The economic evaluation of buildings

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The economic evaluation of public housing projects (Betts)

There are researches provided the economic evaluation of buildings with new and emerging techniques. These have included life cycle costing, elemental cost planning, cost modelling, and the use of knowledge-based systems. Most of these techniques appear to follow one or two approaches: to design a building and then work out its cost, or to set a cost target for a building and then try to design within that constraint.

Recognising this, researchers have made much effort to improve the evaluations and estimates made. This has been happening over a long period and has included techniques for planning cost strategies (Ferry, 1964), attempts to take broader views of costs and revenues in building investments (Stone, 1967), attempts to model the trade-offs between cost and design variables (Brandon, 1978 and McCaffer, 1975), and exploit advances in technology (Brandon, 1990).

These techniques have been successful as theory. A coherent set of techniques has developed and good attempts made to consolidate the academic discipline of economic evaluation (Brandon, 1982; Bowen and Edwards, 1985 and Raftery, 1987).

The practice of economic evaluation of buildings has not caught up with these valid advancements in theory. There is an implementation gap. The new priorities are to address the reasons for this gap and to explore strategies for implementing the body of knowledge that already exists.

A critical framework of effecgtive economic evaluation

An ideal economic evaluation should be, consider the life time of projects and the part of the life that any system embraces. A building project has several phases: feasibility, design, construction, commissioning, use, retrofitting and demolition. The activities in each have a cost in themselves, and contribute to the total cost of the building to its owner and users. An economic evaluation system should therefore cover as many of these activities as possible.

Obstacles

Some particular characteristics that influence economic evaluation are the short term attitudes that organisations take. All appear preoccupied with the projects on which they are engaged and their priorities rather than looking ahead to future projects. This largely arises from the one-off nature of many buildings and the lack of continuous workloads of a repetitive nature and design from single clients.

Projects subject to economic evaluation differs in terms of their size, complexity, time for construction, source of staff, labor and major components, and their means of financing. A body of projects is likely to exhibit great variability within these factors that makes economic evaluation a problem.

The objectives for all projects can be simplified into a combination of time, quality and cost parameters. The problems for economic evaluation come when the relative priority of these parameters is constantly changing from one project to the next and when cost as a parameter is a low priority. But, this is not always the situation for a single organisation.

There are clearly different types of projects with very different objectives and organisations performing economic evaluation of them. The extent to which the framework can be achieved in all these situations differs considerably.

  • Ferry, D. J. (1964). Cost Planning of Buildings. London. Lockwood & Sons.
  • Stone, P. A. (1967). Building Design Evaluation - Costs-in-Use. London. E&FN Spon
  • Brandon, P. S. (1978). A Framework for Cost Exploration and Strategic Cost Planning in Design. Building and Quantity Surveying Quarterly.
  • Brandon, P. S. (1990). The Development of an Expert System for Strategic Planning of Construction Projects. Construction Management and Economics.
  • Brandon, P. S. (1982). Building Cost Techniques: New Directions. London. E&FN Spon.
  • McCaffer, R. (1975). Some Examples of the Use of Regression Analysis as an Estimating Tool. The Quantity Surveyor.
  • Bowen, P. A. and Edwards, P. J. (1985). Cost Modelling and Price Forecasting: Practice and Theory in Perspective. Construction Management and Economics.
  • Raftery, J. J. (1987) The State of Cost Modelling in the Construction Industry: A Multi Criteria Approach. Building Cost Modelling and Computers. London. E&FN Spon.

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