cost planning - project kaleidoscope (pkal)pkal.org/documents/drury-cpmi.pdf · monitor and control...

Cost Planning

Project KaleidoscopeDrury University 2003

Larry Gleason CPMI

Planning &PreliminaryBudgeting

Design &Construction

PostConstruction

Pre-Design &Programming

Cost Management Cycle

Planning Pre-Design Design Construction

Timing of Decisions

Balancing Interests

PROGRAMPROGRAMPROGRAMPROGRAMADVOCATESADVOCATESADVOCATESADVOCATES

BUDGETBUDGETBUDGETBUDGETADVOCATESADVOCATESADVOCATESADVOCATES

DESIGNDESIGNDESIGNDESIGNADVOCATESADVOCATESADVOCATESADVOCATES

SCUP Survey Results

Key Issues/Concernsn Lack of reliable datan Lack of standardized formats for budget estimatesn Confusion regarding description, identification

and calculation of hard and soft costsn Lack of understanding as to how to effectively

monitor and control budgets

Benefits of Cost Planning

nGreater satisfaction with end resultsnBetter value for moneynImproved building quality and performancenBudget and value accountabilitynImproved relationships between all project

participantsnDesign problems identified and solved earliernEarly identification of high-cost elements

Factors in Successful Cost PlanningnConfirm that all project team members are

speaking, and understand, a common language

nManage expectations. Acknowledge change is inevitable and establish contingencies and escalation in cost planning

Factors in Successful Cost PlanningnEstablish and document a solid base of

prioritized needsnStudy as many feasible site and building

alternatives as possiblenEstablish well defined, manageable project

schedulesnInsure the budget has the confidence and

acceptance of all project team members

The Tower of Babble

Reaching common ground for communicating cost data

nConfirm that all project team members are speaking, and understand, a common language

nFailure in cost management is often a failure in communication rather than a failure in application

The Tower of Babble

Reaching common ground for communicating cost data

n Life Cycle Cost v. Non-Building Cost v. Building Cost

n Estimating v. Cost Managementn Types and Levels of Estimatesn Project Budget Chart of Accountsn Contingencies and Escalation

Life Cycle Cost v. Non-Building Cost v. Building Cost

OperationMaintenance

ReplacementsSite Development Alterations Administration

Architectural Financing FinancingBuilding Systems Taxes Legal

SurveysNon-Building Costs Land Purchase

FeesStructural Building Costs Furniture & Equip.

Building Systems ContingenciesEtc .

MechanicalBuilding Systems Life Cycle Costs Non-Building Costs

ElectricalBuilding Systems

Building Costs

The Tower of Babble

Reaching common ground for communicating cost data

n Life Cycle Cost v. Non-Building Cost v. Building Cost

n Estimating v. Cost Managementn Types and Levels of Estimatesn Project Budget Chart of Accountsn Contingencies and Escalation

The Tower of Babble

Reaching common ground for communicating cost data

n Life Cycle Cost v. Non-Building Cost v. Building Cost

n Estimating v. Cost Managementn Types and Levels of Estimatesn Project Budget Chart of Accountsn Contingencies and Escalation

Types and Levels of Estimates

nOrder of Magnitude (“Ballpark”) EstimatesnCost Plan EstimatesnPreliminary EstimatesnInterim Detailed EstimatesnFinal Detailed Estimates

Types and Levels of Estimates

nOrder of Magnitude (“Ballpark”) Estimates– Based on Planning/Programming criteria.

Measurement of occupancy content or gross floor areas. Priced with unit or square foot costs based on historical data

– Expected level of accuracy in a range of ± 20 -25%

Types and Levels of Estimates

nCost Plan Estimates– Based on Planning/Programming criteria.

Measurement of shell/functional areas or the development of cost models. Priced with unit or square foot costs, based on historical data, in Elemental format

– Expected level of accuracy in a range of ± 15 -20%

Sources for cost data

n Cost information from within the institutionn Costs from similar institutionsn Independent cost information servicesn Price books and manualsn Newsletters and magazinesn Published indicesn Consultants, Contractors, Suppliers /

Manufacturers

The Tower of Babble

Reaching common ground for communicating cost data

n Life Cycle Cost v. Non-Building Cost v. Building Cost

n Estimating v. Cost Managementn Types and Levels of Estimatesn Project Budget Chart of Accountsn Contingencies and Escalation

Project Budget Chart of Accounts

n Land/Building Preparation (Non-Building Cost except as noted)

– Acquisition Cost– Land Surveys– Hazardous Materials Surveys– Geotechnical Investigations– Environmental Impact– Historic Preservation– Demolition (Building Cost)– Clearing and Grubbing (Building Cost)

Project Budget Chart of Accounts

n Administration (Non-Building Cost)– Appraisal Fees– Internal Staff Costs– Advertising– Printing– Legal Fees– Building Permits– Builders Risk Insurance– Finance Costs– Construction Contingency– Ground Breaking

Project Budget Chart of Accountsn Professional Consulting Services (Non-Building Cost except as

noted)– Architectural/Engineering Fees and Reimbursables– Preconstruction CM Fees and Reimbursables– Programming Fees– Special Inspections– Soil and Material Testing (Building Cost)

Project Budget Chart of Accountsn Construction (Building Cost)

– Sitework– Foundations– Floor System– Columns– Roof System– Exterior Wall– Exterior Glazing– Interior Wall– Doors– Specialties– Equipment– Conveying Systems

– Plumbing– Fire Protection– Heating, Ventilating & Air

Conditioning– Electrical– General Conditions, Overhead

and Profit– Management Fees– Design Contingency– Escalation

Project Budget Chart of Accounts

n Occupancy Costs (Non-Building Cost)– Movable Fixtures, Furnishings and

Equipment– Artwork– Relocation– Cabling not included in Electrical– Occupancy Permit– Open House/Dedication

The Tower of Babble

Reaching common ground for communicating cost data

n Life Cycle Cost v. Non-Building Cost v. Building Cost

n Estimating v. Cost Managementn Types and Levels of Estimatesn Project Budget Chart of Accountsn Contingencies and Escalation

Contingencies and Escalation

Sample Contingencies

1 8 %Design Contingency 1 3 %

8 % 3 %Construction Contingency

Design Contract Concept Schematic Development Documents Construction

Predesign: Charting the Course

nStudy as many feasible site and building alternatives as possible

nEstablish well defined, manageable project schedules

nEstablish and document a solid base of prioritized needs

nInsure the budget has the confidence and acceptance of all project team members

Predesign: Charting the Course

nToo high a budget will kill a project now -too low a budget will kill it later

Predesign: Charting the Course

nPredesign process and productnOperational planning in PredesignnArchitectural/Engineering ProgramnPlanning alternatives - Predesign or Design?nRisk factors: Schedule and timing, planning

without design, market factors

Predesign process and product

n Predesign is highly focused project planning intended to improve the outcome of design and construction

n Predesign follows strategic and operational planning by users and precedes design

n The result of predesign is a “Program” that also may include conceptual planning alternatives

n Predesign can typically be accomplished for 0.5% or less of the design and construction cost

Predesign process and product

A/E Program

nProblem seeking, not problem solvingnAn organized process identifying prioritized

space and quality needsnDifferent levels of detail depending on how

the information is to be usednThe foundation upon which concepts and

analysis are based

A/E Program

Steps in systematic facilities programmingn Orientationn Initial Data Collection and Analysis n Space Standardsn Building Design Criterian Preliminary Evaluation/Reconciliationn Adjacency Requirementsn Final Summaries and Documentation

Predesign: Charting the Course

nPredesign process and productnOperational planning in PredesignnArchitectural/Engineering ProgramnPlanning alternatives - Predesign or

Design?nRisk factors: Schedule and timing, planning

without design, market factors

Predesign: Charting the Course

nPredesign process and productnOperational planning in PredesignnArchitectural/Engineering ProgramnPlanning alternatives - Predesign or Design?nRisk factors: Schedule and timing, planning

without design, market factors

Planning &PreliminaryBudgeting

Design &Construction

PostConstruction

Pre-Design &Programming

Cost Management Cycle

Design & Construction: Staying the Course

nEstablish clear responsibilities among the owner, users and designers and require that adherence to program and budget be a team effort

nUse quality control of contract documents and management of change during construction

Design & Construction: Staying the Coursen Design within program boundariesn Cost control procedures and decisionsn Interim detailed estimatesn Cost checking and feedback - value managementn Quality control proceduresn Design schedule impact on cost managementn Construction delivery methodsn Construction economicsn Cost Management during Construction