RECO 2040

Construction Project Management I

ELEMENTAL
ESTIMATE
DR. ISABELLE CHAN

DEPARTMENT OF REAL ESTATE & CONSTRUCTION

 Intended Learning Outcomes

By the end of this session, (I hope ) you should be

able to:

 Explain
 WHAT is elemental estimate

 WHY elemental estimate is needed

 WHEN elemental estimate is needed

 HOW elemental estimate can be conducted

 Indicate what are the key factors affecting elemental

estimate /adjustment
 WHAT… is Elemental Estimate?

The History…
 Elemental cost planning, during the design
phase of a project, first came into vogue
during the years after the Second World
War, when the art of accurate single
price estimating became increasingly
difficult to practice because of unsettled
economic conditions and the use of
non-traditional designs.

 Nowadays, this system is still used,

enabling the cost of a scheme to be
monitored during design development.

Kirhjam (2007); Soutos and Lowe (2011)

 WHAT… is Elemental Estimate?

Cost analysis
 The “systematic breakdown of cost data,
generally on the basis of an agreed elemental
structure”.

Elemental Cost Estimating

 The process of using such an elemental
structure, during the estimating process, to
calculate approximately the cost of each of the
elements.

Ashworth (2004)
 WHAT… is Elemental Estimate?

What is an Element?

 An element is defined as a major part of the

building, which always performs the same
function irrespective of its location or
specification.

Kirkham (2007, p.173)

 WHAT… is Elemental Estimate?

Elemental Cost Plan

 A list of the elements of a building such as
substructure, frame and upper floors, each with its
share of the total budget cost.

 Standardization of the list of elements helps to

ensure uniformity between cost estimates or
cost analyses of different projects.

Brook (2008, p.72)

Example of
Elements

Elemental cost plan for a

portal-framed building…

Brook (2008, pp.72)

 WHAT… is Elemental Estimate?

In general, a project can be dissected into following ELEMENTS…

 Foundation (note different foundation type)
 Substructure (normally use ground slab area to pro-rata)
 Structural frame and slab (note storey height difference)
 Sundry concrete (e.g., water tank, lintel, etc.)
 Roofing (adjusted for roofing area)
 Staircase (note storey height difference)
 Internal walls (note storey height difference)
 External elevations (e.g., windows, curtain walls, external walls, finishes)
 Internal doors and iromongeries
 Internal floor finishes
 Internal wall finishes (note storey height difference)
 Internal ceiling finishes
 Fittings and sundries (e.g., sanitary fittings, cabinets, etc.)
 M&E services [e.g., ACMV, lift (note no. of lifts), fire services, plumbing & drainage, Electrical (HV &
LV)]
 Builder’s works in connection with M&E (use 3% on M&E cost)
 External works
 Preliminaries (around 15-20% of all costs)
 Contingencies (normally 10% at early estimate, 5% in detailed estimate)
 WHAT… is Elemental Estimate?

Elemental Cost Plan

 There are 2 kinds of elemental cost plan:

 One is produced to show how a client’s affordability target can

be broken down into sufficient detail to control the
development of the design. (top-down)

 The other is a summary of a more detailed cost plan which has

been produced based on existing designs and advice from
specialist suppliers. (bottom-up)

Brook (2008)
 WHEN… Elemental Estimate?
Pre-Contract Stages Main Purposes
Inception & Feasibility Prepare feasibility studies to
determine cost limit /budget
Outline Proposal Prepare cost estimate &
initial cost studies in order
to confirm cost limit
/budget
Scheme Design Prepare cost plan & detailed
cost studies in order to
confirm cost limit /budget
Design Development Update cost plan & further
cost studies of alternative
designs
Tender Cost check of final design
Available information Type of Cost
Planning
Site location & area; project Preliminary Cost
details (e.g., type, plot ratio, Estimate
CFA, height limit)
No dwgs.
Sketch design (e.g., general Elemental Cost
layout, building shape, no. Estimate
of storey)
Plans, elevations & sections; Cost Plan
frame plans; foundation
information; finishes level;
building services requirement
Alternative design proposal Revised Cost Plan
Complete design (i.e., tender Pre-Tender Cost
/working dwg & specifications) Estimate HKIS (2006)
 WHY… Elemental Estimate?

There is a need for a design cost-plan to emerge.

THE CONCEPT :
 to compare the value of a proposed building
with other completed schemes in order to
ascertain whether or not the amount of money
allocated to each part of the building is reasonable,
both in itself and as proportion of the total
building cost.
Kirhjam (2007); Soutos and Lowe (2011)
 WHY… Elemental Estimate?

However, how to make it an apple-to-apple comparison?

 What about…
 Comparing the summary pages of their bill of quantities (BQ)?
 To eliminate the influence due to any difference in the size of the 2 buildings,
the each part of the BQ would have to be divided by the floor area of the
respective building  comparable figures ($/m2)
 Any problem?
 BQ is separated into trade /work section totals. It would only provide
information about how much each work section (e.g., excavation,
concrete, brickwork, etc.) will cost.
 However, one building may have more expensive concrete work than another
simply because the first one is a concrete framed building, while the other has
a steel frame.
 Hence, work section totals from BQ do NOT give valuable
information on which to make appropriate cost comparison
at design stage.
Soutos and Lowe (2011)
 WHY… Elemental Estimate?

Some part of the building always perform the same function

irrespective of the building types.

For example, the frame always provides structural stability no

matter what the building is.

Therefore, if buildings were divided into such ‘elements’, a

comparison would then be straightforward.

Soutos and Lowe (2011)

 The OBJECTIVES of Elemental Estimates

 To estimate the distribution of costs among

the constituent elements of a project.

 To relate the cost of any constituent element

to its important as a part of the whole
project.

 To compare the cost of the same element

in previous similar projects.

 To enable a determination of how costs

could be allocated to obtain a better
project ( design development based on
cost plan, revised cost plan and cost
analyses).

 To obtain cost data for future projects.

 Elemental Estimate… HOW?

Total Construction = Sum of (Elemental Quantity x

Cost Elemental Unit Rate)

 Where
 Elemental quantity: -
 No. of door
 Area of wall finishes
 Volume of concrete structure

 Elemental unit rate: -

 Average cost per unit elemental quantity
 (i.e., Total Cost of Element /Elemental Quantity)
HKIS (2006)
 Elemental Estimate… HOW?

 Elemental Quantity
 Design information
(e.g., sketch design from the Architect)
 Previous similar projects

 Elemental Unit Rate

 Location factors
 Specification level
 Construction methods
 Cost analysis of previous similar projects
 Adjustment of price index

 Allowance for
 Preliminaries
 Contingencies
HKIS (2006)
 Elemental Estimate… HOW?

What is preliminary?

 They usually comprise all items of site indirect

expenditure that cannot be attributed to individual
items of work but to the project as a whole, or to
substantial sections of it.
 Such costs may include: salaries and wages of site staff,
site offices, messrooms, facilities, etc.

What is contingency?

 Unlike preliminaries, the contingency sum is an

arbitrary amount decided by the client/the design
team.
 It is not really part of the contractors’ tender but is an
amount the contractor is instructed to add to his
tender in order that there may be a cushion to
absorb unforeseen extras.
 Elemental Estimate… HOW?

In fact, the estimation of elements can be calculated in

2 ways:

1. By measuring the approximate quantity of each

element and applying a unit rate

2. By calculating the proportion of total cost for each

element on a similar building and using this ratio to
divide the budget for the proposed building into its
elemental breakdown

Which one is better??

Brook (2008)
 Elemental (Previous Project)

Estimate… HOW?
 If a contractor has built
some portal-framed
factories, he will know
the costs of each sub-
contract package and
can express this
information as costs for
each element as a
rate ($/m2 of floor
area).

 The site team has been

asked to feedback cost
information to the
estimator by
converting package
values to elemental
costs.
Brook (2008, pp.74) Brook (2008)
 Elemental
Estimate… HOW?

 A cost plan for

another similar
factory can be
generated by
multiplying each
rate by the new
floor area.

 Adjustments will
further be made for
inflation,
significant
specification
changes, etc.
Brook (2008, pp.75)
 Elemental
Estimate… HOW?

Typical examples for

adjustments:
 No. of sanitary
appliances,
 Internal doors,
 Roller shutter doors,
 Ground
improvements, etc.

Brook (2008, pp.75) Brook (2008)

 Elemental Estimate… HOW?

Key criteria for this approach:

 Similarity of the 2 projects, e.g.
 Floor area

 Wall-to-floor ratio

What if the subject factory has a much

smaller floor area?
Can this proportional approach be still
applied ??

Brook (2008)
 Elemental Estimate… HOW?
If the subject factory has a much smaller floor area
 ↑ wall-to-floor ratio & a shorter project period

 The estimator should look at some elements such as

external walls and apply a rate/m2 (of the subject
element).
 An allowance for preliminaries should be calculated
using the cost per week of time-related costs for a similar
factory and multiplying by the duration of the new scheme.

A combination of historical data (proportional approach)

and calculated costs for certain elements (approximate
quantity approach) is adopted.
Brook (2008)
 References

 ASD (2014) Building Works Tender Price Index, retrieved at

https://www.archsd.gov.hk/en/reports/building-works-tender-price-
index.aspx on 10th Sept 2014.
 Brookes, M. (2008) Estimating and Tendering for Construction Work, 4th
Ed., Routledge.
 HKIS (2006) Basic of Cost Planning and Cost Estimate, retrieved at
http://www.hkis.org.hk/hkis/general/mis/CostEstimate.pdf on 10th Sept
2014.
 Kirkham, R. (2013) Ferry and Brandon’s Cost Planning of Buildings, John
Wiley and Sons.
 LS (2014) HK Domestic Building Cost, retrieved at
http://www.dlshk.com/cost_data/charts/costdata4.html on 1oth Sept
2014.
 RLB (2015) Quarterly Construction Cost Update, retrieved at
http://rlb.com/wp-content/uploads/2015/04/rlb-hong-kong-cost-report-
march-2015.pdf on 26th Oct 2015.
 Soutos, M. and Lowe, D.J. (2011) Elemental cost estimating: current UK
practice and procedure, Journal of Financial Management of Property
and Construction, 16(2), 147-162.