THE HIERARCHICAL STRUCTURE OF COST DATA

T he construction industry has adopted a hierarchical structure for its cost data as shown in Figure 4.2. This structure consists of eight levels of analysis using total cost as the lowest level of detail. This total cost is often used in conjunction with one of the single-price methods of estimating. It is generally realised that the variability in construction projects, even of a similar type, is such that it is not possible to consider total cost as anything more than a general guide for other projects, when expressed in terms of a single quantity such as GIFA. Reference to

1 Tender sum 54 Cost Studies o f Buildings

L E V E L

TOTAL COST

2 Substructure Superstructure Finishings SIMPLIFIED ANALYSIS

3 Frame Upper floors Roof AMPLIFIED ANALYSIS

4 Columns Beams QUANTITY FACTORS

5 Concrete Reinforcement Formwork MEASURED WORKS

6 Labour Materials Plant ITEM ANALYSIS

7 Labourers Craftsmen Supervision LABOUR ALL4N RATES

8 Basic rates Insurance LABOUR BASIC RATES

F ig . 4.2 Hierarchical structure o f cost data

the B C IS Quarterly Review o f Building Prices will emphasise this view, in the range of prices that is offered.

Opinions vary, but intuition would support the viewpoint that the more detailed the cost data, e.g. level 8, the more accurate would be the resultant estimates prepared from such data. T he PSA study Cost Planning and Computers, however, concluded that to identify the major (100) items of work on any project and to price these accordingly would achieve a level of accuracy that could hardly be increased by more detailed pricing. This has been a method used by building contractors for some time when pricing, drawing and specifying contracts. It is in reality also the method used by contractors when pricing larger projects, since they often ‘guess’

the rates of the cost-insignificant items. Figure 4.3 shows that the level of estimating accuracy improves only marginally beyond the 100 items identification.

T he following points are worthy of note in connection with construction cost data:

■ T he quantity surveyor cannot predict the error contained within the successful contractor’s own estimate.

■ Bills of quantities, although applicable to an actual project, include a wide variation of rates. For example, some items of a comparable nature on different projects may vary by as much as ±200%.

■ Small items on bills of quantities are not priced carefully.

Mean error ofestimates(%)

Cost Data 55

No. of items in estimate

Fig. 4.3 G raph o f estimating errors against the num ber o f items in the estimate Source'. Bennett et al. (1981)

■ T he theory of feedback, as described in standard textbooks, does not occur routinely in practice.

■ Although published cost data are available to the industry, quantity surveyors place greater reliance on their own generated data, on the grounds that they know and understand the important features of their own projects.

■ Unless a practice is very large, the data available are generally insufficient in number or too diverse to provide a satisfactory database.

■ There are many different sources of cost data, which provide different types of information to the profession.

■ T he optimum estimating performance is reached by the measuring and pricing of approximately 100 major items of work (see Figure 4.3).

■ T he provision of suitable cost data will only be possible by use of a central store of information that can be recalled by computer.

■ A quantity surveyor’s estimating accuracy is in the region of ±13% when attempting to forecast the contract sum.

■ T he use of data will be restricted when the system of operation is difficult to use or where the process of application is slow.

■ T he various cost data that are available show conflicting values for the work to be estimated.

■ T he method of measuring in finished quantities encourages inaccuracy in terms of outputs, waste and risk.

■ In a bill of quantities, 80% of the costs can be attributed to 20% of the items and vice versa. T he ratio is somewhat smaller on civil engineering projects, since the Civil Engineering Standard M ethod of Measurement (CESMM) tends to measure only the major cost items.

56 Cost Studies o f Buildings in two different ways, through accuracy and consistency. Accuracy implies a closeness to the actual value, whatever that is. Consistency, on the other hand, is a measure of how often this accuracy can be relied on. It has been established through research that while prices overall (including bills of quantities) have levels of accuracy ±10%, the individual components (i.e. individual items) of these prices may have measures of variance ten times this percentage. In terms of overall consistency the latter aspect presents the users of cost information with substantial difficulties, comfort being taken only in the fact that the overall price will not be subject to such large extremes of variation.

Table 4.1 provides a list of typical project items together with the prices from three different sources of cost information. In Table 4.2 this information has been converted into a series of price relatives, giving the mean price of three sources a value of 100. On an unweighted basis the mean price represents a value of 100, with source C giving the highest value of 107. If it were assumed that the mean

T a b le 4.1 Comparison of published prices (in £): sample of items

No. Item Source A Source B Source C

1 T rench excavation/m J 4.10 4.50 5.50

2 Earthwork su p p o rt/m 2 H ardcore filling/m 3

1.10 2.00 1.60

3 18.00 27.50 25.00

4 Concrete in foundations/m J 52.50 47.00 55.00

5 Fabric reinforcem ent/m 2 2.30 2.20 3.10

6 Wall in commons (H B )/m 2 20.20 21.70 26.50

7 Block partition (100 m m )/m 2 12.60 16.00 15.50

8 Hessian-based D P C /m 2 7.20 8.50 7.00

9 Floor joist (50 X 100 m m ) / m 2.00 2.80 2.20

10 Clay pantiles/m 2 21.50 24.00 19.00

11 Roofing felt (3 layers)/m 2 12.50 16.00 15.00

12 Plasterboard (12.5 m m )/m 2 4.90 4.50 5.00

13 Blockboard (12 m m )/m 2 13.20 11.00 14.50

14 Standard flush door/N o. 21.00 18.50 20.50

15 Float glazing (4 m m )/m 2