Elemental cost planning: how to design to a budget
An estimate tells you what a design will cost. A cost plan tells the design team what each part of the building is allowed to cost, and keeps checking as the design develops. That shift, from measuring cost to steering it, is the core of pre-contract cost control.
By the Caprix AI team · · 8 min read
Key takeaways
- A cost plan divides the budget among the elements of the building so that each has a target.
- Elements are compared using cost per m² of gross floor area and element unit rates.
- The cost plan is updated at each design stage, and every movement is explained.
- Most of the cost is committed early, when the least is known. That is when advice has the most effect.
- Value engineering improves value for the function required. Deleting scope is cost cutting, which is a different thing.
Why elements
A Bill of Quantities is organised by trade, because that is how work is bought. But a design is developed by function: the structure, the envelope, the services. An element is a part of the building that performs one function whatever it is made of. The external walls are an element whether they are brick, precast concrete or curtain walling.
Organising cost by element lets you compare buildings with different designs, see where a design is spending its money, and give designers a target for the part they are responsible for.
| Group | Typical elements |
|---|---|
| Substructure | Foundations, ground slab, basement |
| Superstructure | Frame, upper floors, roof, stairs, external walls, windows and external doors, internal walls and doors |
| Finishes | Wall, floor and ceiling finishes |
| Fittings | Fittings and furnishings |
| Services | Sanitary, water, air conditioning and ventilation, electrical, fire protection, lifts |
| External works | Site works, drainage, external services |
| Preliminaries | The contractor's site and management costs |
The exact list depends on the standard form of cost analysis in use. What matters is that the same definitions are used for every project you compare.
Two measures for every element
Cost per m² of gross floor area expresses every element on the same base, so the elements add up to the building's overall rate and can be compared between projects.
Element unit rate divides the element's cost by its own quantity: the roof by roof area, external walls by wall area. This separates two different reasons an element can be expensive.
Take external walls. If the cost per m² of floor area is high, the unit rate will tell you whether the specification is expensive, or whether there is simply a lot of wall for the floor area. The second is a matter of shape, measured by the wall to floor ratio, and no change of material will fix it. Shape, storey height and the number of storeys drive cost through quantities in this way before a single material is chosen.
Building the cost plan
- Set the cost limit. The budget the client has approved, with a clear statement of what it includes.
- Find comparable projects. Analyses of completed buildings of the same type, as close in size and quality as you can find.
- Bring them to a common basis. Adjust for time with a tender price index, for location with a regional factor, and note differences in specification.
- Allocate the limit to elements. Use the benchmarks as a starting distribution, then adjust for what is known about this building: ground conditions, height, level of services.
- Add the allowances. Design development, construction risk and escalation, shown separately.
- Agree it with the design team. Each target should be one the designer responsible accepts as achievable.
Keeping the design on plan
A cost plan is only useful if it is checked. At each design stage the elements are re-measured from the latest information and compared with their targets.
| Stage | Basis of the cost check | Method |
|---|---|---|
| Brief | Building type, area, location | Cost per m² from benchmarks |
| Concept design | Outline drawings and specification | Elemental cost plan from element rates |
| Detailed design | Developed drawings | Approximate quantities for the main elements |
| Tender documents | Full drawings and specification | Priced bill, reconciled back to the elements |
When an element exceeds its target there are three honest responses: change the design of that element, find the saving in another element, or go back to the client for a decision. Quietly absorbing the excess into contingency is the response that causes trouble later.
Early decisions carry the most weight
By the end of concept design the shape, the height, the structural system and the level of servicing are fixed, and with them most of the cost. Yet that is the stage with the least information and usually the least cost advice. The ability to influence cost falls steeply as design proceeds, while the cost of making a change rises.
This is the practical case for quick early estimates. An order-of-cost figure with an elemental split, available in the first week, changes more than a detailed estimate delivered after the scheme is settled.
Value engineering is not cost cutting
Value is the relationship between what something does and what it costs. Value engineering asks what function an element has to perform and whether it can be delivered for less, or better for the same. Replacing an over-designed structure with one that does the same job is value engineering.
Removing the canopy, downgrading the finishes or deferring the landscaping is cost cutting. It may be necessary, but it reduces what the client gets and should be presented as such. Whole life cost belongs in the same discussion, because the cheapest element to build is often not the cheapest to own.
Where Caprix AI fits
Estimate returns a total, a cost per m² and an elemental breakdown from a one-line brief, with each element's share of the total, rebased to your price year and state. That gives a first distribution to plan against. Later, Compare puts priced projects side by side on a common footing in time and location and explains the gap, which is the benchmarking step done for you.