23 November 2002
By Sunny Chan
and Stephen Wong
THE HONG KONG INSTITUTE OF SURVEYORS
JUNIOR ORGANISATION 00PQSL SERIES
(23 NOVEMBER 2002)
By
Sunny Chan, AHKIS, MRICS
Stephen Wong, AHKIS,
MRICS
PRE-CONTRACT CONSTRUCTION
COST ESTIMATING
23 November 2002
By Sunny Chan
and Stephen Wong
CONTENTS
PART 1 - TERMS AND DEFINITIONS
(A) Area Classification
(B) Terms used in Cost Estimate and
Cost Analysis
PART 2 - TYPE OF COST ESTIMATE
(A) The Pre-Contract Cost Estimating Process
(B) Rough Indication of Costs/ Indicative Order of Costs
(C) Preliminary Cost Estimate
(D) Detailed Cost Estimate
(E) Pre-Tender Estimate
(F) Reconciliation of Estimate
(G) Cost Studies of Alternatives
PART 3 - IMPORTANT POINTS FOR COST ESTIMATING
(A) Pricing of Cost Estimate
(B) Verification of Quantities
(C) Accuracy of Cost Estimate
PART 4 - QUESTION AND ANSWER
23 November 2002
By Sunny Chan
and Stephen Wong
PART 1
00TERMS AND DEFINITIONS
(A) Area Classification
(B) Terms used in Cost Estimate and Cost Analysis
23 November 2002
By Sunny Chan
and Stephen Wong
PART 1 00TERMS AND DEFINITIONS
(A) AREA CLASSIFICATION
GROSS FLOOR AREA (GFA) of a building
is the area contained within the external walls of the building measured
at each floor level, together with the area of balcony and the thickness
of external walls, but excluding carpark and plant room areas.
(for submission to Planning Authorities)
CONSTRUCTION FLOOR AREA (CFA)
is the covered areas fulfilling the functional requirements of the building
measured to the outside face of the external walls or external parameter,
and measured over lift shaft voids and stair well, inclusive of bay
window, carpark and mechanical room and open covered areas.
LETTABLE AREA is the area which
could be leased to a tenant for his exclusive use. Measurement
should include half of the thickness of walls enclosing the lettable
area. (for feasibility studies to assess the profitability)
USABLE FLOOR AREA is the floor
area other than staircases, staircase halls, lift landings, area for
sanitary wares and area occupied by lift and machinery . (for
submission to Planning Authority)
23 November 2002
By Sunny Chan
and Stephen Wong
PART 1 00TERMS AND DEFINITIONS
(B) TERMS USED
IN COST ESTIMATE AND COST ANALYSIS
ELEMENT QUANTITY is the quantities
of element based on element unit, e.g. room, door, wall finishes, etc.
ELEMNET RATIO is the element quantity
per unit CFA (i.e Element Quantity / CFA)
ELEMENT UNIT RATE is the average
cost per unit element quantity. (Thus, Total Cost of Element /
Element Quantity)
INDICES are the indication of
price level for particular subject, such as tender price index, building
services tender price index, labour index, material index and consolidated
labour & material index.
23 November 2002
By Sunny Chan
and Stephen Wong
PART 2
00TYPE OF COST ESTIMATE
(A) The Pre-Contract Cost Estimating Process
(B) Rough Indication of Costs/ Indicative Order of Costs
(C) Preliminary Cost Estimate
(D) Detailed Cost Estimate
(E) Pre-Tender Estimate
(F) Reconciliation of Estimate
(G) Cost Studies of Alternatives
23 November 2002
By Sunny Chan
and Stephen Wong
PART 2 00TYPE OF COST ESTIMATE
(A) THE PRE-CONTRACT
COST ESTIMATING PROCESS (General Concept)
Preliminary Cost Estimate (Elemental
form based on elemental unit costs)
Schematic design drawings showing general layout, shape and height of building.
Form of construction
Prepare cost estimate & initial
cost studies in order to check & confirm cost limit/ budget.
Outline Proposal
Pre-Tender Estimate
(Based on BQ priced with current prices)
Complete design & working drawings
and specifications.
Cost check of final design
Tender
Comparative Cost Studies
(Reconciliation of costs and cost studies
of alternative)
Alternative design proposal.
Design development
Update cost and further cost
studies of design alternatives
Design Development
Detailed Cost Estimate
(Elemental form based on approximate
quantities priced at current rates)
Architectural plans, elevations & sections
Structural framing plans
Foundation information
Standard of finishes
Building Services
Prepare cost plan & continue
cost studies of alternative to check & confirm cost limit/ budget.
Scheme Design
Rough Indication of Costs/ Indicative Order of Costs
(GCFA x HK$/m2)
Location and area of the site
Project Details, e.g. GFA/GCFA, height, size, use and programme
Quality standard required
Prepare feasibility studies to
determine the cost limit/ budget.
Inception & Feasibility
Type of Cost Estimate
Information of Available
Main Purposes
Stages
23 November 2002
By Sunny Chan
and Stephen Wong
PART 2 00TYPE OF COST ESTIMATE
(B) ROUGH INDICATION
OF COSTS/ INDICATIVE ORDER OF COSTS
Total Costs = Construction Floor Area
(CFA) x Unit Area Cost (HK$/CFA)
Where,
CFA can be estimated based on
the following information:-
Maximum buildable area = site area x approved plot ratio
Approx. CFA = site coverage area x no. of floor (for building with full site coverage)
Approx. CFA = GFA x conversion factor (1.05-1.10 for residential, 1.10-1.20 for office)
Functional parameters [e.g. hospital (60m2 to 120m2 per bed), hotel (55m2 to 100m2 per room), auditorium (1.5m2 to 2m2 per seat) and carpark (30m2 to 40m2 per carpark)]
Unit Cost can be built up by :-
23 November 2002
By Sunny Chan
and Stephen Wong
PART 2 00TYPE OF COST ESTIMATE
(C) PRELIMINARY
COST ESTIMATE
Total Construction Costs = Sum of (Elemental
Quantity x Elemental Unit Rate)
In Elemental Form. It include
the elements of demolition & alteration, site investigation, site
formation, foundation, substructure & basement, structural frame,
roof covering, external facade, internal partition & door, internal
finishes, fitting & fixture, interior decoration, building
services, landscaping, external works, preliminaries and contingencies.
Elemental Quantity can be obtained
either from the design information of the proposed project or the cost
analysis of previous similar projects.
Elemental Unit Rate can be estimated
from the Cost Analysis of the previous similar projects; and with adjustment
of price level, location factor, quality of standard, physical conditions,
construction methods and other particulars.
Allowance of Preliminaries and Contingencies
The report of preliminary cost estimate consists of cover, contents, summary of estimated costs, scope of cost estimate (inclusion & exclusion), general particulars (project details, definition of area, schedule of area & basis of cost estimate), outline specification and assumptions and supplementary information.
23 November 2002
By Sunny Chan
and Stephen Wong
PART 2 00TYPE OF COST ESTIMATE
(D) DETAILED
COST ESTIMATE
Total Construction Costs = Sum of (Approximate
Quantity x Unit Rate)
In Elemental Form. It include
the elements of demolition & alteration, site investigation, site
formation, foundation, substructure & basement, structural frame,
roof covering, external facade, internal partition & door, internal
finishes, fitting & fixture, interior decoration, building
services, landscaping, external works, preliminaries and contingencies.
Approximate Quantity for each
element can be measured based on the design information (including drawings
and specifications).
Unit Rate can be estimated from
the Cost Analysis of the previous similar projects with appropriate
adjustment, (ii) recent returned tenders, (iii) recent prepared cost
estimate, and (iv) supplier00/sub-contractor00 quotations.
Allowance of Preliminaries and Contingencies.
The report of detailed cost estimate consists of cover, contents, summary of estimated costs, scope of cost estimate (inclusion & exclusion of works), general particulars (project details, definition of area, schedule of area and basis of cost estimate), outline specification and assumptions and supplementary information.
23 November 2002
By Sunny Chan
and Stephen Wong
PART 2 00TYPE OF COST ESTIMATE
(E) PRE-TENDER
ESTIMATE
Prepared based on the bills of quantities
measured from the tender/working drawings.
Priced at the current rate which can be obtained from
the Cost Analysis of the previous similar projects with appropriate adjustment, recent returned tenders, recent prepared cost estimate, supplier00/sub-contractor00 quotations.23 November 2002
By Sunny Chan
and Stephen Wong
PART 2 00TYPE OF COST ESTIMATE
(F) RECONCILIATION
OF ESTIMATE
Reconciliation of Cost Estimate is used
to systematically report the cost change/ difference between the old
cost estimate and the new cost estimate. Therefore, the reasons
of the change/difference can be identified and assessed.
The cost difference is usually due to
(i) change in price level, (ii) change in the Employer00 requirement,
(iii) change in design/development, (iv) more advanced information obtained,
(v) change in site conditions, and (vi) adjustment upon awarded contract.
It is particularly useful for proceeding
cost saving exercise and reporting changes of the project.
Upon necessary, it may be required to
carry out at each pre-contract stage.
23 November 2002
By Sunny Chan
and Stephen Wong
PART 2 00TYPE OF COST ESTIMATE
(G) COST STUDIES
OF ALTERNATIVES
Cost studies is to compare two alternatives
of design scheme/requirements in terms of cost consideration.
It provides a clear cost direction for the client/architect to make
their final decisions on the selection of design schemes.
Particular in Value Engineering studies and can be applicable to each pre-contract stages.
23 November 2002
By Sunny Chan
and Stephen Wong
PART 3 00IMPORTANT
POINTS
FOR COST ESTIMATING
(A) Pricing of Cost Estimate
(B) Verification of Quantities
(C) Accuracy of Cost Estimate
23 November 2002
By Sunny Chan
and Stephen Wong
PART 3 00IMPORTANT POINTS FOR
COST ESTIMATING
(A) PRICING
OF ESTIMATE
Source of Prices can be obtained from/ cross-checked by (i) suppliers/sub-contractor00 quotations, (ii) recently returned tenders, (iii) recently prepared estimates, (iv) historical cost data/ cost analysis.
Particular attention to be drawn on price level, market conditions, location of site, site conditions, programme of work, procurement method, contract conditions, size of the project and other special characteristics.
23 November 2002
By Sunny Chan
and Stephen Wong
PART 3 00IMPORTANT POINTS FOR
COST ESTIMATING
(B) VERIFICATION
OF QUANTITY
The quantity of each element should be
checked and verified whether it is reasonable. The following are
some of the common ratio/proportion for verification of the element
quantity.
Reinforced concrete / CFA
Formwork / CFA
Reinforcement / CFA and Reinforcement / reinforced concrete
(External wall finishes + windows + curtain wall) / CFA
Roof waterproof = largest footprint
Floor finishes = Approx. 90% CFA
Internal wall finishes / CFA and Internal ceiling finishes / Total floor finishes
23 November 2002
By Sunny Chan
and Stephen Wong
PART 3 00IMPORTANT POINTS FOR
COST ESTIMATING
(C) ACCURACY
OF ESTIMATE
Availability of Information
Market condition/inflation
Method of estimating
Site conditions
Tendering procedure and contractual arrangement
Uniqueness of project
Experience of estimator
23 November 2002
By Sunny Chan
and Stephen Wong
PART 4 00QUESTION AND ANSWER
Q & A
23 November 2002
By Sunny Chan
and Stephen Wong
- END OF PRESENTATION -
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