Building Economics

Cost control aims at ensuring that resources are used to the best advantage. In these days of ever-increasing costs the majority of promoters of building work are insisting on projects being designed and executed to give maximum value for money. Hence, quantity surveyors are employed to an increasing extent during the design stage to advise architects on the probable cost implications of their design decisions. As buildings become more complex and building clients more exacting in their requirements, so it becomes necessary to improve and refine the cost control tools. Rising prices, restrictions on the use of capital and high interest rates have caused building clients to demand that their professional advisers should accept cost as an element in design, and that they should ensure suitably balanced costs throughout all parts of the building, as well as an accurately forecast overall cost. The report of the Special (Future of the Profession) Committee of the Royal Institution of Chartered Surveyors¹ describes how many building clients now adopt cost limits for projects and are instrumental in spreading an awareness of efficiency and value for money in building; and this presages greater use of the quantity surveyor in establishing cost targets, in the appraisal of alternative solutions, and in cost control as a continuous process. This theme was reiterated in the SITE Report,² which defines the role of the quantity surveyor as ensuring that the resources of the construction industry are used efficiently to serve the best interests of society.

The costs of buildings are influenced by a variety of factors, some of which are interrelated. It is essential that quantity surveyors should be fully aware of the cost consequences resulting from changes in shape, size, storey heights, total height, fenestration and other building characteristics. The cost effect of the main design variables will be examined and compared in this chapter. The final design of a building will be influenced by a variety of factors, including user’s wishes, planning and Building Regulations requirements, site factors and aesthetic requirements. Other factors affecting cost include the form of contract, period for completion, structural form, extent of prefabrication and standardisation and consideration of maintenance and running costs, all of which will be considered in subsequent chapters.

This chapter is concerned with the functional requirements and cost implications of alternative constructional techniques for different types of building and of building elements. A comparison of maintenance problems and costs associated with different materials and components is made in chapter 11.

This chapter explores the effect of site and market conditions on building costs and the way in which they account for variations in the price of similar type buildings erected in different locations. The origins and forms of prefabrication and industrialised building are examined and the economics of these processes critically investigated.

This chapter is concerned with the problems associated with housing provision; the alternative forms of layout that can be employed to meet varying housing requirements and their comparative costs; the methods and economics of different forms of car-parking provision; and the considerations involved in a comparison of the relative merits of redeveloping or rehabilitating twilight areas.

In this chapter we consider the function served by approximate estimates, the methods employed and the factors controlling their use. The various methods are compared and applied to practical examples.

There is no universal method of cost planning which can be readily applied to every type of building project. Buildings have widely varying characteristics, perform a diversity of functions, serve the needs of a variety of building clients, and their erection is subject to a number of different administrative and contractual arrangements. Hence, it is not surprising that a wide range of cost planning techniques has been devised to meet the needs of a variety of situations.

This chapter is concerned with the compilation of cost analyses and other data for assessing costs and preparing cost plans of future building projects. It also examines the methods of compiling and applying cost indices as a means of updating past costs of buildings. The use of cost limits is also investigated.

In this chapter cost planning techniques are applied to a variety of practical situations involving the computation of building costs for a range of building projects.

This chapter is concerned with the nature of value and investment, the construction and use of valuation tables and methods of valuation. Until quite recent years these matters were considered to be solely the province of the valuation surveyor, but it has now become apparent that the quantity surveyor also needs to be familiar with some of the valuation techniques and certain of the valuation tables, in order to be able to make feasibility studies and to deal satisfactorily with future costs.

With many projects cost planning cannot be really effective unless the total costs are considered, embracing both initial and future costs. This chapter examines the concept of costs in use, the various approaches, problems in application and its use in practical situations. A number of related issues such as discounting future payments, lives of buildings, the relationship of design and maintenance and life cycle costing are also considered.

This chapter investigates the factors which influence land use patterns and land values. It is also concerned with the whole spectrum of matters which bear upon the development of land, such as site characteristics, planning and other statutory controls, encumbrances and easements.

This chapter is concerned with the basic criteria for development undertaken in both the public and private sectors, problems of land acquisition, financial considerations and sources of finance. An investigation is made of matters contained in a developer’s budget and its practical application to various types of development projects.

In the final chapter we examine the impact of both public and private investment and of government action generally on the construction industry, together with the structure of the industry and the relationship of its output to demand and available resources. The economic aspects of urban renewal and of new town and town development schemes are examined. Consideration is given to the philosophy and nature of cost benefit analysis and its application to a variety of environmental problems.