Construction Market Trends Series: Price (3)
In the second installment of our Construction Market Trends series, we introduced two common methods of calculating construction costs: rough estimates and cost estimates. In this third installment, we will cover some typical approaches to rough estimation that are widely used in actual projects in Japan, ranging from methods that anyone can easily use once they are learned to methods that require a lot of experience and judgment.
1. Using unit price per square meter and unit price per square area
This method is most commonly used to estimate construction costs, and once learned, it can be easily used by anyone. In general, it is widely used in practice when the client is planning a project and wants to set a budget for the construction cost.
As a specific calculation method, first set the unit price per square meter or unit price per area of the building to be constructed, and then multiply it by the floor area (number of square meters or area) of the building to calculate the approximate construction cost. The unit price per square meter or unit price per area is generally determined based on the actual contract price (construction cost) of a project similar to the subject building, and taking into account the rate of increase in prices since the time of the contract for the similar project.
This method is characterized by the fact that the construction cost can be calculated at a stage where there are no blueprints or specifications, i.e., at a stage where the outline of the project, such as region, building use, scale, structure, and building grade, has been planned or planned.
On the other hand, the accuracy of the results obtained by this rough estimate method is generally characterized by large errors and roughness. The reason for this is that in this method, the unit price per area is set based on the construction cost of past projects that are as similar as possible in terms of region, building use, scale, structure, building grade, and so on. This is because even in very similar projects, the site conditions (ground, shape, etc.) and the shape of the building are different, and these differences will result in errors.
Another method similar to this method is to set the unit price based on the main functions of the building, such as unit price per dwelling unit in a housing project, unit price per hospital bed in a hospital project, unit price per audience seat in a hall or theater project, and unit price per guest room in a hotel project. However, the basic approach is to calculate the construction cost by setting the unit price per function based on similar projects in the past, just like the unit price per area introduced earlier.
The method of expressing construction costs using unit price per area and unit price per function has been used in the construction industry for a long time. For example, ¥XXX per area is too expensive, or ¥YYY per dwelling unit will fit into the budget, etc. This is an easy way to visualize the level based on past results and experience.
2. Using the estimated quantity
This method is mainly used at the stage of basic planning or basic design when the client or designer has made some progress in considering the outline of the shape and specifications of the building in the project, for example, to confirm whether the current plan or design is within the budget or to confirm which part of the building is costly. For example, in the basic design stage, it is used to check whether the current plan and design are within the budget and to check which parts of the building are costly.
The specific calculation method is to set up items based on the blueprints and building outline along with the elements that make up the building, calculate the quantity of each item, multiply this by the unit price for each item to calculate the amount for each item, and then add up the total amount to calculate the construction cost.
At first glance, it looks like cost estimating, but instead of picking up the quantity of each detailed item and calculating the amount like cost estimating, it treats multiple detailed items together as one item. For example, in the case of cost estimating, the exterior wall finish is divided into base material and finishing material, and the amount is recorded in the breakdown sheet, but in this method, these base material and finishing material items are combined into one item as exterior wall finish. In this method, the items of base materials and finishing materials are combined into one item as exterior wall finishes. The unit price is also calculated by adding up the unit prices of base materials and finishing materials, and the unit price per exterior wall finish area is adopted.
One of the characteristics of this method is that which items are to be recorded, to what extent the work is to be included in the recorded items, how to determine the quantity, and what units are to be used are estimated based on the experience and thinking of the person performing the rough estimate.
Therefore, even if it is the same project, the items, quantities, units, etc. recorded in the breakdown sheet will differ depending on the judgment of the person who performs the rough estimate, and a large difference may occur in the results obtained. In this way, unlike the rough estimate method, which can be used by anyone but has rough accuracy, such as the method of using the unit price per area, this method requires a wealth of experience and knowledge when using it, and the results obtained by experienced persons can be expected to be highly accurate.
The Ministry of Land, Infrastructure, Transport and Tourism (MLIT) has issued Guidelines for Cost Management in the Design Phase of Government Facilities, which includes Basic Concept and Operation of Estimate Calculation Using the Standard Form for Estimated Construction Cost Calculation, Standard Form for Estimated Construction Cost Calculation, and Notes on Estimated Construction Cost Calculation.
3. Using programs
Finally, we will briefly introduce an estimate system, which automatically creates a breakdown sheet from a program based on the outline of the building such as region, shape, and grade of the planned building, and produces a rough estimate.
These systems are useful not only for reducing the time and effort required for rough estimates but also for simulating changes in shape and grade. It should also be mentioned here that the introduction and use of BIM (Building Information Modeling) has gradually accelerated in the construction industry in recent years, and programs are being developed to calculate rough estimates by linking BIM model information with these rough estimate systems.
In this section, we introduced specific methods for calculating rough estimates of construction costs. In the next column, we will focus on the factors that affect the construction cost.
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