Elemental Cost Plan: An Essential Tool in the Cost Management

Author: Bart Kolosowski
Published: June 21, 2023
The Rate Of Inflation In The Construction Industry

Elemental Cost Plan: An Essential Tool in the Cost Management

 

In the world of construction, having a clear view of the cost implications right from the early stages of design is paramount. Elemental Cost Plans step in to fill this role, serving as a guiding tool for both the design team and the client. These cost plans facilitate informed decision-making, promote cost control, and enhance transparency, contributing to smooth and successful project execution. In this article, we delve into the specifics of these cost plans, their evolution with design stages, their preparation process, and their inherent value. So whether you’re a professional in the construction industry or a client looking to understand your project’s financial landscape, this guide is for you. Let’s get started.

Elemental Cost Plan: An Essential Tool in the Early Stages of Design

The Elemental Cost Plan (ECP) is a vital instrument in the early design stages of a construction project, providing a more refined breakdown of costs than an initial budget estimate. It’s an effective tool that forms the groundwork for both budget management and design evolution, as it divides the overall project cost into its constituent parts, or ‘elements’.

In line with the RIBA stages of work, the Elemental Cost Plan gains relevance during the initial phases of design, specifically during stages 2, 3, and the early part of stage 4. During these stages, the plan becomes a pivotal point of reference, guiding design decisions based on the anticipated costs of different design elements. This cost-conscious approach to design and planning ensures that the final design stays within the project’s budgetary constraints, preventing cost overruns down the line.

The Elemental Cost Plan is a flexible and adaptable tool, able to evolve with the design process. As more detailed design information becomes available, the plan can be elaborated upon, further enhancing its accuracy. The level of detail that an Elemental Cost Plan includes often depends on the depth of available design information. However, it’s important to note that when the design reaches a highly detailed stage, the preparation of a Bill of Quantities (BoQ) may become more suitable for managing costs.

The value of the Elemental Cost Plan goes beyond cost estimation—it also aids in setting realistic and achievable project objectives. By delivering a comprehensive cost estimate early in the design phase, it assists in establishing practical design and budgetary goals.

Moreover, it plays a crucial role in shaping the “Construction Budget Estimate”. The early budget estimate serves as the basis for the Elemental Cost Plan, leading to a more detailed understanding of project costs. This relationship underscores the Elemental Cost Plan’s significance as an integral component of effective financial control in the early stages of project design.

In terms of accuracy, while an Elemental Cost Plan may not provide the exact final cost of a project, it presents a reliable, detailed estimate that greatly aids in decision-making. For both the design team and the client, the Elemental Cost Plan represents an invaluable tool, guiding design decisions, setting realistic expectations, and providing a clear roadmap for project costs.

Elemental Cost Plans: Evolving with Design Stages and Depth of Detail

Elemental Cost Plans are a fundamental tool during the early phases of a construction project. These plans change as a project progresses through the various RIBA stages of work: stage 2 (Concept Design), stage 3 (Developed Design), and early Stage 4 (Technical Design).

In the concept design stage (RIBA stage 2), the Elemental Cost Plan provides a high-level breakdown of costs based on limited design information. Its main purpose is to offer a broad understanding of the financial commitment involved in a project. As the design further develops (RIBA stage 3), the Elemental Cost Plan becomes more detailed and accurate, reflecting the more comprehensive design data available.

By the time we reach the early technical design phase (RIBA stage 4), the Elemental Cost Plan carries a significant amount of detail. It now closely follows the building design and construction methodology. The reliability and accuracy of the cost plan are far superior at this stage than in the earlier stages due to the wealth of detailed design data that is now available.

However, as a project advances and the design details increase, there comes a point where the Elemental Cost Plan is no longer the most suitable cost estimation tool. This threshold is reached when the design details are so specific that a Quantity Surveyor cannot ignore them and continue to use compounded elemental rates. In such cases, a transition from an Elemental Cost Plan to a Bill of Quantities is necessary. This shift has significant implications for cost estimation, typically resulting in even higher accuracy and reliability of cost data.

Another crucial aspect of Elemental Cost Plans is their role in decision-making. At Multiproject, we frequently prepare cost plans for different scenarios and solutions. This approach supports the design team and the client in selecting the most suitable design direction and construction method for the project. It provides a clear financial picture of each potential solution, facilitating an informed choice.

In summary, an “Elemental Cost Plan” is a dynamic tool, continuously adapting to the evolving design stages and depth of detail. It plays a critical role in providing accurate cost estimates during the early phases of a project and guiding significant design and construction decisions.

Behind the Scenes: Understanding the Preparation Process of an Elemental Cost Plan

Elemental Cost Plan preparation starts with the collection of crucial project data, including design specifications, project requirements, project location, and any constraints impacting the development. This in-depth understanding of the project brief forms the basis for an accurate and comprehensive initial dataset.

According to the Royal Institution of Chartered Surveyors (RICS) New Rules of Measurement (NRM1), both building and non-building works are split into cost elements. These elements may include substructure, superstructure, internal finishes, fittings and furnishings, mechanical and electrical services, among others. Each of these elements is associated with standardised units, a practice essential for maintaining the consistency and accuracy of the cost plan.

Following the definition of elements and units, elemental cost rates are applied these are typically from organisations such as Building Cost Information Service (BCIS) or Spon’s Price Books, and/or in-house historical data from past projects. These provide critical information for creating realistic cost rates within the Elemental Cost Plan. However, these figures are not taken at face value. Adjustments are made to account for inflation, changes in technology, and regional variations in costs.

Elemental Cost Plan preparation also includes the incorporation of contingencies and risk. This step accounts for potential uncertainties or unexpected changes that might occur during the project’s lifecycle, thus making the cost plan more resilient.

Regular updates and revisions are an inherent part of the Elemental Cost Plan as design details develop and become available. This ensures that the cost plan remains accurate, relevant, and truly reflective of the project’s evolving status.

The final stage involves the validation and presentation of the Elemental Cost Plan. All costs are checked for accuracy, and all elements are verified to ensure they’ve been captured and calculated correctly. Once validated, the Elemental Cost Plan is presented to the client and the design team, serving as an illuminating document outlining the estimated costs of the project, facilitating understanding of potential financial implications, and aiding in informed decision-making. The “Elemental Cost Plan” stands as a valuable tool in the early stages of design, steering the project towards successful completion within the defined budget.

Balancing Precision and Generalisation: The Accuracy of Elemental Cost Plans

Elemental Cost Plans maintain a necessary balance between generalisation and precision. Grouped into broad categories or elements, these plans still strive for reliability within their broad outline. The rates used in Elemental Cost Plans are unique, diverging from those used in BoQs and benchmark pricing. Due to early design stages, a typical elemental rate for a cost item like cavity walls considers all associated costs, such as brick and block work, cavity formation, insulation, and cavity trays. Essentially, these rates amalgamate costs for various sub-elements, serving to facilitate cost estimation when design detail may not be exhaustive.

Skilled cost consultants play a key role in the accuracy of these plans. By adjusting standard elemental rates to align with specific project characteristics, they ensure these cost plans retain a high degree of accuracy. This professional prowess is crucial when the design information available isn’t fully detailed, a common scenario in early design stages.

The dynamic nature of these cost plans is crucial to their reliability. As the design evolves and more details come to light, Elemental Cost Plans undergo regular updates and revisions. These changes serve to keep the cost plans accurate, in step with the progress of the project.

Finally, it’s important to remember that Elemental Cost Plans are estimates and not fixed figures. They set our direction of project cost development and allow for continuous financial control.

Unlocking the Value: The Benefits of Elemental Cost Plans for the Design Team and the Client

Elemental Cost Plans serve as a valuable tool for both the design team and the client. For the design team, these cost plans provide a critical structure for effective cost control right from the early stages, thus reducing the risk of extensive, expensive design changes later on. The cost plan frames the financial boundaries for design, helping the team to design within known cost constraints.

This budgetary blueprint not only guides the design but allows comparison of cost between different design options or scenarios. In essence, it provides the design team with a clear financial overview, supporting informed and cost-effective design decisions. It further allows for risk-cost analyses, shedding light on potential cost uncertainties and offering insight on mitigation strategies.

For the client, an Elemental Cost Plan is a strategic tool in financial planning. It offers early cost certainty, critical in budget allocation and overall financial decision-making. The cost plan enables clients to see the cost implications of different design choices, helping to align project objectives with budget. It provides a transparent view of the expected cost, thereby fostering trust between the client and the design team.

Elemental Cost Plans create a shared understanding of the project costs amongst all stakeholders. This collaborative platform facilitates alignment between project goals and budget constraints, significantly reducing the risk of exceeding the budget. In essence, the Elemental Cost Plan promotes predictability, enhances control over project costs, and ultimately contributes to the successful delivery of a project.

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