The Measure Of Attributes

Published Date: 02 Nov 2017

Building Economic Analysis is a vital step in the process of constructing a building. Economic analysis in construction ensures that man’s needs are met while providing the suitable, appropriate and efficient living conditions.

Building owners use the economic analysis to determine the most economically efficient or cost effective choice among building alternatives. Rather than having one option to choose from, the client is given multiple options. Each of these comes with its own advantages and short comings. Rushing into a project without careful thought might make a client choose a cheap quality option which may cost the same as one with better quality.

Economic analysis is the monetary evaluation of alternatives for meeting the given objective. This influences the final say and decision made. It is unreasonable to make a decision without critically analyzing all options and there after making a choice. The final choice also has to be extensively planned and calculated.

The evaluation is based on a comparison of discounted costs and benefits to total cost or equivalently, the total net benefits (net present value). Once evaluation is done on all possible options, one notices the differences in cost. This enables the client to choose the price with discount and savings on total cost.

Firstly, when analyzing a building or outcome of constructing one it is important for the contractor, consultant and client to understand the project. The client lets their goals or objectives known to the contractors and consultants for the consultant and contractor to have a better understanding of their role in satisfying the client. The procurement strategy is based on the client’s terms. After doing so, the contractor and consultant collect information by asking the people around using a questionnaire and observation. In our scenario, the questionnaire can contain questions asking employees how convenient the building is for the kind of work they do. Or by observation, looking at how much working space is between each person.

After the collection of data, it is important to carefully analyze the information. These results are then studied and interpreted to a level of relevance to the project. The consultant and contractor also have to look at all possible alternatives to give the client bigger space within their budget and satisfaction. Evaluations and alternative solutions might be based on whether the building belongs to the client. If it does, would renovations be a better option and if it doesn’t are the clients willing to buy land or lease another building.

Lastly, for the project to move forward a decision has to be made. The options are discussed and presented to the client for them to choose the end product of the project. The decision will be based on the balance among risk, control and funding availability for the project.

Task 2

A client is the promoter, initiator, developer and investor of the project. Thus the success of a building project is measured by the satisfaction of the client. This is by making sure all their needs are met according to their standards and what they want.

Price certainty is an important factor. The contractor has to be sure of how much the building material, labor and other added expenses will cost.

The client needs the project to be constructed within the budget. The cost of the project has to be within the client’s budget or affordability. It is convenient for a client to receive a set price within the budget and not have to pay extra because the project was underestimated.

The proposed project has to be completed on time as estimated by the contractor. A client expects his or her building to complete within the stipulated time and not go beyond that time. These delays may occur because of natural causes, like rain, which are not planned for. The building project may also not be completed on time because the contractor didn’t employ enough staff or ill-management. This is a loss to the client.

Best quality based on reasonable price. The contractors transparently give their clients all alternative building choices from which to choose. These range from affordable quality to excellent quality. The client then chooses which option suits them best in terms of quality and cost.

A building with a long life cycle. Having a building is the best investment. The client has to put into consideration the money involved in the building of the investment over the life of the building. The client considers the money that will come in over the years as a result of owning a building.

The main objective of a contractor is to satisfy his or her client’s needs. An advantage for the contractor meeting their client’s needs is them calling again for another tender or giving the contractor good reviews to other clients.

Payments being made on time. For the project to progress funds are supposed to be made available. Without available funds the project is stagnant because the workers can’t be paid and building materials can’t be bought. This also causes a delay on completion date and handover.

Clients who are certain of what they want. Some clients are uncertain about what they want their building project outcome to be. They might have funds but no idea about the input required for their building to be completed. Others might completely not know what they want or how much it costs. Ignorance or lack of understanding about knowledge concerning their project. A contractor would prefer to work with a client who knows what they want.

Reasonable return of the risk. Losses have to be catered for during the planning of a construction project. It is unknown and expected for anything to affect the building during the construction. Despite any destruction caused to the building, a contractor works at not making a loss because of the risk of loss.

Task 3

Cost control is the investigative procedure taken to detect variance between actual costs and standard cost of a budget.

Cost control helps the contractor estimate the amount of money to be spent on a project. This helps the client stay within his or her budget. Redesigning a project to fit the funds available is a waste of time and causes a delay in project completion. For example, a client requests a particular design which is complex. The contractor evaluates the project cost as RM300,000 but the client was only expecting to use a total of RM160,000. Cost control has helped the client know that the project would have only gone half way.

Increases efficiency of accountability especially in huge projects. It is easier to keep track of outgoing funds and compare with the estimated money that was expected to spend. For example, a contractor is expected to spend a particular amount of money each week, depending on the activity. To keep track of this, a schedule of activities per week is led down and how much each activity costs.

Prevents overruns of the budget estimates for each activity in construction. The variance between the actual cost and standard cost shouldn’t be large. Cost control ensures that the contactor gets only what is budged for and not go overboard. For example, the budget estimate on money to be spent on painting the building is RM7,000. The contractor cannot allocate more to that as it will cause unnecessary overruns to the budget.

Cost control eliminates the wasting of resources by funding each activity with the deserved amount of money. Unnecessary over allocation of funds is avoided and thus no resources and materials will be wasted. For example, it would be unrealistic to allocate RM500,000 on the buying of ceramic tiles while RM100,000 is spent on bringing up a foundation and walls of a building.

Shortage of funds and low interest rates caused by recessions can be avoided by cost control. The risk is avoided by putting aside funds to secure the project in case the risk occurs. For example, a building costs RM 600,000 total for all activities but gets rented out for RM1,000 because of the area it is in. No one can afford to rent it at the expected interest rate. The client doesn’t get the expected interest deserved to the building’s quality.

Task 4

The chosen location should be in an area where the building will be easily accessible and visible to both pedestrians and motorists. The building should be in a convenient place and close to the business center in Kota Damansara. A town address pulls in more clients because of the prestige and positive outlook of potential business.

It is preferable that the building be situated on the main road and not in the branch roads. A drive in and out road should be planned for as this helps motorists break off from the main road and join in when desired.

The outside of the building should have an allocated space for a free car park. This will be affordable to both the employees and customers/clients. Having to pay for parking will discourage our perspective customers from getting attended to.

The style of building, whether it is grouped buildings or single located. Which one will be more economic and suitable for the complex of choice? If the building has party walls, the cost will be less.

The total height of the building and the height of each storey. Consider the allowance of total building height in the area to how big the space of the offices should be.

Circulation area around the building. Whether or not the building will cover maximum space of the land or a minimal space. What other infrastructures might be built on the piece of land, for example office space, small security building and garage space.

Building plan shape and land shape. Whether they will contradict or not. Which shape of building will be more economical and suitable for the complex area? A square building might be more economical but not suit aesthetic requirements.

Task 5

Wall to floor ratio is ratio between the total areas of external walls to the gross floor area built. This ratio can be used as a comparison between two buildings to know which one is effect and efficient. It is the calculation of the amount of space occupied on ground and the sides of a building.

BUILDING A

BUILDING B

GFA (m2)

= l x w

= 10 x 10

= 100

= (l x w) + (l x w)

= (5 x 15) + (5 x 5)

= 75 + 25

= 100

WALL AREA (m2)

= Perimeter x h

= 40 x 3

= 120

= Perimeter x h

= 50 x 3

= 150

WALL AREA (m2) / GFA (m2 )

= 120/100

= 1.2

= 150/100

= 1.5

Building A is more economical than Building B because it has a lower ratio.

Task 6

Time in construction is the duration taken to complete a project. When a building project is being planned, the contractor is able to estimate the date of completion and handover. Because a specific period of time is supposed to be spent on building, planning helps to keep the project on time. Time is an important factor, thus it is planned from the construction date till the probation time, also known as the defect period, is over. The time planned also has to cater for the possible internal and external risks that would cause a delay in project completion.

Cost is the amount of money spent on the building project. To fully complete a project without stopping half way because of lack of funds, it is important to plan by using cost control. Cost or money spent is the main core of a building project. It affects the rate at which work is done as well as the quality of the end product.

Quality is the measure of attributes of a building which satisfies the needs of an individual according to their standards. The measure of quality is usually subjective because it is up to individual standards. Objective standards of a building are measured by the standards set out by authoritative boards. For example, all buildings should have window and door space to enable ventilation for it to be suitable for a human to live in. Subjective quality is according to what a person wants for the building to be approved as habitable. For example, some shops have installed air conditioning systems because that is a need and standard for them.

The aspect that is important and most depended on is cost or money that is put towards a project. Without money, it is impossible to have a good quality building and to complete a building on time. It costs to buy building materials and to employ workers to bring up the building. Budget enables the contractor to employ more workers if the project is on fast track. Again when constructing a building quickly with high quality material won’t be cheap. When a project is done at a cheap price in a short period of time the quality of the outcome won’t be good.

COST

TIME

QUALITY