Basics Budgeting explains budgeting

processes during the planning and building BASICS

phases step by step and in practical
terms, and shows in a clearly structured
PROFESSIONAL
PRACTICE
way how cost influences and risks are
estimated and evaluated. With support
from practical tips, examples and graphics,
inexperienced planners acquire an
indispensable tool for starting work in the
budget management field on a sound and
BUDGETING

BUDGETING
Bert Bielefeld, Roland Schneider
practical basis.

DESIGN

PROFESSIONAL PRACTICE
FUNDAMENTALS OF PRESENTATION
CONSTRUCTION
PROFESSIONAL PRACTICE
BUILDING PHYSICS AND BUILDING SERVICES
BUILDING MATERIALS
LANDSCAPE ARCHITECTURE
URBANISM
THEORY
BASICS

www.birkhauser.com
Bert Bielefeld – Roland Schneider

Budgeting
Bert
Bert Bielefeld
Bielefeld –- Sebastian
Roland Schneider
El Khouli

Entwurfsidee
Budgeting

Birkhäuser
BIRKHÄUSER
Basel
BASEL
 Contents
Foreword _7

Introduction _8

Basic budgeting principles _12

Concepts and structures _12
Costing parameters _15
Cost prediction principles _21
Factors influencing costs _22
Assessing cost risks _25

Costing methods _31

Costing based on cubic capacity _31
Costing based on floor area and usable area _36
Costing based on component elements _40
Costing based on construction elements _43
Costing based on work specifications _46

Continuing the budgeting process _51

Basic principles for continuing and maintaining
the cost ­planning process _51
Working with cost determination based on
construction elements in the planning phase _55
Working with trade-oriented cost determination
in the tendering phase _58
Cost control in the building phase _60
Establishing and assessing costs _63

In conclusion _65

Appendix _66
Literature _66
The authors _66
 Foreword
The key part of an architect’s job, alongside design and planning work,
lies in managing matters relating to the project and the client. This
­includes organizational, technical and financial aspects: from planning
the sequence of events, tendering, deadline planning and costing via site
management to handing over to the client. Here efficient and successful
building project management relies essentially on the confident handling
of building costs and deadline planning.

It is the planner’s duty to deploy the client’s money for the building
work as the client intended. As a ruler the planner has a pre-arranged
budget that he has to distribute between all the costs generated in the
course of the work undertaken. Keeping to the prescribed budget is usu-
ally crucial to the success of the project as a whole.

For this reason, the quality of planners is assessed to a very consid-

erable extent by the way they control costs and meet deadlines; to an
even greater extent, budgeting is one of the most important bases for
project realization, and it must play an integral part in the planning and
building process. Determining costs is essential when compiling a pro-
ject budget and for monitoring costs during the subsequent process, so
that any costs exceeded during planning and building can be identified
and controlled.

As students and professionals at the start of their career have little

practical experience, they are particularly uncertain about handling costs
for their early building projects. But their responsibility to the client
­requires that these matters should be tackled confidently.

Basics Budgeting explains budgeting processes during the planning

and building phases step by step and in practical terms, and shows in a
comprehensive and clearly structured way how cost influences and risks
are estimated and evaluated. This is supported by practical tips, exam-
ples and simple, comprehensible graphics that help when compiling a
budget. Inexperienced planners acquire an indispensable tool for start-
ing work in the budget management field on a sound and practical basis.

Bert Bielefeld, Editor

7
Introduction
The relevance of Estimated and actual costs are a key topic for client and architect in
­construction costs many building projects. This is not least because the client has to invest
a considerable sum in a building project, a sum that in many cases is far
larger than other expenditure. It is therefore essential for the client that
contractors work within budgets. This applies particularly when money
is being invested in properties to provide a return on investment, where
subsequent income (such as rents or sales) is set against the necessary
expenditure (building costs, financing costs, depreciation, maintenance
costs). The yield or profit (income minus expenditure) from property
­investments is a key criterion in deciding in favour of the project, and in
its success. Even slight building price rises during the construction phase
can drag the project into loss – with consequences that can last for many
decades.

An additional factor is that construction projects – unlike industrial

production – are usually highly individual in character, or can even be like
prototypes. This means that processes and structures can be carried over
unmodified from one project to another only to a limited extent, so im-
ponderables and surprises may occur that affect timing or finance in a
way that was wholly or partly unforeseen at the beginning of the project.
Additionally, a lot of time can elapse between deciding in favour of a proj­
ect and completing the building, so that estimates made at the beginning
of the project about shifts in market prices, for example, may sometimes
not hold good over a period of time.

Life cycle costs Even if this time span can entail considerable financial fluctuation, it
is very short if measured against the life cycle of a building, but will still
make a substantial impact. Financial decisions, e.g. about options for
construction or domestic services, have an effect throughout the entire
use or life cycle of the building, and lead to differing running costs. If the
costs generated (heating, water and power supplies, repairs, mainte-
nance etc.) while the building is being used are added up, they will be
substantially greater than the initial investment. But investment in a build-
ing project has to be raised within a very short period of a very few
months or years, while running costs extend continuously over decades.
Higher initial investment in technical equipment, such as more efficient
heating systems, for example, can achieve significant savings within the
lifetime of the building. > Fig. 2

8
 project development
n
litio
mo p
de

ro
t|

jec
en

t re
pm

alis
velo

atio
rede

n
hase

use p
use p

has
e
s
ta
t

en nd
ing
ishm em
rb pty
refu
maintenance |

Fig. 1: Life cycle costs

ts
cos
ding
Life cycle

uil
ed b
imis
Min
g costs
d runnin
Minimise
Aim of investment:
Aim of investment:

long-term use
rapid progress

Planning Use and running phase Life cycle

and building

Fig. 2: Links between investment and use costs

9
 Useful life
Shell

Screed, plaster

Technical fittings

Surfaces

Renovation

Refurbishment

In-depth refurbishment
Fig. 3: Life cycle of building sections

Investments­ Alongside the investment costs while a new building is under con-
during use struction and the on-going maintenance costs, new investment is needed
at various intervals (maintenance and replacement costs) in the life ­cycle
of buildings in order to raise the structure to a more up-to-date technical
standard or to repair significant damage. Here a distinction is made
­according to the part of the building concerned between various cycles
that may well turn out differently from project to project. The shell of the
building is generally the longest lasting section, and the end of its useful
life usually coincides with demolition and rebuilding. Sections with a ro-
bust finish such as the outer shell, plaster and screed are also pretty du-
rable and have to be replaced only after some decades. Technical fittings
(e.g. ventilation plants, plumbing, electrical installations, data systems
technology) and surfaces subject to wear and tear (e.g. paintwork, floor
coverings) last for a considerably shorter time and some of these are sub-
ject to very short investment cycles according to their function, construc-
tion method and maintenance level. > Fig. 3

This is why it is important to consider subsequent ease of replace-

ment and the life cycles this implies at the planning stage. If techni-
cal ­features with short life cycles such as data cables or ventilation ducts
are installed underneath longer-lasting items (e.g. screed or plaster),
these will have to be removed and replaced as well during the proce-
dure, along with all coverings and surfaces. This would mean that future

10
i­nvestment would be significantly more costly than would be the case
if reversible and accessibly installed installations in a shaft were used,
for ­example.

Generally speaking, clients will keep a careful eye on holding con- Clients’ expectations
struction costs in check and – in the case of a longer-term interest in the
use of the building – on their impact on the use phase as well. So archi-
tects and planners must accept that an interest in information and suc-
cess are a central planning outcome and build the necessary working
steps into the process. Keeping to budget and to the planned completion
date are among the few physical known quantities that clients can and
will use to judge the quality and professionalism of the architects and
planners involved.

11
Basic budgeting principles
Some basic principles have to be set down at the outset if budgeting
is to be understood. As well as defining the technical terms involved, it
is above all necessary to ensure that the areas of influence and fluctua-
tion range of building costs are grasped, as this is the basic essential for
assessing the validity of costing. Handling imponderables and cost risks
transparently is a key feature of responsible care for the client during the
planning and construction process.

Concepts and structures

Costs within If the entire life cycle of a building is considered, further use and dis-
the life cycle posal costs have to be taken into account alongside the actual construc-
tion costs. ISO 15686-5 defines life cycle costs (LCC) in the narrow sense
as the sum of construction costs, running costs, cleaning and mainte-
nance costs, and demolition or end of life costs. More broadly speaking,
whole life costs (WLC) also include external costs not relating to con-
struction, such as income, financing costs etc. > Fig. 4

Fixing the budget A budget is fixed for almost all projects when the decision to put
them in train is taken, regardless of whether it is a new building or an
­existing project, or whether a private or a public client is involved. The
budget is not the same as the sum of money that provides the planning
base for the work of architects and specialist planners. As a rule the
budget contains additional cost factors for the client, e.g. plot acquisi-
tion, financing costs, additional internal costs, legal advice and solicitors’
costs etc. Project related cost factors are relevant to the planning team
◯ as a costing specification.

◯ Note: A distinction has to be made between a cost-

ing specification as a fixed budget emanating from the
client and the cost guarantee submitted by an archi-
tect. Here the architect is guaranteeing to keep within
these costs and is thus liable for any additional costs
that may be incurred – even if he or she is not responsi-
ble for generating them.

12
 WLC, whole life costs

Externalities LCC, life cycle costs Non-construction costs Income

– financial costs – sales income

– land costs – rental and incidental
– admin., tax costs
– transaction costs

Construction costs Operation costs Maintenance costs End-of-life costs

– manufacturing costs – rents, taxes – building cleaning, – demolition, disposal

maintenance
– conversion costs – energy costs, supply – refurbishment – consultancy costs
– planning costs – insurance, – renovation, – rebuilding
telephony adaptation

Fig. 4: Life cycle costs allocated according to ISO 15686-5

All subsequent costings in the planning and building process have to

address this. A distinction has to be made between the maximum and
the minimum principle when dealing with a costing specification.

Under the minimum principle, it is assumed that the client has fixed Minimum/maximum
quality requirements and that these are to be realised at the lowest pos- principle

sible building costs. This applies, for example, when there are already
fixed rental contracts in place, including building descriptions relating to
later users, or if a hotel chain is building another hotel following a tried
and tested, financially optimised scheme.

The maximum principle works on the principle that that there is a

fixed limit to costs, and that the greatest possible building volume and
quality is be realised on this basis. This is the case for publicly funded
housing, for example, where the maximum living space is to be realised
within a fixed amount of funding. > Fig. 5

Budgeting is the generic term for all activities carried out during the Budgeting
planning and building process. Generally this includes listing costings,

13
 Minimum principle Maximum principle
Building cost

Building cost
Quality Quality

Fig. 5: Minimum and maximum principles

monitoring and checking results and events within the process, and also
controlling activities such as feeding price increases into the budget.

Costings are prepared in stages in the course of the planning and

building process, especially when the client has to make key decisions.
For example, if it is necessary to decide whether a variant preliminary
­design should be pursued further or a planning proposal should be sub-
mitted to the authorities for approval, then the current cost position
should be determined as a basis for the decision.

Two essential factors are involved in cost control. First, it means

matching the current costings to the cost specifications and the previ-
ous costing stages, in order to be able to identify and evaluate any devi-
ations from the process that may have occurred. Then the costs within
the process have to be reviewed continuously, so that the client can be
informed in good time about substantial cost-related consequences. This
puts the client in a position from which it is possible to order direct meas-
ures such as quality adjustments or area reduction where necessary.
Such interventions in the process are called cost control.

Cost classification Another key factor is the way in which costs are presented and struc-
tured. Here a distinction is made between two fundamental ways of look-
ing at things:

Cost classification based on structural components uses building

systematics to structure the building costs that have been determined.
Cost generating elements are listed according to the amount of detail
­required in terms of structural components (ceiling, wall, roof etc.) or by

14
Structural Building components Contract
component bases award bases

Costs for interior walls Shell work

– loadbearing interior walls loadbearing interior walls

– plasterboard walls reinforced concrete ceiling

– plaster rendering
Dry wall construction and rendering
– wall tiles
plasterboard walls
plaster rendering
Ceiling costs
Tiles and ashlar
– reinforced concrete ceiling
wall tiles
– floating screed
floor tiles
– carpeting
– floor tiles Floor covering work
– plaster rendering carpeting

Fig. 6: Structural component-based and contract award-based

single structural elements (floor covering, screed, ceiling rendering etc.).

Here the costs are fed into so-called cost groups. > Chapter on costing para­meters

Cost classification based on award after tender is based on the sub-

sequent structure of award units within the tendering and contract pro-
cess. In this case, skills-related cost structures (shell, roof covering,
screed, rendering, paintwork, electrical work etc.) are taken as the ­basis.
> Chapter on working with a trade-oriented costing in the contract award phase

Costing parameters
Building costs are calculated mainly by following a scheme of multi-
plying volumes/quantities within a costing parameter and then adding
in individually identified costing parameters where appropriate. Here a
distinction has to be made between various cost parameter types.
—— Cubic capacity/plot area-related costing parameters
—— Cost parameters for building components/raw elements (ceiling,
roof, wall)
—— Cost parameters for building components/light elements (ceiling
rendering, reinforced concrete ceiling, screed, floor covering)
—— Unit prices/tender prices (request for tenders or previously con-
cluded projects)
—— Construction estimate from contractors (personnel costs, material
costs, site overheads)

15
Fig. 7: Specimen structural component based costing following German DIN 276

100 Plot 110 Plot value

120 Additional plot costs
130 Clearing
200 Preparation and access 210 Preparation
220 Public access
230 Private access
240 Balancing charges
250 Transitional charges
300 Building – building construction 310 Excavation
320 Foundations
330 Exterior walls
340 Interior walls
350 Ceilings
360 Roofs
370 Structural fittings
390 Other building construction measures
400 Building – technical facilities 410 Sewerage, water and gas fittings
420 Hot water facilities
430 Ventilation facilities
440 Electrical installations
450 Telecom and IT facilities
460 Conveyor systems
470 Facilities for specified use
480 Building automation
490 Other technical equipment measures
500 Exterior work 510 Plot areas
520 Reinforced areas
530 Exterior buildings
540 Technical facilities in external buildings
550 Fixtures in external buildings
560 Bodies of water
570 Planted and seeded areas
590 Other exterior facilities
600 Furnishings and artworks 610 Furnishings
620 Artworks

16
 700 Additional construction costs 710 Client requirements
720 Preparation for property planning
730 Architects’ and engineers’ fees
740 Expert reports and consultation
750 Artistic work
760 Financing costs
770 General additional construction costs
790 Other additional construction costs

Volume- or area-related costings estimate the overall costs for a Volume- or

building by using parameters that are easily calculated from a design. In area-related costings

order to do this, the allotted overall sum required for a building and cor-
responding values such as
—— gross cubic capacity (GCC) as the building volume
—— gross floor area (GFA) as the sum of all the storey areas including
construction areas or
—— usable area (UA)
has to be established. Dividing these into each other gives rough val-
ues per square or cubic metre for future projects. Values of this kind ­often
come in very useful in the early stages of a project, when no precise data,
plans or quality requirements are available.

One major problem when using volume- or area-related parameters Cost generators
arises because these do not relate to the actual cost factors. > Fig. 8 ◯

◯ Note: A part of a building is known as a cost factor if

it contributes to building costs in manufacture. 1 m²
of reinforced concrete ceiling or 1 m² of masonry wall
are direct cost factors, for example, but 1 m³ of build-
ing volume or 1 m² of usable area generate costs only
indirectly, because they all share proportionately in
­different cost factors. This inevitably involves conver-
sion problems.

17
 component part

new building element

demolition

Lack of coherence when using gross area Costs according to cost generators

Fig. 8: Lack of precision in volume-/area-related building cost determination

Component- and Parameters based on cost factors (building components, technical

building elements facilities etc.) for a building are correspondingly more accurate. Com­
ponent-related parameters (also called component elements) sum up the
costs for a complete section of the building (ceiling price per m², roof
price per m²), and so are very simple to calculate after a superficial gen-
eral survey of all parts of the building. Building-element related para­
meters (also called fine-element) allot a set quantity and a specific cost-
ing parameter to each individual structural element (m² of floor covering,
m² of screed, m² of reinforced concrete ceiling, m² of ceiling rendering,
m² of ceiling paintwork). This makes it possible to establish building costs
● much more precisely than with component elements.

● Example: The price for a component ceiling element

does not reveal anything at all about the individual
­elements of the ceiling at first. But there are clear price
differences relating to ceiling construction (timber
beams, reinforced concrete) or floor coverings (natural
stone parquet, PVC covering etc.). This means that
existing prices must always be supported by additional
information and should not be applied to a particu-
lar project without embarking upon more elaborate
­calculations.

18
Specification level
Building element dry wall including
with quality requirement additional components

Cost parameter for

planner’s costing inclusive price per m2

Specification items for

Budgeting level

dry wall free wall ends apertures .......

a main item as defined
in the wall
by the client

Prices on the basis of UP/m2 UP/rm UP/piece ........

contractor’s calculations

Fig. 9: Connection between building elements and unit prices (UP) in a tender

But building elements also include the whole range of typical addi- Inclusive price
tional components. So when setting a price per m² for floor coverings it
must include skirting boards, connecting bars, penetrations etc., and a
dry wall structure must include doorways, wall ends, connections etc. in
the price per m². > Fig. 9

Unit costs are the accounting prices offered by the contractor for Unit cost
each individual item in a tender. The unit cost in agreed contracts after
precise calculation (not all-in contracts) forms the contractual basis
­between client and contractor. It is also possible to work out costs based
on unit prices before the contract is awarded. This approach will be pre-
ceded by tenders backed up by statistically determined unit prices.

Unit prices offered by a building company will be determined in their Construction

turn on the basis of their single cost components. If costs as calculated estimates

by the contractor are used, this is known as an estimate. Estimating a

tender for building work – regardless of whether it is based on an all-in
price or a number of unit prices in a specification – is carried out accord-
ing to business principles of cost and performance accounting. So a ­direct
distinction is made between costs to be allocated to the work required
and supplements for overheads or business expenses. > Fig. 10

Costs that can be allocated directly are known as single partial ser- Individual partial
vice costs. These include wages, the cost of materials, equipment and service costs

machine costs and where applicable outside service costs that can be
allotted to a service and are offered as an item for tender.

19
specification items
Wages Materials Equipment Outside services

Manufacturing costs
Costs for

Individual partial service costs (IPSCO)

Primary costs

+ Site overheads (SO)

+ General business costs (GBC)

+ Risk and profit (R+P)

= Net tender sum

+ Value added tax (VAT)

Gross tender sum

=
Fig. 10: Structural basis for a contractor estimate

The relevant wage elements within a unit costing are calculated from
the average wage and the amount of time needed to produce one square
metre of tiling, for example. The average wage includes social and addi-
tional wage costs, as well as the actual wage paid to employees. To cal-
culate this, all the costs generated in a year for an employee are divided
by the number of effective working hours per year (minus annual leave,
sickness, training, public holidays etc.).

The relevant material costs within a unit costing include the purchase
price for materials such as tiles, tile adhesive, and grouting cement for
tiling, and also additional costs for breakages, waste etc. Auxiliary build-
ing materials (e.g. shuttering, supports) and fuel (e.g. fuel for a digger,
power for a screed machine) are included in the calculation.

Outside service costs include all costs generated by sub-contractors

such as hiring (of a mobile crane, for example, or a concrete pump) or
separate contractors (e.g. sub-contracting for pointing by a dry builder).

20
 Once all the above-mentioned costs that can be directly itemised Overheads and
have been calculated, they are added to individual costs within the re­l­ business expenses

evant section of the work. All items are additionally increased by supple-
ments for further costs that may arise. These include building site over-
heads, general business costs and supplements for risk/profit.

Building site overheads (BSO) include all costs that cannot be allo-
cated directly to the building work but that are nevertheless generated
within the building operation. This includes items such as accommoda-
tion expenses, site insurance, expenses on the contractors’ management
side etc.

General business costs (GBC) are the building contractors’ non-­

operative running costs that that have to be covered proportionately
across all building sites. These include office rental and upkeep, for
­example, management salaries, upkeep and security for a builders’ yard,
and costs for legal and tax advice.

Finally, risk and profit (R+P) represent the commercial result that the
building project would like to achieve, over and above the previous prime
costs.

Generally speaking, such different levels of detail can be graded from

volume-/area-related cost parameters down to detailed business cost
elements in the contractors’ budgeting. Appropriate parameters are used
as a basis according to the costing methods chosen. > Chapter on costing
­methods

Cost prediction principles

The point in time at which costings are made is called the cost esti- Cost estimation point
mation point. It is possible for there to be some years between the cost
estimates made in the early planning phases and the award of the build-
ing contract or the final costing for the building work as charged. This
makes it difficult to predict future market price changes and include them
in the costing.

So in fact costing can be based only on the conditions prevailing at

the time, as future developments are speculative and thus of little rel­
evance. But it is important for the client to know how much money will
­ultimately have to be paid for a project.

The following actions can be taken to reduce this difference:

—— Assess and estimate possible variables in future cost movements.
> Chapter on influences on costs

21
 fixing budget prediction

cost
estimation
point

planning realisation

actual costs

Fig. 11: Cost prediction principle

—— Carry out the best possible risk investigations. > Chapter on assessing
cost risks
—— Do not see costing as static but update it throughout the whole
process and keep adjusting it to current developments. > Chapter on
updating the budget

Factors influencing costs

If building costs are to be estimated purposefully and realistically it
is essential to understand the connection between planning qualities and
costs as well as going through a technical costing exercise. Costing
­parameters are available for all the levels presented in the chapter on
costing parameters via statistical listings, online platforms or books. But
only the architect responsible can adapt them to suit a particular project.

General influences that may well make the project in question dif-
ferent from your own have to be taken into account, particularly in the
case of parameters that are not directly linked to cost factors. > Fig. 12

Scale and context The scale of a project is highly relevant to the costs per square
­ etre, as small projects are often associated proportionately with higher
m
­expenditure.

If very difficult sites are involved such as an inner city area that has
to be developed in its entirety, then it will be extremely difficult and
­expensive to organise the building site, as it may be that external areas

22
 plot
function
quality

installation level

costs
time

organisation
size
form

Fig. 12: Factors influencing building costs

will have to be rented and streets closed, which will cost money. If the
site is not accessible by a developed road (e.g. a research observatory
in a high mountain range), then considerable expenses may well be gen-
erated in getting to the building site. ●

It is goes without saying that different buildings such as dwellings, Function and
offices, warehouses or laboratories cannot be compared in terms of vol- complexity

ume- or area-related parameters, because the installations required and

the complexity of the projects can differ considerably. Building costs
­depend on the technical installations, particularly for projects needing
large quantities of domestic installations. So if volume- and area-related
parameters are being applied, then a building with a similar function
should be used for comparison.

If the project for which estimates are to be prepared is within the Projects in existing
e­ xisting building stock and is to be converted or refurbished, consider­ building stock

ably greater costs will be involved than for a new building. In the sphere

● Example: If we consider the degree of site prepara-

tion and clearing needed to lay screed, this will depend
on whether a medium-sized building is to be treated,
or just a single room. If calculated by the square metre
price for the screed, the relevant building overheads
will be significantly higher in the case of a very small
project.

23
 of monument preservation, individual finishing and adjustment work is
often necessary, with large numbers of personnel involved. Many build-
ing contractors work on the basis of higher expenditure simply because
the project in question deals with existing building stock. They know from
experience that wide-ranging problems and special features will mean
that it will not be possible to work as efficiently as for a new building.

Building period The building period required for a project can also be very important
if building has to be carried out very quickly or will be subject to a large
number of interruptions. If the contractor can use employees only for
short periods – for example because breaks have to be taken in the
course of work on projects in existing building stock that continue to be
in use – s/he will also have to factor in wage costs for the unproductive
intermediate periods. If realisation times are very short, additional costs
for personnel and machines will have to be built in. The provision of build-
ing site facilities can also be a key factor in terms of overall costs, espe-
cially if these costs are not reflected in the physical end result – the ­fabric
of the building.

Quality The quality of both architecture and the materials is significant in the
same way. Products made mechanically in large production runs offer
considerable savings over components made by hand. Material prices
can rise exponentially in the luxury sector, for example for kitchens, bath-
room furniture, tiles, facades etc. In the case of individually designed and
produced components such as special facade structures or windows it
may be necessary to take further expenses into account, such as individ-
ual permits and technical experts, as well as individual manufacturing
costs.

Wages and Generally speaking, the question arises of the extent to which pro-
material costs ducing a construction element is very labour-intensive and thus domi-
nated by wage costs, or whether its key features are rapid installation
and possibly high material costs. In countries with high wage levels it is
preferable to opt for industrial prefabrication and simple delivery/instal-
lation instead of craft work and raw materials processed on site.

If the component being budgeted for is a work-intensive construc-

tion element, changing wage costs may be relevant for price increases
in the planning and building process. Additional wage costs may have to
be taken into account, as well as general wage scale variations. And some
materials may vary considerably in cost as a result of fluctuating raw
­material prices. Metal prices in particular (e.g. for steel girders, reinforce-
ment or electric cables) are very heavily dependent on world demand,
● particularly from China, India and other rapidly developing markets.

24
 But regional and local market fluctuations have to be taken into Market prices/
a­ ccount, as well as world trade and international raw material prices. If economic
developments
the building trade is doing well in the economic cycle and building con-
tractors have full order books, prices will be much higher than in times
of underemployment when every contractor is desperate for orders.
Sometimes prices can fluctuate by 20–30 % between recession and
growth phases.

Assessing cost risks

The above explanations make it clear that it is sensible or even
e­ ssential to conduct a risk assessment operation. It needs to be said
from the outset that the concept of “risk” should not be seen as negative
in the broader sense. In comparison with “security”, a risk means first
and foremost a lack of knowledge about the state of affairs or uncertainty
about whether something is going to happen.

Risks cannot usually be excluded, but simply confined or minimised.

Expense incurred in doing this (e.g. general site or contamination tests)
are known as due diligence. So a decision has to be made about which
costs make sense within a project, so that potentially damaging effects
can be kept to a minimum. > Fig. 13

Risks in the broader sense are fundamentally assessed on the basis Damaging effects
of the incidence rate and the damaging effect in each case. In particular, and the incidence
rate
the risks that are very damaging with disastrous consequences and are
very likely to occur have to be limited in advance. The rigour of the exam-
ination and the limits to due diligence are fixed for individual projects.
It can be helpful to limit risk to a tolerable and above all financially via-
ble level by using the ALARP method (As Low As Reasonably Practicable).
> Fig. 14

Cost risks can be allotted in terms of their origin in various risk ­areas. Market and
As has already been explained, market risks such as fluctuations in the commercial risks

economic cycle can lead to considerable budget changes. Business risks

● Example: A few decades ago, attics were still made

by carpenters from rough timbers, but now CAD draw-
ings are used to prepare all the necessary purlins and
rafters ready for fitting in the factory, using joinery
machines. Even though some of the machines are very
costly, they are considerably more cost-efficient than
hand production.

25
 Costs

Break- even point

Due diligence Damage costs

Expense

Fig. 13: Connections between damage costs and due diligence

such as strikes or insolvency also represent a high uncertainty factor for

the success of the project.

Subsoil risks Subsoil risks also have to be taken into account. For example, high
groundwater levels can require elaborate reinforcement in the cellar and
temporary lowering of groundwater levels in the building phase. If the
subsoil turns out during the building phase to be non-loadbearing, com-
pensatory measures (pile foundations, soil improvement, anchoring, load
distribution slabs etc.), which are usually elaborate and very cost inten-
sive, have to be undertaken.

Risk in existing Particular risks in existing building stock have to be taken into
­building stock a­ ccount for projects in existing stock. These can include:
—— contamination (asbestos, PCB, PAH, AMF, timber protection agents
etc.)
—— static stability can no longer be guaranteed (non-existent
­documentation, corrosion, inappropriate interventions etc.)
—— data unavailable (missing plans/planning permission for the
­project, unapproved modifications, building geometry etc.)
—— damage to parts of building (damp penetration, mould formation,
cracks etc.)

26
 catastrophic
Extent of damage

critical

noticeable

minor

trivial

incalculable improbable rare occasional regular frequent

incidence rate

to be excluded in
no measures to be taken ALARP area advance

Fig. 14: Riskograph using the ALARP method

—— preservation measures not addressed (adaptation to current

­regulations needed)
—— domestic services (ramshackle piping, lack of spare parts,
­adaptation to current regulations etc.)
—— fire protection requirements (upgrading, compensatory measures,
replacement etc.)
—— and so on

This is why is it necessary to assess the building land and any exist-
ing building where appropriate carefully at the beginning of the project,
in order to minimise the greatest of these risks.

Major uncertainties in terms of keeping within the costs as fixed fre- Costing risks
quently arise as a result of setting the project budget early and on the
basis of insufficient data. Fluctuation in the area- or volume-related
­parameters arise because no reference has been made to cost factors
as described above, and in addition to this qualities are often described
imprecisely in the early stages, e.g. “average quality”, which leaves con-
siderable scope for interpretation.

27
Fig. 15: Example of a risk assessment

Risk Cost Effect/ Percentage risk Risk costs

consequence
Building permission not EUR 70,000 End of project due and 30 % EUR 21,000
granted previous planning
Subsoil not EUR 40,000 Ground improvement 25 % EUR 10,000
loadbearing needed
Steel price rises EUR 80,000 Tender prices have to be 10 % EUR 8,000
adjusted
Shell contractor declared EUR 250,000 Increased price as a result 3% EUR 7,500
insolvent of delay and new contractor
... ... ... ... ...

Risk assessment The first key basis for assessing cost risks involves addressing pos-
methods sible risk areas. While it is possible to reduce uncertainty through early
analysis and expert reports, risks cannot be definitely ruled out until
­completion and the final invoice. So possible risks areas have to be
­recorded from the outset, assessed in terms of damage caused and
the ­incidence rate, and then observed throughout the process and the
assessment ­updated in order to guarantee complete risk management.
As this ­involves considerable effort and expense, risk must be assessed
in ­direct relation to the project and an agreement reached about the level
of ­detail and assessment to be taken as a basis.

Now usually only a few potential dangers actually emerge during the
planning and building process, so it is not very helpful just to add up the
possible risk costs. So the risk budget can be assessed using various
mathematical processes, but this depends to a very large extent on the
client’s risk awareness. One possibility is to present the risks using the
following formula:

Risk budget = C Risk  1² + C Risk 2² + C Risk 3² + ...

Risk buffer One typical approach in dealing with costs risks is to build in a risk
buffer. This can be placed in the costing as a cost item or planning in
­optionally as a possibly quality reduction. > Fig. 16

28
 Ascertained construction costs

Client’s quality requirements

– surface design – special features and fittings

– high energy saving standards – bathroom and kitchen fittings
– domestic facilities and equipment – etc.

Minimum investment

Technical measures Functional measures

Construction costs
– statical measures – room sizes and types
– sound insulation requirements – function groups and access
– minimum energy standards – escape and emergency routes
– foundations – workplace requirements
– etc. e.g. air conditioning and lighting
– technical requirements

Fig. 16: Buffering cost fluctuations

In this way, modules are identified that can be used for buffering
should a risk occur. These are usually based on finishing requirements
for the later stages of the project such as floor coverings, external facil-
ities etc. Essential basic requirements for this method are:
—— the client’s agreement
—— the cost relevance of the selected construction elements
(for example, the quality of the toilet walls offers only a very small
buffer in a EUR 20 million project)
—— that the contract has not yet been awarded (if parts of an agreed
building contract are cancelled, further payments still have to be
made to the building contractor)

Unforeseen costs can be dealt with by, for example, building in

phases, fixing optional building stages (e.g. developing the attic storey),
keeping alternatives open in the case of major cost factors (PVC floors,
granite floors etc.). The saving potential of these buffers has to be calcu-
lated and a final date set for when each option within the process is freely
available. > Fig. 17

29
Fig. 17: Example of modular risk buffering

Cost module Overall module Saving Available

cost potential until
Addition of two garages EUR 18,000 EUR 15,000 March 2014
and possibly carport
Extending attic storey, EUR 30,000 EUR 12,000 July 2014
possibly only insulating ceiling
Ashlar floor covering, EUR 25,000 EUR 12,000 August 2014
or linoleum
Exterior garden development, EUR 50,000 EUR 20,000 November 2014
or possibly only grass

Project
Money

development
Planning
Building begins

Shell
Completion
Outer walls complete

Fitting
and finishing

Risk
Possible buffers
Time

Fig. 18: Risks and buffers compared

Risks and their financial implications, and their savings potential, can
be compared directly in this way, and related to a timescale. This also
shows up corresponding gaps in cover provision. > Fig. 18

30
 Costing methods
There are various ways of drawing up costings. The choice of method
depends on the project phase concerned or the depth of planning
achieved. The fundamental principle is that costing figures are always
multiplied by a unit of quantity in order to be able to make a statement
about the costs to be expected. > Chapter on costings For example, the more
detailed the available information about the quality of wall and floor sur-
faces or technical domestic equipment standards, the more precisely
this can be taken into account when costings are being drawn up. There
is usually not much available in terms of detailed information at the be-
ginning of a project, as this has still to be established in agreement with
the client or the various specialist planners in the course of the planning
process. But the amount and type of space needed is usually fixed from
the outset, as this is clear from the intended use or from the prescribed
spatial programme, which means that appropriate cubic capacity and
floor areas can be worked out and costs calculated. The more details
about the planned building are fixed, the more possible it should be to
produce detailed costings. The various costing methods and their appli-
cation potential for various project phases are described below.

Costing based on cubic capacity

One costing possibility in the very early stages of a project is to
c­ alculate the cubic capacity of the building and to multiply it by a cost
figure.

Cubic capacity is derived from the area of the building and its height
from the foundation of the floor slab to the top edge of the roof covering.
In Germany, cubic capacity parameters are defined precisely in DIN 277,
which calculates them as gross cubic capacity (GCC). Costing figures can
be obtained from national building cost information services ( > Literature
chapter), who record and evaluate these statistically by project type, fin-
ishing standard and use. > Fig. 20 It is also possible for individuals to de-
vise or set up their own costing systems, provided that a large number of
projects of the same type, similar size and finishing standard have been
planned, built and budgeted for. In such cases the building costs are
­finally worked out at the end of the project and then calculated back to
the cubic capacity of the building as a rough reference unit. It is essen-
tial to ensure that uniform references are made to cost values and quan-
tities. Construction costs calculated from the cubature of the building
­always remain imprecise, as it is necessary to rely on very rough assump-
tions about construction quality and to an extent about quantities as well,
and it may well be that no definitive building design is available. Direct

31
 h

b
a

Fig. 19: Calculating the gross cubic capacity

links with cost factors are also not available. > Chapter on costings So work-
ing out the expected building costs based on gross cubic capacity is sim-
ply a planning instrument for defining building targets in terms of quan-
tity and quality.

If the gross cubic capacity needed for a building project has already
been fixed, it is then possible to check the essential feasibility or ­financial
viability of a construction project by using product-specific cost figures.
Following the minimum principle > Chapter on concepts and structures, the quan-
tities here are provided by the gross cubic capacity and the qualities by
the choice of the project-specific cost figure. But by the client can follow
the maximum principle and name a certain sum for construction ex-
penses as the target cost specification, which will then make it possible
to aim for the maximum building size that can be achieved and/or the
best possible qualities and finish characteristics within the costs as fixed.

Example 1: An investor wants to erect a new office building. The gross cubic
Specifying the gross c­ apacity is laid down by the maximum size of building allowed on the
cubic ­capacity
plots, which is 3000 m³. The investor provides the architect with rough
information about the desired standard of finish and the material quality
of the building. But as no definite plans have yet been made for the ­office
building, the architect can draw up a costing only on the basis of the
­information provided by the investor. The architect has no costings of his
or her own derived from similar buildings, and so turns to a information
service to find a comparable property that is closest to the design ideas
and the requirements for the new building. > Fig. 20

32
Fig. 20: Costings for average standard office and HQ buildings

Office and HQ buildings, average standard

Costings for building construction and technical features and fittings
15 properties for comparison of 30, see property information
GCC of 2,200 m³ to 29,000 m³, GFA of 780 m² to 9,500 m², UA of 580 m² to 7,500 m²
Reference unit Lower value Average value Higher value
GCC EUR 300/m³ EUR 375/m³ EUR 475/m³
GFA EUR 1250/m² EUR 1500/m² EUR 1750/m²
UA EUR 2000/m² EUR 2500/m² EUR 3000/m²

It is usual to give certain price ranges (from ... to ...) for the cost
­ arameters. If no further clear and detailed information about the build-
p
ing is available it is advisable to use the average cost figures at first and
make the client aware of the fluctuation ranges by means of additions
and deductions.

Gross cubic capacity × costing = building costs to be expected

3,000 m³ × EUR 375/m³ = EUR 1,125,000

The given cost figures actually lie between EUR 3000/m³ and
EUR 475/m³. So the fluctuation is moves between EUR 225,000 down-
wards and EUR 200,000 upwards.

An investor lays down a fixed investment sum of EUR 800,000 for a Example 2:
new office building. As he wants to let the building later, he wants the Specifying the
construction costs
­architect to provide some information about the maximum built area he
can aim to achieve. Costings can be researched via standards fixed as in
example 1, and this means that details about the gross cubic capacity
that can be realised can also be obtained. The following calculation does
not represent an actual costing, but is an important planning instrument
in the early project phase.

The GCC that can be realised for the office building is estimated as
follows:

Fixed investment sum: cost value =

possible gross cubic capacity
EUR 800 000: EUR 375/m³ = approx. 2133 m³

The architect should inform the investor about corresponding con-

sequences for the gross cubic capacity that can be realised on the basis
of the costs, which extend from EUR 300/m³ to EUR 475/m³ > Fig. 20. So

33
 ◯ Note: Once the gross cubic capacity that can be real-
ised is established it is possible, by using conversion
factors for the storey heights (incl. structures on floors
and ceilings), to calculate the gross area and build it
into the preliminary design for the building as a plan-
ning requirement. A further calculation based on the
net floor area of the building and deductions for neces-
sary additional areas can also lead to a statement
about the rentable space that can be realised without a
definite preliminary design for the building

the fluctuation range for the estimated possible gross cubic capacity is
between approx. 2,666 m³ and 1,684 m³.

Example 3: It is not unusual for the client to prescribe both the desired cubic
Specifying the gross c­ apacity and also a fixed budget for the building costs to the architect. If
cubic capacity and
the building costs this is the case, a costing can be calculated by dividing the target costs
by the desired cubic capacity, and this will give some insight into the qual-
◯ ity that can be achieved or whether the project can be realised at all.

The client would like to erect an office building with a gross cubic
c­ apacity of 3,500 m³ for EUR 800,000. The following equation makes it
possible to calculate a project-specific costing.

Fixed investment sum:

gross cubic capacity = costing
EUR 800,000: 3500 m³ = approx. EUR 228/m³

Now the architect has to set the calculated cost against the other
properties available for comparison in order to check whether the client’s
ideas can be realised at all. The lowest cost for comparable office build-
ings is EUR 300/m³ of gross cubic capacity. > Fig. 20 If the calculated cost
falls within the price fluctuations for the comparable properties, the build-
ing project can definitely be realised in the form desired. If, as in the sam-
ple quotation, the calculated cost falls clearly below that of the compa-
rable properties, then the architect’s targets are questionable. In this
case the architect and the client can decide whether to concentrate on
keeping to the target costs or to the desired gross cubic capacity, as it
seems that the project cannot be realised within the target costs. If the
desired gross cubic capacity still has to be achieved, the target costs will
have to be corrected upwards. If the client is prepared to scale the proj­
ect down, the architect can follow example 1 and use a realistic costing
◯ to calculate the gross cubic capacity that can be realised.

34
 Calculating construction costs by using the cubic capacity of a build- Advantages and
ing, as shown in the examples, is a very flexible planning instrument for disadvantages of
costing based on
early project phases without a definitive building design. But the results gross cubic capacity
must always be treated critically, and system-related fluctuations should
definitely be pointed out.

Typical imponderables for this method are:

Information provided by participating specialist planners or local au-
thorities can greatly influence costs at the later stages of the project, and
these are often not predictable in the early stages. Alongside costing fluc-
tuations and unclear definitions of the desired qualities for the standard
of finish, changing the storey heights that have been accepted can have
a great influence on the building costs as calculated. Changed ceiling or
floor heights can influence the gross cubic capacity. It can be necessary,
according to how high the standard for the technical installations in a
building is to be (bus system, ventilation plant etc.), for additional instal-
lation levels such as double floors and false ceilings to be required. This
means that, given a planned clear room height of 3.00 m, the necessary
storey height can easily vary between 3.40 and 4.50 m. Without using a
specialist planner who can undertake to set the dimensions for the in-
stallation levels, it is not possible to settle the actual storey heights, and
thus the height of the building, finally in the early project phases. But this
considerably affects building costs.

On the other hand, increasing the gross cubic capacity does not have
to go hand in hand with a catastrophic increase in costs.

For a factory hall (e.g. with dimensions of 20 m × 80 m × 9 m), increas-

ing the height of the building by a metre affects the building costs less,
as the cost factors for the foundations or floor slab and the roof struc-
ture remain the same, and only the facade area is increased by 200 m².
> Fig. 21 So in the building itself it is essentially only the adapted “air space”

that becomes larger, but this cannot be seen as increasing the cost.

◯ Note: The costings for gross cubic capacity should that he or she feels most closely resembles his/her
not be calculated from an average value for a typical own. Information about individual properties for com-
building typology alone. If an office building is being parison can be taken from the property details. Given
planned, for example, information from building cost inadequate links with the actual cost factors at the
information services will usually list several properties building elements level, the correct choice of property
for reference, differing in size and design. Here the for comparison is the only way of keeping any state-
architect should use the costs for the building project ment about costs as realistic as possible.

35
 h + 1m
h

b b
a

a
Fig. 21: Factory halls with the same area and different gross cubic capacity

Costing based on floor area and usable area

Another way of calculating construction costs involves calculating
the floor area or usable area and multiplying that by a relevant cost fig-
ure. Here the height of the building is more or less ignored. This makes
it all the more important to use costings for comparable properties with
similar absolute storey heights (including structural superstructure for
foundations, intermediate floors and roofs). In the same way, costing
based on floor area and usable area is of only limited usefulness for work-
ing out reliable or robust statements about the costs that can actually be
anticipated, given that here – as is also the case for calculation based on
gross cubic capacity – there is no direct link with the cost factors. It is
best to see this costing method in combination with costing based on
gross cubic capacity and building- or use-specific conversion factors as
a planning instrument for the early phases of the project. In any case it
is advisable to compare the results from the volume- and area-related
costing methods, as in this way the results can be checked and it be-
comes possible to aim for a realistic approximation to the actual build-
ing costs. Costing based on floor area and usable area is explained with
examples.

Costing based on Determining the expected construction costs based on the gross
gross floor area floor area uses similarly simple calculation methods to those used pre-
viously for gross cubic capacity.

As has been pointed out already, there is no direct connection be-

tween costing figures and the actual cost factors. Factors contributing

36
 b
a

Fig. 22: Calculating floor area and usable area

to increased costs such as additional lift equipment, for example, addi-

tional staircase cores providing for shorter routes through the building
or especially high ceiling and floor superstructures that are required be-
cause the standard of the technical fittings has been raised are not con-
sidered separately. As is also the case for the gross cubic capacity
method, the costings for gross floor areas can be included in the con-
struction cost planning in a variety of ways.

Here the following possible approaches can be used:

1. The necessary gross floor area is laid down directly by the
­client or the gross floor area that can be realised on the plot
is ­established and the construction costs are calculated by
­multiplying them by the costs.

2. The client sets a prescribed target cost. The gross floor area
that can be realised within the cost framework is calculated by
dividing the target costs by an appropriate cost figure (taking
the desired qualities into account).

An investor intends to put up an office building with a gross floor area Example 1:
of 3000 m². He asks the architect to estimate the building costs entailed Specifying the gross
floor area
so that he can raise the finance. The architect researches costings for
comparable properties intended for the same use and of the same size
(obtaining this information from construction cost enquiry services or
from his own experience of such costing), and is thus able to prepare a
first rough statement about the building costs. An average price of

37
 EUR 1,500/m² GFA is to provide the basis for the calculation, and sub-
sequent fluctuations with additions and deductions are to be considered
when estimating the costs. > Fig. 20

Gross floor area × costing figure =

expected building costs
3500 m² × EUR 1500/m³ = EUR 4,500,000

The result of the calculation comes out at EUR 4,500,000 and can
deviate up or down by up to EUR 750,000 in each case on the basis of
the costings referenced.

But if the client specifies terms based on target costs or the gross
floor area and the target costs, simple calculation methods as in exam-
ples 2 and 3 can be used based on the gross cubic capacity.

Calculation based The calculation of construction costs based on the gross floor area
on the usable area of a building, as described above, is very easy for the architect to use,
and also readily comprehensible. But most clients are not property
◼ ­experts, and so can make relatively little of planning costs calculated in
this way. In the case of private housing construction and rented office
property the areas that can be actually used or let are placed in the fore-
ground, as it is based on these that later use or later income and profit
can be determined. A cost estimate relating to the usable area (UA) will
be more accessible to the client as he is familiar with his actual use-­
specific area requirements from his own experience, and can thus eval-
uate a project better in terms of economic viability in this way. The client
can give the architect specifications for the usable area relatively easily
by referring to previous area requirements and any increase that is nec-
essary for the future. But it is not unusual for much more abstract spec-
ifications to be given, based for example on the necessary number of
­employees laid down by a company (e.g. at least 1500 employees in sin-
gle offices), the number of beds required in a hotel, or on a particular
number of single or double rooms in hospitals.

◼ Tip: In any costing, the upper and lower values

should be listed in the calculation, so that system-
related fluctuation ranges in the costing method can
be seen. If the architect provides the client with noth-
ing but a single figure for the possible construction
costs, that figure is made to seem unduly significant.

38
 If, as mentioned above, the client gives the architect much more
a­ bstract specifications, then the architect must establish the area needed
in each case and the usable area required for this, as this is the para­
meter that is relevant for his construction planning. Construction costs
calculated by reference to area or cubic capacity can then be recalcu-
lated retrospectively to relate to project-specific abstract reference fac-
tors, so that the client can always keep an eye on this in the contexts of
financial viability checks. Area requirements and conversion calculations
made in relation to particular reference points should always be worked
out in close agreement with the client.

A client intends to erect an office building for 600 employees. As well Example 1:
as individual offices for the employees, the client says that, exactly as in Specifying the
number of employees
his present office building, approx. 400 m² of additional area is required
for toilets, corridors, foyer, kitchens, storage etc., and a further four con-
ference rooms each of 60 m². The architect works on the basis of simple
cubicle offices, each with an area of 14 m². Given the same economical
use of space as in the present building and the additional conference
rooms required in the new building, the following calculation for the us-
able area emerges:

Area required/employees × number of employees +

additional area required = usable area
14 m² × 600 + 400 m² + (4 × 60 m²) = 9040 m²

Costings for comparable properties come out between EUR 2000/m²

and EUR 3000/m² usable area (average value EUR 2500/m²). > Fig. 20

The expected building costs are calculated as follows:

usable area × costing figure = expected building costs

9040 m² × EUR 2500/m² = EUR 22,600,000

Regarding the expected building costs, a fluctuation range of

EUR 4,520,000 upwards and downwards should be allowed for.

Costing based on the gross floor area of a building is as quick and Advantages and
easy to use as calculation based on gross cubic capacity, but it is equally disadvantages of
costing based on floor
imprecise. If the usable area required is specified by the client or worked area and usable area
out by the architect, corresponding cost figures can be taken as a basis.
But then a decision has to be made when selecting the cost figures about
whether similarly economical use of space is possible for this particular
project. If the ground plan arrangement and access facilities were to
­differ significantly, this would create problems in relation to the building
costs as calculated. This is why it is particularly important to select

39
 c­ omparable properties correctly. It is also necessary to decide to what
­extent additional floor space can or may be calculated into the usable
area, or the area that can be let out subsequently. Failure to take account
of the height of the building when using this method can lead to further
imprecision in the case of non-standard storey heights. As almost every
building client finds usable area a comprehensible and familiar para­
meter, it offers the best way of checking specifications and requests, and
makes costs readily intelligible. Calculating the building costs to be ex-
pected by reference to the usable area can make the result noticeably
more precise if applied correctly, as the costing parameters take further
information about the financial viability of the space into account. But
this concealed information about the financial viability of the space can
also bring great imprecision in its wake if no reference objects with
­appropriately realistic cost parameters are available for concrete com-
parison, or the depth of planning achieved for the project so far does not
◯ make it pos­sible to say anything on this.

Costing based on component elements

No reference is made in the above-mentioned calculation methods
to the actual cost factors. In the early project phases it is a matter of
checking feasibility within a certain cost framework, defining the con-
tract range and developing a building design that conforms to these
­conditions.

But these rough calculation methods are too imprecise for the later
planning stages, which means that a more detailed calculation method
is needed. One option here is to calculate the building costs in terms of
component elements. But a definitive building design is essential for this,
as quantities have to be calculated for the individual structural building
components (component elements) needed for the planned building. A
uniform procedure must be followed when establishing quantities for the
individual component elements. A component element applies to individ-
ual parts of the building such as an exterior wall, for example, a ceiling or
a roof, and it can be further broken down into construction ­elements.

◯ Note: Basically, the ratio of the usable area to the ◼ Tip: It is rare for a building to use the same compo-
gross floor area expresses the financial viability of the nent elements all the time. This is why it is necessary
space. The fewer the construction and traffic areas to distinguish between possible ceiling, wall and roof
needed for the same gross floor area, the more eco- structures clearly at an early stage when working out
nomical the building will be. the building costs, as this considerably increases the
accuracy of the costing, while only relatively unreliable
costing statements can be made without reliable infor-
mation about the composition of the individual
component parts.

40
 outside wall
ceiling

Fig. 23: Outside wall and ceiling as component element

For example, a ceiling as a component element can be made up as

follows:

1. tiles, d = 15 mm + adhesive
2. floating cement screed 6.0 cm
3. thermal insulation, footfall sound insulation 5.0 cm
4. reinforced concrete ceiling 25 cm
5. ceiling plaster rendering 1.5 cm
6. paint

The architect proceeds as follows when calculating the building costs

to be expected:
The existing design for the building is evaluated by reference to its
individual structural components. A table is made of the individual com-
ponent elements and they are described in more detail if possible. Then
quantities are worked out separately for each component element and
also entered in the table. > Fig. 24 It is possible to use the individual com-
ponent element descriptions to research appropriately comparable cost-
ings through building cost information services, or to use parameters
drawn up by the architect or planner. These cost figures now relate to a
specific part of the building, rather than simply to a building type. This
creates a direct connection between cost factors and cost figures. As
well as this, cost figures from various objects for comparison can be cited,
as comparability is evaluated by reference to the structural addition. The
costings for the individual component elements are multiplied by the
­established quantities, giving a total for the individual group of compo-
nent elements (roof, outside wall, inside wall, ceiling, foundations). If in-
dividual components are omitted from the quantity survey, this will have
a considerable effect on the building costs as calculated. ◼

41
Fig. 24: Example of a simple costing using component elements allocated to cost groups according to German
standard DIN 276.

DIN 276 Description Quantity, Cost Total price

cost group of component unit of quantity EUR/unit in EUR
310 Excavation pit 900 m³ 8 7,200
320 Foundations 120 m² 150 18,000
330 Outside walls 200 m² 300 60,000
340 Inside walls 80 m² 150 12,000
350 Ceilings 120 m² 165 19,800
360 Roofs 120 m² 220 26,400
...... ....... ....... ...... ........
Total building costs 230,800

Advantages and Costing based on component elements makes it possible to work out
­ isadvantages of
d the costs by reference to the cost factors, and is thus considerably more
costing based on
component elements precise than calculation methods using building volumes or areas. But it
is difficult to reduce the component elements to a single structural item
in each case. The calculation will take a lot more time if the component
elements are described and recorded in a sophisticated way, taking all
the different structural elements into account. But as has already been
pointed out, surface finishes, which affect the cost of a component ele-
ment significantly, are not specified until much later. Precise building
costs can be worked out very quickly and in a very uncomplicated way
for very simple buildings with few different structural features. But if a
building is planned in a way that is highly individual, technical and archi-
tecturally ambitious, calculation by component elements can result in a
high potential for imprecision. Like the above-mentioned costing meth-
ods, building projects in existing stock are very difficult to illustrate or
cost using component elements. A further problem lies in the fact that
different specialist areas or craftsmen doing the work are mixed up to-
gether when costing for a component element.

The list below shows which skilled workers are already involved in
the above-mentioned example of the ceiling:

1. Tiling and slab-work for the floor covering (33 %)

2./3. Screed work for the screed including insulation (13 %)
4. Concrete and reinforced concrete for the loadbearing ceiling
(44 %)
5. Rendering and stucco for the interior ceiling rendering (7 %)
6. Painting and decorating for the ceiling rendering (3 %)

42
 The following skilled work can be needed for an outside wall as a
component element:

1. Masonry for the outside wall (65 %)

2. Rendering and stucco work for the interior and exterior
­rendering (27 %)
3. Painting and decorating for the facade and for painting the
­interior wall rendering (8 %)

As can be seen from the two examples of component elements for a

ceiling and an outside wall, factoring the estimated construction costs
into the budget for the individual tendering units is a very fiddly proce-
dure when the project later moves from the planning to the realisation
stage. > Chapter on work with a skilled-trade oriented costing This is achieved by break-
ing down the percentage costs of a component element to relate to the
individual skills involved. But this approach is questionable, as the per-
centage cost is very strongly affected by project-specific conditions in
the objects chosen for comparison.

Costing based on construction elements

Costing with the aid of component elements does indeed offer the
possibility of working out the building costs based on cost generators,
but it leads to imprecision and to problems of application as the project
runs its course. This is why a more precise breakdown of the costs, down
to the individual construction elements, should be carried out as soon as
sufficiently precise information is available about planned structural
­additions and surface qualities. > Chapter on working with component-oriented cost-
ing approaches

Before costing based on construction elements is explained, the con-

cept of a “construction element” should be unambiguously defined. A
building element can also be called a fine element, a component, a struc-
tural component etc., but these terms cannot be precisely defined. The
following explanation is unambiguous: a construction element is a part
of a building that can be designated as a component and also assigned
to a particular construction skill.

All component elements in a building can be subdivided into individ- ◯

ual building elements. An outside wall and a ceiling are shown as exam-
ples of component elements in figure 25.

This costing method is based on a building description, which must

contain all the construction elements in the planned building. Different
costings can be assigned to the individual building elements on the ­basis

43
◯ Note: This means that a construction element ◯ Note: In the case of a dry construction wall, for
c­ annot be subdivided further according to its function e­ xample, it is important to have information about
in the building (e.g. a “wall, non-loadbearing or load- the thickness of the wall, details about the materials
bearing, including doors” can be subdivided into required for insulation, and also the materials and
non-loadbearing walls, loadbearing walls, and doors). the thickness required for the planking layers, as this
There are no construction elements that can be will imply certain fire- and sound-insulation require-
assigned to several work areas or tender units – for ments that make a crucial impact on the costs. If a wall
example, “ceiling ­plaster with emulsion paint” can consists of two separately constructed partition walls,
be subdivided as construction element one “ceiling this also affects costs considerably, as it increases the
plaster, rendering work” and construction element amount of time needed for the work, and thus the
two “emulsion paint, painting and decorating”. wages to be paid for doing it.

of the qualities as described. As each construction element is defined

unambiguously, the costings used for comparison can also be selected
very realistically. This construction element catalogue presents all the
construction elements in the building in tabular form. In contrast with a
room schedule, all the construction elements that are structurally the
same are described only once, so that even for large projects the total
quantity falls within a manageable framework that is easy to handle. The
description should restrict itself to the essential characteristics needed
to distinguish between different qualities. But the construction elements
must be listed in full, in order to guarantee a precise result for the cost-
ing that will be determined later.

Procedure When drawing up the construction element catalogue, the architect

goes through the individual cost groups for a building and notes all the
relevant construction elements. For example, all the non-loadbearing
­interior walls are listed and described briefly, along with their qualities
and requirements. The same is done for all the other construction ele-
ments, such as loadbearing interior walls, loadbearing exterior walls,
­exterior wall cladding etc. The services required (skill areas needed for
the work) should also be identified in this table, not just the cost groups,
so that the calculated building costs for individual construction elements
can be collated in order to create budgets for the tendering units. In this
way, it is easy at any time to move from a building- to a realisation-­
oriented view within table calculation software. The specified services
for the later tender units can be also be summed up project-specifically
◯ ­according to the range of services offered by the contracting firms.

Allocation by rooms It makes complete sense to identify rooms in the construction ele-
ment catalogue. This is particularly helpful to the client in understanding
the planned qualities of the building. Rooms can be identified in groups
or by the numbers required. For example, if all the floor coverings in
the conference rooms in an office building are identical, floor coverings
in other rooms can be unambiguously defined using this description

44
 exterior m² tiles
rendering

m²
floating
screed
masonry outside wall ceiling

m² reinforced
concrete ceiling
interior
rendering

m² ceiling
rendering

Fig. 25: Outside wall and ceiling as component elements broken down into construction elements

(e.g. “parquet floor, oak as in the conference rooms”). If the rooms are
iden­tified meticulously and fully, the building description will also work
as a room schedule, as all the construction elements featuring in a
room or group of rooms can be presented clearly. But a table in a con-
struction ­element catalogue is considerably easier to work with than a
room ­schedule.

Quantities for the construction element catalogue should be estab- Establishing

lished as comprehensibly as possible in a table, so that synergies in quantities
for construction
­deadline planning (duration of all processes) and, above all, quantity elements
­calculations can be exploited when going out to tender.

If the appropriate cost figures are now added to the construction ele­ Allocating cost
ment catalogue, it is possible to proceed with determining the costs. The figures

overall price for a construction element is then arrived at by multiplying

the construction element quantity by the cost figure for the building ele­
ment. The table can then simply be reorganised to calculate either costs
for primary component elements or cost group, or also work categories.

The chief advantage of costing based on construction element clearly Advantages and
lies in the additional use that can be made of the calculated costs by ­disadvantages
of costing based
­re-allocating them in budgets for tendering units for individual craft skills. on ­construction
The building description with construction elements makes it possible to ­elements
define and adapt the qualities of the building as described more precisely
even when the project is under way. Ultimately it forms the basis for draw-

45
Fig. 26: Construction elements catalogue (with cost groups allocated according to German standard DIN 276)

Cost group Construction element Work type

DIN 276 Description
350 Ceilings
351 Reinforced concrete ceiling 20 cm, no requirements for under Shell
side of ceilings
352 Floating cement screed ZE20, thickness 50 mm on footfall insulation Screed work
20 mm, rest of structure in thermal insulation PS 20 WLG 035, total
height 150 mm
352 Parquet, wide oak plank, 22 mm, surface oiled in white Parquet work
353 Gypsum rendering under the ceiling, average thickness 15 mm Rendering work
340 Interior walls
341 Reinforced concrete wall 15 cm, no surface requirements Shell
345 Internal rendering on both sides, average thickness 15 mm Rendering work

ing up the specifications for individual areas of work. Project-specific

­qualities, clearly summarised, are easier to understand for the client, as
a layperson, than individual items in work specifications, as the construc-
tion element always describes the completed structural component and
not the work necessary to manufacture it. Despite the high level of ­detail
the structure remains very flexible, as each construction element can be
allocated precisely to a cost group (e.g. in Germany according to the third
level of DIN 276) and to a work area. > Chapter on terms and structures

Costing based on work specifications

The degree of detail and precision within a cost calculation as
­ escribed above can be increased considerably by breaking the compo-
d
nent elements down into individual building elements. In order to makes
things even more precise, it is possible to refine all the information about
the individual construction elements that are relevant to cost within the
specifications. A specification provides all the relevant information about
the individual skills (trades) needed for realising the building, in the form
of a set of textual building instructions. The construction element method
focuses solely on the completed structure, but costs determined based
on work specifications take the way in which the work is realised into
­account as well. In project-specific terms, the way in which the work is
realised can influence costs considerably, as the wages element is cor-
respondingly raised or lowered. These cost factors are not taken into
­account by the cost determination methods discussed so far.

All the construction elements in a building can be divided into indi-

vidual service items, which can be summed up in corresponding ­specialist

46
Fig. 27: Construction element catalogue incl. allocation by room and quantity determination.

Cost group Construction element Work type Room groups Quantity

DIN 276 Description Room numbers Quantity unit
350 Ceilings
351 Reinforced concrete ceiling Shell Offices and 120 m²
20 cm, no requirements for corridors
under side of ceilings
352 Floating cement screed ZE20, Screed work Offices and 120 m²
thickness 50 mm on footfall corridors
sound insulation 20 mm. Rest of
structure in thermal insulation
PS 20 WLG 035, total height
150 mm.
352 Parquet, wide oak planking, Parquet work Offices and 120 m²
22 mm, surface oiled in white corridors
353 Gypsum rendering under the Rendering work Offices and 120 m²
ceiling, average thickness corridors
15 mm
340 Interior walls
341 reinforced concrete wall 15 cm, Shell Staircase 80 m²
no surface requirements
345 Inner rendering on both sides, Rendering work Staircase 160 m²
average thickness 15 mm

areas (trades). An example of this is shown in figure 29 for a tile and par-
quet floor and a loadbearing exterior wall. ◯

A specification for laying parquet, for example, would list all the items Example:
necessary for preparing the completed floor, including ancillary items (all costing based on
specifications
materials, protective measures, preparing the base, applying adhesive to
the parquet, smoothing and oiling the parquet, fitting footboards etc.) for

◯ Note: When determining quantities for individual

s­ ervice items it is essential that the unit prices cited
are all based on the same quantity calculation modal­
ities. Different national approaches to calculation can
be found here, and a variety of relevant rules can be
found. In Germany, calculation modalities are laid down
in VOB/C, for example. It may be necessary to convert
the unit prices quoted for comparison. In the long term,
sustainable documentation and evaluation of unit
prices based on individual specification tenders makes
it possible for the architect to achieve additional cer-
tainty when budgeting.

47
Fig. 28: Construction element catalogue incl. room allocation, quantity determination and cost figure allocation

Cost Construction Work type Room groups Quantity Inclusive Total price
group element price

DIN 276 Description Room numbers Quantity EUR/unit EUR

unit

350 Decken 19,800.00

351 Reinforced concrete Shell Offices and 120 m² 87.00 10,440.00
ceiling 20 cm, no corridors
requirements for
under side of
ceilings
352 Floating cement Screed work Offices and 120 m² 16.00 1920.00
screed ZE20, corridors
thickness 50 mm
on footfall sound
insulation 20 mm.
Rest of structure
in thermal insulation
PS 20 WLG 035,
total height 150 mm.
352 Parquet, wide oak Parquet Offices and 120 m² 47.00 5640.00
planking, 22 mm, work corridors
surface oiled in
white
353 Gypsum rendering Rendering Offices and 120 m² 15.00 1800.00
under the ceiling, work corridors
average thickness
15 mm
340 Interior walls 12,000.00
341 Reinforced Shell Staircase 80 m² 120.00 9600.00
concrete wall 15 cm,
no surface
requirements
345 Inner rendering on Rendering Staircase 160 m² 15.00 2400.00
both sides, average work
thickness 15 mm

the entire project on all floors. When the specification is complete, the
architect can insert average unit prices for the individual items; multiply-
ing them by the quantities determined will then give the total sum required
for the parquet work. Once all the specifications for the different work
needed to complete the building have been drawn up, the unit prices for
the individual services can be added in as well. The individual specifica-
tion totals then represent one tendering unit at the planning stage before
the project is realised. Adding together all the specification totals with
their unit prices gives a very realistic view of the total costs to be expected

48
 exterior wall
masonry m² tiles
Item 1 Prepare floor
Item 2 Floor tiles
Item 3 Skirting tiles
...

m² parquet
Item 1 Prepare site Item 1 Prepare floor
Item 2 Calcareous sandstone Item 2 Parquet laying
Exterior masonry Item 3 Baseboard
...
Item 3 Cover apertures
with lintel
...

Fig. 29: Construction elements broken down into individual service items

for the project as a whole. The specifications can then also be drawn up
in a simplified form, with all the items defined by short titles only.

Costing based on specifications guarantees a reliably realistic state-

ment about the costs to be expected. But this approach assumes that all
the qualities and detailed requirements for the planning process have
been finally fixed and that all the quantities have been listed without omis-
sions. This means that the method cannot be used or does not provide
reliable results in the absence of precise information about the realisa-
tion of the project. If planning for the project has not progressed far
enough, another costing method should be used instead.

Account must also be taken of the fact that drawing up all the nec- Advantages and
essary specifications takes a comparatively long time, so the architect disadvantages of
costing based on
has to look at each project phase and decide whether the construction specifications
element or component element method might not be the right tool for
determining the costs in this case. But if the planning is at a very ad-
vanced stage, no additional time will really be needed. On the contrary,
costing based on specifications in fact anticipates planning work that the
architect has to do anyway as part of putting building work out to tender.
The work can be cut down to some extent by using simplified specifica-
tions, but the individual work items have to be expanded and adapted
subsequently so that they can be used as a basis for seeking tenders
from contractors.

In particular cases, costing based on specifications can also be used

in combination with other cost determination methods. Individual areas

49
Fig. 30: Costing for parquet work using a specification

Item Work item Quantity Unit price Total

no. Description Unit EUR EUR
1 Clean the subsurface, remove of sinter layers 500 m² 5,00 2500
2 Glue oak planks 14 cm wide, 22 mm thick, light 500 m² 85.00 42,500
oak
3 Oil parquet surface with white-pigmented oil 500 m² 10.00 5000
4 Fit footboard, 20 × 50 mm, MDF, white 500 m² 5.00 2500
5 Fixing skirting boards, 20 × 50 mm, MDF, white 100 m 12.00 1200
6 Cover completed parquet with protective 500 m² 2.50 1250
cardboard
7 Apply tolerance compensation filler to concrete 50 Stk. 25.00 1250
steps (110 × 30 cm)
8 Glue risers and steps, light oak, 50 Stk. 150.00 7500
3 cm × 110 cm × 30 cm or 17.5 cm, to match
parquet
9 Smooth steps 50 Stk. 10.00 500
10 Oil steps with white-pigmented oil 50 Stk. 5.00 250
Parquet work total 64,450

of work for which wide-ranging information and thus certainty about plan-
ning are available can be described and priced sufficiently precisely
based on specifications, whereas cost determination based on construc-
◯ tion methods can make sense in other areas.

◯ Note: If the architect is unable to find prices for rare

or unusual construction elements in the literature, cost
determination based on specifications still offers a
­possibility for putting one’s own figure on a cost. In this
way the individual items necessary for creating the
­construction element are determined and an inclusive
price is reached using all the unit prices.

50
 Continuing the budgeting process
There are no circumstances in which a building cost calculation that
is set too low from the outset can produce a satisfactory outcome, as it
will not be possible either to deliver the desired quality or to complete
the full number of rooms required. This is why it is essential to conduct
cost planning continuously and in stages in order to work within the proj­
ect budget and thus keep the client satisfied. The foundation stone for
this is laid when the project budget is first fixed. The following describes
the project phases into which cost planning can be divided meaningfully
and how the insights or results provided should be updated in the next
project phase.

Basic principles for continuing and maintaining the cost

­p lanning process
As already described in the basic principles for cost planning chap-
ter, the specified cost of keeping to the project budget is usually a key
factor in the success of the project. Generally speaking, few points of
­detail have been settled at the time the decision to go ahead with the
project is taken, so costings have to be updated throughout the planning
and building process. Almost all the decisions made as the process con-
tinues – whether in terms of agreement about design, details, qualities
or retrospective changes – will alter the cost structure of the process.

Costs must be fully presented at the point of each key decision by Costing stages
the commissioning client as the project proceeds and handed over as a
basis for decisions along with the actual project documents such as plans,
for example. The usual decision levels are:

1. Cost framework: deciding to go ahead with the project

The first step the architect takes is to establish whether the general
conditions laid down by the client (site use, usable area, cost framework,
timeline etc.) can be implemented in terms of the given requirements. In
order to establish this s/he uses the development plans to examine
whether the plot is suitable for such building and possible exploitation,
and checks whether the costings and timeframe provided are realistic –
without going as far as to produce a design. If it really is possible to ­realise
a building within these project parameters, the necessary aids to deci-
sion-making are submitted to the client, who decides how the designs
should be drawn up. This has major financial consequences, because the
given parameters will form a basis for consulting and commissioning vari­
ous building and specialist planners, and also experts in particular fields.

51
 It is essential to check at this stage whether the specified cost and
the desired usable area are statistically realistic, by reference to sample
projects for which budgets have been calculated.

2. Estimating costs: deciding about the design idea/the

­preliminary design
After the architect has developed a first design idea s/he will pre-
sent this to the client and, where appropriate, provide alternatives to help
in making the decision. The client now has to decide whether to go ahead
with the preliminary design, or which alternative should be pursued. In
order to do this, s/he needs information about whether the design that
has been devised can be realised within the specified cost, or which
­alternative will generate which construction costs. Fixing the design idea
will make a considerable financial impact to the extent that approving
the design represents a move towards design planning that might be
­acceptable for realisation, but basically is not being questioned in full.

So at this stage architects draw up the costs in with reference to the

design by using volume- or area-related costings, or better by using cost-
ings that have already been compiled with reference to construction com-
ponents/elements backed up by quantity surveying.

3. Calculating costs: deciding about submitting the application

to build
Once the design has moved forward and been thoroughly planned to
the extent that it is “adoption-ready”, the client has to decide whether
s/he wishes to realise it as presented, and so is ready submit the build-
ing application to the responsible authorities. In this respect, the build-
ing application generates facts, as the building permission granted on
the basis of it reflects the design as it is to be realised, so if changes are
required they have to be submitted to the authorities for approval.

At this stage, costs are compiled with reference to the design using
cost figures based on construction components/elements backed by
quantity surveying. This compilation is more detailed than at the last
stage, as considerably more information about the project and the shape
it is taking is available as a basis for costing.

4. Estimating costs: deciding to go to tender and fix the agreed

construction work
After building permission is granted, preparations are made to put
the building work out to tender, and for the actual realisation of the
­building. This is done drawing up descriptions of the work needed and
where necessary providing final plans/details according to the chosen

52
t­ endering and awarding procedure. Planning precision is enhanced by
the ­degree of detail provided by the quality requirements in the tender’s
global description sections, and then by drawing on the detailed specifi-
cations, and this can lead to marked changes in the costs. After the doc-
uments have been submitted there is very little scope for making rel­
evant changes, particularly in the case of public commissions. Thus fixing
the “agreed construction work” is crucial within the tender process.

At this stage the costs are presented in terms of construction ele-

ments. This is based on structural components at first, by analogy with
the level of detail in the tender documents, and is then reformulated with
a view to contract award. So when single assignment awards are being
made, budgets presented using single award units are easy to break down
and easy to check when offers are submitted.

5. Comparing prices: deciding how to award the building work

contract
After all the responses to the tender have come in and are available
for consideration, the client has to decide which contractor s/he is ­going
to commission to carry out the building work. The architect’s examina-
tion of the tenders provides a basis for this: the client compares the prices
and assesses deviations, variant solutions etc., and then makes a recom-
mendation awarding the contract. Awarding the contract to a single con-
tractor or to several single craft firms (trades) represents a significant
milestone in the cost development, because after the contract has been
awarded, any changes to the building programme have to be accounted
for financially in consultation with the building firm. If the client takes out
or cancels single items of work, payment still usually has to be made
to the contractor, as the latter must receive either complete payment
­minus any saved expenditure or at least a profit claim based on the sum
­contracted.

The architect usually processes the tenders by comparing the single

tender prices offered by the various contractors against each other. > Fig. 31

6. Establishing costs: determining the actual costs

Once all the building work is finished and audited and final accounts
have been presented, the lead architect brings all the costs generated
together in a cost statement. This is useful for the architect’s own work
on concluding the project, and also as information for the financing indi-
viduals or institutions or the client’s auditors. So for example the bank
providing the finance or an internal auditor on the client’s side can check
whether the monies that have been transferred have been used for the
correct purposes in the building programme.

53
Fig. 31: Example of a price comparison

Tender 1 Tender 2
Item Work involved Quantity Unit price Total price Unit price Total price ...

01.001 Site preparation Flat rate EUR 200.00 EUR 200.00 EUR 450.00 EUR 450.00

01.002 Ceiling rendering 60 m² EUR 19.00 EUR 1140.00 EUR 22.00 EUR 1320.00

01.003 Interior wall rendering 40 m² EUR 25.00 EUR 1000.00 EUR 20.00 EUR 800.00

01.003 Exterior wall rendering 40 m² EUR 42.00 EUR 1680.00 EUR 46.00 EUR 1840.00

01.004 ... ... ... ... ... ... ...

... ... ... ... ... ... ... ...

... ... ... ... ... ... ... ...

Total price ...

Fig. 32: Example of a list of decisions and changes

No. Date Decision/change Approved/ Affects Costs increased (+)

rejected costs Costs reduced (–)
1 10. 03. 14 Patterning on the tile product by client yes yes EUR –1535.00
2 20. 03. 14 Change of tile colour yes no 0.00 EUR

3 25. 04. 14 Amendment 01 for compensating no yes EUR + 2670.00

for the uneven ground
... ... ... ... ... ...

Cost control Every cost determination stage is bound to deviate from its pre­
decessor because new information has come to light, changes have been
made or matters have become more concrete. So it is necessary to rec-
oncile the current cost determination stage with the one before it and
with the costs as originally specified. Here detailed reasons have to be
supplied for any changes to the overall costs and how they can be picked
up again if necessary. One way of presenting this via the planning and
construction process is to produce a decision list and a list of changes,
in which the main events after commissioning relevant to costs are listed
chronologically. > Fig. 32

Sometimes the client or the project managers will insist that every
decision or request for change by the client that is relevant to costs must
be assessed and shown to the client. This makes for precise documen-
tation of the cost-relevant processes.

54
 Wall structure
Facade paint, white
Lime cement plaster, 3.0 cm
Porous concrete, 36.5 cm
Interior wall rendering, gypsum 1.0 cm
Emulsion paint, white

Ceiling structure
Stoneware tile, 1.5 cm + adhesive
Cement screed, 6.0 cm
Footfall sound insulation, 5.0 cm
Reinforced concrete ceiling, 25.0 cm
Ceiling rendering, gypsum, 1.5 cm
Emulsion paint, white

Fig. 33: Structural detail for wall/ceiling

The aim is to put the client in a position to think over his or her deci- Controlling
sions, and where appropriate to compensate for them by taking other interventions

measures. For example, this could entail reducing the quality of finish
elsewhere, reducing the usable area or providing additional financial
­resources. It is essential here that the client be informed immediately or
at a time close to the decision about which past arrangements have led
to which consequences, and not simply be given a summary in a later
project revision. So this work is not restricted to particular cost determi-
nation stages, but must accompany the process and be carried out
­continuously.

Working with cost determination based on construction

­e lements in the planning phase
If a costing relating to construction elements is drawn up during the Groundwork in the
design process, it will not usually contain much specific information about preliminary design

precise qualities and surface finishes. This is because materials and sur-
face qualities tend to be decided on successively in the course of the
planning process. So in the first place costs are worked out by working
on general assumptions about quality. > Figs. 33 and 34

55
Fig. 34: Simple costing based on construction elements for figure 33

Component Quantity Unit Inclusive price Total price

(EUR/unit)
Ceiling
Tiles 60 m² 80 EUR 4800.00
Floating screed 60 m² 25 EUR 1500.00
Reinforced concrete ceiling 60 m² 115 EUR 6900.00
Rendering 60 m² 19 EUR 1140.00
Paint 60 m² 4 EUR 240.00
Total EUR 14,580.00
Wall
Facade paint 40 m² 13 EUR 520.00
Exterior rendering 40 m² 42 EUR 1680.00
Masonry 40 m² 105 EUR 4200.00
Interior rendering 40 m² 25 EUR 1000.00
Interior paintwork 40 m² 4 EUR 160.00
Total EUR 7560.00

Clients will often have said nothing at all about individual materials
or quality, so that the architect has to set a first general quality standard.
The client will then see from these listings what standard the architect is
working from, and what general quality standards the architect has used
when determining the construction costs.

Continuing the Decisions are made and details are regularly clarified throughout the
­planning process planning process, in meetings with the client, for example, so that these
can then be incorporated into the current costing. > Fig. 35 Cost changes
can then be identified directly and passed on to the client by matching
● the qualities laid down in the list to the relevant costing figures.

● Example: In the exploratory phase of the preliminary

design, decisions made by the client and the architect
are usually based on broad creative themes within the
design. But then the client says that she or he wants to
see a “good average standard”. Then the architect,
when determining costs, will accept simple parquet as
a floor covering, without any further specific details
at first, tiles costing an average sum, and gypsum ren-
dering, painted white, for the surface finish.

56
Fig. 35: Concrete detail for cost determination based on construction elements

Component Construction element Quantity Unit Inclusive Total price

price
(EUR/unit)
Ceiling
Stoneware tile 30 × 60 cm, anthracite, 60 m² 80 EUR 4800.00
laid using the thin bed method,
grouting in tile shade, skirting tiles
Cement screed as floating hot screed, 60 m² 25 EUR 1500.00
d = 6 cm, on 5 cm footfall sound
insulation
Reinforced concrete ceiling, in-situ 60 m² 115 EUR 6900.00
concrete, d = 25 cm, shuttering,
reinforcement, underbeams
Sprayed ceiling rendering, gypsum 60 m² 19 EUR 1140.00
rendering, d = 1.5 cm, pre-treatment
of floor
Indoor emulsion paint, ceiling, white 60 m² 4 EUR 240.00
Total EUR 14,580.00
Wall
Exterior paint for mineral substrates, 40 m² 13 EUR 520.00
white
Exterior wall rendering, lime 40 m² 42 EUR 1680.00
cement plaster, d = 3.0 cm, ­
pre-treatment of floor
Masonry wall, porous concrete, 40 m² 105 EUR 4200.00
d = 36.5 cm
Interior wall rendering, gypsum 40 m² 25 EUR 1000.00
plaster, d = 1.5 cm, pre-treatment
of floor
Interior emulsion paint, wall, 40 m² 4 EUR 160.00
light colour
Total EUR 7560.00

With this approach the continuation of the costing becomes an iter-

ative planning component because planning decisions are constantly
checked, adapted and modified by feedback from the cost management
process until a viable solution is found that does justice to the budget.
Continuation to the end of the planning phase produces a final project
target as a basis for going out to and awarding tender.

57
Fig. 36: Costing based on contract award

Trade Construction element Quantity Inclusive Total price

price
(EUR/unit)
Shell EUR 11,100.00
Reinforced concrete ceiling, in-situ 60 m² 115.00 EUR 6900.00
concrete, d = 25 cm, shuttering,
reinforcement, underbeams
Masonry wall, porous concrete, 40 m² 105.00 EUR 4200.00
d = 36.5 cm
Rendering work EUR 3820.00
Sprayed ceiling rendering, gypsum 60 m² 19.00 EUR 1140.00
rendering, d = 1.5 cm, pre-treatment of
floor
Sprayed ceiling rendering, gypsum 40 m² 25.00 EUR 1000.00
rendering, d = 1.5 cm, pre-treatment of
floor
Exterior wall rendering, lime cement 40 m² 42.00 EUR 1680.00
plaster, d = 3.0 cm, pre-treatment of floor
Painting EUR 920.00
Interior emulsion paint, wall, light colour 40 m² 4.00 EUR 160.00

Indoor emulsion paint, ceiling, white 60 m² 4.00 EUR 240.00

Exterior paint for mineral substrates, 40 m² 13.00 EUR 520.00
white
Screed work EUR 1500.00
Cement screed as floating hot screed, 60 m² 25.00 EUR 1500.00
d = 6 cm, on 5 cm footfall sound insulation

Tiling EUR 4800.00

Stoneware tile 30 × 60 cm, anthracite, laid 60 m² 80.00 EUR 4800.00
using the thin bed method, grouting in tile
shade, skirting tiles
Total EUR 22,140.00

Working with trade-oriented cost determination in the tendering

phase
Tender-oriented view The continuing process of establishing costs changes once the ten-
der documents are drawn up. Up to this point the design and the con-
struction components associated with it have essentially provided the
focus, but now definite building jobs are being assigned to one or more
contractors, and they will determine the relevant structuring for the cost-
ing process.

58
Fig. 37: Matching up budgets and contract award sums

Trade Construction element Quantity Inclusive Total price/ Contract Deviation

price budget award price
(EUR/
unit)
Shell EUR 11,100.00 EUR 11,460.00 EUR + 360.00
Reinforced concrete 60 m² 115.00 EUR 6900.00 EUR 7140.00 EUR + 240.00
ceiling, in-situ concrete,
d = 25 cm, shuttering,
reinforcement,
underbeams
Masonry wall, porous 40 m² 105.00 EUR 4200.00 EUR 4320.00 EUR + 120.00
concrete, d = 36.5 cm
Rendering work EUR 3820.00 EUR 3620.00 EUR – 200.00
Sprayed ceiling rendering, 60 m² 19.00 EUR 1140.00 EUR 1020.00 EUR –120.00
gypsum rendering,
d = 1.5 cm, pre-treatment
of floor
Sprayed ceiling rendering, 40 m² 25.00 EUR 1000.00 EUR 1080.00 EUR + 80.00
gypsum rendering,
d = 1.5 cm, pre-treatment
of floor
Exterior wall rendering, 40 m² 42.00 EUR 1680.00 EUR 1520.00 EUR –160.00
lime cement plaster,
d = 3.0 cm, pre-treatment
of floor
... ... ... ... ... ... ...

So the costing table, which has previously been based on structural

components, is re-sorted so that the individual structural components
are subordinated to the contract units or trades. As described in the chap-
ter on costing methods, costing based on construction elements, the
­essential requirement is that each construction element can be properly
allocated as a structural component, or to a trade as a contract award
unit.

Summing up the individual structural elements as a contract award Creating contract

unit makes it possible to create contract award budgets that can be com- award budgets

pared directly when submitting and assessing the offers. This listing
forms the basis for keeping an eye on costs throughout the building phase.

If a contract is awarded to individual craftspeople, then over- or

­ nder-spending on the contract award budget as calculated can be
u
compen­sated for by subsequent contract awards during the building
­process. > Fig. 38

59
 Realisation planning Tenders invited for Building work
Work on shell work on shell carried out on shell
Dependencies/Re-planning

Realisation planning Tenders invited Building work carried

for facade/roof for facade/roof out on facade/roof

Realisation planning Tenders invited Building work carried

for finishing work for finishing work out on finishing work

Realisation planning
for …

Time sequence

Fig. 38: Typical sequence for planning and contract award during the building phase

Cost control in the building phase

When the building contract is awarded the building costs are fixed
via the contractual payment agreement as a lump sum, or a provisional
one (in the case of settlement or unit price contracts).

This makes it necessary to update and check costs throughout the

building period. The client must be informed of significant cost changes
immediately so that she or he can intervene to direct matters where
­appropriate. But minor cost changes are normal, and do not necessarily
◯ need intervention and direction.

Structuring The following cost control sequence is triggered by each award unit:
cost ­control 1. Fixing the budget
2. Invitation to tender and submission of offers
3. Assessment and checking of the contract award sum with the
budget specification
4. Cost predictions and cost control during the building process
5. Following up changes in the scope or content of work
6. Cost statement after checking the final invoice
> Chapter on working with trade-referenced cost determination in the contract award phase

Sequence of events If contracts for the building work are awarded to several firms, this
with single tenders scheme makes it possible to check on each individual contractor in terms
of costs. This is because the contractors are all appointed at different
times. So it can come about in the course of the building process that in-
dividual items of work (e.g. earthworks, shell construction) have been
paid off, but later items have not yet even gone out to tender and been
awarded. Other jobs may still be in progress. If a current cost estimate

60
Shell Final invoice total

Building exterior Contract award sum

+ additional costs

Rendering/screed Contract award sum

Dry construction Tender sum

Other finishing work Budget

Contract Building Point reached

award period period in building period ∑ Current financial position

Fig. 39: Working out the current financial position during the building phase

is to be made now, then very different situations in terms of contracts

awarded and work completed will have to be taken into account. If work
has been completed, the final invoice sum will be used here, but where
work is still in hand the contract award sums plus known additional costs
and deviations from the original agreement in terms of work done will
form the basis. Work that has still not gone out to tender will continue
within the budget as calculated. As soon as offers or a commission are
available, the appropriate sums will be taken from the contract. > Fig. 39

This produces a work-related table of costs that can be continued on

the basis of the contract-award related costing. The most up-to-date cost
data for a piece of work are listed in the last column, so that the sum of
this column reflects the current financial position. > Fig. 40

Checking contractors’ invoices can reveal that the bills of quantities Information gained
as originally accepted clearly differ from the quantities invoiced. Any from checking the
invoice
quantity deviations for items affecting costs should feature in the table
of costs. ●

◯ Note: In the case of a unit price contract, payment ● Example: Quite often the ground to be built on is
is made according to the amount of work done. Con­ checked only by random test drillings prior to the work.
solidating payment into a lump sum shifts the risk The resultant assumptions about quantities can turn
in relation to quantities to the contractor. This depends out to be wrong once soil starts to be excavated. If this
on the degree of detail provided in the description of occurs, the costs should be adjusted correspondingly
the agreed construction work. in the case of unit price contracts.

61
Fig. 40: Structure of a costs table during the building phase

Job/ Structural Quantity/ Budget Contract Additional Final Current

contract elements units cost award sum costs/Cost invoice financial
award unit estimate prediction position
Job 1 Construction
element 1
Construction
element 2

Incorporating It is not unusual for work to be listed that is not included in the
­additional sums “agreed construction work”, perhaps because it was forgotten when the
work went out to tender, was not open to identification, came to light only
in the building phase, or was ordered by the client at a later stage. Sums
that deviate from the “agreed construction work” (also know as additional
payments), can be generated as modifications to work required or delays
during the building period, as well as by the above-mentioned quantity
deviations. Changes to work required include all changes ordered by the
client, plus necessary work, exclusions/partial terminations etc. Costs
generated by delays during the building period mean all the additional
costs resulting from obstacles to the building process, extending or
speeding up the building period.

Demands from contractors for additional payments are checked

against the grounds for the claim, whether it is justified, and the amount
involved. As a rule, the additional price must correspond with the con-
tract price level. This means that if a contractor has stated a very reason-
able price in the tender, the additional price must be correspondingly low.
Additional charges are then included in the table of costs, and here it is
also possible to distinguish between checked, unchecked and assigned
charges. For large projects, separate lists of additional charges are
­usually kept, and these record and evaluate all additional charges so far
incurred chronologically. The totals for all these lists of additional charges
are then transferred into the statement of costs.

Cost predictions But it is not only additional costs that make the building process more
expensive. Often the site manager will notice things that have not yet
been addressed but will or could generate additional costs as the build-
ing process moves on. For example, if items were omitted from the invi-
tation to tender, then the costs generated should be built into the cost
predictions as soon as they are identified – even if the contractor con-
cerned has not yet made an additional charge.

62
Fig. 41: Established costs for the client based on contracts as awarded

Job/contract award unit Total final invoice

Work on shell EUR 512,134.50
Roof waterproofing work EUR 64,478.42
Windows EUR 83,210.00
Rendering EUR 51,619.36
Rendering work EUR 12,820.00
Dry construction EUR 21,143.67
Painting EUR 10,405.50
Heating/plumbing EUR 134,685.08
... ...
Total construction costs EUR 1,105,680.05

Establishing and assessing costs

Once the project has been inspected, approved, and any necessary
corrective measures taken, the contractors involved in the project will
present their final invoices within a contractually agreed period. These
will include all the costs generated by the project on the basis of contrac-
tually agreed additional payments, and those that have emerged sub­
sequently. The final invoices are checked for correctness by the archi-
tect and amended where applicable.

The costing that documents the actual project costs (> Chapter on the Total of all final
is made up of the sum of all the
­basic approach to updating and serving cost planning) invoices

costs incurred and thus represents a survey of all the costs already gen-
erated, and represents the final cost determination stage. Usually a list
of all the costs in the final invoices is drawn up here and presented as
a total sum, and this is usually sufficient information in terms of the
­client’s interest.

If the table structure for the planning and construction process had Re-organisation based
been updated systematically, the contract-based totals can be re-allo- on structural
components
cated to the original construction elements without a great deal of effort.
This has distinct advantages for the architect, as it means that he or she
can assess the project as a whole and thus draw conclusions and deter-
mine costs for future projects.

To do this, the sums actually invoiced, including all changes, addi- Compiling
tional charges etc. are divided by quantities invoiced. When compiling cost ­f igures

cost figures based on construction elements, care must be taken that all

63
Fig. 42: Determining costing figures

Job/contract Heading Sum due under Quantity invoiced Inclusive price cost
award unit heading figure
Dry construction
Dry-built walls EUR 24,154.50 517.56 m² approx. EUR 47.00/m²
Firewalls EUR 3468.36 46.50 m² approx. EUR 75.00/m²
Suspended ceilings EUR 11,210.42 214.67 m² approx. EUR 52.00/m²
... ...

the additional constituent elements are added in again. This can be done
most successfully if all the essential building components including
­relevant secondary items are listed under their own headings in the invi-
tations to tender. In this way the specific value can be derived from the
invoiced sum under this heading and the total quantity under the main
◯ item. > Fig. 42

If specific values are to be prepared for component elements, the

relevant costs should be totalled from a retrospective cost breakdown
based on building parts. To compile costings relating to volume or area,
the invoiced construction costs should be divided by the areas and gross
cubic capacity that will usually have been determined previously for the
◼ building application.

◯ Note: It is important for planning practices to set up ◼ Tip: Costings should always be entered in a personal
their own costing databases. Costs derived from database without value added tax, in case this is
their own projects define costs according to the indi- altered by law. It also makes sense to name the con-
vidual quality requirements, constructions and degrees struction year as well, so that cost values can still be
of detail customary for the practice, and are therefore used by allowing for inflation and statistical adjust-
­significantly more precise than average statistical val- ments. Statistics offices in almost all countries keep
ues that are generally accessible. records of significant price fluctuations in the build-
ing sector.

64
 In conclusion
Construction costs are a key element for the client in almost all
a­ rchitectural projects, and determine their success or failure. The aes-
thetic quality of a building is very important, but it is governed by subjec-
tive evaluation criteria – as a layperson, the client can judge a building
technically only to a limited extent. But apart from the user-friendliness
of a building, keeping to costs and where necessary to deadlines are fixed
factors that are extremely important for the client, who can also assess
them very readily. Keeping within the planned building costs can always
be checked in terms of concrete figures. High creative ambitions and
good architectural concepts can be realised and implemented attrac-
tively only if they are based on professional budgeting. This ensures that
the desired quality will be delivered, but also guarantees that the project
as whole is financially viable, and no architecture can be realised if this
does not happen. So it is essential for architects to see the subject of
costs as an essential planning element, to tie the emerging designs and
projects together in a structured way, and to cost them carefully.

Even though the subject of costs is often not an important feature

of architectural studies, a competent approach to costs is essential if
­architects are to be successful in their later professional lives. For this
reason the methods and practical procedures are an important building
block in architectural studies as a preparation for their subsequent pro-
fessional lives. Understanding creative design, technical construction,
holistic co-ordination and competent budgeting as an iterative process
constitutes a good architect’s repertoire. Just as the design process can-
not be schematised, budgeting is also a project-related heterogeneous
process that adapts itself both to the client’s special needs and spheres
of interest and also understands how to illustrate the shape of a particu­
lar project and its specific idiosyncrasies.

65
Appendix
Literature
Bert Bielefeld, Lars-Philip Rusch: Building projects in China, Birkhäuser
Verlag, Basel 2006
Bert Bielefeld, Falk Würfele: Building projects in the European Union,
Birkhäuser Verlag, Basel 2005
Chartered Institute of Building (ed.): Planning and Programming in
­Construction, Chartered Institute of Building, London 1991
CIRIA: The Environmental Handbooks for Building and Civil Engineering:
Vol 1. Design and Specification, Thomas Telford Ltd, 1994
Sandra Christensen Weber: Scheduling Construction Projects.
­Principles and Practices, Pearson Prentice Hall, Upper Saddle
River, NJ, 2005
Institution of Civil Engineers, Association of Consulting Engineers and
Civil Engineering Contractors Association: Tendering for Civil
­Engineering Contracts, Thomas Telford Ltd, 2000
Richard H. Neale, David E. Neale: Construction Planning, Telford,
­London 1989
Jay S. Newitt: Construction Scheduling. Principles and Practices,
­Pearson Prentice Hall, Upper Saddle River, NJ, 2009

The authors
Bert Bielefeld, Prof. Dr.-Ing. Architect, architect teaches construction
economics and construction management at Siegen University and
is managing partner of the bertbielefeld&partner architecture
practice in Dortmund.
Roland Schneider, Dipl.-Ing. M.Sc. Architect, is academic assistant in
the construction economics and construction management
­department at Siegen University and managing director of the
­art-schneider architecture practice in Cologne.

Thanks go to Ann Christin Hecker and Benjamin Voss for their support
in creating the graphics.

66
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