AEC / CEEC Colloquium 2^nd October 1998

Ecole polytechnique fédérale de Lausanne

Estimating Building Costs in Switzerland

Speaker:

Martin Wright

Chartered Quantity Surveyor ARICS

Bauökonom / Economiste de la Construction AEC

PBK AG, Joweid Zentrum 1, CH-8630 Rüti / Zürich, Switzerland

Tel +41(0)55 250 33 80 / Fax +41(0)55 250 33 81 / E-mail wright@pbk-ag.ch

Professional Cost Planning procedures are being used more and more on building projects in Switzerland. This development has been particularly assisted by the standard documentation of the Swiss Centre for Building rationalisation CRB [[1]^]and the professional practitioners within the Swiss Association for Construction Economics AEC [[2]]^. This autumn AEC hosts the General Assembly of the European Committee of Construction Economics CEEC (Comité Européen des Economistes de la Construction) and at the same time carries out this colloquium on subjects of interest to Construction Economists. One of the main features of the colloquium is a selection of presentations by the CEEC member countries demonstrating national methods of estimating applied to a common CEEC example. This paper contains examples of Swiss methods.

AEC: The Swiss Association for Construction Economics / Association Suisse pour l’Economie de la Construction / Schweizerische Gesellschaft für Bauökonmie

In 1993 the 'Fachverband für Bauökonomie FVB' was set up as an association for professional Construction Economists working in Switzerland. At the same time the 'Schweizerische Gesellschaft für Bauökonomie' was set up as a separate broader based association for those generally interested in Construction Economics, i.e. including non-practitioners. 1997 the two associations merged, and reorganised with a central committee, two regional sections and a national Chamber of Professional Practitioners, which is only open to members who are suitably qualified. The Chamber of Professional Practitioners is a driving force behind the post graduate course in Construction Economics for Architects and Engineers running at the Institute of Technology in Horw, Lucerne.

The European Committee of Construction Economists CEEC

The European Committee of Construction Economists CEEC (Comité Européen des Economistes de la Construction) was set up in 1979 as representative for the profession of the Construction Economist in Europe. The Committee works to ensure that the economic side of construction projects is handled by suitably educated professionals. The members consist of the respective professional organisation of the individual countries and, for countries without professional organisation, of individual personal members or observers. Belgium, Denmark, Germany, Finland, Great Britain, Holland, Ireland, Italy, Portugal, Romania, Switzerland, Spain and Turkey are represented. Switzerland is represented by the Professional Chamber of AEC.

Swiss background

Until the early seventies Swiss practice consisted mainly of calculating the costs of finished designs - project costs were at first estimated on a very rudimentary basis and then planning more or less completed as basis for a detailed cost estimate. The detailed estimated was often described as an 'addition of the costs of mis-planning'. Commonly costs turned out higher than originally foreseen, which necessitated project alterations or even complete replanning, resulting in delays and increased planning costs.

Today a step by step approach has been introduced using modern methods of cost planning which allow early cost control. In this way, the costs can be influenced in the early planning stages, i.e. at a point where much can be achieved with a modest effort. At the beginning of the design phase costs can be highly influenced (by practically 100% if the project is dropped!). Later the scope for influence is very quickly reduced and is by the beginning of the construction phase very limited.

Costs and cost influence

Traditional methods of estimating in Switzerland were based generally on prices per cubic meter volume or, less commonly per square meter floor area of the building. The results do give an indication of the approximate overall costs, but are not transparent and give very limited indication of the factors lying behind the costs. The Swiss Standard LHO SIA 102 ^[[3]], which covers planning services, stipulates an accuracy for such estimates of ± 20 bis ± 25 – a span that is quite insufficient for an investment decision.

In Switzerland today elemental estimating has become standard procedure allowing more accurate, transparent predictions of cost at an early stage in the project. Design dependant factors can be quantified and compared to reference data, which allows cost control from the beginning of the project.

Important design factors

The most important design factors can be individually quantified:

· the overall size, for example with the m3 volume or m2 floor area

· the shape, for example with the ratio of the elemental quantity to the gross floor area

· the quality for example with the average elemental unit rate e.g. roof costs per m2 roof area

· the complexity for example with the proportion of mechanical and electrical services

The layout and shape of the standard CEEC project example has already been defined, which jumps one of the first typical steps of cost planning, the optimising of areas and shape. Normally the data of the current project would be set against data from similar projects as a basis for identification and questioning of characteristics which may be cost drivers. These comparisons apply both to the relationships of usable floor areas, circulation areas, etc. and the so called 'shape ratios' i.e. the relationships between elemental quantitities and gross floor area.

shape ratios

The quantities

The first step for any estimate is to establish the quantities involved. For the CEEC project example a standard bill of quantities from Denmark was available, which considerably reduced the work involved. The measurements necessary were limited to the basic quantities (gross floor area, volume) and the overall elemental quantities (ground floor slab, roof, external elevations, etc.) which were measured according to the appropriate Swiss standards. The quantities were measured quickly and efficiently from the plans using an electronic digitiser, which had the additional advantage of documenting the measurements.

Measurement of gross floor area

The results of the measurement were compared to the overall Danish values and the quantities in the bill of quantities were aggregated and compared to the Swiss totals for the elements. The elemental totals compared well, but a large difference was noted with gross floor area. It appears that the definitions in Denmark are quite different from Switzerland. In the Danish documentation the gross floor area was noted as 1 800m2 as against an area of 2 875 m2 measured according to the Swiss standard SIA 416 ^[[4]] This indicates one of the dangers of superficial international comparisons on a square meter basis.

Cost estimates

Cost estimates form an important base for cost planning and cost control.

The Swiss standard Elemental Classification EKG ^[[5]] published by the Swiss Centre for Rationalisation CRB is the common denominator through all phases of planning and construction.

Based on the CRB classifications the following stages of cost estimates have become established in Switzerland:

· Preliminary estimates based on Element groups and Macroelements

· Elemental estimates

· Detailed estimates based on elemental components

· Resorting of data into tender packages

Phase	Feasability	Outline proposals	Design	Construction
Estimate type	Preliminary estimate	Elemental estimate	Detailed estimate	Tender packages
Level	EKG-Element groups and Macroelements	EKG-Elements	Elemental components	Trades
Results	EKG: - Element groups - Macroelements	EKG: - Element groups - Macroelements - Elements	EKG: - Element groups - Macroelements - Elements - Components	BKP / NPK-Sections + EKG: - Element groups - Macroelements - Elements

Stages of estimates

The Preliminary Estimate

The first step for the CEEC project example was a preliminary estimate structured by the standard Element Groups and Macroelements, based on a limited number of parameters which particularly take into account the quality and shape of the external envelope. Typically such estimates take place based on preliminary sketches and permit simple comparison of project alternatives and the setting out of cost models for the project.

The overall quantities of the external elevations, roof and floor areas are defined in the most preliminary of sketches. The overall quality required is also known at an early stage. With the quantifying of areas and elemental rates both of these parameters can be taken into account.

Example of preliminary estimate

The elemental rates are defined after reference to comparative data from other projects, which are adjusted according to the standard foreseen

A data base with project analyses provides considerable assisitance when defining the appropriate elemental rate. Modern database systems allow suitable data to be efficiently selected on the basis of project criteria, quickly adjusted to the current market price level and the background information to be clearly presented. A very important aspect of the comparative data is the description (text and/or graphic) of the content of the rates. On the basis of this information the differences between the comparative figures can be scrutinised when deciding on the estimated values for the new project.

Comparative data

Analysis of own projects supply the best comparative data,. These are however commonly limited and in Switzerland we fortunately have a central data base, the Baukostenkennwert-Katalog BKK ^[[6]] , published by CRB, which is a valuable source for additional information..

Excerpt from the CRB-Database 'Baukostenkennwert-Katalog BKK'

The elemental estimate

The elemental estimate is more detailed then the preliminary estimate and is generally based on further planning steps (e.g. outline design with plans scale 1:200 and a description of the standards foreseen). The calculation takes place directly at elemental level and is limited to approximately 100 elements, of which not all occur on most projects. The elements are individually estimated on the basis of the most important quantities and elemental rates for the standard foreseen.

The Macroelement MB External elevations is for example sub-divided into four elements.

Elemental estimate for Macroelement MB 'external elevations'

Here also, the comparative data available from own projects can be augmented with data from the CRB BKK-Katalog.

The presentation of an elemental estimate is normally in the form of a cost analysis based on the standard elemental classification. An elemental estimate was not produced for the CEEC example project as the bill of quantities supplied from Denmark permitted a more detailed estimate. The elemental analysis of the results of the detaled estimate is however appended separately.

The detailed estimate

For a detailed estimate the planning process has to be far enough to provide more information than that necessary for an elemental estimate. The elements are sub-divided into components for the differing construction types and materials. The components are however limited to composite parts of the building that can be simply assessed, without becoming lost in the details of trade contracts.

The bill of quantities supplied from Denmark was subdivided by the elements of the SfB system ^[[7]], which considerably reduced the amount of work involved in transition to the Swiss classification. With only very minor exceptions it was possible to reclassify the SfB- elements directly to the Swiss elements, which underlines the importance of the elements for international comparisons. It was also possible to allocate the items in the bill of quantities directly to tender packages based on the Swiss Building Classification 'Baukostenplan' ^[[8]] which permitted later resorting into trade packages.

Excerpt from a detailed estimate

(Element E0 Upper floors CEEC example project)

The unit rates for the components are determined on the basis of comparative projects or can be built up from first principles with the necessary trade items and contractors unit prices.

Built up rate for elemental component

Standard components can be taken from the BEK-Katalog ^[[9]] published by CRB, which also contains cover prices.

Excerpt from the BEK-Katalog (components)

The rates for the CRB components are built up from trade items from the Swiss standard library of descriptions NPK ^[[10]] and the CRB-Unit price database BAUHANDBUCH ^[[11]]. The build up has to be adjusted for content (relative quantities) and price (market situation).

Excerpt from the BEK-Katalog (built-up rate)

Tender packages

For the construction period of a project target costs are required for the individual trade packages. The packages are not directly related to the elements, as they are contractor orientated (e.g. concrete work, steelwork, plumbing, plastering). By coding the items of the detailed estimate with the trade packages foreseen (e.g. the Swiss Building Cost Classification BKP) the items can be simply resorted to obtain the required target costs.

Sorting of items for concrete and masonry contractor

If the rates for all components of the estimate are build up in detail it is also possible to resort the data into a bill of approximate quantities. However the detailed build up entails a lot of work and is in practice often not possible because the planning has not reached a sufficient level of detail in all areas.

‘Top-Down’ Principle

In practice, the clear cut differences between the individual stages of estimates presented become a little blurred. Instead of systematically proceeding with only one level of information at a time a 'top-down' approach is normally adopted. After the preliminary estimate only cost relevant items are further detailed to the next level of information. At the next level the procedure is continued so that again only important items are detailed. According to the so called '20-80 rule', 80 % of the costs are in 20% of the items. With the top-down approach the most important 20% is given most attention and large risk elements can be reduced.

‘Top-Down’ principle

Conclusion

The current 'state of the art' for estimating building costs in Switzerland is based a concept of functional elements. The element method is however not just a method for estimating costs, but provides an instrument for cost planning and cost control. During the planning and construction process it enables permanent monitoring of deviations from project targets, with the possibility of taking corrective measures at an early stage, when they are most effective.

Today's Clients require better estimates, more cost information, more alternative evaluations and more transparency. Well educated and trained Construction Economists using a systematic approach and the efficient use of information technology can provide this service and add value to projects.

Experience in Switzerland shows: with the consistent use of cost planning we can create buildings of higher quality within given cost limits.

Swiss Standord Elemental Classification EKG (cover page)