Demonstrate knowledge and critical understanding of building economics including development appraisal, financing, cost factors and ways in which construction costs can be controlled pre-contract and post-contract.

Assignment Brief

Module name: Building Economics

Module code: QSP5BEC

Learning outcomes

LO1 Demonstrate knowledge and critical understanding of building economics including development appraisal, financing, cost factors and ways in which construction costs can be controlled pre-contract and post-contract.

LO2 Use established methods and techniques to analyse alternative construction design solutions and evaluate their impact on initial and lifecycle costs.

LO3 Produce cost estimates, cost plans and lifecycle costs associated with the construction and lifecycle of new building.

LO5 Locate information sources, assemble data and communicate information, arguments and analysis using the key techniques of building economics.

Scenario

You are employed by a cost consultancy firm and are providing project and cost control services to your client, Coastal Holidays, who specialise in the rental of self-catering holiday villas. Coastal Holidays owns a number of three- and four-bedroom holiday homes across the country and in order to expand their business they are about to embark on a programme of upgrading and refurbishing their existing holiday villas to high-end luxury accommodation. Your boss has asked you to prepare guidance on a suitable cost plan for your line manager to review.

Task

In the form of a briefing note, explain the process to be followed to prepare an elemental cost plan for this scheme. You must also critically discuss the factors that will have to be considered when choosing an appropriate cost analysis. Include in your discussion examples of adjustments that may be required when using the data from an appropriate cost analysis. Reference list and bibliography You should include a reference list with a minimum of five separate relevant and appropriate sources that you have written about and cited within your work. A bibliography of uncited sources is not required.

Sample Answer

QSP5BEC: Building Economics

Briefing Note: Preparing an Elemental Cost Plan for the Refurbishment of Holiday Villas

1. Introduction

This briefing note outlines the process for preparing an elemental cost plan for the proposed high-end refurbishment of holiday villas owned by Coastal Holidays. It also highlights the critical factors involved in choosing an appropriate cost analysis, with examples of potential data adjustments when applying cost data from external sources.

2. Purpose of an Elemental Cost Plan

An elemental cost plan is used to forecast and control project costs by breaking down the total construction cost into elements (e.g., substructure, finishes, services). For Coastal Holidays, this cost plan will help in:

• Budget management

• Comparing design options

• Cost control from early stages to completion

3. Process for Preparing the Cost Plan

The following steps should be followed:

Step 1: Define the Project Scope

• Confirm number of villas to refurbish

• Determine target standard (high-end luxury)

• Understand required upgrades (kitchens, bathrooms, furnishings, energy systems)

Step 2: Collect Project Data

• Site location and access

• Building dimensions and form

• Current building condition

• Client preferences and priorities

Step 3: Establish Cost Plan Format

• Use NRM1 (New Rules of Measurement) by RICS for building works

• Organise cost elements (e.g., substructure, superstructure, finishes, mechanical & electrical, etc.)

Step 4: Source Unit Costs

• Use current cost data from recognised sources such as BCIS (Building Cost Information Service)

• Adjust costs to reflect local market conditions and project specifics

Step 5: Adjust and Apply Costs

• Apply data to villa specifications

• Adjust for:

  • Location factors

  • Project size

  • Time (inflation or deflation)

  • Specification differences

Step 6: Include Preliminaries and Overheads

• Add allowances for preliminaries (e.g., site setup)

• Include profit margins, design fees, contingency, and risk allowance

Step 7: Review and Present Plan

• Double-check quantities and assumptions

• Present clearly for client approval

Continued...