Reference no: EM132332205
Code Description
A1 knowledge and critical understanding of the production of a development appraisal
A2 knowledge and comprehensive understanding of the techniques used in the provision of cost advice provided during the pre-contract phase of a construction project
A3 knowledge and critical understanding of how design solutions impact on initial and life cycle costs and the methods used to establish such costs
A4 knowledge and comprehensive understanding of the impact that sustainability has on construction projects through the use of value engineering and life cycle cost exercises
B1 define, investigate and analyse commercial aspects of a construction project encountered during the pre-contract phase
B2 appraise possible solutions to issues relating to commercial aspects of a construction project encountered, during the pre-contract phase
C1 integrate theory and practice to allow appropriate recommendations to be provided on matters relating to the commercial aspects of a construction project during the pre- contract phase
D1 communicate effectively with stakeholders in the context of commercial aspects relating to the pre-contract phase of a construction project
Scenario
You are part of the cost consultancy team working for a speculative developer at the pre-contract phase of a project. The developer has purchased a site in a prime urban location near a railway station and obtained planning permission for a six-storey office building.
The developer has identified that minimum running, repair and maintenance costs are a top priority to ensure that they are able to let the building for a high rent. An excellent BREEAM rating is required to demonstrate this. The developer is also looking to receive a return on their investment as soon as possible. They are currently negotiating a contract with a management contractor and want to be assured that they will be receiving value for money for this project. The developer is therefore looking for advice on alternative funding options for the project.
The project details are as follows:
Grade A specification offices, designed to meet the energy efficiency requirements of a modern business.
Gross floor area: 16,000 m2
Lettable area: 90%
Required yield: 8%
Anticipated rent: £450 per m2
Target Construction cost: £2,800 per m2
Construction period: 3 years
Finance rate: 5%
Assume all other information not provided.
Task
Write a report that explains how the developer's profit on the project would be established and critically appraise the risks that might adversely affect this and the mitigating measures that could be taken. Include a residual profit calculation to support your discussion.
Include a critical evaluation of the factors to be considered to achieve an excellent BREEAM rating and also meet the developer's requirement for minimum running, repair and maintenance costs.
Also include advice on alternative funding options for the project.
It is anticipated that around 2,000 words would be required on the residual appraisal and its analysis and then a further 1,000 words for the discussion on the BREEAM ratings, a further 1,000 words on funding options and the balance of 200 words for your conclusion.
Attachment:- Building Economics.rar