DESIGN ECONOMICS

For students who would like to understand more about how to use regression analysis, check out the analysis that I did for Scotiabank Place (Corel Centre) lands.

The questions was: How much would density have to increase to justify the additional investment in a local transportation system like Doppelmayr's Cable Liner.

This is a great piece of technology; see: http://www.dcc.at/default.asp?pid=41.

For the regression analysis, see: http://www.dramatispersonae.org/ValueDensityLocationAreaRegressionAnalysis.xls.

I put it up on my server in .xls format so you can download it to your PC and keep a copy. This will enable you to use it as a template if you want to try something like this on your own.

Please look at what you need to do for your project:

OUTPUTS

1. Plan views.
2. Elevations.
3. Isometric (optional).
4. Model (required).
5. List of parts, suppliers, sub trades and all 'hard' costs together with catlogue numbers and references including deck, porch and paved driveway.
6. Capital Budget showing hard costs and soft costs. Remember when you are doing a quantity survey to include labour as well as materials. You may also need to include allowances for certain items where you do not have all the data such as kitchen cabinets or lighting fixtures. You may also add the cost of a construction superviser for the duration of the project and a margin for overheads and profit. It is not unusual to add 10% for overheads and another 10% on top of that for profit (i.e., 21% of the capital budget). Profit is not a dirty word. Profit allows a firm to grow and develop; invest in employee training; buy newer equipment and invest in the latest construction techniques too. Always check 'both ends against the middle'. Capital budgeting is like drilling the Chunnel- you start on the English side and on the French side and hope that both tunnels meet in the middle! So, a) do a detailed cost breakdown using a credible source of data. b) Provide reasonable allowances for design elements where there are still a lot of design unknowns. c) Add in a contingency fund of not more than 10% and hopefully around 5%. The contingency fund is used for coping with unforseen problems and for ensuring the quality of construction too. You should spend all of it. d) Put in place an incentive for all parties to share in cost savings and in time-to-complete too, using some equitable formula. e) Do a reality check- use some notional cost per square foot times the gross floor plate to make sure that the total capital budget is neither hideously over the top nor unrealistically low. If it is, check your assumptions!
7. Operating Budget showing all revenues and expenses.
8. Cost/benefit analysis using an internal rate of return calculation.
9. CPM schedule showing construction of the home in not more than 35 days. There are five ways to look at the CPM schedule. 1) Students can take the total cost of materials and supply and install from a source such as RS Means or Hanscomb's Yardsticks, subtract the cost of materials and then divide by the unit cost of labour to arrive at the number of person-hours for the task. Dividing this by the number of persons working on the task will yield the length of time for that task in project work-days. 2) Students may wish to contact sub trades realizing that they tend to estimate low. 3) Students may call a GC (they usually tend to provide estimates that are on the high side). 4) Students can use their own judgement based on their experience. 5) Some combination of the above can be used to arrive at realistic estimates of task times. Scheduling is also often done using a 'both ends against the middle' type of approach- if you know when a project must be completed by and you know when it will start, you obviously have two important constraints in place. This is not all that unusual; if you are building a home for a client, the start date is when you sign a contract for design and the end date is dictated by when the client needs to move in or when their tenants need to move in. Then you can work forwards from the start date and work backwards from the end date. Put your schedule up on a web site or on a board where you can see it and digest it. Remember CPM is designed to assist you in project scheduling but nothing has yet replaced human judgement and experience. In summary then, you will need to: a) estimate task times, b) put together a preliminary schedule based on what tasks logically precede and follow others, c) run the CPM, d) test your assumptions- see what tasks might be done in parallel and then do a sensitivity test (run the CPM again). CPM software can be a big help here especially if you are working on a complex project with lots of variables and you have to run dozens of scenarios!
10. Functional Program and On Line Survey- on a spreadsheet summarize your functional program including all aspects of your design (linear feet of wall, room areas and uses, etc.) based on a (non scientific) web survey of potential stakeholders (investors and residents).

Please read:

http://www.dramatispersonae.org/DesignEconomics/GrannyFlatFuntionalProgram.htm

and

http://www.dramatispersonae.org/DesignEconomics/GrannyFlatSurvey2.htm

Here are some examples of complete projects:

http://www.dramatispersonae.org/StudentWork/Files/coopcd.htm

http://www.dramatispersonae.org/GrannyFlatStudentWorkTimRosenbergAlisonFox.htm

FOR YOUR ASSIGNMENT

I hope the students will enter their studio projects, Design Economics or City Planning and Organization projects to the Cyril Leeder Competition:

http://www.dramatispersonae.org/CyrilMLeederPrize/CyrilLeederPrizeInUrbanDesign.htm.

Also, here are the suggested list of essay topics but you may certainly choose one of your own if you get permission from one of your TAs.

http://dramatispersonae.org/DesignEconomics/Essay_topics.htm

READINGS

Updated on Oct 15^th 2006

Please pass on this piece I did for the students this weekend on how to assess Development Potential:

http://www.dramatispersonae.org/DevelopmentPotential/DevelopmentPotentialCenturyBlvdOctober2006.htm

The spreadsheet that goes with this is at:

http://www.dramatispersonae.org/DevelopmentPotential/74_72_76CenturyBoulevardBudgetOctober2006.xls

Also, I found another good example of a student project:

http://www.dramatispersonae.org/StudentWork/GrannyFlats/StudentLofts.PDF

It was a loft project and a pretty good model of what we expect from the students in their assignments.