Rough Draft Project Value from ICF - Business Plan Example

Sketch Plan Cost, Elemental Costing and Life Cycle Costing a) Cost Planning Techniques Design Sketch (or Scheme) Design is the initial stage in a design and development of a project proposal. This is the pioneer stage where the aims, aspirations and objectives associated with the proposal are harnessed in order to come up with a credible design. In this stage the essential and critical requirements, and expected budget limitations are considered in analyzing the cost versus benefit associated with the project. The clients “wish list” is scrutinized to come up with a personalized scheme. Tender documents refer to the full design information provided by the consultant. This included the construction drawings, detailed bill of quantities, and working procedures and instructions. The designer comes in handy to interpret the requirements and project brief and thus coming up with proposal sketches and aids in giving a pictorial representation of how the final product may appear. Cost planners and estimators seek to offer credible information on cost associated with the project to the clients, professional design team, and potential construction contractors through preparation of feasibility and budgetary requirements. To the client, the estimated cost helps in the determination of project scope and the probability of the project succeeding. The estimated cost assists the contractor in determining the righting tendering and bidding requirements. This helps them in determining whether it is economically feasible to ask for the job. During preliminary project description stage, the consultant designers prepares concept drawing with particular description that helps in the decision making on the best option of the alternatives provided. This helps all the project stakeholders and participants to both technical and commercial to relate the costs proposed versus the scope described in the preliminary design stage. Through such schematic designs and preliminary cost evaluation, the team is able to carry out design tradeoffs at an early stage on both performance and costs based on the tabled project description and corresponding cost data. This helps in lowering the project cycle time and the associated overhead costs. Finally elements associated with high uncertainty degree with respect to costs and completion milestone are identified early prior to commencement of project and where necessary states aimed at mitigating the associated costs are considered at an early stage. Aims and objectives of Cost planning Techniques i. Awareness: The cost estimator seeks to determine the scope and the level of materials, resources and effort required for successful completion of the project. In arriving at this, the estimator relies on information on the financial capability of the client, staff, and organization capacity (in situations where the cost planning is for a construction company), required to complete the task. In achieving this objective, the cost planner considers the time duration require for project completion with respect to the clients time schedule. During this cost planning phase, the estimator or cost planner assesses the overall general and specific project conditions on the contract and from this he is able to deduce the probable resultants effects that may ultimately have indirect cost implications. ii. In the Sketch (or Scheme) Design phase, the cost planner scrutinizes the preliminary design drawings to ascertain the correct perspective of the overall scope of the project. In the tender document, the cost estimator analyses the approved shop and construction drawings associated with the project. It is from this that final precise information is communicated to the rest of the project team in a timely manner iii. Uniformity: In cost planning, the estimator aims at developing guidelines of estimating the procedures and forms that ultimately coincides with the specific requirements of the project. This developed procedures should be ultimately be accessed by the concerned team. This guideline defines the right material, equipment and labor rates associated with the task to be carried out. In coming up with this, some postulates regarding profit and overhead margins, and other contingency markups needs to be considered in the final summary submissions. iv. Verification: the cost planner aims at offering logical cost calculation methods that can withstand proof of accuracy through an independent assessment of the prevailing market conditions and environment. v. Documentation: the cost estimator seeks to package all the potions of cost approximations in a systematic, consistent, legible and logical manner. It may be necessary in the course of the project for the concerned team to refer the initial Sketch (or Scheme) Design estimates when the detailed specifics are ambiguous. Types of Cost Planning Techniques i. Take- off Techniques This type of techniques makes use of design sketches and drawings produced for the project in the calculation and estimation of costs on material, labour and tools required in undertaking the project. From this calculated costs, a bill of quantities of materials for the contractor is prepared and subsequently used in tendering, conducting valuation and establishing interim progress payments. ii. Two- Methods Estimations This technique involves the determination of the general dimensions of the quantities associated with the project e.g. the length of a road to be carpeted. This method is therefore inaccurate and as such it is used in rough estimation of the probable project costs. A more precise detailed estimation technique is used to provide a more accurate account of the actual costs and quantities required by the builder, to successfully complete the project. iii. Value Engineering Technique This cost planning technique is employed through the analyzing of alternative proposed design concepts, labour, materials, and methods proposed in carrying out the project tasks. This involves the consideration of functions of the completed building, and ensuring that that the aims, objectives and aspirations of the client are not compromised. Cost planner utilizes this technique to arrive at most, precise and cost- effective design estimation in both, material and construction methods requirements. iv. Life-Cycle Cost Analysis This cost planning technique takes into account the cost associated with the, acquisition, owning and eventual disposal off of the building. This involves the analysis of the probable alternatives input costs and ultimately settling on that cost that promises higher net savings. The cost planner is concerned even with the cost associated with the project even beyond the completion period. b. Elemental Cost for the Proposed Green Building Scheme A sustainable entity should satisfy certain factors for it to be successful; first the life-cycle cost analysis of the base resources should recognize the long term foregone costs; and should offer an improved measurement tools and systems that track specific and systematic objectives. The design of the building involves a four story office. The proposal analyses the structure, materials and facilities to be installed in the green building office. A sustainable entity should satisfy certain factors for it to be successful; first the lifecycle cost analysis of the base resources should recognize the long term foregone costs; and should offer an improved measurement tools and systems that track specific and systematic objectives. The design of the building involves a two story office complex with an office space of about 150,000 square foot. The customer base is general public as the site is primary out of the city centre along the main highway towards Elizabeth farm. In Australia, there are over 3 million office buildings. Over 30 Billion USD were spent in building these buildings from to house new offices in both 2009 and 2010 (Australian Bureau of Statistics 2012). Majority of these office blocks were constructed by RC concrete, structural steel, aluminum, glass and brick. However the construction of these structures and maintenance of buildings has a huge environmental impact. There is no standard design used in making convectional office buildings. Conducting LCA studies on a single building reveals less information concerning the environmental impact associated with it. In light of this, most of the studies conducted often disregards the office occupancy while other studies consider just the operational energy installed in the building. Studies associated the operational energy often concludes that the energy savings on concrete based buildings is between 5 and 30 percent as compared to the savings in steel based buildings. The chosen building external enclosure consists of reinforced structural beams and columns and extended polystyrene insulation, gypsum board and aluminum for ties as the buildings envelope. Both exteriors alluminium and interiors wall clad is are painted. The roof ids concrete deck with water proofing material is laid on top. Tiles are eventually arranged on the roof surface. On the underside, a dropping ceiling of gypsum is suspended under. Elemental Costs Elemental costs refer to the cost of material, labour, and Contractors overhead costs and marginal profits. In coming up with the elemental cost, the engineering economists need to first establish the generalized bill of materials and basing on the available information calculating the respective costs in line with prevailing site conditions and market preferences. This element therefore involves the summing up of the labour costs and system components project in the preliminary design stage. At any particular stage, the elemental cost estimates can be based on the Preliminary Element Cost of the Green Building i. External Wall The wall shall be constructed with materials that match the cladding of the adjacent buildings. On the front and back exterior enclosures, the walls will be made of reinforced concrete columns and beams which at the relative floor slabs. To fill up the structure modular face brick wall will be constructed in running block bond as well as tooled concave joints. However along the horizontal masonry reinforcement extruded insulator polystyrene board will be set. In order to ensure that the surface is water proof and of sound quality, bituminous damp proofing sealant shall be applied over the entire exterior enclosure with masonry reinforcing. Along the edges, load bearing masonry bricks together with horizontal galvanized joints shall be installed as an added reinforcement. Along the openings of the lintel units, concrete masonry units shall be used as beams to bond the top wall. ii. Exterior Windows In the outside walls aluminum and glass double hung windows of commercial grade shall be used. Such windows shall consist of clear insulating glass with clear anodized surface finish. iii. External Doors All the external doors and frames shall be: insulated, flush doors set on exterior steel frames. However at the main entrance next to the main staircase and element, a burglar proof shutter door shall be installed. All the door accessories such as, closers, locksets, ball bearing butts, thresholds shall be manufactured from all weather metal material preferably brass or bright steel. iv. Roof The roof shall consist of concrete slab with reinforcing beams. On main shopping hall a composite beam, steel structural lattice and partial concrete slab shall be used. The entire area to be covered with steel is approximately (27x50x5=72,500 SF). The external wall is composed of Insulated Concrete Forms (ICF) with interior wood framing. There are 16 rooms per floor with a central alley that crosses the building lengthwise with an average external wall of 27m by 50m. The height of the building is 16m covering the ground floor and three floors. There are two sets of stairs on either side of the main entrance. In addition to this, there is an elevator core. The building is to be designed in accordance with the relevant existing building codes and regulations of Australia. The Insulated Concrete Forms are made of 200mm load bearing concrete walls together with 65mm of Expanded Polystyrene insulation on both sides of the construction formwork. Form ties will be used to bind the two EPS layers together. From the general dimensions given, we can calculate the total external surface area as; Total Surface area= 2{(50x16) + (27x16)} =3200m2 This is equivalent to 26,000 SF (Square Foot) Fig1.0: Sample Wall arrangement SYSTEM COMPONENTS QUANTITY UNIT $COST PER SF MATERIAL LABOUR TOTAL FACE BRICK VENEER 1.00 SF 2.8 8.4 11.2 WASH BRICK 1.00 SF 0.61 1.83 2.44 POLYSTRENE INSULATION 1.00 SF 0.1 0.3 0.4 FLASHING ALLUMINIUM 1.00 LB 0.5 1.5 2 SHELF ANGLE 1.00 LF 0.7 2.1 2.8 CONCRETE BLOCK 0.30 EA 0.06 0.18 0.24             TOTAL         19.08 Table 1.1: Elemental cost for the External walls. EXTERIOR ENCLOSURE RATIO OF QTY/GFR QUANTITY SF UNIT RATE COST Exterior Walls 19.08 26,000 SF 18.43 469,180 Exterior Windows 0.12 6,600.00 SF 47.58 314,028 Exterior Doors 0.00 5 Nos 2,040.00 10,200 Roof 1.2 14,500 SF 20.65 299,425 Assumptions carried out in the Elemental Cost analysis; i. The elemental considerations have been assumed to offer segregation at different levels, for instance a uniform external wall material has been considered. However in actual sense lesser material will be consumed as the one move to the upper floors ii. The listed materials are just the generalization, thus there are quite a number of unlisted but quite consequential materials in the detailed bill of materials upon the issuance of approved construction and production drawings. iii. The elemental cost has just pin pointed the main materials which has a direct significance influence on the projected construction cost. However, this does not necessarily imply that other subsidiary costs such as labour do not have a direct impact on the project cost iv. The cost of materials has been based on a professional judgment based on the prevailing market conditions and practice around the proposed site. However, these costs cannot be guaranteed to be valid throughout and especially during the project duration. This cost classification was aimed at commercial buildings although some specific details concerning green buildings details may be added to a more specialized building type. c. Alternative proposed by the Architect in wall finishes Alternative A Initial Cost of wall finishing= $1,500,000 Annual maintenance cost= $5,500p.a. Annual cleaning costs = $10,500 p.a. Time t= 12yrs For the sake of computation we will a hypothetical rate r=1% for both cases NPV= 1,500,000+ (10,500+5,500)*0.887 (PV factor of an annuity for 12 years @1%) NPV1= $1,514,912 for alternative A Alternative B Initial cost, P= to be advised Annual maintenance cost= o Annual cleaning cost= $15,500 Time, t= 24yrs Assumed rate, r= 1% p.a. NPV= 15,500*21.5 (PV factor of an annuity for 24 years @ 1% p.a.) NPV 2= $333, 250 Therefore NPV1= p+ NPV2 P= NPV 1- NPV 2 =$1,514,912-$333, 250 Initial cost of alternative wall finish B= $1,181,662 d. Impact of Technology in Life Cycle Costs As improvement of technology progresses faster than the rate at which engineering managers can keep with structural maintenance, a vital step is necessary in defining the kind of technology to incorporate into commercial and institutional facilities though the understanding of the financial implications of any particular of system or product. However, managers usually make costly blunders in the maintenance process. In most cases, they focus more on the incurred initial cost of the new emerging technology and thus ignoring the accrued long-term, life cycle implications of its acquisition and implementation. This trend is quite bothering because it is obvious that, over 90 percent of the cost of an infrastructure is usually incurred during the construction phase. This means that managers ignorantly focus on the short term aims and constraints that they fail to have energy, time and knowledge to seriously assess the total cost of property ownership trough the life-cycle-cost- analysis. In order to avoid such pitfalls, managers should develop new innovative strategies for specifying the best appropriate technology for the physical investment. This involves: a) Emergency preparedness: Property investment managers need to recognize a range of growing threats of technology and implementing strategies aimed at safeguarding the safety and security of the occupants. b) Sustainability: Investment managers should be increasingly involved in water and energy conservation, waste reduction, and environment responsibility c) Aging physical facilities: The prevailing economic turmoil in most nations have affected budgets, resulting in delayed regular maintenance. This has eventually taken toil of the investor’s bottom line d) Work force issues: As a nation’s workforce evolves, new generation innovative engineers and technicians who are computer and techno- savvy arise. Such human resource is more diverse culturally and boosts of diverse technical skills which enable them to continually update themselves with the current and emerging technology. It is worth noting that, although most organizations use huge portions of their resources to procure maintenance software such Enterprise Resource Planning (ERP), Computerized Maintenance Management Systems (CMMS), little resources are set aside for training on how such software can be used effectively. Sometimes such training are done to the wrong people for instance equipping the information technology team with maintenance information which would be have been more relevant and beneficial to the maintenance and engineering team. Recommendation Concerning sustainability, the design and general architecture of the proposed green building has been significantly done to minimize the effect of the property and maintenance of the structure, this in turn helps a long way in lowering the ecological impacts likely to be associated with the project during and after construction. The building aims at achieving these by using fewer construction materials, low emission of pollutants, offering a healthier environment to its occupants, and consuming less energy. Some of the items have been itemized and quantified to form part of the bill of quantities, but others have just been estimated to show the justification while dealing with variability. References Australian Bureau of Statistics, 2011 Chanan V, S (2003) Sustainable water management in commercial office buildings, paper Cox, B.J. and Horsley, W. (1995). Square Foot Estimating Methods, 2nd Edition Kingston, MA: R.S. Means Co., Inc. Dell’Isola, A.J and Kirk, S.J. 1995. Life Cycle Costing for Design Professionals, 2nd Edition, (New York, NY: McGraw-Hill, Inc.,). Edwards, B. (2003) Green buildings pay. London: Spon Press. Kirkwood, G. (2009) The Economic Value of Space, Golden Books Center: Sydney, Australia OECD (2003), Environmentally Sustainable Buildings: Challenges and Policies. A report by the OECD, presented at Innovations in Water: Ozwater Convention and Exhibition, Perth. Property Council of Australia (2001), Energy Guidelines on setting energy Targets and operation, maintenance issues Read More

During this cost planning phase, the estimator or cost planner assesses the overall general and specific project conditions on the contract and from this he is able to deduce the probable resultants effects that may ultimately have indirect cost implications. ii. In the Sketch (or Scheme) Design phase, the cost planner scrutinizes the preliminary design drawings to ascertain the correct perspective of the overall scope of the project. In the tender document, the cost estimator analyses the approved shop and construction drawings associated with the project.

It is from this that final precise information is communicated to the rest of the project team in a timely manner iii. Uniformity: In cost planning, the estimator aims at developing guidelines of estimating the procedures and forms that ultimately coincides with the specific requirements of the project. This developed procedures should be ultimately be accessed by the concerned team. This guideline defines the right material, equipment and labor rates associated with the task to be carried out.

In coming up with this, some postulates regarding profit and overhead margins, and other contingency markups needs to be considered in the final summary submissions. iv. Verification: the cost planner aims at offering logical cost calculation methods that can withstand proof of accuracy through an independent assessment of the prevailing market conditions and environment. v. Documentation: the cost estimator seeks to package all the potions of cost approximations in a systematic, consistent, legible and logical manner.

It may be necessary in the course of the project for the concerned team to refer the initial Sketch (or Scheme) Design estimates when the detailed specifics are ambiguous. Types of Cost Planning Techniques i. Take- off Techniques This type of techniques makes use of design sketches and drawings produced for the project in the calculation and estimation of costs on material, labour and tools required in undertaking the project. From this calculated costs, a bill of quantities of materials for the contractor is prepared and subsequently used in tendering, conducting valuation and establishing interim progress payments. ii. Two- Methods Estimations This technique involves the determination of the general dimensions of the quantities associated with the project e.g. the length of a road to be carpeted.

This method is therefore inaccurate and as such it is used in rough estimation of the probable project costs. A more precise detailed estimation technique is used to provide a more accurate account of the actual costs and quantities required by the builder, to successfully complete the project. iii. Value Engineering Technique This cost planning technique is employed through the analyzing of alternative proposed design concepts, labour, materials, and methods proposed in carrying out the project tasks.

This involves the consideration of functions of the completed building, and ensuring that that the aims, objectives and aspirations of the client are not compromised. Cost planner utilizes this technique to arrive at most, precise and cost- effective design estimation in both, material and construction methods requirements. iv. Life-Cycle Cost Analysis This cost planning technique takes into account the cost associated with the, acquisition, owning and eventual disposal off of the building. This involves the analysis of the probable alternatives input costs and ultimately settling on that cost that promises higher net savings.

The cost planner is concerned even with the cost associated with the project even beyond the completion period. b. Elemental Cost for the Proposed Green Building Scheme A sustainable entity should satisfy certain factors for it to be successful; first the life-cycle cost analysis of the base resources should recognize the long term foregone costs; and should offer an improved measurement tools and systems that track specific and systematic objectives.

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