FORECASTING COSTS

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Cost management The quantity surveyor has the responsibility for providing accurate and timely cost advice throughout the duration of a project to a variety of organisations including the client and architect; The terms commonly associated with cost advice are: Element Part of a building that fulfi ls a specifi c function or functions irrespective of its design, specifi cation or construction, e.g. the element external walls provides the external vertical envelope to a building, separating the internal and external environment irrespective of how it may be constructed. Each element is fully defi ned in order that there can be no doubt as to what is included within a particular elemental cost and that all estimates are prepared on the same basis. An example of the BCIS standard list of elements can be found at:

Cost planning Cost planning came to prominence during the 1970s and was devised in an attempt to introduce more rigour and accuracy into the pre-contract costing process The key publication that introduced cost planning was Building Bulletin No. 4, published by the then Department of Education and Science in 1972 The system, described in the following text, is based to some extent on the standard model set out in Building Bulletin No. 4, plus the standard list of elements developed by The Building Cost Information Service (BCIS) that is now the industry standard for presenting cost plans and cost advice The BCIS format therefore attempts to produce all cost information in a standard format based on standard rules and parameters Note that in order to maintain accuracy in the target cost, there should be no major changes in design after Stage D Design Development Cost control Planning cost is only half of the story. Once a project commences on site there is a need to control cost targets (set in the pre-contract phase) to ensure that costs do not spiral out of control.

Cost analysis Cost planning of new projects is dependent on accurate and well-documented cost information. Cost analysis is the process of analysing and recording the cost data of projects once tender information has been received A cost analysis is a record of how cost has been distributed over the elements of a building; it includes a brief description of the overall nature of the project and specifi cation notes on the general level of fi nishes and so on A cost analysis should be prepared as soon as possible after tenders have been received for a number of reasons, such as currency of the cost information and familiarity with the project One of the objectives of elemental cost planning is to make it easier for the design team and client to see at a glance where the cost of the project has been allocated The cost allocation should become more detailed as the design develops, although the overall budget should remain unchanged.

Cost significant elements The BCIS standard list of elements comprises thirty-four individual

elements and seven groups of elements. Some of these elements/ element groups will be larger, in value terms than others. For example, an analysis of several cost analyses would show a range of values for two elements as follows: External walls: 1220% + Services: 1530% + It therefore makes sense to concentrate more on the cost signifi cant elements and less on elements such as stairs and drainage, during the preparation of cost estimates. It is also good practice once the preliminary estimate is complete to check that the amount allocated to each group of elements is in an acceptable ball park range for comparable building types A useful guide to measurement conventions is The Code of Measurement Practice: A Guide for Property Professionals, RICS Property Measurement

Group,

Design risk An amount included in the budget at Stage B (Design Brief), after the elemental cost has been calculated, based on the perceived risk that the design may undergo changes that will impact on the budget during Stages C and D.

Price risk An amount included to reflect the estimated increases in cost between the preparation of the cost plan and the tender date based on tender based index.