Wednesday, September 25, 2013

Assessment of Projects


Project assessment requires some degree of quantity determination in numbers, lengths, area, volume, weight, etc. Secondary assessment occurs through comparisons (evaluation) using different factors (‘yardsticks’ or datums). There are two classes of secondary assessments, monetary and non-monetary.

  • Monetary assessments are in terms of the COST (contribution for purchase or acquisition), or the (monetary) VALUE (probable increase or decrease to the cost, or attached sentiments) of an item, or its unitized section.
  • Non-monetary assessments are based on factors like: energy efficiency, loads, stability, consumables, upkeep, time schedules, productivity, risks probability, man power requirements, length, area or volume spreads, growth rates, change rates, ecological concerns, social relevance, legal implications, etc.

Projects are assessed frequently through their period of conception, design, execution and later during operations. In each event, the perceptions, level of accuracy, means of assessment, format of presentation,  and agencies are different. Projects reveal their varied facets, when appraised in different context.

The purposes for assessment of projects include: solving problems, making decisions, highlighting or projecting certain details, supporting or confirming facts, procuring grants, loans, subsidies, and payments like execution costs, rents, lease charges, taxes, etc. These purposes also determine the means and methods of assessment and also the form of final presentation (reportage).

In a design practice an estimate serves diverse purposes, such as:

  • to find out, if there are any costs over runs in a project.
  • to estimate intermediate and final payments to other professionals, contractors, suppliers, etc.
  • to estimate the total costs of executed work, or non executed work, especially when changes in the terms of contract / contractor, or rates are contemplated.
  • to accommodate changes in design, materials, installation techniques etc. due to availability of newer or cheaper options, or additional expenditure with higher allotment of resources.
  • to determine the incidence of tax that is payable as per the government‘s schedule.

QUANTITY ESTIMATING

It is generally experienced that certain form characteristics, dimensions (widths, depths etc.), etc. of parts and components remain constant not only through a project, but across projects of similar nature. Such constants are recognized and minor variables are leveled out within certain dimensional ranges. Dimensional ranges become effective in modular dimensions and through the methods of taking measurements. (See section on Modules of measurements and Modes of measurements). Modest qualitative differences are evened out through flexible and wider rang of specifications.

Quantity estimates form the prime database on which monetary estimate is scheduled. Quantity estimates help us compound simple measures like lengths, widths, heights, weights, numbers, etc. into quantities with fewer variables. Typically a volumetric quantity is more inclusive than linear or surface quantity. Similarly a numerical estimate far more comprehensive than even volumetric estimate.

There could be several levels of conversions before a quantity estimate becomes relevant. One of the most important conversion is through  monetary rating. Such conversions are carried out by many different agencies, without the author or the originator of the quantity estimate being aware of it, or being informed about it.


MONETARY ESTIMATES


Monetary estimates result out of a process called costing. Costing or cost finding is done for item as deliverable by a single agency, or for its parts, which have market equivalents, and so definite prices. However, where parts have no readily available market equivalents, these are evaluated for the cost of their constituent raw materials, labour and other inputs required for the assembly or construction.

Monetary estimates are based on items or jobs which no matter how complex are, consist of only few elemental parts, or very simple tasks. The elemental parts and tasks are usually comparable to many others used in different items or situations. Elemental parts, though similar in form and constitution, acquire a unique personality depending on the position of the component in the whole, nature of use, method of installation or erection and time schedule of installation.

In a monetary estimate parts of different types are categorized on the basis of external factors like guarantee mechanism, life span, utility, depreciation, finance, cost, return, energy consumption, waste output, hazard, ecological value, replacement schedule, etc.


NON MONETARY ESTIMATES

Non monetary estimates, follow a process called VALUATION. The valuation or value providing creates a basis for judgement of an item. The value may be real and may match the monetary estimate of the item. The value could be a hypothetical one based on a perceived use, commonness or exclusivity, observed affectation, future cost of acquisition or disposal, etc.

Non monetary evaluations help define projects from many different aspects for which monetary costs are  available. Yet, appropriateness and success of a design depends substantially on decisions made through such evaluations.

Non monetary evaluations are like:
  • Average space provided to a clerk, average area per resident in a hostel, proportion of area between rooms and a corridor, proportion of usable vs. service areas, energy consumption per user, load per bearing area, garbage output per resident, noise level per vehicle, water consumption per unit, etc.


ESTIMATE SCHEDULES

Estimate schedules represents a comprehensive reportage of the entire exercise of cost finding and / or value providing. The estimate schedule also presents the rationale, means, methods of taking measurements, manipulations done with the information, and presumptions made for thinning out the data.

  • Format of an estimate schedule depends on by whom, and for what purpose these are accessed. A customary format is evolved by the design organization to suit its own nature of practice and needs. For commercial use like tenders or quotations etc. a style confirming to local market is required. For Government and corporate entities, designers have to adjust the format of estimate schedule to their accounting procedures requirements.

  • Estimate reports once created are used by many different people, and for nominally never perceived uses. A person preparing the estimate must foresee that, someone else in another time span will deal with the estimate, not only to interpret, but also to revise it.

  • The format of presentation, logic and mode of documentation should allow easy revisions. All the contextual information and their sources must be properly recorded. Procedures for accommodating various parameters like: fitment sizes, tolerances, mode of measurements, modules of measurements, rounding off, average, means, etc. should be of standard type, or well explained.

  • Accuracy of an estimate depends on how well the job has been conceived and detailed. Estimates that create liabilities due to their ability to cause secondary changes elsewhere (such as: item selection or elimination), or have hazardous consequences, are prepared with due care. Budget  estimates prepared, before or during the design and execution stages are approximate only, because the cost base is presumed, or of a current date. By the time actual execution occurs, the costs may go up or down, or the components may get altered. Whereas, Historic estimates prepared after the item has been executed and paid for, are very exact, as the cost base is real and accomplished one.

  • Estimate Reports become part of finance related procedures of the client. Typically financial institutions would like to sanction a loan on things that are physical, fixed, long lasting and with resale value. As a result, soft furnishings, polishing, painting and such other expenditures are not favoured for borrowing. A designer and the client (or the financial expert) together can, to an extent, redefine some of the items, or divide and regroup the items so that these can be classified as worthy of an appropriate category of disbursement, expenditure or depreciation. By re-framing the specifications, such items can be made integral part of the hard furnishings.

  • Exposure of estimate reports: An estimate schedule is a very sensitive document.   Its exposure to outsiders, including the client, automatically makes it an open document with lot of liabilities. A premature  exposure conveys a hidden guarantee, that items with such specifications will cost so much. A client may perceive the provisional estimate details (of a mid project appraisal, etc.) as a promise. Where it is necessary to expose an estimate report prematurely, it should be conditional. All data, specifications, assumptions, forming the estimate base must be preserved.

  • Estimates reports provided to outside agencies, though prepared for their specific needs, must not create undue liability for the designer. Government and other agencies demand Estimate Reports for sanctioning grants, loans, subsidies, etc. But due to large scale design + build practice prevalent in interior design, more often than not, estimate reports are interpreted to be an advance or pro-forma-invoice for supply of goods or services, and money is accordingly issued to the author of report (the designer), rather than to the contractor of the scheme. This could involve a designer into a huge tax liability.
  • To avoid such a situation design professionals in their estimate reports, must clearly state: "this  estimate report presented by the interior designer, is a designer’s estimate and not a pro-forma or advanced invoice, or a promise to supply, or arrange to supply the goods, or services, that are implicit in the  report.”

Estimate schedules are of two types representing the stage of the project. 

    1    Budgetary estimates are prepared at the beginning or during the work.
    2    Historic estimates are compiled after the completion of the work.

Budgetary estimates are prepared to determine the likely cost of execution. It helps in planning of  resources, to search options, to check quotations, to control likely cost over runs, to determine the professional services bill amounts for % fees.

Pre execution or budgetary estimates are made with certain presumptions. Such estimates remain variable, because for every change in parameters like, the cost of input materials, labour etc. the estimates need revision.

Budgetary estimate, as a document are designed to be revisable. The fluidity lasts till the item is executed. Once the item is born, the budgetary estimate document if adequately updated, becomes static, a historic estimate.

Budgetary estimates are usually made by the people involved in the design and execution of the project, because they have all the data resources.

Preliminary  estimates help in feasibility check up, primary budgeting, funds planning, in fixing the extent of a job, and stages of strategic and tactical actions.

Clients on their own prepare or order a cost estimate, often, even before retaining a design professional. Such estimate projections prepared by a financial or project consultant at times contain lot of technical terms of finance, and a good design professional must have the proficiency to understand the terms, and if necessary comment upon such data.

Mid-project estimates are carried out, as a design takes a concrete shape with  dimensions and details. These estimates help in final selection of materials, finishes, procedures, details, etc. Several such in-house evaluations are carried out as the design progresses. A client may be exposed to selective sections of such evaluation exercises, to increase the awareness of the design process, to solicit additional information, and get approval of certain design decisions.  

 Tender or Contract estimates are very exact, requiring equally perfect drawings, details and specifications. Tender estimates are often used to verify bills for work. The structure of such estimates is controlled by factors, such as: nature of an item, schedules and sequences of execution, contract system, supervision  system and agency, modules of measurements, modes of measurements, mode of billing and mode of payment.
Historic estimates, are made, to determine the actual expenditure incurred on a project. It also helps in assessing the absolute value addition to the wealth, investigate conditions that caused cost over or under runs, to determine the set-off or depreciation amounts, to set insurance cover charges, to fix operations or servicing costs, etc..

Historic cost estimates are prepared on the basis of accomplished facts, soon after the birth of a product. Historic cost estimates are very realistic, unalterable  static documents, and have an archival value.

Historic estimates, may also be carried out by third parties, or people not necessarily involved with design or execution processes.

Assessment of Projects  --from series Interior Design Practice and Office Management -II


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