Student ID - 1247095

Module Title Procurement, Tendering and Estimating

Module Code BSCC06H

Marked by Ralph Howard

Assignment Title Applied Estimating

Hand in Deadline 27th February 2012

Word Count N/A

Contents 1. Introduction 2. Main report 2.1. Cost per m2 2.2. Elemental cost plan 2.3. Bill of Quantities 2.4. Select and justify the appropriate meth Cost per m2 3. Appendices 4. References

1. Introduction
One of the first questions asked by a client who wants a building or structure erected is How much will it cost? The next question will be How accurate is the figure? The purpose of a pre tender estimate is to provide an indication of the probable cost of construction. This will be an important factor to consider in the clients overall strategy of the decision to build. During the projects development and construction phases this estimate may be reviewed and revised many times. Perhaps the single mist important criterion of the estimate is its accuracy. An early price estimate which is too high may discourage the client from proceeding further with the scheme, and so the potential commission is lost. Alternatively, if the estimate is too low, it may result in an abortive design, dissatisfaction on the part of the client or even litigation. It should be accepted, however, that early price estimates are an approximation and will therefore include some amount of uncertainty.
Cost studies of building, 4TH Edition, Allan Ashworth, Page 264

2. Main Body
We are going to select and evaluate three contemporary methods of producing an estimate for the proposed works to see which method is best for this project, to let the client know the cost of the building and the time it is going to take. The three methods we are used are cost per m2, approximate quantities and Bill of quantities. There are other methods as well which are used at the tender stage to give the client a cost on the relevant project but we are only going to compare three to see which is the most visible for the building.

Building Design Cost Management David Jaggar, Andy Ross, Jim Smith & Peter Love Page 57 2.1 Cost per m2 Cost per m2 is the cost of an element divided by the measured quantity of the element (eg the cost of the element Roofs divided by the area of the element Roofs). The basis of unit costing for a particular site operation is the calculation of expenditure either in cash terms or on the basis of the hours involved. http://www.aaqs.org/ECEA.pdf

There are many techniques used by estimators in building up unit rates, ranging from rough notes in a bill of quantities, to sophisticated forms showing the constituents of rates broken down into rates and totals for labour, materials, plant and sub-contract elements. If changes are made to the estimate at the settlement meeting, the estimators hand written pricing notes could not be used (without further explanation) by construction staff except as a guide to the general logic and pricing structure.
The chartered institute of building code of estimating practice, seventh edition, Wiley-Blackwell, Page 65

The superficial area method is still the most common method in use for early price estimating purposes. The estimate of cost is easy to calculate and thus is expressed in a way that is fairly readily understood by those in the industry and the average construction industry client. Cost studies of building, 4TH Edition, Allan Ashworth, Page 268

Advantages and Disadvantages Cost per m2 is the quickest and cheapest way to give the client an idea of how much the proposal workshop facility is going to cost. This is the cheapest way to cost a job because the contractor will not have to spend much time on working out a rough price to build this project. As we know cost per m2 is quick and cheap, because of this it gives a rough idea to the client on the price of the job, it is not accurate or reliable for the contractor to get a fair comparison to the client. Not much in the way of specification and drawing are needed for this method to be used, this means not much preparation is needed to get a quick price to the client, other methods need more information in the way of specification and tender drawings to determine a price to the client. Considerations should be borne in mind, however. First, the client may express the project only in terms of the usable space required, and it is necessary therefore to add to this area circulation and other non-usable space to make the building function correctly.
Cost studies of building, 4TH Edition, Allan Ashworth, Page 268

2.2 Elemental cost plan Elemental estimating is not strictly a method of approximate estimating, but more associated with cost planning, used widely in both public and private sectors for controlling costs
Cost studies of building, 4TH Edition, Allan Ashworth, Page 266

An elemental cost plan can be produced from a preliminary building design. Again the method depends on reliable data being available from comparable projects where the actual cost for each building element is known. The chartered institute of building code of estimating practice, seventh edition, WileyBlackwell, Page 117 Elemental Cost Planning relies upon the adoption of a Standard Form of Cost Analysis for buildings which allows costs to be compared on a common format and forms the basis of the benchmarking analysis central to the concept of Elemental Cost Plans. It should : Ensure that the tender amount is close to the first estimate, or that any likely difference between the two is anticipated and is acceptable. Ensure that the money available for the projects is allocated consciously and economically to the various components and finishes. Always involves the measurement and pricing of approximate quantities at some stage of the process. Aim to achieve good value at the desired level of expenditure. Elemental cost planning is often referred to as 'designing to a cost' or 'target cost planning' since a cost limit is fixed for the scheme and the architect must then prepare a design not to exceed this cost.

http://www.docstoc.com/docs/60879393/TEMPLATE-7--Elemental-cost-breakdown

Advantages & Disadvantages This method does provide more detailed and reliable method of approximate estimating, but it involves more time and effort than other methods.
Cost studies of building, 4TH Edition, Allan Ashworth, Page 271

Elemental cost plan will help the client budget for his project but it is not as accurate as a bill of quantities, bill of quantities takes a lot more time than elemental cost but is the most accurate out of the 3 contemporary methods. It is more accurate than cost per m2 but later however also seeks to do much more. It provides cost advice during the design process, offering the client better value form money. It keeps the designer fully informed of all the cost implications of the design in relation to an approved approximate estimate and likely to accept the tender sum.
Cost studies of building, 4TH Edition, Allan Ashworth, Page 272

Elemental estimating does not work out every individual items like Bill of quantities does, which will take lot longer to produce and also will be more expensive for the client to pay the contractor to produce.

2.3 Bill of Quantities Bills of quantities: In traditional contracting, a contract document comprising a list of the materials required for the works and their estimated quantities, produced by the contractors quantity surveyor. The contractor tenders against this document, stating his price for supplying and installing each of the materials. The total of the contractor's prices, added to his prices for the various items in the Preliminaries, forms the contract sum. The contract sum cannot be varied just because the actual quantities differ from those in the bills of quantities, so the contractor must satisfy himself that the quantities shown are at least approximately correct. A Bill of Quantities should make it easier for a contractor to price a particular project since all the materials and work to be carried out is listed. Each contractor should be working from the same information therefore a fairer system is employed when pricing competitively. Less mistakes should be made compared to an estimator taking quantities off drawings since is this procedure the estimator is effectively making up his own bill of quantities.

http://www.longworthconsulting.co.uk/construction_contracts/bill_of_quantities.htm

Advantages and Disadvantages Bill of quantities is the most accurate way to give the client an exact estimate of the proposal workshop facility, with the only cost changes arising in the project will be any changes to the actual works of the project itself. Bill of quantities are far more accurate that Cost per m2 and elemental costs. Bill of quantities take a long time to produce and are very costly compared to the two other methods of pricing. The client is after a quick and cheap method to get a price on how much this project will cost to build. After the bills of quantities are drawn up the client has to wait to be sent out to the contractor to price them. The client is asking for initial cost advice which cost per m2 can give can the client a wuick and cheap idea of the price, Bill of quantities can be used when the client is looking for a more in depth price, to produce an accurate Bill of quantities there will have to be a specification produces the for proposal workshop and also tender drawing will have to be drawing up buy the architect. At the present time the timescale to produce a bill of quantities is a lot longer than Cost per m2 and elemental cost plan and is not relevant for the client at present.

2.4 Select and justify the appropriate method Cost per m2 The client is asking for a quick cost estimate for a proposed workshop facility to assist the decision whether or not to undertake the project. There are a lot of different methods you can use to work out a price for how much the project is going to cost, I have evaluate three different methods, by labelling the advantages and disadvantages of each one. I have come to a conclusion for this particular project and getting the client an initial quick price for the proposed workshop facility cost per m2 would be the best method to use. The other two methods I have evaluated, elemental cost and Bill of quantities both could be used to price up the project because there is all the relevant information for these tendering methods, but they both would take a lot longer, meaning I could not meet the clients needs of initial cost advice. The prices per metre squares is based on Spoons 2010 Vehicle repair and maintenance buildings up to 500m2, due to the market the prices are very similar to the current market prices. Prices given under this heading are average price, on a fluctuating basis, for typical buildings based on a tender price level index of 463 (1976 = 100). Prices allow for preliminaries at 13%, and Overheads and Profit. Unless otherwise stated, prices do not allow for external works, furniture, loose or special equipment and are, of course, Exclusive of fees for professional services. Prices are based upon the total floor area of all storeys, measured between external walls and without deduction for internal walls, columns, stairwells, lift wells and the like. As in previous editions it is emphasized that the prices must be treated with reserve, as they represent the average of prices from our records and cannot provide more than a rough guide to the cost of a building.. Spons 2010, Architect and Builders price book 2010, David Langdon, 2010 The new maintenance workshop the client has proposed is 8.53 metres x 6.23 metres = 53.14 metres squared. The prices for a vehicle repair and maintenance building up to 500m2 is (Excluding VAT) between 1350 and 1700 per metre square, so on an average cost I will base this project at 1525 per metre square (Excluding VAT), but as it is a new build the VAT can be claimed back. Appendix A

53.14 m2 x 1525 = 81,038.50. (Excluding VAT) 81,038.50 x 20% Vat = 97,246.20. These prices above on are the building cost of the project and dies not include in for planning permission, building regulations and a client quantity surveyor which is optional. Spons 2010, Architect and Builders price book 2010, David Langdon, 2010, Page 68 - 69

If the clients does choose to go with a Quantity surveyor based on spons 2010 he would be priced is Category C Simple works up to 150,000 based on 4.9% of the project cost before VAT Appendix B 81,038.50 x 0.049 x 3,970.89 = clients quantity surveyor costs. So if the client chooses to proceed with the build without a Clients QS it will cost 81,038.50 and with a Client Quantity surveyor it will cost 85,009.39.

4. References
Cost studies of building, 4TH Edition, Allan Ashworth, Page 264

http://www.aaqs.org/ECEA.pdf
The chartered institute of building code of estimating practice, seventh edition, Wiley-Blackwell, Page 65 Cost studies of building, 4TH Edition, Allan Ashworth, Page 268 Cost studies of building, 4TH Edition, Allan Ashworth, Page 268 Cost studies of building, 4TH Edition, Allan Ashworth, Page 266

The chartered institute of building code of estimating practice, seventh edition, WileyBlackwell, Page 117 http://www.docstoc.com/docs/60879393/TEMPLATE-7--Elemental-cost-breakdown
Cost studies of building, 4TH Edition, Allan Ashworth, Page 271 Cost studies of building, 4TH Edition, Allan Ashworth Page 272

http://www.longworthconsulting.co.uk/construction_contracts/bill_of_quantities.htm Spons 2010, Architect and Builders price book 2010, David Langdon, 2010 Spons 2010, Architect and Builders price book 2010, David Langdon, 2010, Page 68 69

3. Appendices

Appendix A

Appendix B