD Approval)& 3C (Investment
Decision)

 Volume 2 – Construction Quantities and Works

Procurement
 RIBA Work Stages F – K;(Production Info, Tender, Construction and Completion)
 OGC Gateway 3C (Investment Design)

 Volume 3 – Maintenance and Operation Cost Planning

and Procurement
 RIBA Work Stage L (Post Practical Completion); OGC Gateways 4
(Readiness of Services) & 5 (Operation Review and Benefit Realization)
Part 1 - General
Structure of the Document

Part 1 - Cost estimating and elemental cost planning in context with the RIBA Plan of
Work (and the OGC Gateway Process for UK government Org.).

Part 2 - Describes the purpose and content of an order of cost estimate.

Part 3 - describes the purpose of elemental cost plans.

Part 4 - Comprises the tabulated rules of measurement for the preparation of formal
elemental cost plans.

Appendices:
 Appendix A: Core definition of gross internal area (GIA)
 Appendix B: Commonly used functional units and functional units of measurement
 Appendix C: Core definition of net internal area (NIA)
 Appendix D: Special use definitions for shops
 Appendix E: Measurement rules for elemental method of estimating
 Appendix F: Logic and arrangement of levels 1 to 3 for elemental cost planning
 Appendix G: Information requirements for formal cost plans
 Appendix H:Template for elemental cost plan (based on level 1 codes)
 Appendix I: Template for elemental cost plan (based on level 2 codes)
RIBA Work Stages and OGC -Gateway
Some Important Definitions

 Cost checks (cost check or cost checking) – take place during all
design stages and are concerned with comparing current estimated
costs against cost targets previously set for elements or sub-elements
of the building.
 Cost control – process of planning and controlling the costs of
building(s). Takes place throughout complete duration of the
construction project.
 Cost limit (or authorised budget or approved estimate) – means
the maximum expenditure that the employer is prepared to make in
relation to the completed building.
 Cost target – the recommended total expenditure for an element. The
cost target for each element is likely to be derived from a number of
sub-elements and components.
Some Important Definitions

 Cost per m² of gross internal floor area (or cost/m² of GIFA) –

unit rate which, when
multiplied by the gross internal floor area (GIFA), gives the total
building works estimate (i.e. works cost estimate less main
contractor’s preliminaries and main contractor’s overheads and profit).

 Elemental cost analysis (or cost analysis) – is a full appraisal of

costs involved in previously constructed buildings and is aimed mainly
at providing reliable information which will assist in accurately
estimating cost of future buildings. It provides a product-based cost
model, providing data on which initial elemental estimates and
elemental cost plans can be based.
Some Important Definitions

 Elemental cost plan (or cost plan) – is the critical breakdown of

the cost limit for the building(s) into cost targets for each element of
the building(s). It provides a statement of how the design team
proposes to distribute the available budget among the elements of the
building, and a frame of reference from which to develop the design
and maintain cost control. It also provides both a work breakdown
structure (WBS) and a cost breakdown structure (CBS) which, by
codifying, can be used to redistribute work in elements to construction
works packages for the purpose of procurement
Some Important Definitions

 Gross external area (GEA) – is the area of a building measured

externally (i.e. to the external face of the perimeter walls) at each
floor level.
 Gross internal floor area (GIFA) (or gross internal area (GIA))
– is the area of a building measured to the internal face of the
perimeter walls at each floor levels. Appendix A
 Net internal area (NIA) – is the usable area within a building
measured to the internal face of the perimeter walls at each floor
level. Appendix C
 Site area – means the total area of the site within the site title
boundaries (or the total area within the site title boundaries defined
by the employer as the site for the building), measured on a
horizontal plane, excluding the area of the building footprint. Excludes
any areas used temporarily for the building works that do not form
part of the delivered building project.
Elemental Cost Planning
 Elemental cost planning is based on
the assumption that:

 It is possible to establish a realistic

estimate of the project at or before the
early sketch plan stage.

 Both designer and quantity Surveyor

are willing to be bound (with certain
reservations) by the early estimate.
 Elemental Cost Planning
 Items required for the preparation of detail cost
plan:

 Copies of the sketch plans and elevations

 A brief specification of the method of construction.

 A note of the proposed standard of finishes, fittings,

service etc, probable type of contract, estimated
tender date, length of contract and cost target.

 A suitable cost analysis

 Other suitable analysis for checking purpose

Comparative Cost Planning

 A comparative cost plan sets out the

estimated costs of individual section of
work, where appropriate, the estimated
costs of alternative methods and materials
that the architect may wish to consider

 This type of cost plan is therefore a concise

statement of the cost consequences of any
decisions the architect may make and is
based on the pricing of a specific design
and specification.
Comparative Cost Planning
 Comparative cost planning aims to:

 Settle systematically whether one

alternative is cheaper than another at a
stage when it is most useful;

 Present to the designer in a well ordered

manner all the information relating to cost
that he requires to make an economic
design decision
Comparative Cost Planning

 Comparison of alternatives based on

initial scheme design drawings.
Preparation of an initial cost plan.

 Completion of the scheme design.

Preparation of the final cost plan.
 Comparative Cost Planning
Items required for preparation of the initial cost plan
are:
1. Copies of the sketch plans and elevations.

2. Brief details of the parts of the construction for which no

alternatives are considered.
3. Brief details of the alternative forms of construction the
architect considers worth investigating.
4. Details of finishes, services and fittings, including any
alternatives to be considered.
5. Note of the probable type of contract, estimated tender
date, length of contract and cost target.
6. Cost analysis and priced bills of quantities of similar jobs
for comparison.
 Comparison of elemental and
comparative cost planning

Elemental cost planning Comparative cost planning

 It may involve the  It is likely to take more
designer in more of the quantity
redrawing at the surveyor’s time
detail stage if his because several
solutions do not fit alternative schemes
in with the cost plan may need to be priced.
Comparison of elemental and
comparative cost Planning

 The designer will  The designer will

require a skill and need to make
ability and some design decisions
knowledge of costs early in the design
to keep his design stage
details within the
cost plan
framework
Comparison of elemental and
comparative cost Planning
 The use of the square  The pricing of
metre of floor area as a
yardstick provides a
means of comparing
different projects.
alternative solutions to
any design problem will
show the cost
consequences of any
choice and is likely to
isolate the most
economic solution to
the problem. The early
study of relative costs
will help the designer
to decide the basic
lines of design
Indices
 Building Cost Index – The building cost
index measures changes in the
contractors’costs. It is constructed on a
combination of actual wage, material costs
and plant and overhead charges.

 A building cost index can be constructed for

– The total construction costs of a building or a
type of building
– An element(external wall) or trade (brickwork)
within the building process
– A single material, e.g. cement
 Historic data

 All plans / estimates need accurate /

reliable information
– Drawings / scope work /contract details
– Pricing infomation
 Cost per sq.m
 Unit rates

 Composite rates

 Cost analyses
 Indices

 Tender Price Index – The tender price

index is based on what the client is
prepared to pay for the building.
Therefor it takes into account building
costs, but also makes an allowance for
market conditions and profit.
Processes
Feasibility estimate - cost/bed, /room,
/place etc.
Design brief - Cost/m2
Elemental cost - Cost/m2 of
each element

Measured quantities.
TENDER
Resource estimates Market prices

Cost of completed work

Actual cost
 Problems with traditional cost
planning
 What are we trying to predict?
– The tender figure?
– Something else?

 Historical cost data is not 100% reliable

 No two buildings are the same

 Do we CONTROL building cost or merely

MONITOR it?
Questions?
 How would you identify risk within the cost
plan?
 The cost plan should include a level of
contingency which generally covers unforeseen
events on site.
 Provisional or PC sum should include within the
cost plan.
 You may have risk register or risk schedule,
which will include risk identified by the project
team.
 As design develops and cost plan develops,
hopefully the risks will be designed out or
mitigated to a manageable level, to a point
where the risk register only include a small
number of risks.