Frequently
Asked Questions
Feasibility,
Qualifications, Construction, Building Delivery ...
Frequently asked questions answered so you may start thinking in project mode. Helpful to plan eliminating process "traffic jams."
If you are interested in building or developing, you could find some important questions unanswered as early as you may prefer. On the other hand, you may have already asked around and were given insufficient or confusing answers. Here you find the questions we were most frequently asked explained in simple words.
In most countries there are separate ones for Building and Planning, but in some fast developing countries it may be different. A building surveyor or senior planner at your Municipality can also give you an excellent head start.
FEASIBILITY COSTS ...
What's difference between sales, revenue and turnover? ... >>TENDERING ...
What
is Negotiated Tender? ... >>
Single
Sum Tender
... >>
CONSTRUCTION ...
What
is Contract Administration? ... >>
What
is Construction Management? ... >>
What
is
Project Management? ... >>
What
is Building
Supervision? ... >>
SELECTING THE RIGHT PROFESSIONAL ...
What can a building
designer do for me? ... >>
What
qualifies a building designer to work on my project? ...
>>
What
are the requirements of registration? ... >>
What
is a professional Indemnity Insurance? ... >>
How much
is a fair payment?
... >>
FEASIBILITY COSTS
What's difference between sales, revenue and turnover?
As your project grows, you will find that the definition of these terms needs a little review.
In short: On a Profit and Loss statement they are three names for the same. But as sources of income there are accounting differences. Why do you need to know this? Good example is when we calculate the feasibility of a shopping facility. Before deciding on the target size of the leased area you should have a fair idea of the kind of income you will expect. And since rents can be measured as an agreed rate of either sales or turnover, it doesn't hurt to know which is what really.
Revenue includes income from rent and other revenues. So as a developer of a shopping facility your income will be what you collect from rents. It is your total taxable income before costs. In other words it is your total yield from a property.
Turnover is the gross sales including discounts plus taxes on goods sold, in this case by the tenants of your shopping centre.
And finally sales is the income from selling goods and services, in this case by the tenants also.
If you want to research the matter further, including government revenue and inventory turnover, this yahoo thread is a good start.
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TENDERING
What is a Negotiated Tender?
Negotiated Tender is the recommended choice of tendering once your Designer have a shortlist of preferred builders. You should also aim for the quality execution of the design. (Ie. it is an overkill for a speculative Unit development, where a builder would tend to submit simple figures not well detailed - in the extreme I call this a Single Sum Tender.)
Depending on the size of the job, usually 2-3 builders should be on the short list who will then submit a tender for a predetermined brake down. This is important so you will compare apples with apples. Next you sit down with the selected tenderer to see how much you can make the figures better. This is also the good time to have a feel for how much control on the costs you will really have once construction starts.
Good builders at this stage ususally have very useful suggestions for cost reduction changes. Here your Designer should be able to help you decide what proposed changes are acceptable. Some related documents might need to be altered as a result.
If negotiations are successful you choose builder and enter into contract. If not, you say a friendly good by and sit down with the next tenderer. It is important to emphasise that this should be a friendly but business focussed process. Often builders can't change some figures even if they want to. (Eg. a subcontractor critical to the outcome is not willing to lower his figures.)
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Single Sum Tender ...
Single Sum Tender is what I call when a builder submits a few undetailed sums for a tender that would require otherwise.
This is the usual choice of the market for speculative Unit development or small extensions / renovations, where a not well detailed low figure is all what clients seek. However, I find that only inexperienced owners / developers want to go down the path of accepting the lowest single sum tender. I would avoid to accept a tender on that basis.
If you aim for better then average quality for your project or a better cost control, you might want to get some kind of detailed break down of the figure. I would also recommend some kind of time schedule to be discussed and made part of the contract - any contract. Note that this is harder to estimate for projects that have a high unexpedted component (ie renovations / extensions when you only really know what you deal with once you strip away the planks and plasters.
Regardless of the size you might also want to consider the benefits of a Negotiated Tender if you are seeking quality execution of the plans with a higher degree of cost control.
To find out more about the subsequent contract see Contract Administration.
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CONSTRUCTION
What
is Contract Administration (CA)?
To
build there shoul always be a contract between you and the builder
called
contractor. There is a lot of money at stake and so your builder is
also required to secure a bank guarantee that is quite a large sum.
Further, your builder may secure loans to be able to pay suppliers or
secure discounts before they get paid. You can appreciate that keeping
track of what is built, what was changed and what should be paid
accordingly is not an easy task.
This kind
of specialist building "accountancy" is called contract administration.
Accountants often undertake such job or estimators / quantity
surveyors. But they do it in conjunction with someone who can read the
plans and understand what is the original design and what is a change.
When
the builder is comfortable with it and ready to sign a contract that
allows for Construction Administration, it is best if the professional
who is most knowlegeable about the design and contract documentation is
the one who administers the contract.
However, on
small residential construction the common practice preferred by
builders is to use a building industry contract that does not allow for
third party administration of payments and changes (called variations.)
Contract
Administration by the designer becomes really beneficial in
facilitating the construction when the level of difficulty or
uniqueness of the design and the subsequent complexity of construction
would take too much effort if it (CA) was carried out by someone else.
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What
is Project Management (PM)?
It
usually involves managing the whole of project on your behalf. It can
include many things from securing loans to finding and tendering
between professionals, consultants and contractors and beyond managing
the procurement of construction also selling or leasing the resulting
building.
Project Management is often confused with Contract
Administration yet only an
experienced professional with sufficient PII
Cover can actually do it.
Yet another
building delivery (we call it procurement) method is Construction
Management.
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What
is Construction Management (CM)?
So it aims to manage the construction phase, but does it in the context of the total project process. So the role is more of a manager than a builder. In effect it is them who will have a number of separate contracts not the builder (which is the usual head-contract and many sub-contracts structure.) An owner builder for example is also a construction manager. But of course CM is used as an independent service on somewhat larger projects.
of the role of a Construction Manager >> more
Review of Construction Management tools and systems >> more
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What
is Building Supervision?
It
requires detailed and specialist building knowledge only an experienced
builder has. A building supervisor can ensure the quality of
construction by supervising what and how is being built (manufacturers
specification and standards are met) preferably on a daily
basis. Often there is a so called foreman appointed by the builder, or
a third party builder appointed by the project manager for a similar
task.
Building or Construction Supervision is often
confused with Contract Administration.
But unlike CA and Project Management
- where the two overlap - CA and Building Supervision are two entirely
different things with different responsibilities.
SELECTING THE RIGHT PROFESSIONAL
What Can a Building Designer Do For Me?
Althought the name suggest differently Building Designers can carry out a broad range of services.- Feasibility study design
- Opinion of probable cost (at various stages of the project)
- Building Design (Preliminary, Schematic, Design Development)
- Coordinate and contract other consultants on your behalf
- Talk to authorities on your behalf (if you authorize this) and resolve issues and potential conflicts with regulations and the Planning Scheme
- Permit Drawings (this is what most Drafting Services provide for simple residential projects)
- Working Drawings (include additional working details necessary to compete construction. Shop drawign drafting services may complement this service to document details of special building component such as precast exterior wall panels.
- Tendering on your behalf (call, close and evaluate tenders)
- Contract Administration during construction
- Ongoing redevelopment advice
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What qualifies a Building Designer?
In short: experience and knowledge. Part of it comes from qualification.
A Building Designer should have relevant technical and building industry qualification. (At TAFE level for example their qualification is administered under the same arm as other building practitioners, such as building surveyors.)
But many Building Designers choose to further educate themselves. You may want to check the level of qualification as it can vary from practioner to practitioner. You must select your consultant based on qualification and/or experience. Here is why:You should be comfortable that your Building Designer can handle your problem out of knowledge and expertise. It is possible that your building designer will have acquired the expertise without higher design qualification (such as a university degree in architectural design - Bachelor or Master of Architecture - BArch or MArch) and can competetently handle your project. In such cases it is a good idea to check if the professional you want to engage has PII cover for the activity in question.
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What are the requirements of registration as a Building Designer?
Requirements are getting stricter by the year, so if you are thinkinf of registering start the process now. You will need planning knowledge, building construction knowledge (prerequisite of getting the your qualification anyway.) On the top of that, you will need your logbook of experience countersigned by a supervising building designer.
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What is a Professional Indemnity Insurance?
Most professions involved in the handling of potentially large value mandate that such insurance be carried by its practitioners. In this respect building designers are no different from lawyers or doctors.
And it is for a good reason too. The investment in your home or property development is likely to be one of the largest you ever make.
Building designers must carry a mandatory minimum of $1M AUD PII or they cannot practice. If the project warrants larger liability, this amount can be increased at a cost.
For more details visit BDAV online.
How much is a fair payment for a Building Designer?
Whether or not it is good or bad, fact is that no Designer Association of present in Australia recommends fees or fee scales. Published guidelines may exist based on member surveys. But building designers usually provide a very broad range of service, where there is an enormous amount of behind-the-scene work. They won't be able to finish the project efficiently without proper payment.
To set the most reasonable value, there is something developers and project stakeholders of all kinds do have to consider for their own success sake.
A design professional who is accepting a job in return for unrealistic fees is in fact threatening the viability of the owners' or developers' project (including critical path scheduling) when it will come to the real crunch.
And as a usual rule of thumb, we count around half the fee for design and another half for documentation. For administration we recommend paying about 40% of the professional fee -- to help ensure the outcome as close to the intended design as possible.
"It’s unwise to pay too much, but it is worse to pay too little. When you pay too much you may stand to lose a little money – that is all. When you pay too little you sometimes lose everything, because the thing you bought was incapable of doing the things it was bought to do. The common law of business balance prohibits paying a little and getting a lot."
John Ruskin 1819-1906
And if you are a fellow designer, I find this to be a very good analogy of the process:http://www.lunareclipse.net/clientside2.htm
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