CONSTRUCTION

ECONOMICS ECONOMICS
Fara DivaMustapa
DepartmentofQuantitySurveying
UTM
COSTMODELLING
Whatiscostmodelling?
Historicaldevelopmentofcost
modelling
Purposesofcostmodelling
Approaches to cost modelling Approachestocostmodelling
Typesofmodel
Othercostmodellingapplications
MODELS
ETHNICMODEL FEMALEMODEL
CARMODEL
MATHEMATICALMODEL
STATISTICALMODEL
MATHEMATICALMODELS
MATHEMATICALMODEL
VIRTUALMODEL REAL
INTRODUCTION
Basic definition of model: A procedure developed to reflect by
means of derived process.
I h d d l h l i i i h In another words, models represent the real situation in another
form, or a smaller scale
The aim of cost models generally is to represent accurately the
whole range of cost variables inherent in a building design to secure whole range of cost variables inherent in a building design to secure
improved forecasts and/or design optimisation.
IndustryPractice
Industryisaboutto
manufactureanewproduct
Solve3DimensionalProblems
EstimateCostofProduction
Identifytoolsrequiredforproduction
Evaluate Performance
Hebuildsaprototype
EvaluatePerformance
Testproductsmarketability
Providesampleasevidenceofquality
AIMOFCOSTMODELLING
Tostimulateacurrentorfuturescenarioinsucha
waythatdecisionmakerscanmadeuseofthe
results to decide their investment decision. This will resultstodecidetheirinvestmentdecision.Thiswill
alsohelpsthedesignersoptimise theirdesign
incorporatedwithcostplanningandcostcontrol
INTRODUCTION(contd)
COST is one of the meas res of the f nction and performance of a b ilding COSTisoneofthemeasuresofthefunctionandperformanceofabuilding,
AndshouldbecapableofbeingModelledinorderadesigncanbeevaluated.
Type ofmodel Form
1
PHYSICAL 3DArchitectsModel
2
MATHEMATICAL Equation
3
STATISTICAL Informationindicatingtrends
INTRODUCTION
Constructmodelsthatwillhelpintheunderstandingandpredictionof
Cashflow
Building
thecosteffectonchangingdesignvariables
CostModellingmybedefinedasthesymbolicrepresentationofasystem,
expressing the content of that system in terms of the factors which influences its cost
Building
Component
TheMODEL
expressingthecontentofthatsystemintermsofthefactorswhichinfluencesitscost
DesignVariables
Constructionmethod
time
CostItems
Simulateacurrentorfuturesituationinsuchawaythatthesolutionsposed
in the Simulation will generate results which may be analysed and use
In QS Terms
intheSimulationwillgenerateresultswhichmaybeanalysedanduse
InthedecisionMakingprocessofdesign
InQSTerms
Estimatingthecostofabuildingdesignatanearlystagetoestablisheditsfeasibility
TECHNIQUES
DEVELOPMENTOFFORECASTING
EstimatingAccuracyonaConstructionProject
PRE
60s
BillofQuantities
Approximate
Estimate
+/
50%
60s CostPlanning
CostAnalysis
ElementalBills
50%
70s CostModelling
CostInUse
Formulae(Price
Adjustments)
Inception
Adjustments)
80s LifeCycle Costing
CostData
ValueEngineering
Final
Account
Tender
Inception
CONSTRUCTION
DESIGN
g g
CostEngineering
Accuracyin
Forecasting
90s ExpertSystems
QualitySystems
DevelopmentstagesforModel
Identify The Problem IdentifyTheProblem
CollectionofData
AnalysisofData
O i d l
ModelBuilding
OptimumModel
EvaluateTheModel
Testing
Application
NewData
COSTMODEL
CRITERIAS FORAGOODMODEL
1 Data requiredfreelyavailable
I i f d Inappropriateformandamount
(Qualityofcostadvice=Quality&QuantityofData)
2 Allowanceforcontinuous updating(Newdata)
3 Evolvetosuittheneedsofchangingsituation
e.g. Construction Technology
4 Costmodelling process Quick,Cheap&Efficient g p p
5 Accurate&Reliable
Representwhatit attemptstopredict
DOTHEYWORK?
1 YES The industryneedtobealittlelessconservative&protectionist
toitsintroductionforpracticaluse
2 NO Nothingfurther needtobedone.
3 NO Itappearssofarfromtheworkdonesofar,giventimeandthe
necessary expertise the required result could be achieved necessaryexpertise,therequiredresultcouldbeachieved
TYPESOFCOSTMODEL(TRADITIONALMODEL)
DESIGN STAGE TRADITIONAL MODEL EXAMPLE DESIGN STAGE TRADITIONALMODEL EXAMPLE
1 BRIEF STAGE
UNIT
Cost PerBed
Cost/Student
Cost/Seat UNIT Cost/Seat
2 SKETCHDESIGN
SPACE
Cost/m2ofGFA
Cost/m2ofFunctionalSpace
Cost/m3ofBuildingVolume / g
3 DETAILEDDESIGN
ELEMENT
CostofFunctionalElement
expressed/m2 ofGFA
4 CostofGroupSMMitems
FEATURES
p
(Abbreviated Quantities)
5 WORKING
DRAWINGS SMMITEMS
BillofQuantities
6
OPERATIONS
CostperNetworkOperation
7
RESOURCES
CostofLabour,
materials plant RESOURCES materials,plant
Source:TraditionalCostModelling
CostPlanning&Buildings
DouglasFerry,PeterBrandon
OBJECTIVESOFCOSTMODEL
PartoftheStrategicDecisionMakingProcess
1 Give confidencetotheClient:ExpectedCostofhisproject
2 AQuickDevelopmentofarepresentationofbuilding
ItsCostcanbetestedandanalysed
3 Establishasuitablesystemforadvisingdesignersoncost
buildupofdesign.
4 To establish a link between cost control of design and the 4 Toestablishalink betweencostcontrolofdesignandthe
mannerinwhichcostsaregeneratedandcontrolledonsite.
Dealwithcostofresourcesatanearlystage.
5 Theresultsofthemodelshouldallowthedesignerto
incorporatethisknowledgeintothedrawings,specifications
and quantities andquantities
TYPESOFCOSTMODEL
ESTIMATING
COSTS OF
ApplicationofAppropriate
Unit Rate
ComputerisedThe
COSTSOF
APROPOSED
BUILDING
UnitRate
TO
MeasuredFinishedQuantities
OfProposedProject
TraditionalMethods
SuccessfulEstimatingRequires
hugeamountofData
ImprovedTechniquesFor
Useatthedesignstage g g
(CostPlanning)
D l N M th d f DevelopNewMethodof
PriceForecasting.
UseComputerstoManipulate
DatawithComplex
M th ti l F l
COST
MODELS
MathematicalFormulae
TYPESOFCOSTMODEL
MODEL
DETERMINISTIC
MODEL
Values canbeattributedtoallVariables
(Variablesareknownorcanbepredicted
Exactly
MODEL
BUILDING
PROBABILISTIC
MODEL
Valuesofsomevariableswillbe
uncertainandcanbeonlyestimated
( ) (UseconceptsfromProbabilityTheory)
1 EMPIRICALMODEL
2 REGRESSION ANALYSIS 2 REGRESSIONANALYSIS
3 SIMULATION
4 EXPERT SYSTEM 4 EXPERTSYSTEM
EMPIRICALMODEL
d b Basedonobservation,experience&intuition
DevelopedonthebasisRightFeeling
A common sense method of understanding application and presentation Acommonsensemethodofunderstanding,applicationandpresentation
PhysicalAppearanceofthebuilding
MethodsofConstruction
Developa
Modelto
In terms of Descriptions
Specification
Generate
Cost
IntermsofDescriptions
&Dimensions
RelateQuantities ToCost
Measurement
(StandardMethodofMeasurement)
Informationmadeavailable
Visuallybywayofdrawings
EMPIRICALMODEL
BILL
OF
ThinkintermsofALGEBRICTerms
(Quantity&Cost)
QUANTITIES
P=LX WXDXR
Price = Length on Width on Thickness Measured Price = Lengthon
Plan
Widthon
Plan
Thickness Measured
Rate
Example: ECA Example:ECA
REGRESSIONANALYSISMODEL
ATechniquethatwillfindaformulaormathematicalmodelwhichbestdescribed
the data collected thedatacollected.
1 SimpleLinear
Regression Analysis
Quantifyrelationship
between 2 Variables
Plotted Graphically
RegressionAnalysis between2Variables
2 MultipleRegression
Analysis
3ormorevariables UseofComputer
Solutions
Total
Y=ax+b
2 VARIABLES
Cost
2VARIABLES
C i
FloorArea
MULTIPLEVARIABLES
Construction
Cost
f(FloorArea,StoreyHeights,ProcurementMethod,ContractPeriod,
=
SIMULATION
Whatisit?
1
Acomplexmathematical modelthatisconductedonthecomputerthat
representacomplex(building)system. p p ( g) y
2 Conductedalmost totallyusingcomputerprogramme
3
UseMonteCarloTechniquebasedonthegeneralideaofusingsamplingto
3
estimatedesiredresult.
4
Theprocessofbuildingsimulationmodelinvolvesformulatingasetof
relationshipsbetweenthevariablesincludedinthemodel
5
Reasontousesimulation:
Avoid directExperimentation(developing&Testingparticularsystem)
SolutionpurelyMathematicalModel
G th f O ti l R h GrowthareaofOperationalResearch
6
UseofSimulation
CostManagement
C t ti E ti ti /C t F ti ConstructionEstimating/CostForecasting
Construction Planning
EXPERTSYSTEM
ArtificialIntelligence(AI)Robotics g ( )
AcomputersystemwhichbehavelikeExperts(QuantitySurveyor)
PickupthebrainsofalltheExpertsandcarefullystoreallthe
personsrulesofthumbinthecomputersmemory.
Example
1990
TheAlveyProject,SalfordUniversity,UK,ProfessorPeterBrandon y j , y, ,
TheLeadConsultantSystem(Elsie)
KnowledgefromExpertsinpracticebuiltintoasystemforuseonanumber
of different building types ofdifferentbuildingtypes.
TheElsieKnowledgeBasedSoftwareEstimatingSystem
Builtaround4modelsofBudget,Procurement,Time&DevelopmentAppraisal
AbleToProduceEstimatefromNoDesign
AdaptivetoWhatIfFeature
EXPERTSYSTEM(ELSIE)
BUDGET
Use minimalorNodrawnInformation
CatersfromComplexitiesofelementsqualities
ExpressedinBCISFormat BUDGET p
DetailedAssumptionReport
ReportIncludesadviceandabreakdownofallElements
Evaluatesallmajorprojectcharacteristics&Clientpriorities
PROCUREMENT TestandRanksthe5MainProcurementMethods
ReportsContainsdetailedexplanations&Reasoning
Forecast likelyprojectduration
Id ifi C i i l A i i i i 3 Ph (F ibili D i &
TIME
IdentifiesCriticalActivitiesin3Phases(Feasibility,Design&
Procurement,Construction&Commissioning)
Variationsexploredbychangingvariables
Reportcontainsbreakdownofevents&Reasoning p g
DEVELOPMENT
Adviceonviabilityofprojects
Derive &Test5ResidualValues(BuildingCost,profit,rentorsale,
APPRAISAL
marketyield,landvalues
ConstructionofCashflow.
APPROXIMATE
ESTIMATE
ANALYTICAL
ESTIMATING
COSTMODELS
COMPARISON
ESTIMATE ESTIMATING
1
Calculate
(Single Quantity)X
(AllinmeasuredRate)
Elementalbasis
(Individual
MeasuredItems)X
Appropriately
(Model Formulae)X
RatesGeneratedby
TheComputer
Analysed Rates
2
Accuracy
13% 10% 1520%
(Depending onData)
3
Speed
1 Hour(singlepriced
method)
FewDays(More
detailed estimate)
1Month
(ToComplete
Calculation)
Modelsdataalready
storedonthe
computer.
New Data will need detailedestimate) NewDatawillneed
tobeinputwith
resultsinanhour
4 Use of an experienced Estimator with Estimator or Surveyor 4
Costof
Calculation
Use ofanexperienced
QS
Estimatorwith
Assistants
EstimatororSurveyor
tocompletedata
input
5 Early Understoodand UsedbyEstimator Methodlargely
Usage
y
usebygenerationsof
Surveyors
y
conversantwith
Techniques
g y
unknown andnot
understood.
Reluctancetochange
The End TheEnd
Thank You! ThankYou!