Factors Affecting Costs
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What do you think?
Has this happened to you as an estimator for a government or public works agency? Someone shows you a square foot cost, published in a construction magazine and attributed to RS Means. The figure is much lower than what you are using. First you adjust for the location of the project by using the Location Factor Table, then adjust for the gross building size using the Square Foot Project Size Modifier table, and even add an escalation factor to account for construction duration, using the Historical Cost Index table. Yet the published square foot cost is still lower than yours. How do you reconcile this? Well, as that old time radio announcer used to say... “Now for the rest of the story.” There is an important, yet often overlooked section of the RSMeans Cost Data books called “Factors Affecting Costs.” Items listed include: Size of Project, and Location — which we covered above. Quality, Overtime, and Productivity are other factors that can explain the cost difference. There is a sub-heading called Other Factors, which includes, among other important things, building code requirements and owner’s special requirements. Some of the building code requirements in a few major cities can increase the cost of a building, though with the adoption or partial adoption of the International Building Code across the country there is less difference from one location to the next. Owner's Special Requirements is a big item. It can include MBE/WBE/LBE programs, “Buy American” clauses, certified payroll requirements, “Percent for Art” programs and other public reporting requirements/regulations. Collectively these items can add as much as 10% to project costs. Some cities still maintain Multiple Contract requirements. These require General Construction, Electrical, Plumbing, and HVAC trades to be let out as separate and distinct prime contracts, which can add as much almost 25% to the cost of smaller projects, according to a study evaluating New York City projects. Many government and public works agencies strive for a LEED rating. While some of the lower LEED levels do not add significant cost to a project, a GSA study has concluded that the higher LEED levels can add up to 8% to construction costs. These are probably all good programs and may add to the value of the building and to the public well-being. Individually, the cost of these items is usually not significant, but if several of them are combined, the project costs can be increase project costs up to 50% range. Another important point to remember is that government and public work is a separate market from private construction work, and is often subject to different market forces. Member Comments» View all comments (1 total comments)
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