BUILDING ECONOMICS

AND INITIAL COST

Introduction to building economics; The Economic
context: Materials, Labour, Capital; Economic aspects
of design decisions; The Initial Cost of Building
Projects; Construction Cost; Financing Construction
Projects.; The Future Performance of Buildings: Cost-
In-Use; Life Cycle Cost; Benefits and Value of
Buildings; Measures of Economic Performance;
Techniques of Economic performance analysis for
building projects;
ECONOMİC ASPECTS OF DESİGN
DECİSİONS
 INTRODUCTION
 Design is often regarded as a soft parameter – on par with
human resources and marketing
 Difficult to quantify since its mechanism cannot be defined in
isolated terms.
 Importance and ability of earlier stages to influence
sustainability, performance, and life cycle cost.
 Facilitate the collaboration between stakeholders and clients
and eventually yield a sustainable and high performance
building throughout its life cycle.
 Design is many things by many people.
 Aesthetics.
 Healthy Living
 Structure.
 Functionality.
 Outlet/Emotions
 Process.
 Cost centre or maybe it’s a profit centre.
AESTHETIC CONSIDERATIONS IN ARCHITECTURE

 Line.
 Shape.
 Size.
 Texture.
 Colour
 Balance.
 Unity.
 Movement.
 Emphasis/contrast.
 Symmetry.
 Space
 Alignment.
 Culture.
 Context
DESIGN MOVEMENTS/PERIODS

 Classic
 Modernism

 Postmodernism

 Deconstructivism

 Post-structuralism

 Neoclassicism

 New Expressionism,

 Supermodernism

 Architects believe that not only do they sit

at the right hand of God, but that if God
ever gets up, they take the chair.”
 Good design is not merely about how
something looks; it encompasses
efficiency in construction, value for
money, environment friendly and
fitness for purpose.
 HOW MUCH TO INVEST IN DESIGN
 Raj Rewal
 Le Corbusier
 Charles Correa
 Hafeez Contractor
 Vithaldas Joshi
 Sir Edwin Landseer Lutyens
 Nari Gandhi
 Anurag Chawla
 Romi Khosla
 Achiyut Kanvinde
 Frank Lyod Wright
 Zaha Hadid
 DESIGN PAY OFFS
 Comprehensive approach to design make
more money and generate more value.
 Design means : design strategies,
development and styling – everything that
takes place prior to production or execution
of construction.
 High quality of design is an approach based
on building performance.
 Requirement of an integrated and
interdisciplinary project team working
through an integrated planning and
preparing a project to its best performance.
DESIGN AND BUSINESS SENSE
 DESIGN DECISIONS
 Whether interested in profit or in social
welfare, designers are concerned with the
preferences people have and the choices they
make.
 Design decisions are driven by the preferences
of various stakeholders, and the decisions
made by designers have impact on these
stakeholders.
 Need to develop quantitative tools to model
and predict consumer behaviour and
competitive firm behaviour to guide product
design decisions to perform well in the
marketplace.
INFLUENCE OF DESIGN DECISIONS ON LIFE
CYCLE IMPACTS AND COSTS
 COSTS
 Planning and Design costs.
 Construction cost

 Operation Cost

 Maintenance Cost

 Energy Cost

 Water Cost

 Waste Disposal

 HVAC

 Ownership costs

 Residual or disposal
NON ECONOMIC ASPECTS OF ECONOMIC
ASPECTS
 Aesthetics
 Safety, Security

 Health Care

 Special Needs of Elderly

 Productivity

 Civic Pride

 Landmarks, iconic structures.

 Tourism

 Environment and sustainability

 Historic Preservation
 INTERDEPENDENCY OF VARIABLES
A rigorous sensitivity analysis can help establish
which factors are most important in the life cycle
analysis and accurate impacts on the decision-
making.
 For example, project costs need to be linked to
the BIM models for accuracy.
 Something as simple as net quantities of drywall
may not be accurate due to reductions based on
window areas, even though the drywall is needed
in the construction process. So it is essential to
coordinate cost information across all platforms
and aspects of a project
THE INITIAL COST OF BUILDING
PROJECTS
INITIAL COST OF BUILDING PROJECTS
 Initial cost appraisals are carried out without the
benefit of a design for the project.
 Once the initial cost appraisal is completed, the client
will decide the scope of costs that will in future be
monitored by the cost consultant and those that will be
monitored and controlled by the client organisation.
 Initial cost appraisals break down the overall project
budget based on information provided by the client, an
analysis of comparable projects and the experience of
the cost consultant.

 https://www.designingbuildings.co.uk/wiki/Initial_cost_a
ppraisal_for_design_and_construction
 INITIAL COST ESTIMATE
•Assumptions about the nature of the project, identifying variables.
This will include a guestimate of gross internal floor area and a
rate psm to be applied from a range of historical data.

•Inclusions and exclusions.

•Location and site constraints. South Delhi will attract a premium.

Ground conditions and proximity of neighboring buildings affect
costs.

•Adjust for market conditions.

•The building's function and facilities influence design loadings,

floor to floor heights and structural spans which may affect costs.
Special spaces with acoustic or vibration control will attract a
premium.
INITIAL COST ESTIMATE : FACTORS
•Procurement route.
•Land costs and purchase prices.
•Book value.
•Legal fees (including vendor).
•Agent fees (including vendor).
•Stamp duty.
•Site investigations and surveys.
•Demolition.
•Consultant team fees including expenses and unusual items such
as models.
•Running costs.
•Building and infrastructure costs.
•Units costs could include the number of; dwelling units, parking
spaces, rentable area, hotel bedrooms, hospital beds, prison cells
and so on. . .
•Fixtures, fittings and equipment.
•Relocation / migration costs.
 INITIAL COST ESTIMATE : FACTORS
•Promotion and marketing.
•Capital gains tax.
•Corporation tax.
•GST
•Planning fees.
•Building control fees
•Insurance.
•Establishment costs.
•Funding costs
•Capital allowances.
•Grants.
•Inflation /escalation.
•Operational Cost
•Whole-life cycle costs.
 FUTURE PERFORMANCE OF BUILDINGS
 Architects design buildings that are supposed to
operate at a high level of occupant satisfaction.
 Complex interplay of variables, which can’t
always be predicted or managed, may create the
perception that these buildings are not
performing as designed.
 The building owner might not service a high-
performance building's heating and cooling
systems regularly;
 tenants may set thermostats too low or high, or
leave the doors and windows open at
inopportune times; or an unexpectedly cold
winter could diminish a building's advertised
efficiency.
FUTURE PERFORMANCE OF BUILDINGS
 Predicting the energy performance of buildings is important
to optimize the energy consumption. Building Energy
Performance Simulation (BEPS) is a key tool that is used to
predict the environmental performance of buildings.
 Always a gap between predicted and measured energy
consumed in buildings due to a range of influencing factors.
 Understanding the causes of performance gap can help in
reducing it between design targets and actual performance.
 Buildings should be designed to be able of dealing with
future climatic changes using mitigation and adaptation
measures.
 Building Energy Performance Simulation (BEPS) can be
used to estimate the energy performance of buildings and
their indoor environments based on future climatic
scenarios and to assess the different design options.
100 POINTS ARC BREAKDOWN USA: LEED

Base Score
of 10 Points

http://www.cadmusgroup.com/articles/arc-wave-future-high-performance-
buildings/
 FUTURE PERFORMANCE OF TOWNSHIPS AND
BUILDINGS

•Demand for sustainable, low carbon energy buildings is increasing.

•How the buildings will perform in different weather conditions and at
different levels of use is a Challenge
•Forecasting how entire cities will perform environmentally is even more
complex.
•modelling is possible to simulate thermal and airflow performance as part
THE VALUE OF GOOD DESIGN: PUBLIC
PERCEPTION

 http://www.designcouncil.org.uk/sites/default/file
s/asset/document/the-value-of-good-design.pdf