RS MEANS CONSULTING TECHNICAL WHITE PAPER ON COST ESTIMATING*

By Phil Waier, PE, Principal Engineer at RS Means

Cost Control through Estimating The costs of construction and facility renovation projects easily can grow out of control if healthcare facility planners dont keep a watchful eye on them from the earliest stages. Even in the beginning, when there is little more than historical data or a crude sketch of a building, executives and planners need a conceptual estimate of costs based on a rough order of magnitude or the anticipated number of square feet involved. Estimating across the life of a project keeps everyone on the project team focused. With conceptual estimating, a hospital facility planner can predict the costs of an outpatient facility, clinical area, hospital, medical office building and multi-level parking garage on a rough order of magnitude basis and apply the resulting cost data to any area of the United States. RS Means - leaders in cost management for the construction industry offers a variety of products and services to assist healthcare planners with cost estimates at each phase of construction planning.

Figure 1: Estimating Across the Project This figure illustrates the reliability and accuracy of cost estimating done at particular times throughout a construction project.

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Conceptual Estimate Conceptual estimating is done early in the planning process for new construction or major renovation to anticipate the costs of major building components and to provide a planning focus for project requirements. Conceptual estimating may be done on the basis of an order of magnitude, which incorporates historical data and in general has a degree of accuracy within 20% of actual cost. Further into project planning, when the approximate size and basic building parameters are known, conceptual estimating may be done on a square-foot basis, which has a degree of accuracy within 15% of actual cost. Conceptual estimating utilizes the Uniformat system, which was developed by the Construction Specification Institute (CSI), and analyzes the relative cost relationships between various aspects of building structure. As a result, each of the components of building structure, such as the substructure, shell, interiors, and service may be viewed in relation to one another. Square foot estimates do not, however, encompass expenditures associated with site work or demolition, or, structural considerations such as seismic allowances and foundations, and medical equipment and interior finishes. Regional cost swings can also be predicted. Construction costs for hospitals in Alabama or Mississippi are only about 70% to 80% of national averages, but costs in New York, San Francisco, or Anchorage are 130% of the average. Schematic Estimate A schematic estimate, which is done when the design of a construction project is about 15% complete, incorporates the costs of assemblies or systems. Assemblies or systems estimates group several different trades into building components or broad building elements so estimators or designers can make quick comparisons of alternatives and find the most cost effective roofing, such as preformed corrugated aluminum, fiberglass, or galvanized steel or formed copper or zinc copper alloy - or foundation, such as poured concrete strip and spread footing or slab on grade reinforced concrete with a vapor barrier and granular base. Designers and estimators also can easily determine which systems are best suited to meet the projects budgetary targets, building codes, load and insulation requirements, fireproofing standards, acoustic levels, energy demands, and any special building considerations.

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Figure 2: Hospital two-to three-story square foot (S.F.) estimate

Estimates of assemblies or systems become more detailed at the design development phase, when about 35% of the project is on the drawing board including footprint and exterior skin, structural framing, mechanical and electrical details. Estimates at this stage detail individual components of each assembly or system, the costs of a typical system, and costs for similar systems with different dimensions or size variations. For an oil-fired water heater, for example, an assemblies estimate would list pipes, unions, adapters, and valves and break out costs for materials and installation.

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Figure 3: Hospital two-to three-story UNIFORMAT II estimate The breakdown components in Figure 3 (e.g., substructure, shell, interior, services, etc.) provide the details of construction configuration for Figure 2. (The industry standard for assemblies or systems estimating is UNIFORMAT II.)

Unit Price Estimate The most precise and detailed estimates, which provide unit prices, are applied when projects are within 80% to 90% completion of detailed working drawings and specifications and after decisions about the buildings materials and methods have been made. At this point, the quantity and quality of materials, equipment, and labor have been determined. Unit price estimates project the most current and accurate

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costs for materials, labor, and equipment on the basis of the costs of similar projects or a standards database, such as the RS Means 2003 Building Construction Cost Data. The estimates are grouped into the Construction Specifications Institutes (CSI) 16 MasterFormat divisions: general requirements, site work, concrete, masonry, metals, wood and plastics, thermal and moisture protection, doors and windows, finishes, specialties, equipment, furnishings, special construction, conveying systems, mechanical, and electrical.
Figure 4: Estimate example for a medical office building This figure illustrates an actual estimate breakdown for a medical office building with the 16 CSI divisions and major subdivisions. Estimate does not include land or development costs.

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Finding Cost Savings While health facilities managers can find cost-saving construction alternatives in all of the 16 CSI MasterFormat divisions, the biggest payoffs come in the mechanical and electrical areas, particularly if managers can forego cost savings today for greater economies in the future. Kevin Walsh, who supervised construction of a 125,000-square foot addition to South Shore Hospital, South Weymouth, Massachusetts, knew that if he had installed chillers and air handlers in the building, he could have saved money initially. However, from an operational standpoint - he was sure he could save even more over the next three to five years by having a central power plant feed the building. Dave Fleming, senior project engineer for the Institute for Cancer Research, Philadelphia, is benefitting from construction decisions made back in 1988 when the master plan for the cancer centers entire campus called for an electrical substation that could be expanded for future uses. In the process of building the new 120,000-square-foot Research Institute for Cancer Prevention, Fleming noted, We had to throw another electrical section in and expand the electrical service to our new pavilion. To reduce overall energy costs for the Research Institute for Cancer Prevention, Fleming explored several fixed heat pipe energy recovery systems. After visiting manufacturers or sites with installed systems, he settled on one that took 20 to 25 degrees5 degrees less than the manufacturers own projectionsoff cooling 95-degree-plus outdoor air to save on the use of the main chilled water coils. Fleming also simplified the plumbing and electrical cabling for voice data. The Research Institute for Cancer Prevention is an outpatient diagnostic and treatment facility and laboratory research center. Fleming copied the design for the two laboratory levels from one of the structures built on campus in 1990 that directed all hot and cold water lines, oxygen, vacuum, gas and electrical lines through common chases in the main corridor. Whenever a laboratory needs to be upgraded down the line, Fleming will be able to make quick changes in plumbing and electrical lines and keep labor costs down. Another big cost-saving area for health facilities managers is concrete. Going with precast concrete is almost always cheaper than poured-inplace, not only because of the manpower needed to form the concrete but the need to transport and mix it onsite, according to Bill Shevlin, manager of construction and renovation services, Sarasota Memorial Hospital, Florida. Even though the design of a new parking garage had to be adjusted to accommodate various zoning restrictions, Shevlin made sure the size remained the same so he could get precast concrete. Rather than change the size of the garage, designers even petitioned Sarasota officials for a 12-foot variance in a no-build zone. It would have added a lot more cost to shrink the size of the garage to make it fit in the no-build zone because we would have had to go to cast-in-place concrete, Shevlin explained.

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Flexible, prefabricated cabinet wall systems can make it easier and cheaper to modify workspace setups. Fleming noted that the laboratories in the Research Institute for Cancer Prevention have already been revised, even though the building is only two years old. Because of the flexible cabinet wall system, construction workers can change the heights of cabinets without having to buy either stand-up or sit-down units, attach them to studs, and patch over the previous holes in the drywall. The workers can simply unhook and reposition countertops along tracks on the wall. According to Fleming, Its four bolts and theyre done. They dont have to tear out a whole section of cabinetry to readjust the top of a cabinet or tighten a cabinet drawer or door or shift to open shelving. Walsh also saved on cabinetry in South Shore Hospitals 15 renovated labor and delivery rooms. Many LDRs have decorative cabinetry behind the bed that encase oxygen and other equipment and still create a homier feel for mother and family. Nurses at South Shore told Walsh that the cabinets were almost always open to allow easy access to equipment. The cabinetry behind the bed was dysfunctional; so we went away from that and decided to make the room more functional and manageable by creating a storage closet for vertical equipment and a storage area for the nurses, according to Walsh. South Shore didnt scrimp on amenities, however. The hospital installed a vinyl wood floor and decorative draperies in the LDRs and paid more attention to creature comforts, such as wood chair rails and artwork, in the 54-bed postpartum areas because mom, her new baby, and family would be spending more time there. The ease of installing some finishes sometimes can make it more sensible to opt for high-end surfaces. The design for the bathrooms on a renovated patient bed floor at Sarasota Memorial Hospital specified fiberglass shower stalls. However, the concrete floors had to be chipped out in order to embed the fiberglass, which would have multiplied labor costs. According to Shevlin, the hospital decided to replace the fiberglass with Corian when it learned that by buying in large quantity, it could cut the cost per square foot of the shower stalls by about 7%. On the other hand, logistics can end up dictating the choice of complex assemblies, such as conveying systems. Walsh would have liked to install regular-sized elevators to haul central processing supplies to and from South Shore Hospitals 14 new operating suites, but the chases and machinery made them cost-prohibitive; so the hospital chose dumb waiters for the cost savings. Shevlin captures the most in cost savings by acting as general contractor on many projects. With a staff of only five, he cant always handle everything from site preparation to topping off. But its not uncommon for him and his crew to oversee five to seven projects at a time and save on the order of 10% to 15%. Even when hes subcontracting out most of a project, Shevlin still keeps tabs on every aspect of cost right from the start. The only way to control costs and the choice of materials, use of labor, he said, is to get involved when the project is only a picture on a cocktail napkin.
* Technical white paper reprinted from September 2002 cover story Weighing the Options by Karen Sandrick in Health Facilities Management Magazine.

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