tcm 303-05 power point slides - unit 1

7/27/2019 TCM 303-05 Power Point Slides - Unit 1

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TCM303 Building Quantity Practice

Unit 1

ESTIMATING PROCESS AND METHODS


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Unit Overview

This unit is divided into three sections.

Section one, you are introduced to cost estimation, the

application and use of cost estimation and the methods

and processes involved in preparing cost estimates.

Section two discusses two case studies amplifying the

different functions of cost estimating and the methods

used to prepare cost estimates for different purposes.

Section three, introduces an overview of project

procurement methods used for building works


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Introduction to Cost

EstimatingThe main purpose of a cost estimate is to

provide an indication of the probable cost

of construction so that the client will have

an idea how much finance he needs for

his project. Thus, the cost estimate will

usually be one of the deciding factors in

the clients development strategy. It willalso form the basis for his budget and his

financing strategy.


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Introduction to Cost

EstimatingThe various estimates can be classified into

the following categories: -

Initial budgeting preliminary estimate,

feasibility, viability, authorisation

Cost control final budget

Design comparison exercise conductedprogressively before the construction

commenced


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Methods of Cost EstimatingMethod RemarksFinancial methods Used to determine cost limits or the building costs in a

developers budgetUnit Applicable to projects having standard units of accommodation

like schools and hospitals. It is usually used to fix cost limits for

public sector building projectsSuperficial area Still widely used, and the most popular method of approximate

estimating. Can be applied to virtually all types of buildingsCube Used to be a popular method amongst architects where the

volume of the building is used as a basis tocalculate the cost. It is

not in used anymoreStorey-enclosure Not an accurate method and is hardly used nowApproximate quantities Still a popular method on difficult and awkward contracts. This is

a more accurate method if time permits

Elemental estimatingNot strictly a method of approximate estimating, but more

associated with cost planning; used widely in both the public

and private sectors for controlling costsCost models These methods are still in the course of development


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Cost estimate for budgeting Case

Study 1

In the initial stage of a project, design drawings may not be

ready as the architect would still be preparing the

conceptual sketch.

However, the client would still want to know the estimated

cost in order to decide if he has sufficient funds to

proceed with the project.

As such, the quantity surveyor (QS) would prepare a

preliminary cost appraisal just by using the gross floor

area.


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Study 1

Parameters that would have to be considered are: -

Type of building to be constructed

Location of the building

Size of the site Site conditions/constraint

An indication of the standard of finishes and fittings

Additional feature to roof or wall

Exclusion items

Cost of external works in relation to the

development like flyover to site, demolition of buildings,

etc


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Study 1

Reporting the cost estimate (preliminary cost appraisal

format)


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Cost estimate for feasibility

study - Case Study 2

A feasibility study is requested by the client when the

client intends to sell the buildings.

As such, the client would need to know if the project

generates a good return. If the return is not good, the

client will ask the architect to change the design or

development mix to produce a mix that gives good

return.

A feasibility study is used for this purpose and is an ideal

method to calculate and recalculate the return of variousdesign and development mix. Gender neutrality


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Parameters

to

consider

item Parameters Notes1. Types of buildings to be constructed The client/architect would have to decide what

type of building they are going to develop on the

site and list it out.

a) Highrise or lowriseb) Apartment, condominium,high end

condominium, office tower, shop office,

terrace houses, factory, etcc) The number of storey and number of unitsd) The nett saleable floor area of each unit

2. Selling price for each type of building The selling price of the development will beadvised by the client. If none is provided, the QS

would have to look at the current selling/rental

price to apply to the proposed development 3. Land value Land cost is usually provided by the client.

Otherwise, the QS would have to look at

rental/selling rate for land nearby the proposed

development area4. Construction cost of the various buildings The cost appraisal would have to be generated by

the QS prior to be able to run the feasibility

studies5. Soft cost relating to the entire development The soft cost in relation are:-

a) Marketing, promotion and agency feesb) Financing chargesc) Local authorities contributionsd) Professional feese) Project management and administrationf ) Construction supervisiong) Pre-development expenses and statutory

contribution

h) Land costi ) Legal fees and stamp duty

6. Phasing if the development is big If the development is a mixed development andthe site is very big, then phasing would have to be

incorporated.7. Construction period The construction period would have to be advised

by the QS based on the various type of building.8. Loan interest This is based on the latest base lending rate as

advised by Bank Negara


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Cost estimate for feasibility

study - Case Study 2

RM000Gross Development Value 130,000Less Gross Development Cost 85,000Net Cash Surplus/(Deficit) 45,000Cash surplus/(deficit) 45,000Less paid up capital (land value) (8,800)

36,200Return on Development Cost (RODC) 42.58%Return on Development Value (RODV) 27.84%

Reporting the cost estimateThe most important figure the client is interested to view in a feasibility

studies is the return on development cost (RODC) and return on

development value (RODV). This will be generated once the selling price,

soft cost and construction cost is calculated. The format which the

feasibility study can be presented is as follows:-


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Project Procurement Methods

Traditional Procurement

Employer

Architect

QuantitySurveyor

Mechanical &Electrical

Engineers

Civil &

Structural

Engineers

Main

Contractor

Sub -

Contractors


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Design and Build

Employer

Architect

QuantitySurveyor

Mechanical &

Electrical

Engineers

Civil &

StructuralEngineers

Sub-

Contractors

Contractor

Employers

advisers


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Management Contracting

Employer

Architect

Quantity

Surveyor

Mechanical &

Electrical

Engineers

Civil &

Structural

Engineers

ManagementContractor

Works -

Contractors


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Public Private Partnerships (PPP)

Employer

Design team

Project

manager

Finance

Suppliers

Main Contractor

Sub -

Contractorss


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Thank you

tcm 303-05 power point slides - unit 1

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