Full Review Of Proposed Residential Property Development Project

Total Measurement of GFA

This report presents a wholesome review of the proposed residential property development project. The project is a three-storey residential building, called Nest Apartments, that is to be built along Tucker Street in Adelaide, SA. The project has to be completed within a specified timeframe so that the University students can start using the building immediately. The client is concerned about several issues including uncertainty of the immediate global economy growth and the heavy reliance of the Australian residential market on the Chinese investor market. As a result, the client has requested a review of several elements of the project including: total measurement of the ground floor area (GFA), expected order cost of the development, functional areas of the development, design value of the project, value management option, suitable type of contract, and required tender documentation. Findings from this report will help the client make a decision on whether to invest in the project or not.

Ground floor area (GFA) is a building’s total amount of floor space (square footage). It is determined by measuring the length and width of internal walls of the building and multiplying the two measurements. In this scenario, GFA is determined as the sum of fully enclosed covered area (FECA) and unenclosed covered area (UCA) (Australian Property Institute, (n.d.)). FECA refers to the sum of the building’s fully enclosed covered areas including basements, penthouses, garages, floored attics and roof spaces, enclosed porches, staircases, lift shafts, equipment rooms, vertical ducts, and the building’s usable areas (Branson, 2014); (International Code Council, 2015). UCA refers to the sum of all unenclosed building floor covered areas including open verandahs, roofed balconies, open covered ways, porticos and porches, unenclosed access galleries, usable space that is under the building, and other trafficable covered areas (James Cook University, 2014).

The car park is on the ground level of the main building hence included in the GFA

The balconies in this project are roofed hence included in the GFA

Ground level:

= [(2400 + 2300 + 2300 + 2400)] x [(2180 + 3170 + 3040 + 2320 + 2350 + 4100 + 4100)] – [(2300 + 2400) x 1637]

= [9400 x 21260] – [4700 x 1637]

= [9.4m x 21.26m] – [4.7m x 1.637m]

= 199.844m² – 7.6939m² = 192.1501m² = 192.15m²

Level 1:

= [4260 + 5050] x [(3640 + 2180 + 3170 + 3040 + 2320 + 2350 + 4100 + 4100)]

= [9310] x [24900]

Expected Order of the Cost

= 9.31m x 24.9m = 231.819m² = 231.82m² 

Level 2:

= [8992] x [(3640 + 2180 + 3170 + 3040 + 2320 + 2350 + 4100 + 4100)] + [½ x 4823 x (1456 + 1820)]

= [8992] x [24900] + [½ x 4823 x 3276]

The last part is the area of trapezoidal balcony on level 2

= [8.992m x12.9m] + [½ x 4.823m x 3.276m]

= [223.9008m²] + [7.9m²]

= 231.8m² = 231.80m²   

Level 3:

= [(4260 + 5050)] x [(3640 + 2180 + 3170 + 3040 + 2320 + 2350 + 4100 + 4100] + [½ x 4823 x (1456 + 1820)]

The last part is the area of trapezoidal balcony on level 3

= [9310] x [24900] + [½ x 4823 x 3276]

= [9.31m x 24.9m] + [½ x 4.823m x 3.276m]

= [231.819m²] + [7.9m²]

= 239.719m² = 239.72m²

Total GFA = GFA of ground level + GFA of level 1 + GFA of level 2 + GFA of level 3

= 192.15m² + 231.82m² + 231.80m² + 239.72m² = 895.49m²

Therefore the GFA of the proposed residential development in this project is 895.49m².

There are different methods of estimating the cost of a residential building. Accurate estimation of construction cost of a building requires data including the building’s plans and sections, specifications of different elements of the building, and rates of each elements (Misronet.com, (n.d.)). The cost of the development in this project is determined by multiplying the total GFA with the estimated construction cost of a residential development in Adelaide, Australia. This method is referred to as square foot estimation method. In this, dimensions in design drawings of the building are used to estimate GFA that is then multiplied by the unit cost (cost per square foot) obtained from historical data (Cullen, 2016). This is a quick method of estimating cost of a building project. The historical data is mainly obtained from previous experiences of similar projects (Bettini, et al., 2016). The level of finish of the building also affects the cost per square meter (Mortgage House, 2018). The finish levels are classified as: low or basic, medium or standard and high or luxury (Kempthorne, 2018). Each region is also unique and therefore has different construction cost per square meter. Hence it is important to consider regional variations when estimating the cost of construction. In this scenario, the regional variation of Adelaide is applied. The level of finish for this project is medium/standard. The estimate cost per square meter of a three-level unit with a ground floor parking and concrete structure with medium/standard finish in Sydney is $2,255. The regional variation of Adelaide is 95% – 108% (MBT Quantity Surveyors, 2018). This means that the construction cost per square meter of the same unit in Adelaide costs between $2,142.25 and $2,435.40. The average of these two is $2,288.95, which is used as the cost per square meter of the proposed residential development in this project.

Functional Areas of the Development

Thus the construction cost of the proposed project is: 895.49m² x $2,288.95/m² = $2,049,731.85

Considering the , the cost can vary from $1,844,758.70 and $2,254,705.05. It is important to note that the price is exclusive of GST.

The costs have been determined by considering the GFA of the proposed residential development, number of levels of the building, the structure and type of materials of the building, type of finish of the building, estimated construction cost per square meter of a similar project based on historical data, and regional variation (Adelaide region).

Sample calculations of areas of the various elements of the building on level 3 are as follows:

Living areas:

Living/dining = 4.26m x 4.823m = 20.55m²

Amenity (bathroom) areas:

Bath = 1.82m x 1.82m = 3.31m²

Bath2 = 0.728m x 2.73m = 1.99m²

Kitchens:

Kitchen1 = 3.64m x 2.548m = 9.27m²

Kitchen2 = 4.26m x 0.819m = 3.49m²

Bedrooms:

Master bedroom = (3.276m x 4.55m) + (1.82m x 2.73m) = 14.91m² + 4.97m² = 19.88m² 

Bedroom1 = (3.185 x 2.73m) + (1.729m x 0.728m) = 8.70m² + 1.26m² = 9.96m²

Bedroom2 = (3.276m x 3.276m) + (0.728m x 1.638m) = 10.73m² + 1.19m² = 11.92m²

Outdoor space

Balcony = 9.31m x 0.819m = 7.62m²

From the calculations above, the areas of different elements of the building are similar with other new developments. This is because the sizes of different elements of the building are within reasonable range to the typical sizes of similar developments.

Since the client is keen in providing superior quality to the street frontage and improved interiors, the elements that should remain because of their value to the client include the following:

Balustrades: all the types of balustrades provided (aluminium, stainless steel and galvanized steel balustrades) should remain because they have the capacity to perform the intended function of enhancing safety of the occupants and also provide adequate aesthetic value to the client.

Screens and finishes: the provided screens and finishes on the elevations of the building (both internal and external) should remain because they are of high quality and provide high aesthetic value to the client.

Balconies: the balconies provide great aesthetic value and are also designed to provide occupants with an outdoor space to relax or store their items. Therefore the balconies should remain.

Exposed block walls: these walls should remain because they provide high aesthetic value to the client besides performing their intended function adequately.

Compressed fibrous cement (CFC) sheeting: all the CFC sheeting types provided for the stairs element should remain because besides increasing the sustainability of the building, it provides value to the client.

Design Value of the Project

Stairs: the stairs should remain as they are because they will facilitate movement of occupants from one floor to another. Their sizes are adequate and are made of suitable materials. They are also have high aesthetic value.

Columns and beams: the columns and beams of the building should remain because of their role in structural integrity of the building.

Fire rated ceiling: the ceiling should remain because its properties are adequate to protect the indoor of the building against fire and also provide the required aesthetic value.

Ceiling plasterboard: this should remain because it is able to provide the required aesthetic value by the client and also help regulate indoor air temperature and sound.

Roof sheeting: the roof sheeting should remain because it has a strong metal cover and insulation blanket that provides the required cover for the building and also helps in improving indoor environment by reducing entry of excess heat and light into the building.

Eaves and box gutters, and downpipes: they should remain because they are effective in collecting rainwater hence will enable the client harvest adequate rainwater and manage it easily.

Joints: the various joint types or systems used should also remain because they provide the required supports and connections for various components of the building to make it a continuous integrated system.

Internal shelving, doors and other interior elements: these elements should remain (together with their finishes) because they have the capacity to perform their intended functions and also provide high aesthetic value to the client.

Hot water unit: t should remain because it will provide the required heated water for consumption by the students occupying the building.

Air conditioning unit: it should remain because it has the capacity to regulate the indoor air temperature and thermal comfort.

Parapet wall: this wall has to remain because besides acting as a security barrier and providing privacy to the occupants, it also increases the aesthetic value of the development.

Value management plays a very key role in maximizing value for money in all types of construction projects (Oke & Ogunsemi, 2009). Some of the main benefits of value management are: encourages creativity and innovation; improves common knowledge and communication among stakeholders involved in the project; improves the quality of final products or services provided; results to better decision making; saves time; enhances competitiveness in the construction industry; and increases value for money; among others (Oke, 2017); (Zhao & Moh, 2016). In general, the concept of value management is to select designs and materials that provides high quality at the lowest cost possible (Oke & Aigbavboa, 2017). Some of the value management solutions that can help the client increase the value or reduce the cost of the project include the following:

Value Management Option

Function analysis: the client should involve professionals to analyze the functions of the development and clearly state the target objectives. This involves comprehensive analysis and definition of the main objectives to be achieved, the things that must be done right so as to achieve the target objectives, the things that should be considered when designing the project, and the impact of the chosen designs in achieving these targets. The cost of each function has to be determined so as to establish appropriate ways of reducing it as much as possible.

Function analysis system technique (FAST): this is the technique where all stakeholders (from different professions) involved in the project communicate effectively so as to give their views on how the cost of the project can be minimized. This mainly involves answering the how/why questions.

Cost/worth: this is where the client analyzes the lowest cost possible that can be incurred to achieve a particular function of various elements of the building. This helps in determining alternative designs, materials or construction processes for each element of the building.

Simple multi-attribute rating technique (SMART): this is the process of identifying various objectives of the project and their respective attributes on how to achieve then objectives followed by ranking them based on their importance to the project.

Value drivers: some of the applicable value drivers in this project are: achieve or enhance the desired financial performance; comply with necessary constraints of the third party; project the right image of the project; minimize operational costs and maximize operational efficiency; ensure effective management of procurement process; attract and retain occupants; improve the environment; reduce maintenance costs; and ensure safety and health during project lifecycle. Value engineering entails establishing the functions of a service or product, identifying the functions’ worth, and identifying suitable functions that will meet the desired performance of the structure being built at the lowest cost possible (Mahadik, 2015).

Creative techniques: this is where innovation is applied to reduce the cost of the project or increase its value. There are numerous creative techniques that can be used such as use of nanomaterials, modern construction methods, etc.

Target costing: this is where the cost of the project is determined based on what the client is ready to pay. This means that the designs of the building have to be developed by considering the client’s requirements and budget. The suppliers should also be engaged so as to understand the price that the client is ready to pay for the materials delivered for the project.

Suitable Type of Contract

Lean construction: this is the technique of minimizing wastage at different stages of the project. The option can be implemented through reuse of materials, use of recycled materials, encourage recycling, provide waste collection systems, harvesting rainwater, use of renewable energy, and accurate estimation of materials.

Building information modeling (BIM): this is a process of improving documentation throughout the project lifecycle thus making it easier for all stakeholder to access the required information quickly and timely. Effective communication is very essential in improving value for money because it eliminates possible costs associated with delays, errors/reworks and disputes/conflicts among stakeholders (Constructible, 2017).

Prefabrication: this is process where various components of the buildings (referred to as modules) are manufactured in an offsite factory and transported to the site for assembly. The option reduces construction time, improved quality, minimizes wastage and improves value for money.

Automation: this options involves use of automated systems to monitor, regulate and manage various elements and processes of the project. The option is very useful both during construction and operation stages of the project (Ellis, 2018). During operation, the automated systems can be used to monitor and regulate use of water and electricity in the building thus increasing resource efficiency and improving value for money.

Nanotechnology: this is the process of manipulating properties of materials to meet the desired specifications. In this option, available materials are improved or engineered to meet the target properties depending on the intended use of these materials. The options ensures use of available materials thus reducing the cost of importing materials over long distances, which helps in improving value for money.

These value management options should be implemented throughout the project lifecycle. The client should use modern technology as it has become a very important tool in reducing cost of construction projects and increasing value for money (Rucker, 2015).

The type of contract is usually selected by considering the project objectives, project constraints and delivery method of the project. Since this project has to be delivered within a tight deadline, requires an experienced developer and cost certainty is important to the client, the most suitable type of contract for the project is fixed price or lump sum contract. This is because the client has already developed the required drawings that can be used to accurately estimate the total cost of the project. Once the actual total cost of the project has been determined, the client can choose a formula to calculate the developer’s overhead, profit and margin. These costs are then used to come up with the fixed price or lump sum of the project. This contract type is most appropriate in cases where the project has been properly defined and there is less likelihood of the client making changes during construction stage as these changes or variations will be very costly and delay the project significantly. The developer who tenders for this type of contract must also be experienced enough to be able to accurately estimate the cost of the project and establish innovative ways of completing the project earlier and below the fixed price so as to maximize profits.

Required Tender Documentation

Some advantages of fixed price or lump sum contract include: the developer or contractor bears the highest risk (Rodriguez, 2018); the total cost of the project is determined early and fixed hence the client has enough time to plan on where to get the required money; the developer or contractor gets incentives for completing the project below budget or early (Riddell, 2017); and there are minimal change orders.

Disadvantages of fixed price or lump sum contract include: there are penalties for the developer/contractor if the project is completed late (Brown, 2016); the contractor bears the highest risk; there is no room for variations or else the client will pay heavily for any changes made during construction stage; the developer/contractor’s desire to complete the project under the budget and early can detriment quality hence the client has to hire experts to monitor quality as the project progresses; it is difficult to quantify variations to the drawings or specifications; there is a high possibility of change orders being rejected by the client; and the project must be designed completely before any construction work can start.

Considering that the recommended contract type is fixed price or lump sum contract, the documentation that the client should provide with the tender to help tenderers provide the best pricing include:

General conditions: these are standard or general details of the project. They include the project definition, components of the contract, the client and contractor/developer’s rights and responsibilities, the schedule of the project, payment method to be used, delay penalties and warranty (Jain, 2017).

Special conditions – these are unique details or modifications of the project that are necessary to make this project to stand out from others, make it more flexible and help achieve the project’s objective easily.

Drawings – these are illustrations and pictures showing the details of various plans, sections and elevations of the building to be constructed. The drawings indicate the dimensions (sizes and shapes) and layout of various elements of the building that help the tenderer estimate the cost of each of these elements.

Specifications – these are the details of properties and standard requirements of various components and materials, finishes and appliances to be used in the project. The specifications are very essential in estimating the cost of works packages of the project.

Bill of quantities (BOQ) – this is also a very important document in tendering process. The document defines the types of materials, equipment/plant and labour that are likely to be used in executing the project. Based on the project objectives, constraints and delivery method, the client can provide a list of materials, plant/equipment and labour that must be used in the project and make them compulsory for use by the successful bidder. The client must ensure that the BOQ is prepared by a qualified and experienced cost consultant. The client issue the BOQ to tenderers so that they can provide the price for each of the items included in the BOQ. The client then uses the prices provided to select the best tenderer depending on his budget, project objectives and the capability of the tenderer to complete the project successfully.  

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