Sample Answer
Preparation of an Elemental Cost Plan for Coastal Holidays’ Luxury Villa Refurbishment Programme
Introduction and Context
This briefing note has been prepared to guide the preparation of an elemental cost plan for Coastal Holidays, a company specialising in the rental of self-catering holiday villas across the UK. The client is planning a programme of upgrading and refurbishing its existing three and four bedroom villas to a high-end luxury standard in order to expand its business and attract higher value customers. As a cost consultancy, our role is to provide clear cost planning guidance that supports informed decision making, cost control, and value for money throughout the project lifecycle.
An elemental cost plan is a fundamental tool within building economics. It allows costs to be structured, analysed, and controlled by breaking the project into functional elements rather than individual trades. This approach is particularly suitable for refurbishment projects where design development, quality expectations, and lifecycle performance play a significant role in overall value. This briefing note explains the process for preparing an elemental cost plan for the scheme and critically discusses the key factors influencing the selection and use of cost analysis data, including necessary adjustments when applying historic cost information.
The Purpose of an Elemental Cost Plan
An elemental cost plan provides a structured method of estimating and controlling construction costs by grouping costs into elements such as substructure, superstructure, finishes, services, and external works. According to the Royal Institution of Chartered Surveyors, elemental cost planning supports early cost certainty, enables comparison between design options, and assists in managing costs throughout design development (RICS, 2021).
For Coastal Holidays, an elemental cost plan is particularly valuable due to the refurbishment nature of the project. Existing villas may vary in condition, layout, and location, meaning that costs need to be analysed at an elemental level to identify cost drivers and areas of risk. Additionally, upgrading to luxury accommodation places greater emphasis on finishes, building services, and lifecycle performance, all of which can be clearly evaluated through elemental analysis.
Process for Preparing an Elemental Cost Plan
The preparation of an elemental cost plan follows a logical and structured process, ensuring that costs are realistic, transparent, and aligned with the client’s objectives.
The first stage is establishing the project brief and scope. This involves understanding Coastal Holidays’ requirements, including the desired level of luxury, target market expectations, programme constraints, and any sustainability or operational considerations. At this stage, it is essential to clarify whether the refurbishment includes structural alterations, upgrades to mechanical and electrical services, or external works such as landscaping and parking. A clear scope reduces the risk of omissions and cost overruns later in the process.
The second stage is the collection and review of relevant project information. This includes existing drawings, condition surveys, specifications, and any preliminary design proposals. For refurbishment projects, condition surveys are particularly important, as unknown defects can significantly impact costs. Information is also gathered on villa sizes, locations, and any variations between properties that may affect cost planning.
The third stage involves selecting an appropriate elemental classification. The New Rules of Measurement (NRM1) provides a standardised framework for elemental cost planning, ensuring consistency and comparability (RICS, 2021). Elements are defined clearly so that costs can be allocated accurately and analysed effectively.
Once the elemental structure is established, cost data is applied to each element. This data is typically sourced from historic project information, published cost databases, or internal cost models. For Coastal Holidays, comparable refurbishment projects within the holiday and hospitality sector would be particularly relevant. Costs are adjusted to reflect the specific characteristics of the scheme, which is discussed in more detail later in this briefing note.
The elemental costs are then aggregated to produce an overall cost plan. This total is reviewed against the client’s budget to assess affordability. Where necessary, value engineering exercises can be undertaken to explore alternative design solutions that reduce costs without compromising quality or performance.
The final stage is reporting and review. The elemental cost plan is presented clearly, showing cost breakdowns, assumptions, exclusions, and identified risks. This allows the line manager and client to understand the cost drivers and make informed decisions as the project progresses.
Factors Influencing the Choice of Cost Analysis
Selecting an appropriate cost analysis is critical to the accuracy and reliability of an elemental cost plan. Several factors must be considered to ensure that the cost data used is suitable for the Coastal Holidays scheme.
One key factor is the nature of the project. Refurbishment projects typically involve greater uncertainty than new build projects due to unknown site conditions and existing building constraints. Therefore, cost analysis data must be drawn from refurbishment projects of a similar type, scale, and quality. Using new build cost data without appropriate adjustments would significantly distort cost forecasts.
Location is another important factor. Construction costs vary across the UK due to differences in labour rates, material availability, and market conditions. Coastal Holidays’ villas are located across the country, meaning regional cost variations must be considered. Location factors published by BCIS can be applied to adjust base cost data accordingly (BCIS, 2023).
The required quality and specification level also strongly influence cost analysis. Luxury accommodation demands higher quality finishes, advanced building services, and enhanced durability. Cost data must therefore reflect high-end specifications rather than standard residential refurbishment. Failure to account for this would underestimate costs and increase the risk of budget overruns.
Market conditions at the time of construction must also be considered. Inflation, supply chain disruptions, and contractor availability can all affect costs. Cost analysis data should be adjusted to reflect current market conditions, using appropriate indices to ensure costs are up to date.
Finally, lifecycle considerations play an important role in cost analysis selection. Coastal Holidays is investing in long-term rental assets, meaning that operational and maintenance costs are just as important as initial capital costs. Cost analysis should therefore support lifecycle costing by identifying elements where higher initial investment may reduce long-term costs.
