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Farhan Tanvir

#024 Design Economics and Cost Planning (PART 2) 🏗️

Hello friends 👋


I hope you are all well and safe!


I have now done posts for Level 1 on my required competencies. Here is a list of them with links if you have missed any of them.

I would highly advise you to go through the candidate guide and the QS pathway guide to understand the basics.


Each competency is defined at three levels of attainment. You must reach the required level in a logical progression and in successive stages.

  • Level 1 – knowledge and understanding

  • Level 2 – application of knowledge and understanding

  • Level 3 – reasoned advice and depth of knowledge

We have gone through Level 1, i.e. a theoretical understanding of the competencies and the subject matter. Level 2 is all about the practical experience of Level 1. Page 8 of the candidate guide notes that you have to "show how you have put your knowledge and understanding into practice" and you can do this by referring to projects you worked on.


For these articles, I am just going through the bullet points for each of the competencies and giving you ideas of what experience you might have gained.


You probably have more experience than you think.


If you feel that can't relate to any of the activities below, please speak to your supervisor/counsellor to ensure you get the experience you need!


DISCLAIMER: The following is not an exhaustive set of notes, but it's an attempt to help those who, like me at the beginning, did not know where to start! Please feel free to let me know if I have said anything incorrect or out of date!


So what is Level 2 Design Economics all about?


The RICS pathway guide suggests that to effectively demonstrate your competence at this level you must show that you can (at a minimum):

Apply your knowledge to the cost management of design development on a project from feasibility to design completion. Prepare and submit cost data to in-house and/or external data collection agencies.

Producing Order of Cost Estimates and Elemental Cost Plans

  • This is fairly straightforward, you need to give an example of how you produced an order of cost estimate. It doesn't need to be a whole estimate (especially if you are working on large projects) it could be a section of the cost plan.

  • Remember you don't just produce estimates in the pre-contract stage, you use the same skills when you are producing an estimate for a compensation event (or variation) post-contract.

Carrying out life cycle costing exercises

  • The first thing you have to do here is understanding the basic principles of life cycle costing. There's an RICS guide that breaks down the basics, but here's a video that shows this in practice:

  • It may be the case that you have not undertaken an entire LCC by yourself, but you may have contributed. For example, on one of my projects I had to provide lifecycle information about specific bespoke assets to the LCC modeller who in turn used this to produce the costs.

Applying value engineering processes

  • This could be pre or post-contract. In the pre-contract stage were any suggestions made to achieve the same function with a reduced cost?

  • Usually, this activity takes place during a value engineering workshop or it might even be a standard design workshop.

  • In the post-contract stage, you might have made suggestions with respect to dealing with a variation.

Quantifying risk

  • Your experience here could be in relation to supporting the project manager with the risk register. How does one quantify risk? There are several methods - please check the Risk Management article for a brief breakdown!

  • An example could be during the initial stages there may have been a risk that if the ground conditions were really poor you may have to use more extensive (and therefore more expensive) foundations. You may have had to price up how much those foundations may cost or perhaps investigate the cost of a survey in order to determine whether any further action is needed.

Preparing cost reports

  • There could be a trick question here. Always remember that there are two types of costs reports, type 1 refers to those reports which are conducted at the pre-contract stage. Its purpose is to inform the client about the cost of the project as the design develops. In the RIBA world, you may produce cost reports at the end of each design stage (0, 1 2, and 3).

  • The second type of cost report is done in the post-contract stage. Its purpose is to inform the client about the cost of the project during the construction phase.

  • As this is the design economics and cost planning competency, ensure you have experience with type 1 cost reports. Type 2 cost reports are reserved for the Project Financial Controls competency.

Preparing and submitting cost data to in-house and/or external data collection agencies.

  • We know that cost information that is live and recent is gold in the construction industry. Everyone wants to know live prices, and this can be very difficult in a dynamic industry where costs are not widely shared in a central repository. Sure there are services you can pay for, but the best information is that which is your own.

  • When you obtain tenders for your projects, or quotations from suppliers, you may have been asked to register this in your firm's database.

  • You should be able to explain how you extracted the relevant information, how your normalised the cost, how you adjusted for location and inflation etc.

That's it for this post folks!


As always if you have any questions please drop me a message!

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