Cost Awareness in Structural Design

Structural Guidance Note 3.1. Cost awareness in structural design. 30/07/99

STRUCTRAL GUIDANCE NOTE 3.1

COST AWARENESS IN STRUCTURAL DESIGN July 1999

Contents

1. SCOPE

2. AIM

3 OVERVIEW

4 UNDERSTANDING THE REQUIREMENTS OF A PROJECT

5 COST PLANNING AND COST CONTROL

6 COST ESTIMATES

7 FACTORS INFLUENCING COST ESTIMATES

7.1. Site Location7.2. Overseas Work7.3 Economy of Scale7.4 Plan Layout7.5 Building Size Versus Height

8 FACTORS IN SCHEME DESIGN INFLUENCING THE COSTS

8.1 Column spacing8.2 Floor Loadings8.3 New techniques8.4 Foundations8.5 Floor to Floor Height8.6 Procurement Route

9 FACTORS IN DETAILED DESIGN INFLUENCING THE COSTS

9.1 Standardisation9.2 Simple Detailing9.3 Cantilevers9.4 Buildability9.5 Reinforcement9.6 Steel Grade

10 MATERIALS COST

11 INDICES AND COST TRENDS

APPENDIX A AVERAGE NET CONSTRUCTION COSTS 1998 (FOR GUIDANCE ONLY)

APPENDIX B COMMON SOURCES OF INFORMATION AND REFERENCES

APPENDIX C RECENT TRENDS IN TENDER PRICES

APPENDIX D BILLS OF QUANTITIES


COST AWARENESS IN STRUCTURAL DESIGN

1. SCOPE

This note deals with the ways that development of a structural design can affect (and be affectedby) the cost of the overall Project. It is not intended that it should give hard and fast rules as allbuilding projects are different, and all clients will have different priorities. However there aresome general guidance points which can be made when looking at the economics of the design.

The construction industry is not a static industry and new innovations are always coming onto themarket. An example in recent years is Slimdek by British Steel where, at the expense of moresteel, thinner floor slabs can be achieved for longer spans. This article does not attempt toidentify or contrast the available techniques; rather it tries to establish the underlying principlesby which they can be judged. Even the way we look at costs is changing as issues such assustainability and life cycle costs become more prevalent.

While mainly dealing with building engineering some of the principles are equally valid in thecivil engineering field. In Civil Engineering the Engineer is normally the prime agent and so isresponsible for costs. In building work the responsibility is carried by the Architect assisted bythe Quantity Surveyor.

Typical unit prices for more common buildings and building materials are given in Appendix A.Common sources for updated financial information, costs of materials, rates for measured workand contacts within ARUP are given in Appendix B. A graph showing recent trends in tenderprices in Appendix C and a description of Bills of Quantities is given in Appendix D.

It should be noted that the unit prices are presented for comparative purposes only. On mostprojects the final estimates will be given by the Project Quantity Surveyor. However theEngineer should have a feel for prices and should have enough knowledge to question theQuantity Surveyor if the Engineer has reservations on the costs presented. This is a requirementof the Institutions, particularly the Civils. The figures given here should not be relied upon forgiving cost advice to outside parties. In most cases engineers should not be giving such advice,but, where they do, its purpose and limitations must be spelled out, being typically comparativecosting.

It is important to realise that the minimum weight design is rarely the minimum cost design: apoint many professional cost managers have yet to understand.


2. AIM

To quote the introduction of BS5950: The aim of structural design is to provide, with due regardto economy, a structure capable of fulfilling its intended function and sustaining the design loadsfor its intended life. To arrive at a economic structure it is essential that engineers should beaware of the cost implications arising from their design, not least in the conceptual stage whenfundamental decisions are made about layout, structural system, and materials to be used.

Beyond this it is also essential that engineers should have a wider appreciation of how thedecisions that they make influence the cost of the project as a whole. The most economic solutionpurely in material quantity terms is rarely the most economic overall structural solution, normight the most economic structure be the best value for money for the overall project.

3 OVERVIEW

The cost of the structure typically represents about 15 to 25 per cent as a proportion of the totalcost. Obviously this will vary considerably from one building to another, depending on, forexample, complexity of structure, use of the building (structural costs as a percentage are higherfor domestic structures) ground conditions and basements. In comparison the cost of M&Eservices will range from less than 20 per cent for simple installations to 40 per cent for highlyserviced buildings.

As well as the cost of the solution the Engineer must also appreciate the cost of the designprocess itself. An awareness of how the project is staged is needed. For example, in the RIBAPlan of Work, an idealised linear process, there are set stages when the Client signs off theconcept and then the scheme: similar formalities are now incorporated in the ACE Conditions ofEngagement (1995). The Engineer needs to gauge the correct input to achieve these stages butnot do too much detail design too early which could later become abortive, commonly withoutrecompense. Pressure to undertake final designs too early, motivated by a desire for costcertainty, should be resisted.

The Engineer must also try to anticipate the development of the scheme by others: examples arethe requirements for service penetrations through a flat slab which are often in the worst position,i.e. up against the columns; or the smoke ventilation required around a basement perimeter. TheEngineer must define the limitations his design places on other parties at an early stage andunderstand the constraints imposed by the requirements of others.

4. UNDERSTANDING THE REQUIREMENTS OF A PROJECT

In order to produce a good value solution the first priority is to understand the problem. It is tooeasy to base the solution on preconceived principles that might not be appropriate.

At the start of a project, when time is usually less constrained, information and experience fromsimilar projects should be gathered and relevant constraints be understood. In this mannerprevious mistakes can be identified and avoided and good practice repeated, saving time and costin the design office and eventually on site.

It is most likely that the Clients requirements will dictate the geometrical form of the building.Other economic factors such as speed of erection, building life and maintenance costs willprobably also affect the structural form chosen in the concept stage.

In choosing the appropriate structural materials and form, many factors need to be considered.These include:


C Local economic factors. The relative cost of labour can have a significant influence.Local availability of materials may be a constraint. Perceptions of local labour forcedeficiencies (either quantitative or qualitative) have been known to drive thinking in thedirection of off-site fabrication.

C Local planning constraints. The height of the building might be constrained, or the rightsof light might require stepping back of the upper floors.

C The final use of the building. An example is the case of a laboratory building in whichthe stiffness of the building might be important. Delicate measuring instruments mightrequire stricter than usual deflection and vibration criteria; this would suggest solutionswith greater mass.

C Speed of construction is often an important consideration for the client; maximum use ofprefabrication and pre-assembly might be required. Even if such techniques areexpensive the value of the time saved may tip the balance in their favour.

C The Client may require a prestigious building of traditional construction; conversely hemay be motivated to use state of the art construction techniques as a statement of hiscompany profile. More often nowadays, market forces encourage low risk conventionalsolutions.

C Construction constraints such as site access, restricted working hours and materialstorage or the proximity of existing buildings will influence construction costs.

C Ground conditions that will influence the number of basements and foundation type, andsite levels, which influence the economic disposition of buildings, will affect the costs.

C Uniformity of structural spans is desirable to increase repetition. If there is to bevariation it is best to avoid stacking short spans vertically over long spans which againintroduce transfer structures. If columns cannot continue to base then the implications oftransfer structures must be considered.

There are other possible factors. It is possible that there are conflicting constraints, for example alaboratory building (heavy construction) over a loading bay requiring transfer structure (lightconstruction).

It is only once these requirements are understood and balanced that the choice of suitablestructural form can be started.

5. COST PLANNING AND COST CONTROL

The objective of cost planning and cost control is not only to determine the target cost of thebuilding and to ensure an equitable distribution of the budget between the elements, but also toensure that costs are controlled throughout the design development and the actual constructionperiod up to the Final Account.

At concept stage the cost target is established and at scheme design stage an Elemental Cost Planis prepared showing how the target cost is distributed over the major elements. From then on,during the detail design, the process becomes one of refining the estimates and controlling thecosts. If necessary the allocation to the various elements is redistributed to ensure that the finalcost does not exceed the estimate; alternatively the Client must understand and agree why itshould do so.


Value Engineering is becoming more predominant in the industry. Proponents claim itidentifies ways that the structure (or other parts of the project) could be adjusted in a way whichimproves the benefit to cost ratio. Handled badly, however, this can become a simple cost cuttingexercise at the expense of benefit. The process can be successful if applied at the appropriatetime. However if applied late in the process there is a danger that it needs to justify itself byintroducing some change, even on an already cost-effective scheme - which can be destructive toproject momentum and our own profit margin.

6 COST ESTIMATES

There are various ways of making 'first shot' estimates which are intended to forecast theprobable capital cost of a construction project before it has been designed in any detail.

The Unit Method is based on the cost per unit such as seats in a theatre, rooms in a hotel, spacesin a car park or children in a school. Obviously this method is not very accurate but it can formquite a useful comparison between similar projects.

By far the most common method of preparing approximate estimates is to calculate the cost onthe basis of typical square metre prices for the type of building in question. The total floor areaof all storeys, including basement but excluding roof plant rooms, is measured between the insidefaces of the external walls with no deductions for internal walls, staircases, etc. The limitationsof this method are obvious as it cannot make allowance for all the factors listed in section 7below.

Appendix A lists typical square metre prices (these are based on outcome of the ARUP SeminarMoney Matters held at Hemingford Grange) adjusted for 1998 prices. Further information isavailable on the ARUP Intranet site under the Structural Skills Network web pages. As widevariations can occur in practice the figures should only be used as a rough guide and a properestimate, based on the design of the actual building, should be prepared at the earliest possibletime. These are often the basis on which many clients will review the feasibility of a project andthe success or otherwise of a project on completion.

The Elemental Method is often used as a basis for cost planning. Cost of elements are obtainedfrom cost analysis of similar buildings, adjusted for difference of quantity and specification, andused in estimating the proposed works.

Where some design work has been undertaken to a detailed level, approximate quantities basedupon typical elements are often the preferred method of estimating.

7. FACTORS INFLUENCING COST ESTIMATES

Listed below are some of the factors that influence the estimated cost of buildings and structures.Some, engineers will have no influence over; these will be prescribed by the particular projectconstraints or requirements. None the less, the influence on overall costs needs to be understoodto understand how the approximate estimate is derived.

7.1. Site Location

Building on a restricted city site adds considerably to the cost with a difference of 22 percent between Central London and the East Midlands, Yorkshire and HumbersideRegions. This is accounted for by higher wages, problems with delivery and storage ofmaterials, lack of working room and restrictions on mechanical plant.


The following table gives indices for the total project cost used for various regions in theUK; similar indices can be expected for the structural elements.

Location Factor in 1997 % change 1998Scotland 0.96 (0.83) +2.2%Northern Ireland 0.77 (0.67) Not givenNorthern 0.94 (0.82) +4.3%Yorkshire and Humberside 0.94 (0.82) +4.9%North West 1.00 (0.87) +4.9%East Midlands 0.94 (0.82) +4.2%West Midlands 0.95 (0.83) +5.0%Wales 0.95 (0.83) +4.3%South East 1.05 (0.91) +6.9%Greater London 1.15 +6.8%South West 0.97 (0.84) +6.4%East Anglia 0.97 (0.84) +4.5%

This table based on information in BCIS News No. 39, February 1998, and updated June1999. The factors adjusted relative to Greater London are given in brackets. Moredetailed information is given in BCIS Surveys of Tender Prices (reference 1).

Conversely there is also a penalty to be paid for building in a remote area with extratransport costs, imported labour, and additional site development costs.

7.2 Overseas Work

Overseas construction costs, particularly in developing countries, can be very differentfrom UK costs. This can be caused by differences in cost of labour, availability ofnatural materials, transport costs, and import duties.

Unless the information is available already it is necessary at an early stage to carry out asurvey of the local building industry. This should establish how such factors as thecapability and skill of the indigenous labour force together with the availability ofmaterials and plant affect the costs of different forms of construction. A project thatrequires highly skilled foreign labour and specially imported materials will nearly alwayscarry a cost penalty.


7.3 Economy of Scale

For a larger a project the overheads reduce in proportion to the overall cost ofconstruction and the greater purchasing power comes into play. Figure 1, extracted fromBCIS News No. 39 February 1998 shows this trend.

Figure 1: Effect of size of Contract on Pricing levels.

7.4 Plan Layout

Buildings with simple plan layouts are a good deal cheaper than those with irregularcomplicated shapes. Curved walls are expensive. A good example of the way curves canbe suggested without actually being incorporated is Millbank Tower in Pimlico wherethe surfaces are actually straight with a single section of three faceted panels at thecentre of each face. The overall impression is of a building with two opposite surfacesconvex and the other two concave.

The higher the perimeter to area ratio the more expensive the building becomes becausecladding costs represent a significant proportion of the overall cost of a project.

For example take the case of a 72m by 24m four-storey office block:

1) Gross area = 4 x 72 x 24 = 6912m5General office building = ,1200/m5Total cost = 6912 x 1200 = ,8.3 million

2) Determine approximate cost of cladding

Take average type cladding costing ,500 per sq m elevationCost of cladding = 16m (height) x 2 x (72+24) x 500 = ,1.5million

Hence it can be seen that the cost of the cladding is 18% of the building cost. A normalpercentage that can be expected is 12 to 20%.


A circular plan shape gives the smallest ratio of wall/floor area, but for reasons of siteinefficiency, internal space planning and the cost factor referred to above not many arebuilt; square or squarish buildings tend to be favoured. The requirements for sub-divisions, natural light and ventilation will however pull in other directions; for example,for office blocks the optimum depth is generally considered to be between 12 and 18m.

7.5 Building Size Versus Height

For a given number of storeys, a large building will be cheaper to construct per squaremetre than a small one. An increase in plan size leads to lower production cost per unitand in addition the overheads will not increase proportionally.

Building at height tends to be more complicated in terms of provision of high speed lifts,service distributions, special foundations and during construction, access for theoperatives, hoisting of materials, safety precautions, etc. which all add to the cost of tallbuildings.

A building with a larger footprint and less height will have better wall/floor andnett/gross ratios (for example the proportion of the plan area taken up by lifts reduces).Therefore the unit costs per square metre will reduce until the requirement for a higherlevel of building services takes over. However, this must be balanced by the cost of theroof which is clearly not lettable space; a four storey building could therefore be bettervalue than a three storey.

However, in inner city areas the additional cost of high rise buildings can be more thanoffset by savings in land costs; in such cases tall structures can yield a higher return.Taller buildings, of more than say 10 storeys, warrant a separate study.

8. FACTORS IN SCHEME DESIGN INFLUENCING THE COSTS

Once the conceptual outline design has been established for the project the scheme design willstart. Normally the materials to be used, sizes for the principal members and foundation systemwill have been proposed, and procurement routes discussed. Depending on the project, moredetailed consideration of material type and grid sizes may take place at this stage if they have notbeen fully determined at concept stage.

8.1 Column spacing

The column spacing is dictated primarily by function and secondly by economics: thecombined cost of floors and frame increases as the spans go up.

For a reinforced concrete structure with small spans the slab thickness is not governedby strength and deflection but by practical considerations such as noise reduction andfire rating. In these circumstances a solid flat slab is likely to be the cheapest solution.As the span increases waffle slabs are generally more economic than a slab/beamstructure.

An increase in span from 6 metres to 9 metres adds about 20 per cent to the cost of theframe or something in the order of 2 to 3 per cent to the total cost of the building.However, if the shorter column spacing means that a major transfer structure is requiredto give larger open areas on the lower levels, it may well be justified to use an increasedcolumn spacing throughout the height of the building.


8.2 Floor Loadings

The Client often proposes the design floor loadings. However the Engineer needs toreview these to ensure that they are adequate but not excessive, and agree these with theclient; drawings showing the loadings assumed help to ensure this agreement and alsoact as a valuable aide-memoire for the design team and included with the calculationplan.

Higher floor loadings inevitably lead to a higher cost of the structure. Generally floorloadings are determined in commercial operations by what the letting market requires.There are moves towards a more rational set of requirements but at present a typicalloading allowance of 5kN/m5 in office areas, being 4kN/m5 occupancy load and 1kN/m5for lightweight partitions, may still be demanded. This is often a function of what theletting agents inform the client he needs in order to let his property in the current marketrather than actual loading that is needed. Arguably office occupants interests would bebest served by a realistic design imposed loading of 2.5kN/m5 generally (plus partitions)together with the provision of designated bulk storage zones at 7.5 to 10kN/m5distributed within the building. The lower value still exceeds measured levels fromstudies in this topic. 5kN/m5 is seen as a compromise between these uses but over-estimates general office floor loading whilst not being sufficient for a range of storagesystems; the perceived flexibility is illusory.

It is important to keep this in perspective. For waffle slabs with spans in the 6 to 10metre range an increase in imposed load from 2.5kN/m5 to 5kN/m5 will add 4 to 7 percent to the cost of the floor slab. In actual money this may not be more than the pricedifference between different grades of carpet.

However a cost comparison should not neglect the important additional expense thatincreased loading might involve elsewhere, e.g. in larger vertical structure (additionalcost of cladding) and foundation works.

8.3 New techniques

The construction industry is conservative and tends, sometimes with justification, toview new techniques with suspicion and price them accordingly.

Even years after they are introduced some forms of construction are still considered to bespecial. Prestressed concrete is an example; its use in frame construction and in situfloor plates is starting to be more common. However, in spite of the savings in materialquantities the cost of construction is still greater than reinforced concrete in the UK.There are, however, savings in floor thickness that may give an overall benefit to theproject.

If a design appears innovatory it is advisable to involve contractors at an early stage andadopt a contract letting procedure which ensures the maximum cost benefit. Newtechniques offering apparent economies in construction cost should be carefullyexamined before adoption to assess possible liabilities such as increased frequency orexpense of maintenance.

8.4 Foundations

As the scheme develops the foundation proposals will also be developing. The geologyand any particular site constraints, from underlying services to underlying tunnels, will


mainly determine these. Some general advice is given in the ARUP Structural SchemeDesign Guide. It is also worth bearing in mind when making comparative costassessments between viable schemes that other factors might play a role. For example ifpiling is being compared to say a raft solution then the Piling Contractor may requireaccess to the entire site while his works are progressing; whereas a raft solution wouldbe carried by the Contractor himself or by direct labour which could be phased andcontrolled. This could have consequences if the programme is very tight.

8.5 Floor to Floor Height

Given the relative cost of structure and external envelope, minimising the floor to floorheight, possibly by using less economic structural members, will often give the greatesteconomy to the project as a whole. This will be true even when other constraints such asplanning do not limit the allowable height. How this will be achieved will vary fromproject to project.

For example, on a steel frame structure with reasonable spans but with an expensivecladding system the use of universal column sections in lieu of universal beams might beconsidered economic for the cost of the project as a whole. This cannot be a general ruleas apart from the extra material quantity there would be the additional cost of handlingthe heavier sections and cost of vertical structure to take the heavier loads. It might be aconcrete flat slab would give a more economic solution still, but would be heavier withadditional cost implications for the vertical structure and foundations.

8.6 Procurement Route

There are now many ways that the Contractor can be brought onto a project which meanthat the Contractor has to allow for a varying degree of risk. These are summarised onFigure 2 with the level of risk that the Contractor has to allow for on Figure 3.

The level of design development, and the prevailing market conditions, will clearly havea significant effect on the degree to which the Contractor will price this risk.

In order to get the maximum input from the Contractor in the design process someprocurement routes are based on a schedule of rates provided at tender stage. These arethen used, once the design is complete, to get a fixed price for the work.

The Contractor is still carrying a degree of risk against unforeseen circumstances butunder this route these should have been minimised.


Figure 2: The Categorisation of Building Procurement Systems.Source: Perry

Figure 3: Allocation of Financial RiskSource: Flanagan


9. FACTORS IN DETAILED DESIGN INFLUENCING THE COSTS

Once the client has approved the scheme design then the process of detailed design cancommence. At this point the sizes of principal members, or alternatively zones for structure,services and architectural finishes will have been established and agreed with the other designconsultants; the designs of the other disciplines should have been fixed and a philosophy agreedon how the various elements will be coordinated.

However it is worth remembering that every party will now also be developing their detail designso as much flexibility as possible in this stage of the process will allow for the unexpecteddevelopments that will inevitably occur, often after the structural design is complete. This isimportant to prevent late changes to the issued information that will also lead to potential claimsand increased cost to the project, as well as abortive design work which adds to our own designoffice costs. Too much of this can turn a profitable job to a loss making one; the amount of suchwork and reason for it needs to be carefully recorded.

The following should also be considered during the detailed design, although the principlesshould have been established through the preceding stages:-

9.1 Standardisation

Standardisation, which leads to repetition, is the real key to cost savings. It also reducesthe risk of things being built incorrectly.

In concrete construction the re-use of standard formwork is to be encouraged. Anexample is the re-use of the same size of column over a floor plate rather than changingthe size to reflect the loadings. It also allows for the standardisation of other details suchas the architectural finishes details along the edge of a building.

With standardisation, pre-fabrication starts to become an economic proposition;particularly if it results in a shorter construction period. Working in factory conditionsshould also lead to improved or better assured quality, and a reduction in waste. Pre-fabrication of reinforcement cages which are then lifted into their final positions isbecoming common. This is only possible if the detailing allows this to happen. Extralaps at splice bars will increase the quantity of reinforcement slightly, but the saving intime helps the programme and the steel fixers productivity which outweighs this extracost. If this has been established at the time of tender then this saving will have beenbuilt into the costs. However it can be difficult to quantify later but is still beneficial,leading to easier construction and less likelihood of claims.

In steel construction limiting the number of standard steel sections allows the fabricatorto make the maximum use of discounts for bulk orders of steel. For example, for a singleshort beam a smaller section might be viable structurally but the fabricator will have topay a premium to buy the steel from a stockist if the total quantity required is less than 2tonne.

The use of standard connections from the Green Books, as published by theSCI/BCSA Connections Group, is to be encouraged. This not only saves in design costsbut also allows standard fabrication procedures to be adopted.

9.2 Simple Detailing

Simple details in either steel or concrete are cheaper and are more likely to be builtcorrectly than complicated details.


In concrete construction complicated detailing is often a result of congestedreinforcement in sections that are too small, and the use of slightly larger sections mightalleviate the problem. Even where the detailing is not complicated as such it can still becongested and time consuming to fix.

It is both time-consuming and wasteful in material terms to make formwork for complexshapes. Upstands, nibs, projections and rebates should be avoided where it is notdetrimental to the architectural concept. Non structural downstands are even moredisruptive.

In steel construction consideration might be given to increasing member sizes to alleviatethe need for stiffeners or connection details which involve more workmanship by thefabricator. As fabrication is a large percentage of the overall cost of steelwork then theuse of larger simpler sections will nearly always be cheaper than using the minimumweight solution but requiring more fabrication time. This is not always understood in theindustry and Quantity Surveyors especially still think of steelwork in terms of pertonne. Often an extra-over is allowed for connections but this will often not reflect thetrue complexity, being a notional standard figure.

9.3 Cantilevers

Cantilevers, once they exceed a modest extent, tend to dictate structural depth and areexpensive.

In situ concrete cantilevers at high level are particularly expensive because of thefalsework required. The use of cantilevers in steel construction will involve specialconnection details.

9.4 Buildability

The cost of materials needs to be balanced against the cost of labour and plant, the ratiois getting closer and therefore ease of construction is becoming increasingly important.

It is part of our responsibility to consider buildability as part of our duties under theCDM Regulations; this should only affect the recording of an activity we always carryout. Examples of things that need to be considered are how steel members can be liftedsafely into place or special requirements for working on vertical faces of existingbuildings, and particular issues which might affect the future use and maintenance of thebuilding. In prestressed concrete this might also include issues which might affect thefuture demolition of the building.

It is our duty to identify particular hazards and show that a method exists to overcomethese. It is not to dictate how the Contractor finally elects to construct the project.

A record showing that these issues have been addressed is a mandatory part of ourdesign in the UK. This is incorporated in the Health and Safety Plan held by the PlanningSupervisor and handed over to the Principal Contractor for executing the works; sectionswill be required by the Client as part of the Health and Safety File.

9.5 Reinforcement

To design sections with high yield steel is cheaper in price per tonne carried than to usemild steel. Mild steel should be used only when the steel needs to be bent to tight radii,or re-bent - such as pull-out starter bars cast into walls, or in some cases for ease ofwelding.


9.6 Steel Grade

The cost of S355 (old grade 50) steel is less than 10% higher than S275 (old grade 43);its strength is 30% higher. However, unlike high grade reinforcing steel, it is less readilyavailable from stockists, normally having to be ordered from the mill.

To use S355 economically there must be sufficient quantity to justify its use. Alsostrength is not always the issue in design. Sometimes it is the stiffness, either invibration characteristics or deflection, that will govern and S275 will perform just aswell in such cases and is more economic.

Jumping from one grade to another in a single project is to be discouraged as there is thepotential for error.

10. MATERIALS COST

Prices of materials move relative to each other due to such factors as changes in supply,improvements in productivity, fluctuations in exchange rates, etc. Some of these changes, likethe increase in copper prices during the Vietnam War, are short-term but others such as theincrease in the cost of timber are caused by an actual long-term shortage. Changes in oil pricesaffect the cost of transport, but more importantly the manufacture of most materials used in thebuilding industry requires a considerable amount of fuel. The current trend towards using re-cycled materials may go some way to reducing costs.

Relative changes in material costs will eventually influence the choice of components andmethods employed in construction.

The effect of price increases should not be exaggerated. For a reinforced concrete building,cement typically constitutes about 7 per cent of the cost of materials. A 10 per cent increase inthe cost of cement will therefore add 0.7 per cent to the materials cost; assuming labour accountsfor one third and the materials two thirds of the total cost, the building cost will thereforeincrease by less than 0.5 per cent.

Prices for the commonly used structural materials are listed in Appendix A. These are based onaverage prices for medium to large jobs. Prices for small quantities will invariably be higher andlong haulage distances will also add to the cost.

11. INDICES AND COST TRENDS

Indices are used to measure the difference between tenders obtained at different times. They arealso used to update the cost of buildings already constructed so they can be analysed andcompared with the estimated cost of new projects. Finally, they give an indication of cost trendsand future costs assuming there will not be any significant changes in market forces.

It is important to distinguish between costs and prices:

'Building Costs' - the actual cost of carrying out the works, covers labour, materials, plant,overheads, etc.

'Tender Prices' - the price at which the Contractor is prepared to carry out the work, take account ofthe expected cost and market factors which include the level of competition and therefore profitmargins.

When there is plenty of work, contractors are looking for a substantial contribution to long-term


profits and tender prices will increase at a greater rate than building costs. When work is scarcecontractors may be prepared to take on work as long as their prime costs are covered and there issome contribution to fixed overheads.

Cost indices can be obtained from a number of sources. Some cover a specific types of projectssuch as housing or roads, and others take in all forms of construction.

The Building Cost and Tender Price Indices plotted in Appendix B are based on informationpublished by the BCIS.


APPENDIX AAVERAGE NET CONSTRUCTION COSTS 1998

(FOR GUIDANCE ONLY)

1. Building DataCosts per m

A high quality city office block 1,500 to 2,000A provincial office 800 to 1,200A shopping centre

Mall (fitted-out) 1,300 to 1,800Shell and core 350 to 500

Multi storey Residential 550 to 1,000Social Housing 450 to 600

2. Unit Costs

per seat in a theatre (500 seats +) 10,000 to 15,000per seat in opera house (1250 to 2250 seats) 25,000 to 60,000per seat of a concert hall 15,000 to 25,000per seat in a football stadium Depends on non-sports facilities provided

800 to 1,200

per hospital bed Depends on number of operating theatres

50,000 to 80,000

per car parking space in a multi storey car park 4,000 to 8,000per car parking space in an underground car park 10,000 to 20,000per bed of a 5 star hotel 100,000 to 150,000per bed of a three star hotel 40,000 to 60,000

3. Materials

Structural Steelwork per tonne (supplied and erected) Column and beam frame construction 900 to 1,500 Complex fabrication or curved 1800 to 2,200Reinforcement per tonne 600Concrete per cubic metre placed 65 to 90Piling per tonne carried 20 to 60Air conditioning per m5 150 to 350An escalator installation 80,000 to 150,000Electrical installations per m5 100 to 150A lift installation; 8 person; 6 to 9 levels 80,000Curtain walling per m5 300 to 1500

if fire rated

A double glass facade per m5 (not double glazing) 1000 to 2000


APPENDIX BCOMMON SOURCES OF INFORMATION AND REFERENCES

Updated Indices:

1. BCIS: Surveys of Tender Prices. Royal Institution of Chartered Surveyors. Updated quarterly.2. Spons Architects and Builders Handbook. Updated Yearly.3. New Civil Engineer, ICE4. Architects Journal, RIBA

General Reference:

1. SCI publication P150: CIMsteel: Design for Manufacture guidelines 19952. SCI publication P178: CIMsteel: Design For Construction 19973. Reinforced Concrete Detailing Manual, Ove ARUP and Partners

Intranet Information:

1. Cost Information: via Structural Skills Network home page2. Project Handbook

Quantity surveyors are to be found in both:

1. ARUP PMS2. ARUP IPG


APPENDIX CRECENT TRENDS IN TENDER PRICES

Source: BCIS: Surveys of Tender Prices: Royal Institution of Chartered Surveyors: June 1999,updated quarterly.

BCIS: General Building Cost Index and All in Tender Price Index.


APPENDIX DBILLS OF QUANTITIES

D1 Introduction

There are a number of ways of letting a contract, but for buildings the traditional route of acontract let under the JCT Standard Form of Building Contract with Quantities is still common. The Bills of Quantities comprise composite items that include labour, plant and materials. Theprimary function of the Bill of Quantities is to obtain competitive tenders on the same basis. They also provide a way of valuing completed work and allow for extending the quantities ofmeasured items using the stated rates.

D2 Description

For building works the method of measurement is the Standard Method of Measurement ofBuilding Works: Seventh Edition published by the RICS and the Building EmployersConfederation.

The first section of the Bills is the Preliminaries/General Conditions, where those items thateffect the works as a whole, and are not priced in the individual work items, are present.

These include:

Project ParticularsDescription of the WorksEmployers RequirementsContractors General cost itemsNominated Sub-Contractors & SuppliersWork by Statutory AuthoritiesProvisional Work

Contractors General Cost Items Include:

The Contractor's Site AdministrationInsurance of the Works Site Offices for RE. and Clerk of WorksPlant, Tools, and VehiclesScaffoldingWater and Lighting for the WorksTemporary RoadsTemporary Accommodation and TelephonesRemoving RubbishTemporary Hoardings

SMM7 has been prepared in accordance with the Common Arrangement of Work Sections forBuilding Work produced by the Co-ordination Committee for Project Information. However,Bills of Quantities based on elements, trades, activities, etc are also produced.Work by sub-contractors or specialist supply items can be included in the tenders as PC Sumsand later set against the relevant account, with adjustment of any profit added by the Contractor.

Provisional Sums are lump sums included in the tender to allow for carrying out work that lacksdefinition but is known to exist. Provisional sums differ from Contingencies in that they are setagainst a particular expenditure, whereas Contingencies are allowance against unforeseen.


Most contracts usually involve some unpredictable work which must in fairness be executed asDaywork on a time and material basis. In order to achieve competitive costs for such work theBill of Quantities may contain a Dayworks Bill setting out notional amounts of labour, plant,and materials.

D3 Measured Rates

Unit rates for an item of work can be built up from the cost of materials, labour, plant, overheads,and profit. The material cost can be calculated accurately, the labour content will depend on howthe operation is carried out, the plant cost and the overheads may be included in the build up orpriced in the Preliminaries. Since contractors compete on the basis of the total cost of carryingout the works, they are not too concerned about the accuracy of their unit prices; this is quiteevident when priced bills are examined and the rates inserted by different contractors arecompared. Contractors are also interested in getting the best possible cash flow, which is helpedby putting a high price to those items which are constructed early. They may also believe thatthere will be variations to the measured quantities so items that are likely to reduce are priced lowand high rates are used for those quantities that may increase.

Documents

Cost Awareness in Structural Design