Construction cost management
Scenario You have been engaged as a cost consultant working for a leading property developer in London. The developer wishes to invest in the midlands areas and are considering to invest in high-end gated residential units which includes flexible working rentable offices and a gym. Write a report to your client explaining some of the key financial practices that will happen at various intervals throughout the project. As a minimum your report should cover 1) Estimating options (20%) including compare and contrast the various stages of cost planning in pre-tender work on projects (15%) 2) Budget development (15%) 3) Cost Planning (15%) 4) Cost management (20%) 5) Valuations and variations (15%) For each of the above you must provide critical evaluation and make recommendations for which should be used on the project. Providing examples will enhance the clarity of your answers. Do not forget to submit your work fully validated with citations and detailed academic research. Assignment scenario GUIDE Q1 – Estimating options (Pre Contract) This question requires you to explain the main methods for initial cost estimation and project appraisal. Refer to the NRM1 and discuss the various stages involved. I would also like to see some very brief worked examples. Refer to your presentation, BCIS, or the examples given in the session (e.g. sports facility). * Functional Unit method * Superficial (Floor Area) method Q2 – Budget Development (Pre Contract) *Consider the various design options and the requirements around budget development. What information is needed from the client and various other authorities/project participants during the early stages of a project? For example, do we need to have an idea of the features surrounding the site? * Discuss/propose how to identify and manage various risk events at the early phase (e.g. poor ground conditions). * Discuss aspects related to the business case and the feasibility study (i.e. RIBA stages 0 and 1). Q3 – Cost Planning (Pre Contract) * Provide a brief overview of the cost planning process in relation to the NRM1. Identify how a cost plan evolves from cost plan 1, 2 and 3. * Refer to some worked examples from the BCIS and perhaps how to develop a detailed cost plan in accordance with the NRM1. Q4 – Cost Management (Post Contract) * In this section, discuss one aspect related to cost management (e.g. interim valuation and the process involved or value engineering). Q5 – Valuations of Variations (Post Contract) * Under this section, consider how to value a variation. This is mostly in relation to the role of the contractor and how they work out the value of a variation. Please refer to the RICS guide for further information; and the JCT SBC 2016