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STRUCTRAL GUIDANCE NOTE 3.

1
COST AWARENESS IN STRUCTURAL DESIGN

July 1999

Contents
1.

SCOPE

2.

AIM

OVERVIEW

UNDERSTANDING THE REQUIREMENTS OF A PROJECT

COST PLANNING AND COST CONTROL

COST ESTIMATES

FACTORS INFLUENCING COST ESTIMATES


7.1.
7.2.
7.3
7.4
7.5

FACTORS IN SCHEME DESIGN INFLUENCING THE COSTS


8.1
8.2
8.3
8.4
8.5
8.6

Site Location
Overseas Work
Economy of Scale
Plan Layout
Building Size Versus Height

Column spacing
Floor Loadings
New techniques
Foundations
Floor to Floor Height
Procurement Route

FACTORS IN DETAILED DESIGN INFLUENCING THE COSTS


9.1
9.2
9.3
9.4
9.5
9.6

Standardisation
Simple Detailing
Cantilevers
Buildability
Reinforcement
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

Structural Guidance Note 3.1. Cost awareness in structural design.

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COST AWARENESS IN STRUCTURAL DESIGN

1.

SCOPE
This note deals with the ways that development of a structural design can affect (and be affected
by) the cost of the overall Project. It is not intended that it should give hard and fast rules as all
building projects are different, and all clients will have different priorities. However there are
some 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 the
market. An example in recent years is Slimdek by British Steel where, at the expense of more
steel, thinner floor slabs can be achieved for longer spans. This article does not attempt to
identify or contrast the available techniques; rather it tries to establish the underlying principles
by which they can be judged. Even the way we look at costs is changing as issues such as
sustainability and life cycle costs become more prevalent.
While mainly dealing with building engineering some of the principles are equally valid in the
civil engineering field. In Civil Engineering the Engineer is normally the prime agent and so is
responsible for costs. In building work the responsibility is carried by the Architect assisted by
the 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 work
and contacts within ARUP are given in Appendix B. A graph showing recent trends in tender
prices 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 most
projects the final estimates will be given by the Project Quantity Surveyor. However the
Engineer should have a feel for prices and should have enough knowledge to question the
Quantity Surveyor if the Engineer has reservations on the costs presented. This is a requirement
of the Institutions, particularly the Civils. The figures given here should not be relied upon for
giving 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 comparative
costing.
It is important to realise that the minimum weight design is rarely the minimum cost design: a
point many professional cost managers have yet to understand.

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2.

AIM

To quote the introduction of BS5950: The aim of structural design is to provide, with due regard
to economy, a structure capable of fulfilling its intended function and sustaining the design loads
for its intended life.To arrive at a economic structure it is essential that engineers should be
aware of the cost implications arising from their design, not least in the conceptual stage when
fundamental 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 the
decisions that they make influence the cost of the project as a whole. The most economic solution
purely in material quantity terms is rarely the most economic overall structural solution, nor
might 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 total
cost. Obviously this will vary considerably from one building to another, depending on, for
example, complexity of structure, use of the building (structural costs as a percentage are higher
for domestic structures) ground conditions and basements. In comparison the cost of M&E
services will range from less than 20 per cent for simple installations to 40 per cent for highly
serviced buildings.
As well as the cost of the solution the Engineer must also appreciate the cost of the design
process itself. An awareness of how the project is staged is needed. For example, in the RIBA
Plan of Work, an idealised linear process, there are set stages when the Client signs off the
concept and then the scheme: similar formalities are now incorporated in the ACE Conditions of
Engagement (1995). The Engineer needs to gauge the correct input to achieve these stages but
not do too much detail design too early which could later become abortive, commonly without
recompense. Pressure to undertake final designs too early, motivated by a desire for cost
certainty, should be resisted.
The Engineer must also try to anticipate the development of the scheme by others: examples are
the 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. The
Engineer must define the limitations his design places on other parties at an early stage and
understand 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 too
easy 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 from
similar projects should be gathered and relevant constraints be understood. In this manner
previous mistakes can be identified and avoided and good practice repeated, saving time and cost
in 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 will
probably 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:

Structural Guidance Note 3.1. Cost awareness in structural design.

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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 force
deficiencies (either quantitative or qualitative) have been known to drive thinking in the
direction of off-site fabrication.

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

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

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

The Client may require a prestigious building of traditional construction; conversely he


may be motivated to use state of the art construction techniques as a statement of his
company profile. More often nowadays, market forces encourage low risk conventional
solutions.

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

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

Uniformity of structural spans is desirable to increase repetition. If there is to be


variation it is best to avoid stacking short spans vertically over long spans which again
introduce transfer structures. If columns cannot continue to base then the implications of
transfer structures must be considered.

There are other possible factors. It is possible that there are conflicting constraints, for example a
laboratory building (heavy construction) over a loading bay requiring transfer structure (light
construction).
It is only once these requirements are understood and balanced that the choice of suitable
structural 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 the
building and to ensure an equitable distribution of the budget between the elements, but also to
ensure that costs are controlled throughout the design development and the actual construction
period up to the Final Account.
At concept stage the cost target is established and at scheme design stage an Elemental Cost Plan
is 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 the
costs. If necessary the allocation to the various elements is redistributed to ensure that the final
cost does not exceed the estimate; alternatively the Client must understand and agree why it
should do so.

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Value Engineeringis becoming more predominant in the industry. Proponents claim it


identifies ways that the structure (or other parts of the project) could be adjusted in a way which
improves the benefit to cost ratio. Handled badly, however, this can become a simple cost cutting
exercise at the expense of benefit. The process can be successful if applied at the appropriate
time. However if applied late in the process there is a danger that it needs to justify itself by
introducing some change, even on an already cost-effective scheme - which can be destructive to
project momentum and our own profit margin.
6

COST ESTIMATES

There are various ways of making 'first shot' estimates which are intended to forecast the
probable 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, spaces
in a car park or children in a school. Obviously this method is not very accurate but it can form
quite a useful comparison between similar projects.
By far the most common method of preparing approximate estimates is to calculate the cost on
the basis of typical square metre prices for the type of building in question. The total floor area
of all storeys, including basement but excluding roof plant rooms, is measured between the inside
faces of the external walls with no deductions for internal walls, staircases, etc. The limitations
of this method are obvious as it cannot make allowance for all the factors listed in section 7
below.
Appendix A lists typical square metre prices (these are based on outcome of the ARUP Seminar
Money Mattersheld at Hemingford Grange) adjusted for 1998 prices. Further information is
available on the ARUP Intranet site under the Structural Skills Network web pages. As wide
variations can occur in practice the figures should only be used as a rough guide and a proper
estimate, based on the design of the actual building, should be prepared at the earliest possible
time. These are often the basis on which many clients will review the feasibility of a project and
the success or otherwise of a project on completion.
The Elemental Method is often used as a basis for cost planning. Cost of elements are obtained
from cost analysis of similar buildings, adjusted for difference of quantity and specification, and
used in estimating the proposed works.
Where some design work has been undertaken to a detailed level, approximate quantities based
upon 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 project
constraints or requirements. None the less, the influence on overall costs needs to be understood
to 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 per
cent between Central London and the East Midlands, Yorkshire and Humberside
Regions. This is accounted for by higher wages, problems with delivery and storage of
materials, lack of working room and restrictions on mechanical plant.

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The following table gives indices for the total project cost used for various regions in the
UK; similar indices can be expected for the structural elements.
Location
Scotland
Northern Ireland
Northern
Yorkshire and Humberside
North West
East Midlands
West Midlands
Wales
South East
Greater London
South West
East Anglia

Factor in 1997
0.96 (0.83)
0.77 (0.67)
0.94 (0.82)
0.94 (0.82)
1.00 (0.87)
0.94 (0.82)
0.95 (0.83)
0.95 (0.83)
1.05 (0.91)
1.15
0.97 (0.84)
0.97 (0.84)

% change 1998
+2.2%
Not given
+4.3%
+4.9%
+4.9%
+4.2%
+5.0%
+4.3%
+6.9%
+6.8%
+6.4%
+4.5%

This table based on information in BCIS News No. 39, February 1998, and updated June
1999. The factors adjusted relative to Greater London are given in brackets. More
detailed 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 extra
transport costs, imported labour, and additional site development costs.
7.2

Overseas Work
Overseas construction costs, particularly in developing countries, can be very different
from UK costs. This can be caused by differences in cost of labour, availability of
natural materials, transport costs, and import duties.
Unless the information is available already it is necessary at an early stage to carry out a
survey of the local building industry. This should establish how such factors as the
capability and skill of the indigenous labour force together with the availability of
materials and plant affect the costs of different forms of construction. A project that
requires highly skilled foreign labour and specially imported materials will nearly always
carry a cost penalty.

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7.3

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

Figure 1:
7.4

Effect of size of Contract on Pricing levels.

Plan Layout
Buildings with simple plan layouts are a good deal cheaper than those with irregular
complicated shapes. Curved walls are expensive. A good example of the way curves can
be suggested without actually being incorporated is Millbank Tower in Pimlico where
the surfaces are actually straight with a single section of three faceted panels at the
centre of each face. The overall impression is of a building with two opposite surfaces
convex and the other two concave.
The higher the perimeter to area ratio the more expensive the building becomes because
cladding 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 = 6912m5


General office building = ,1200/m5
Total cost = 6912 x 1200 = ,8.3 million

2)

Determine approximate cost of cladding


Take average type cladding costing ,500 per sq m elevation
Cost 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 normal
percentage that can be expected is 12 to 20%.

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A circular plan shape gives the smallest ratio of wall/floor area, but for reasons of site
inefficiency, internal space planning and the cost factor referred to above not many are
built; square or squarish buildings tend to be favoured. The requirements for subdivisions, 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 square
metre than a small one. An increase in plan size leads to lower production cost per unit
and 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 the
operatives, hoisting of materials, safety precautions, etc. which all add to the cost of tall
buildings.
A building with a larger footprint and less height will have better wall/floor and
nett/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 higher
level of building services takes over. However, this must be balanced by the cost of the
roof which is clearly not lettable space; a four storey building could therefore be better
value than a three storey.
However, in inner city areas the additional cost of high rise buildings can be more than
offset 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 will
start. Normally the materials to be used, sizes for the principal members and foundation system
will have been proposed, and procurement routes discussed. Depending on the project, more
detailed consideration of material type and grid sizes may take place at this stage if they have not
been fully determined at concept stage.
8.1

Column spacing
The column spacing is dictated primarily by function and secondly by economics: the
combined cost of floors and frame increases as the spans go up.
For a reinforced concrete structure with small spans the slab thickness is not governed
by strength and deflection but by practical considerations such as noise reduction and
fire 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/beam
structure.
An increase in span from 6 metres to 9 metres adds about 20 per cent to the cost of the
frame 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 required
to give larger open areas on the lower levels, it may well be justified to use an increased
column spacing throughout the height of the building.

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8.2

Floor Loadings
The Client often proposes the design floor loadings. However the Engineer needs to
review these to ensure that they are adequate but not excessive, and agree these with the
client; drawings showing the loadings assumed help to ensure this agreement and also
act as a valuable aide-memoire for the design team and included with the calculation
plan.
Higher floor loadings inevitably lead to a higher cost of the structure. Generally floor
loadings 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 typical
loading allowance of 5kN/m5 in office areas, being 4kN/m5 occupancy load and 1kN/m5
for lightweight partitions, may still be demanded. This is often a function of what the
letting agents inform the client he needs in order to let his property in the current market
rather than actual loading that is needed. Arguably office occupants interests would be
best 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/m5
distributed within the building. The lower value still exceeds measured levels from
studies in this topic. 5kN/m5 is seen as a compromise between these uses but overestimates general office floor loading whilst not being sufficient for a range of storage
systems; the perceived flexibility is illusory.
It is important to keep this in perspective. For waffle slabs with spans in the 6 to 10
metre range an increase in imposed load from 2.5kN/m5 to 5kN/m5 will add 4 to 7 per
cent to the cost of the floor slab. In actual money this may not be more than the price
difference between different grades of carpet.
However a cost comparison should not neglect the important additional expense that
increased loading might involve elsewhere, e.g. in larger vertical structure (additional
cost of cladding) and foundation works.

8.3

New techniques
The construction industry is conservative and tends, sometimes with justification, to
view new techniques with suspicion and price them accordingly.
Even years after they are introduced some forms of construction are still considered to be
special. Prestressed concrete is an example; its use in frame construction and in situ
floor plates is starting to be more common. However, in spite of the savings in material
quantities 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 the
project.
If a design appears innovatory it is advisable to involve contractors at an early stage and
adopt a contract letting procedure which ensures the maximum cost benefit. New
techniques offering apparent economies in construction cost should be carefully
examined before adoption to assess possible liabilities such as increased frequency or
expense of maintenance.

8.4

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

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mainly determine these. Some general advice is given in the ARUP Structural Scheme
Design Guide. It is also worth bearing in mind when making comparative cost
assessments between viable schemes that other factors might play a role. For example if
piling is being compared to say a raft solution then the Piling Contractor may require
access to the entire site while his works are progressing; whereas a raft solution would
be carried by the Contractor himself or by direct labour which could be phased and
controlled. 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 floor
height, possibly by using less economic structural members, will often give the greatest
economy to the project as a whole. This will be true even when other constraints such as
planning do not limit the allowable height. How this will be achieved will vary from
project to project.
For example, on a steel frame structure with reasonable spans but with an expensive
cladding system the use of universal column sections in lieu of universal beams might be
considered economic for the cost of the project as a whole. This cannot be a general rule
as apart from the extra material quantity there would be the additional cost of handling
the heavier sections and cost of vertical structure to take the heavier loads. It might be a
concrete flat slab would give a more economic solution still, but would be heavier with
additional 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 mean
that the Contractor has to allow for a varying degree of risk. These are summarised on
Figure 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 have
a 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 some
procurement routes are based on a schedule of rates provided at tender stage. These are
then 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 but
under this route these should have been minimised.

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Figure 2:

The Categorisation of Building Procurement Systems.


Source: Perry

Figure 3:

Allocation of Financial Risk


Source: Flanagan

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9.

FACTORS IN DETAILED DESIGN INFLUENCING THE COSTS


Once the client has approved the scheme design then the process of detailed design can
commence. 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 design
consultants; the designs of the other disciplines should have been fixed and a philosophy agreed
on how the various elements will be coordinated.
However it is worth remembering that every party will now also be developing their detail design
so as much flexibility as possible in this stage of the process will allow for the unexpected
developments that will inevitably occur, often after the structural design is complete. This is
important to prevent late changes to the issued information that will also lead to potential claims
and increased cost to the project, as well as abortive design work which adds to our own design
office costs. Too much of this can turn a profitable job to a loss making one; the amount of such
work and reason for it needs to be carefully recorded.
The following should also be considered during the detailed design, although the principles
should have been established through the preceding stages:9.1

Standardisation
Standardisation, which leads to repetition, is the real key to cost savings. It also reduces
the risk of things being built incorrectly.
In concrete construction the re-use of standard formwork is to be encouraged. An
example is the re-use of the same size of column over a floor plate rather than changing
the size to reflect the loadings. It also allows for the standardisation of other details such
as 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 conditions
should also lead to improved or better assured quality, and a reduction in waste. Prefabrication of reinforcement cages which are then lifted into their final positions is
becoming common. This is only possible if the detailing allows this to happen. Extra
laps at splice bars will increase the quantity of reinforcement slightly, but the saving in
time helps the programme and the steel fixers productivity which outweighs this extra
cost. If this has been established at the time of tender then this saving will have been
built 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 fabricator
to make the maximum use of discounts for bulk orders of steel. For example, for a single
short beam a smaller section might be viable structurally but the fabricator will have to
pay a premium to buy the steel from a stockist if the total quantity required is less than 2
tonne.
The use of standard connections from the Green Books, as published by the
SCI/BCSA Connections Group, is to be encouraged. This not only saves in design costs
but 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 built
correctly than complicated details.

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In concrete construction complicated detailing is often a result of congested


reinforcement in sections that are too small, and the use of slightly larger sections might
alleviate the problem. Even where the detailing is not complicated as such it can still be
congested and time consuming to fix.
It is both time-consuming and wasteful in material terms to make formwork for complex
shapes. Upstands, nibs, projections and rebates should be avoided where it is not
detrimental to the architectural concept. Non structural downstands are even more
disruptive.
In steel construction consideration might be given to increasing member sizes to alleviate
the need for stiffeners or connection details which involve more workmanship by the
fabricator. As fabrication is a large percentage of the overall cost of steelwork then the
use of larger simpler sections will nearly always be cheaper than using the minimum
weight solution but requiring more fabrication time. This is not always understood in the
industry and Quantity Surveyors especially still think of steelwork in terms of per
tonne. Often an extra-over is allowed for connections but this will often not reflect the
true complexity, being a notional standard figure.
9.3

Cantilevers
Cantilevers, once they exceed a modest extent, tend to dictate structural depth and are
expensive.
In situ concrete cantilevers at high level are particularly expensive because of the
falsework required. The use of cantilevers in steel construction will involve special
connection details.

9.4

Buildability
The cost of materials needs to be balanced against the cost of labour and plant, the ratio
is 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 the
CDM Regulations; this should only affect the recording of an activity we always carry
out. Examples of things that need to be considered are how steel members can be lifted
safely into place or special requirements for working on vertical faces of existing
buildings, and particular issues which might affect the future use and maintenance of the
building. In prestressed concrete this might also include issues which might affect the
future demolition of the building.
It is our duty to identify particular hazards and show that a method exists to overcome
these. It is not to dictate how the Contractor finally elects to construct the project.

9.5

A record showing that these issues have been addressed is a mandatory part of our
design in the UK. This is incorporated in the Health and Safety Plan held by the Planning
Supervisor and handed over to the Principal Contractor for executing the works; sections
will be required by the Client as part of the Health and Safety File.
Reinforcement
To design sections with high yield steel is cheaper in price per tonne carried than to use
mild 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 of
welding.

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9.6

Steel Grade
The cost of S355 (old grade 50) steel is less than 10% higher than S275 (old grade 43);
itsstrength is 30% higher. However, unlike high grade reinforcing steel, it is less readily
available from stockists, normally having to be ordered from the mill.
To use S355 economically there must be sufficient quantity to justify its use. Also
strength is not always the issue in design. Sometimes it is the stiffness, either in
vibration characteristics or deflection, that will govern and S275 will perform just as
well in such cases and is more economic.
Jumping from one grade to another in a single project is to be discouraged as there is the
potential 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, like
the increase in copper prices during the Vietnam War, are short-term but others such as the
increase in the cost of timber are caused by an actual long-term shortage. Changes in oil prices
affect the cost of transport, but more importantly the manufacture of most materials used in the
building industry requires a considerable amount of fuel. The current trend towards using recycled materials may go some way to reducing costs.
Relative changes in material costs will eventually influence the choice of components and
methods 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 in
the cost of cement will therefore add 0.7 per cent to the materials cost; assuming labour accounts
for one third and the materials two thirds of the total cost, the building cost will therefore
increase by less than 0.5 per cent.
Prices for the commonly used structural materials are listed in Appendix A. These are based on
average prices for medium to large jobs. Prices for small quantities will invariably be higher and
long 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 are
also used to update the cost of buildings already constructed so they can be analysed and
compared with the estimated cost of new projects. Finally, they give an indication of cost trends
and 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 of
the expected cost and market factors which include the level of competition and therefore profit
margins.

When there is plenty of work, contractors are looking for a substantial contribution to long-term
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profits and tender prices will increase at a greater rate than building costs. When work is scarce
contractors may be prepared to take on work as long as their prime costs are covered and there is
some contribution to fixed overheads.
Cost indices can be obtained from a number of sources. Some cover a specific types of projects
such 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 information
published by the BCIS.

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APPENDIX A
AVERAGE NET CONSTRUCTION COSTS 1998
(FOR GUIDANCE ONLY)
1.

Building Data
Costs per m
A high quality city office block
A provincial office
A shopping centre
Mall (fitted-out)
Shell and core
Multi storey Residential
Social Housing

2.

1,500
800

to
to

2,000
1,200

1,300
350
550
450

to
to
to
to

1,800
500
1,000
600

10,000
25,000
15,000
800

to
to
to
to

15,000
60,000
25,000
1,200

50,000

to

80,000

4,000
10,000
100,000
40,000

to
to
to
to

8,000
20,000
150,000
60,000

to
to

1,500
2,200

to
to
to
to
to

90
60
350
150,000
150

Unit Costs
per seat in a theatre (500 seats +)
per seat in opera house (1250 to 2250 seats)
per seat of a concert hall
per seat in a football stadium
Depends on non-sports facilities provided

per hospital bed


Depends on number of operating theatres

per car parking space in a multi storey car park


per car parking space in an underground car park
per bed of a 5 star hotel
per bed of a three star hotel
3.

Materials
Structural Steelwork per tonne (supplied and erected)
Column and beam frame construction
Complex fabrication or curved
Reinforcement per tonne
Concrete per cubic metre placed
Piling per tonne carried
Air conditioning per m5
An escalator installation
Electrical installations per m5
A lift installation; 8 person; 6 to 9 levels
Curtain walling per m5

900
1800
600
65
20
150
80,000
100
80,000
300

to

1500
if fire rated

A double glass facade per m5 (not double glazing)

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1000

to

2000

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APPENDIX B
COMMON SOURCES OF INFORMATION AND REFERENCES
Updated Indices:
1.
2.
3.
4.

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

General Reference:
1.
2.
3.

SCI publication P150: CIMsteel: Design for Manufacture guidelines 1995


SCI publication P178: CIMsteel: Design For Construction 1997
Reinforced Concrete Detailing Manual, Ove ARUP and Partners

Intranet Information:
1.
2.

Cost Information: via Structural Skills Network home page


Project Handbook

Quantity surveyors are to be found in both:


1.
2.

ARUP PMS
ARUP IPG

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APPENDIX C
RECENT 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.

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APPENDIX D
BILLS OF QUANTITIES

D1

Introduction
There are a number of ways of letting a contract, but for buildings the traditional route of a
contract 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. The
primary 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 of
measured items using the stated rates.

D2

Description
For building works the method of measurement is the Standard Method of Measurement of
Building Works: Seventh Edition published by the RICS and the Building Employers
Confederation.
The first section of the Bills is the Preliminaries/General Conditions, where those items that
effect the works as a whole, and are not priced in the individual work items, are present.
These include:
Project Particulars
Description of the Works
Employers Requirements
Contractors General cost items
Nominated Sub-Contractors & Suppliers
Work by Statutory Authorities
Provisional Work
Contractors General Cost Items Include:
The Contractor's Site Administration
Insurance of the Works
Site Offices for RE. and Clerk of Works
Plant, Tools, and Vehicles
Scaffolding
Water and Lighting for the Works
Temporary Roads
Temporary Accommodation and Telephones
Removing Rubbish
Temporary Hoardings
SMM7 has been prepared in accordance with the Common Arrangement of Work Sections for
Building 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 Sums
and 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 lacks
definition but is known to exist. Provisional sums differ from Contingencies in that they are set
against a particular expenditure, whereas Contingencies are allowance against unforeseen.

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Most contracts usually involve some unpredictable work which must in fairness be executed as
Daywork on a time and material basis. In order to achieve competitive costs for such work the
Bill of Quantities may contain a Dayworks Billsetting 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 how
the operation is carried out, the plant cost and the overheads may be included in the build up or
priced in the Preliminaries. Since contractors compete on the basis of the total cost of carrying
out the works, they are not too concerned about the accuracy of their unit prices; this is quite
evident when priced bills are examined and the rates inserted by different contractors are
compared. Contractors are also interested in getting the best possible cash flow, which is helped
by putting a high price to those items which are constructed early. They may also believe that
there will be variations to the measured quantities so items that are likely to reduce are priced low
and high rates are used for those quantities that may increase.

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