Budget, Cost Estimation

(C) MSc. Arch. László Szőnyi

2011.03.11.

Msc. Arch. László Szőnyi Budapest University of Technology and Economics, Department of Construction Technology & Management, Hungary http://www.epulettervezo.hu; [email protected] 10 – 03 - 2011

Budget, Cost Estimation 11/03/2011

(C)MSc. Arch. László Szőnyi

1

11/03/2011


2

Dome, Florence, Italy (1294 – 1434)

Why it is important to knew about costs for an architect?

• usually costs play key rule in an investment • Must knew: where, why and how do arise costs. • to give advises to the investor or owner

Sometimes there are extraordinary cases. 11/03/2011

Three examples:


3

Santa Maria del Fiore, Florence, Italy (1294 – 1434)

Santa Ma ria 11/03/2011

del Fiore


4

Time and Cost Management - really? 1418

Santa Raparata was demolished Filippo Brunelleschi, Florence , Dome Arnolfo di Cambio’s Desing (1296) Section and enlarged by Francesco Talenti (1367) the structure of the cupola(C)MSc. Arch. László Szőnyi 11/03/2011 actual plan

5

Santa Ma ria 11/03/2011

del Fiore, Florence (C)MSc. Arch. László Szőnyi (1296 – 1436)

6


2011.03.11.

Dome, Florence, Italy (1294 – 1434)

Time and Cost Management - really?

Filippo Brunelleschi, Florence , Dome Section and the structure of the cupola(C)MSc. Arch. László Szőnyi 11/03/2011

7

Some examples in the world

11/03/2011

8


Ed inburgh Scottish Parliament

Olympic Stadium (Montreal), Canada Despite initial projections in 1970 that the stadium would cost only C$ 134 million to construct, strikes and construction delays served to escalate these costs. By the time the stadium opened (in an unfinished form), the total costs had risen to C$264 million.

Scheduled to open in 2001, it did so in 2004, more than three years late w ith an estimated final cost of £414 million, many times higher than initial estimates of betw een £10m and £40m.

11/03/2011


Ross King: Brunelleschi’s Dome. The Story of the Great Cathedral in Florence, Pimlico, 2005


9


In 1986, a large chunk of the tower fell onto the playing field during another Expos game. A contract for a new permanent steel roof was awarded in 2004, with an estimated $300 million price tag. In mid-November 2006 the stadium's costs were finally paid in full. The total expenditure (including repairs, renovations, construction, interest, and inflation) amounted to C$1,610 m illion, making it the second most expensive stadium ever built. Though some Montrealers have called for the stadium to be demolished, it would be an extremely long and expensive project. Due to its unique structural design and the metro line directly underneath, it is not possible to implode the stadium. Instead, it would have to be 11/03/2011piece by piece, which (C)MSc. Arch.years László Szőnyi dismantled would take and cost an estimated C$700 million. 10


Olympic Stadium (Montreal), Canada


Despite initial projections in 1970 that the stadium would cost only C$ 134 million to construct, strikes and construction delays served to escalate these costs. By the time the stadium opened (in an unfinished form), the total costs had risen to C$264 million. In 1986, a large chunk of the tower fell onto the playing field during another Expos game. A contract for a new permanent steel roof was awarded in 2004, with an estimated $300 million price tag. In mid-November 2006 the stadium's costs were finally paid in full. The total expenditure (including repairs, renovations, construction, interest, and inflation) amounted to C$1,610 m illion, making it the second most expensive stadium ever built. Though some Montrealers have called for the stadium to be demolished, it would be an extremely long and expensive project. Due to its unique structural design and the metro line directly underneath, it is not possible to implode the stadium. Instead, it would have to be 11/03/2011piece by piece, which (C)MSc. Arch.years László Szőnyi dismantled would take and cost an estimated C$700 million. 11

11/03/2011


12


2011.03.11.


Causes of Cost Overrun


Three types of explanation for cost overrun exist: Technical: imperfect forecasting techniques, inadequate data, etc, Psychological: optimism bias (over-estimating the likelihood of positive events and under-estimating the likelihood of negative events), and

11/03/2011


13

•

Percentage: actual cost minus budgeted cost, in percent of budgeted cost

• •

Ratio: actual cost divided by budgeted cost

11/03/2011

$100 million $150 million


15

Technical Causes of Cost Overrun • • • •

14

Technical Causes of Cost Overrun

Calculation of Cost Overrun

For example: the budget for building a new bridge: the actual cost: the cost overrun: 50 % or the ratio 1.5

Political-economic: the result of strategic misrepresentation of scope or budgets. 11/03/2011 (C)MSc. Arch. László Szőnyi

•

Cost estimates method and the detail of the plan is inadequate, defective cost data, imprecise cost estimates (calculation) method, price increases during the beginning of planning and the delivery of the investment period,

11/03/2011


16

Possibilities to influence the project costs (%)

additional costs because of the change of the investment program and the plans, unforeseen construction conditions (e.g., poorer soil conditions, adverse weather), hindering the construction (e.g., late delivered plans, external action of associations), lack of cost management in planning and construction process.

11/03/2011


17

11/03/2011


18


2011.03.11.

How can we calculate costs? The principle of cost calculation

Quantitative factor

geometry of the building:

qualitative factor :

• functional basic area

• using of the building (detached house or hospital)

• the size of the surfaces of the floors

• claim level of the building

• 11/03/2011 surfaces of the facade(C)MSc. ….. Arch. László • conditions of the market … Szőnyi 19

• Relevant parameter at the time of the planning, construction and use. • Quantitative factor is needed for: • characterization of the building, • definition, controlling and management of the construction costs, • comparison of variant design solutions, • definition, controlling and management of the operating costs, • calculation of the rent, • calculation of the worth of the real estate, etc

That is: ~ is very important at the calculation. 11/03/2011


(DIN 277-1)

(DIN 277-1) Volume and surface areas of buildings. Part 1: concepts and methods of calculation

20

Division of the gross floor area

Office building, general floor plan

net area + structural area 11/03/2011

(DIN 277-1)


21

11/03/2011

= gross floor area (C)MSc. Arch. László Szőnyi

(DIN 277-1)

Division of the net area

22

Which structural area belongs to which area?

Structural area betw een the areas of a and c: counted to a a and b: counted to a b and c: counted to b

functional basic area + traffic floor area + mechanical floor area 11/03/2011

= net area


23

11/03/2011

Gross floor area area: a ( interior) area: b (C)MSc. (semi-open Arch. László area)Szőnyi area: c (uncovered area)

24


2011.03.11.

(DIN 277-1) Volume and surface areas of buildings. Part 1: concepts and methods of calculation

(DIN 277-1) It is a precise standard.

11/03/2011


25

11/03/2011


26

27

11/03/2011


28

DIN 277-2: Partition of net floor area

11/03/2011


The principle of cost calculation

Cost factor Expenses fall under two major sections: Initial expenses: Initial expenses are usually equal to the investment of a project.

geometry of the building:

qualitative factor :

• functional basic area

• using of the building (detached house or hospital)

• the size of the surfaces of the floors

• claim level of the building

• 11/03/2011 surfaces of the facade(C)MSc. ….. Arch. László • conditions of the market … Szőnyi 29

Future expenses: Future expenses are usually equal to the incurring costs after the occupation of a facility. 11/03/2011


30


2011.03.11.

Cost factor

Cost factor: future expenses

There are two standards in Germany which summarise the costs in the building industry: • the Standard 276-1 (DIN, 2006) contains the total investment cost of a project (Initial expenses) and • the other German Standard 18960 (DIN, 2008) defined the future expenses at the life of a building.

The German Standard 18960 (DIN, 2008) defined the following future expenses at the life of a building:

11/03/2011

11/03/2011


31

Cost factor: total investment cost The Standard 276-1 (DIN, 2006) contains the total investment cost of a building project. The aim of the DIN 276-1 standard is to give the opportunity to stand up a complete structure of building costs and makes it possible to project all costs of a planned investment. Each cost element is encoded and divided to three levels. The first level refers to all the costs of the project (budget): 11/03/2011


33

100 Capital costs: interest loss and amortization 200 Object management costs: personal costs in connection with the operation of the building and other material expenditures 300 Operating costs 400 Maintenance costs


32

Budget: the total investment cost (DIN 276-1) 100 Building plot 200 Infrastructural facilities 300 Building – constructions 400 Building – installations 500 Outdoor constructions and installations 600 Furniture and artworks 700 Additional expenses 11/03/2011

DIN 276-1

11/03/2011



34

DIN 276-1

35

11/03/2011


36


2011.03.11.

DIN 276-1

DIN 276-1 C.G. 221 C.G. 222 C.G. 222 C.G. 225 C.G. 226

Public area (street) C.G. 220: Infrastructure, public utilities

C.G. 413

Pr ivate area (building plot) C.G. 540: Building services and technical equipment outside the building

Border of the plot

C.G. 543

C.G. 400: Building services and technical equipment in the building

C.G. 542

C.G. 412 C.G. 411

C.G. 541

Border of the building

C.G. 547

C.G. 444

C.G. 546

C.G. 451

Plan

11/03/2011


Section

37

Gas Sewage Electricity Telecommunications Water and information technology 11/03/2011 (C)MSc. Arch. László Szőnyi

DIN 276-1

DIN 276-1 C.G. 312

C.G. 313

C.G. 311

C.G. 326 C.G. 322 C.G. 324 C.G. 313

Flat foundation and dew atering 11/03/2011


39

38

11/03/2011

DIN 276-1


Level of ground w ater during dew atering 40

DIN 276-1 C.G. 311

C.G.326 C.G.324 C.G.327 The most high level of ground water C.G.323

Deep fundation and drainage 11/03/2011


41

11/03/2011


42


2011.03.11.

DIN 276-1

DIN 276-1 500 C.G.

C.G.514 C.G.517

C.G.511 C.G.533

C.G.534

C.G.539

C.G.523

C.G.515

dwelling house and office

parking

pavilion

C.G.535 C.G.544

C.G.540

11/03/2011


43

11/03/2011



C.G.551 border of44 the plot

DIN 276-1

DIN 276-1

11/03/2011

C.G.515

rubish

45

DIN 276-1

11/03/2011


46

Building Cost Documentation The data are set up on the one hand based on empirical values of buildings completed – analitycal method -, On the other hand based on forecasting made from plans, designs and standards (norms) – synthetic method. The calculation of costs should take into account all factors which may impact on costs.

11/03/2011


47

11/03/2011


48


B u i l d i n g C o s t 11/03/2011

2011.03.11.

Building Cost Documentation

D o c u m e n t a t i o n


• Analytical method BKI (Baukosteninformations -centrum Deutscher Architektenkammern) Unit costs for elements of buildings Kostenkennw erte für Gebäude

49

11/03/2011

Building Cost Documentation


50

Factors affecting the cost

• Synthetic method

• Independent factors not related to cost elements: – cyclical effect on the market (the date of execution) – regional market conditions (local price levels, degree of competition) – method of the competition, – type of construction contract, – the scale of the investment, – user requirements, – site conditions, – building geometry, – aesthetic and structural specialties. 11/03/2011


51

52

• The price index is given for the cost update. If you want to use data from more Building Cost Documentations you have to convert the data to a common price level. • The prices are also used for forecasting. Example: conversion from 2002 to 2011 price level, if the base year is the 2005th (2005 = 100%) price level in 2002: 92.0 price level in 2011: 118.0 unit price in 2002: € 2,500,000 unit price in 2011: 2500000 x 118 / 92 = € 3,206,522

• Cost element related factors, example: cost element: basement excavation – – – – –

soil class , shape and depth of the excavation pit, transport distance, the building location (city, outer space), type of ground support (slope, shotcrete, slurry wall, timber shoring ...), – type of dewatering (does not exist at all or exists..). (C)MSc. Arch. László Szőnyi


Price index

Factors affecting the cost

11/03/2011

11/03/2011

53

11/03/2011


54


2011.03.11.

Sorting of the calculation methods

1. Function-orientated methods

Function-orientated methods –

based on function-unit (for example workplaces, parking spaces or the number of hospital beds) – based on useful basic area – based on room-categories (the counting depends on only the program of rooms, the building’s type is equal) Building-orientated methods – “two –factors methods” – based on surface model – by distribution to building construction units Realization-orientated methods – by distribution to work types – based on specifications 11/03/2011 (C)MSc. Arch. László Szőnyi – based on ABC-analysis

55


57


56

11/03/2011


58

2. Building-orientated methods


11/03/2011




11/03/2011

11/03/2011

59

11/03/2011


60


2011.03.11.

Based on surface model SURFACE UNITS


ROOF SURFACE

11/03/2011


61


11/03/2011



INTER WALL SURFACE BUILT IN CONSTRUCTION

OUTER WALL SURFACE

BUILDING PLOT (IN THE CASE OF CELLAR) FLOOR SURFACE CONTACT WITH THE SOIL OR FUNDATION SURFACE CELLAR WALL OR BASEBOARD WALL SURFACE

The shape of the buildings can be described with (C)MSc. Arch. László Szőnyi 62 the main building units.

11/03/2011


63


11/03/2011

FLOOR SURFACE

11/03/2011


64

3. Realization-orientated methods

65

11/03/2011


66


2011.03.11.



11/03/2011


67

11/03/2011


68

System of cost management Költségek meghatározása Cost estimation (tervek, árajánlatok ellenőrzése) (controlling of plans, designs)

Feedback (Change in geometry, Szabályozás (geometriai,

in construction, alternatives of épületszerkezeti változtatások, building technology) alternatívák...) építéstechnológiai

11/03/2011


69

• It is important to keep the participants of the investment in intensive connection • Have to determine the target planned • Have to make the designs • Have to organise competition for the constaction

70

• The costs as they actually occur are continuously compared with the budget. • Cost reports are prepared at regular time intervals. (making it possible for the owner to determine the cost status of the project)

Cost estimation always must be synchronised with the design. (C)MSc. Arch. László Szőnyi

Terv-tény összehasonlítás Comparison the actual costs (tervezett és tényleges költségek) with the budget


2nd phase: Comparison the actual costs with the budget

1st phase: Cost estimation

11/03/2011

11/03/2011

71

•Information in proper time is required if effective action against cost overruns is to be taken. 11/03/2011


72


2011.03.11.

3rd phase: Feedback

Criteria

• Significant differences lead to change of the designs. • Management consideration is quickly focused on those job areas that need attention. •Prefering the alternative biddings at the competition is suggested.

11/03/2011


73

• Using such a cost estimating method, that we can use in each project stages. • Data could be transported to one project phase to the other. • Systematic Work Breakdown Structure of the costs. • Use of project cost code. • Documentation of cost data of buildings accomplished. • Use of Building Cost Documentation with data of analyzed method. • Treatment of costs: both direction among the project phases.

11/03/2011


74

Bibliography Thank you very much for your attention.

1.

2.

3.

Msc. Arch. László Szőnyi Budapest University of Technology and Economics, Department of Construction Technology & Management, Hungary http://www.epulettervezo.hu; [email protected] 11/03/2011


4.

5.

75

Bibliography 6. 7.

Keoki Sears S, Sears G A, Clough R H: Cosnstuction Project Management, Wiley, 2008 Szőnyi L: Cost Planning of Building Investments, Budapest University of Technology and Economics, Department of Construction Technology & Management (in Hungarian: Építő ipari beruházások költségtervezése), 2011

11/03/2011


77

Mearig T, Coffee N, Morgan M: Life Cycle Cost Analysis Handbook, State of Alaska - Department of Education & Early Development, Education Support Services/Facilities, Juneau, Alaska, 1999 http://www.eed.state.ak.us/facilities/publications/LCCAHandbook1999.pdf Date accessed: 24.03.2010 Schade J: Life cycle cost calculation models for buildings, Proceedings of 4th Nordic Conference on Construction Economics and Organisation : Development Processes in Construction Mangement, Luleå tekniska universitet, Luleå, 2007, http://www.ltu.se/staff/j/jutsch?l=en Date accessed: 24.03.2010 DIN 276-1 Building costs - Part 1: Building construciton (Kosten im Bauwesen Teil 1: Hochbau) Deutsche Norm, November 2006. In: Fröhlich, P.J.:Hochbaukosten - Flächen - Rauminhalte, DIN 276 - DIN 277 - DIN 18960, Vieweg+Teubner, GWV Fachverlage GmbH, Wiesbaden 2008, p. 21-46, ISBN 978-3-8348-0591-1 DIN 18960 User costs of buildings (Nutzungskosten im Hochbau) Deutsche Norm, Februar 2008. In: Fröhlich, P.J.:Hochbaukosten - Flächen - Rauminhalte, DIN 276 - DIN 277 - DIN 18960, Vieweg+Teubner, GWV Fachverlage GmbH, Wiesbaden 2008, p. 195-200, ISBN 978-3-8348-0591-1 Szőnyi L: Calculation of operating costs of new buildings, International Conference Organisation, Technology and Management in Construction 8, Umag, Croatia, 2008, Book of Abstacts, page 51, ISBN 953-96245-8-4

11/03/2011


76

Budget, Cost Estimation

Budget, Cost Estimation

Suggest Documents

cost estimation

Software cost estimation

Software cost estimation

Software Cost Estimation - CiteSeerX

Web Cost Estimation - CiteSeerX

Software Cost Estimation (GP)

On Budget-Balanced Group-Strategyproof Cost

Bariatric Surgery: Cost-Effectiveness and Budget

cost an estimated - Independent Budget Office

Web Cost Estimation - Semantic Scholar

Introduction on Software Cost Estimation

SOFTWARE DEVELOPMENT COST ESTIMATION ...

Cost Estimation for Ontology Development

Cost Estimation for Ontology Development

Software Cost Estimation - Google Sites

Development of an Integrated Cost Estimation and Cost Control ...

Web Hypermedia Cost Estimation: Further Assessment ... - CiteSeerX

Software Reliability Modeling and Cost Estimation ... - CiteSeerX

Software Cost Estimation Methods: A survey

Review of EPC Projects Cost Estimation and

cost estimation in agile development projects

Software Quality Improvement and Cost Estimation ...

Farm Accountancy Cost Estimation and Policy

Current Practices of Software Cost Estimation ...