Meaningful cost comparisons and analyses of cost estimates will only be possible if cost data are based on a uniform standard analysis. The following section provides an overview of acceptable formats for a Schematic Design preparation by:

• Defining the Elemental Format
• Defining Selection of Elements
• Preparing Elemental Cost Analysis for an accommodation project
• Discussing design, estimation, escalation and construction allowances

The Cost Consultant should use the proposed, industry accepted, formats to ease analysis of results and to facilitate comparative elemental estimating.

Elemental Format

Elemental Cost Analysis ”Cost Analysis” is a system of cost planning and control intended to monitor and control project costs during the design development of buildings and other structures. Cost control is achieved by preparing a Cost Plan based on the information contained in the analysis in the very early stages of a project when little is known about the materials or methods that will be used. An Elemental Cost Analysis examines the known costs of a building at the end of the design process into an Elemental Format and divides the cost by a quantity to give a unit rate. A Cost Plan is used at the beginning of the design process and determines the required reserve. It multiplies a quantity by a unit rate obtained from one or more cost analyses to give a cost. To be useful, the breakdown and method of analyzing the costs in the Cost Analysis must therefore be identical to that used in the Cost Plan4. It is generally an accepted industry standard that a Schematic Design Estimate is prepared in Elemental Format which is approved by the Canadian Institute of Quantity Surveyor, (CIQS) or an equivalent format. Using industry standards makes the output understandable to a wide audience and allows for comparisons between projects.

Selection of Elements

An Element is defined as a major component common to most buildings, fulfilling the same function irrespective of its design, specification or construction. In selecting and defining the Elements the following CIQS principles are used:

1. Each Element should have a significant influence on the cost of a structure and a high frequency of occurrence.
2. There should be consistency and simplicity in the definitions of Elements. One of the primary purposes of a standard list of Elements is to enable cost analyses of completed projects and to help control costs of future projects.
3. Each Element is intended to represent a component of the building which always performs the same function regardless of its composition. Any attempt to try to identify materials in a Cost Analysis defeats the purposes of a Cost Plan which is prepared when few, if any, materials have been selected.
4. Wherever possible an Element should be measurable.
5. The Elements are ordered hierarchically into four levels to allow for different levels of aggregation and summarization as follows:

a.	Level 1	Major Group Elements	denoted by a single character code
b.	Level 2	Group Elements	denoted by a two character code
c.	Level 3	Elements	denoted by a three character code
d.	Level 4	Sub – Elements	denoted by a four character code

 

For Example	A	Shell	Level 1
	A1	Substructure	Level 2
	A11	Foundations	Level 3
	A111	Standard Foundations	Level 4

A more detailed sample of an Elemental Format for an accommodation project, which is consistent with the CIQS standard, is provided below.

LEVEL 1 Major Group Elements	LEVEL 2 Group Elements	LEVEL 3 Individual Elements
A Shell	A1 Substructure	A11 Foundation
		A12 Basement Excavation
	A2 Structure	A21 Lowest Floor Construction
		A22 Upper Floor Construction
		A23 Roof Construction
	A3 Exterior Enclosure	A31 Walls Below Grade
		A32 Walls Above Grade
		A33 Windows and Entrances
		A34 Roof Covering
		A35 Projections
B Interiors	B1 Partitions and Doors	B11 Partitions
		B12 Doors
	B2 Finishes	B21 Floor Finishes
		B22 Ceiling Finishes
		B23 Wall Finishes
	B3 Fittings and Equipment	B31 Fittings and Fixtures
		B32 Equipment
		B33 Conveying Systems
C Services	C1 Mechanical	C11 Plumbing and Drainage
		C12 Fire Protection
		C13 H.V.A.C
		C14 Controls
NET BUILDING COSTS (Including Site)
D Site and Ancillary Work	D1 Site Work	D11 Site Development
		D12 Mechanical Site Services
		D13 Electrical Site Services
	D2 Ancillary Work	D21 Demolition
		D22 Alterations
NET BUILDING COSTS (Excluding Site)
Z General Requirements and Allowances	Z1 General Requirement and Fee	Z11 General Requirements
		Z12 Fee
TOTAL CONSTRUCTION ESTIMATE (Excluding Allowances)
	Z2 Allowances	Z21 Design Allowance
		Z22 Escalation Allowance
		Z23 Construction Allowance
TOTAL CONSTRUCTION ESTIMATE (Including Allowances)

 

The following is an expanded list of items that are generally found in each Element. These items should be measured under the same Element to ensure consistency from one Cost Plan to the other.

Shell:

• Substructure – includes foundation systems, basement excavation, shoring system, dewatering.
• Structure – includes slab on grade, granular sub-base, upper floor framing, roof framing.
• Exterior – includes the building envelope such as curtain wall, solid wall system and assembly
• (brick, metal, etc.), windows, roof membrane, canopy, parapets.

Interiors:

• Partitions and doors – includes elevator and stair core walls, block wall, drywall partition, hollow metal doors, solid core doors, door frames and hardware.
• Finishes – includes floor, wall and ceiling finishes.
• Fittings and equipment – includes fixed millwork, washroom accessories, handrails, guardrails, equipment (approved and agreed with Project Sponsor outside of the FFE list).

Services:

• Mechanical – includes plumbing, fire protection and sprinkler, HVAC, building controls.
• Electrical – includes Service Distribution, Lighting, Power Systems and Ancillaries, Fire Alarm, Security and IT systems.

Site and Ancillary Work:

• Site work – includes soft and hard landscaping, exterior lighting, incoming hydro service, storm service, sewer service, natural gas service.
• Ancillary work – includes demolition, renovation works.

General Requirements:

• General conditions and fees – includes General Contractor’s overheard and profit, site supervision cost, temporary service, hoarding, temporary accommodation/office.

 

In the table above, the example of an Elemental Cost Analysis, the total construction estimate excluding allowances represents the base estimate. It is common practice to add allowances, otherwise known as contingencies, to the base estimate. A contingency can be defined as a financial provision to absorb the impacts of cost escalating events that are likely to occur, but for which costs cannot be estimated with a high degree of certainty at the time of the capital investment budget establishment. Contingencies are typically related to imprecision in quantities, depending on the level of advancement of the detailed design, and the variation of unitary prices due to events that may be difficult to quantify with a high degree of certainty (e.g., volume of soil to be decontaminated).

 

Within the Elemental Cost Analysis, the Cost Consultant should determine the appropriate contingencies for different elements. The different elemental contingencies will reflect the different levels of uncertainty associated with the respective elements. The contingencies are included in the primary budget. Schematic estimates typically contain contingencies or allowances to deal with uncertainty in three different project areas:

 

1. Design and Estimating Allowances are added to reflect the early state of the project design. The contingencies are to cover omissions and unknown project elements resulting that can be expected to be discovered over the design process.
2. Escalation Allowances are added to allow for unexpected changes in sub-contractor and input prices between the time of the initial estimate and when the work is ultimately performed. In capital projects, local market conditions can often give rise to short-term labour, material and equipment shortages resulting in spikes in construction prices.
3. Construction Allowances are added to address potential cost increases that can occur during the construction stage. These allowances are built in to absorb cost overruns and project delays. They will also cover unexpected damage to the project, site or adjacent areas.

 

When developing the cost estimates for the asset, the Cost Consultant separately identifies the contingencies from base costs, in parallel with risk quantification to help ensure there is no double counting between cost contingencies and risk quantification. It is recommended that the scope of the Cost consultant’s engagement include participation in the risk workshop(s). Contingencies should be built into the Project Sponsor’s primary budget with the expectation to be fully spent during the capital investment. When Proponents prepare bid prices, they will typically include a risk provision (also sometimes called owner’s reserve), which will vary depending on the delivery method and risk allocation approach. The risk provision is typically left outside of the primary budget.

Source: PPP Canada Schematic Design Estimate Guide