Transcript Brunei Darussalam Construction Cost Hand Book

Brunei Darussalam
Construction Cost Hand Book
Interpretation of Cost Trends
Speaker:
Awg. Mohd Shafie Hj. Mohd Yusof
MOD Training Centre
4th February 2014
Talk Synopsis
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The Brunei Darussalam Construction Cost Hand Book has seen four editions so
far since 2007 with the latest being 2013. The objective of this talk on this hand
book is to provide awareness to various government agencies, consultants and
industry players on the contents and data of the hand book. The hand book covers
variety of useful data ranging from unit costs of key construction items to a wide
area of Tender and Material price indices dating back as early as 1996.
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Currently the data sampling and analysis for this is being done from various
projects under the Ministry of Development with future aims for a wider area of
coverage to provide more reflective data of the industry taking into consideration
of projects undertaken by other Ministries and Private sectors. As other
Ministries and Private Sectors are also implementing construction projects that
contribute significant percentage to the industry’s output.
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The aim of this talk is to present on the various sections of these Hand
Book, what the data/information represent, comparisons of such data in the
region and how these information can be used as reference at various scenario.
The talk will also include a section on the interpretation of these data and their
associated trends in the Industry. In addition, to get feedback and comment from
the audience on the current hand book which shall act as a platform for
improvement to future editions.
Topics to Cover
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Cost Hand Book and its Previous Editions
Contents of the Construction Cost Hand Book
Data Sampling and Analysis
Tender Price Indices
Material Price Indices
An Analysis of Construction Cost Data
Factors Contributing Construction Costs
Future Editions
Q&A
Cost Hand Book and Its Previous Editions
 With the current Edition there are already four editions of Brunei
Darussalam Construction Cost Hand Book (2007, 2008, 2011, 2013)
Cost Hand Book and Its Previous Editions
 In addition quarterly publications with only cost information are made
available in the form of leaflets.
Contents of Cost Hand Book
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Foreword
Introduction
Calendar
Brunei – Country Statistics
About Ministry of Development
Construction Trends in the
Country
Construction Cost Data
Contract Procurement
Financial Information
Other useful Information
Contents of Cost Hand Book
 Brunei – Country Statistics
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Area and Geographical Location
Government
Language and Religion
Population
Economy
Infrastructure
Telecommunication
Finance and Foreign Exchange
Employment
Contents of Cost Hand Book
 About Ministry of Development
 This section briefly summarises about Ministry of
Development and it’s role in His Majesty’s
Government.
 Content also provides organisation structure of this
Ministry and various departments under this
Ministry.
 This section also provides a basic understanding to the readers of the
functions, roles and responsibilities undertaken by the various departments
under the Ministry of Development.
 A section has been exclusively allocated for a comprehensive list of standards
and guidelines documents published by various departments under Ministry of
Development and their associated price / place of purchase.
 Under this section details are provided on procedures and processes related to
the Registration of Contractors and Suppliers with the Ministry of
Development.
Contents of Cost Hand Book
 Construction Trends in the
Country
 This section aims in providing a very brief
outlook of Construction Industry in Brunei
Darussalam.
 Key sections under this include the
Tender Price Indices and Material Price
Indices.
Contents of Cost Hand Book
 Construction Cost Data
 This is the core section of the Hand book which provides
key cost information.
 A specification and preambles section that states the
assumptions and basis for the cost establishment.
 Construction costs for various types of developments
are tabulated under this section.
 Construction costs for various types of developments are tabulated under this
section. Unit costs of ancillary facilities such as bin centre, sub-station etc.
 Unit rates of common major work items for ease of reference.
 A section is also available for Mechanical and Electrical Costs with breakdown
among various services.
 In addition to new construction, costs related to fit-out of facilities is also provided.
 Rates for Labour, Plant and Materials commonly used as day works are also
provided.
 Other useful information such as estimating rules of thumb and weights and
measures for conversion is given for ease of reference.
Contents of Cost Hand Book
 Contract Procurement
 This section summarises the common
procurement arrangements practiced in
Brunei.
 Various types of forms of contracts used
in Brunei are briefly discussed and a
comparison against key provisions of
each of them is also provided.
Contents of Cost Hand Book
 Financial Information
 This section deals with the various
financial definitions and formulae for
ease of reference.
 Currency exchange rates, prime lending
rate by banks, balance of trade and
consumer price index information are
furnished.
 Contents such are Balance of Trade and
Consumer Price Indices are extracts
from publication by Department of
Economic Planning and Development.
Contents of Cost Hand Book
 Other Useful Information
 Details of various utility service costs in Brunei
are provided in this section.
 Public Holidays.
 Related Website addresses.
Data Sampling and Analysis
 Data sampling for construction costs and tender price indices are based on
National Development Plan Projects under the Ministry of Development.
 Currently projects from other ministries, private sectors are not included as part
of analysis.
 Contract Documents from various departments under Ministry of Development
are collected for the period / quarter for which the costs are being analysed.
 Cost analysis and sampling approach depends on the content for which the costs
are being analysed.
 Due consideration are taken on confidentiality hence there is always a minimum
of one year lag in the information published.
Tender Price Indices (TPI)
 TPI analysis / history of data goes back as early as 1996.
 TPI has been further split into two types based on building works and
civil/infrastructural works.
 Year 1996 was taken as a baseline year with an index of 100.
 Currently only RKN projects under Ministry of Development has been used as a
basis for analysis.
 Sampling involved study of supply and install prices for various key materials
included in the sampling basket and their average excess from the previous year
contributed to the percentage of inflation / deflation.
 Trends established are counter verified by the overall construction cost for the
typical developments/projects from their corresponding increase from the
previous year.
Tender Price Indices (TPI) - Building
Construction Expenditure Extracted from Source:
Department of Economic Planning and Development
Possible impacts on TPI (one or combination)
 Increased deflation
 Less projects in the market
 Entry of foreign contractors into the market
 Entry of new local contractors into the market
 Surplus of major construction materials in the
region
 Others
 Increased inflation
 More projects in the market against Contractor’s
availability / workload
 More specialised projects in the market
warranting specialised contractors (less in no.) –
Market monopoly
 Shortage of construction materials / equipment
 Shortage of construction manpower in the
region
 Others
TPI (Bldng.) – Regional Comparison
Year
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Brunei
TPI
Annual Growth
100.00
0.00
97.99
-2.01
92.00
-6.11
89.00
-3.26
87.47
-1.72
76.43
12.62
84.00
9.90
95.25
13.39
87.94
-7.67
85.85
-2.38
85.74
-0.13
93.90
9.52
110.02
17.17
97.69
-11.21
100.88
3.27
101.34
0.46
98.16
-3.14
Malaysia (L&S)
TPI
Annual Growth
97.80
4.49
90.60
-7.36
98.10
8.28
101.20
3.16
100.00
-1.19
91.70
-8.30
96.60
5.34
92.20
-4.55
111.30
20.72
118.00
6.02
122.80
4.07
137.20
11.73
159.85
16.51
138.40
-13.42
141.50
2.24
146.35
3.43
151.68
3.64
Singapore (L&S)
TPI
Annual Growth
107.6
N/A
107.3
-0.28
100.2
-6.62
88.9
-11.28
87.9
-1.12
88.1
0.23
89.9
2.04
95.6
6.34
98.9
3.45
100
1.11
103.2
3.20
122.5
18.70
137.3
12.08
115.9
-15.59
114.4
-1.29
114.1
-0.26
114.2
0.09
As base year varies comparison is to be made only against the annual % growth
TPI (Bldng.) – Regional Comparison
As base year varies comparison is to be made only against the annual % growth
World Oil Price Trend
Source: OPEC.org
TPI (Bldng.) – Regional Comparison
 Regional fluctuations in TPI need not be in the same pattern.
 Local industry output / demand has significant impact on the TPI when compared
against the regional impacts.
 Regional trends tend to align only if major materials in the region that has
common source for procurement is affected by the regional demand.
 Other factors that normally affect the TPI include country’s economic and
political stability .
Tender Price Indices (TPI) – Civil / Infra
Construction Expenditure Extracted from Source:
Department of Economic Planning and Development
Possible impacts on TPI (one or combination)
 Increased deflation
 Less projects in the market
 Entry of foreign contractors into the market
 Entry of new local contractors into the market
 Surplus of major construction materials in the
region
 Others
 Increased inflation
 More projects in the market against Contractor’s
availability / workload
 More specialised projects in the market
warranting specialised contractors (less in no.) –
Market monopoly
 Shortage of construction materials / equipment
 Shortage of construction manpower in the
region
 Others
Tender Price Indices (TPI) – Building & Civil/Infra
Usage of Tender Price Indices (TPI)
 TPI analysis helps the industry players understand the construction trend in the
market and acts as a historical record to facilitate future studies on historical
records.
 The average fluctuation rates (excluding anomalies) may be used as a basis for
incrementing the previous estimates with adjustments for inflation if there is a
delay in the implementation of the projects (applicable only if the industry output
is anticipated in the upward trend).
 Acts as a benchmark to study the industry stability over the period of analysis.
 May be used as a valuation tool for projects completed beforehand without any
records for their construction costs. This can be done by applying the cost per m2
of the similar development and current costs and adjusting them by applying the
net difference from the inflation rate of the year in which the building was
constructed.
Material Price Indices (MPI)
 MPI analysis / history of data goes back as early as 1996 for materials the
likewise of bulk cement, high tensile reinforcement bars, mild steel reinforcement
bars, bricks and ready-mix concrete grades 25, 30, 35 & 40, Timbers the likewise
of kapur bukit (sawn and wrot), red meranti (sawn and wrot), fine and coarse
aggregates, hardcore, crusher run and washed sand. In this case base year is
1996.
 MPI also includes precast reinforced concrete piles, pre-stressed spun concrete
piles, mild steel tube piles and bakau piles since 2003. In this case base year is
2003.
 In regards to electrical works materials the likewise of cables are recorded since
2004. In this case base year is 2004.
 Inputs for MPI are obtained from various producers / suppliers in Brunei
Darussalam on the basis of supply only rates including delivery within Brunei /
Muara district.
Material Price Indices (MPI)
* Upto 3Q 2012
Material Price Indices (MPI)
* Upto 3Q 2012
Material Price Indices (MPI)
* Upto 3Q 2012
Material Price Indices (MPI)
* Upto 3Q 2012
Material Price Indices (MPI)
* Upto 3Q 2012
Material Price Indices (MPI)
* Upto 3Q 2012
Material Price Indices (MPI)
* Upto 3Q 2012
Material Price Indices (MPI)
* Upto 3Q 2012
Material Price Indices (MPI)
Material Price Indices (MPI)
* Upto 3Q 2012
Usage of Material Price Indices (MPI)
 MPI analysis helps the industry players understand the trend of materials in the
market and acts as a historical record to facilitate future studies on historical
records.
 The average fluctuation rates may be used as a basis for incrementing the
previous estimates with adjustments for inflation if there is a delay in the
implementation of the projects (applicable only if the industry output is
anticipated in the upward trend). Such increments may only be applied over the
corresponding material supply cost in the estimate.
 Acts as a benchmark to study the material price stability in the industry over the
period of analysis.
 In future if there is a need for application of fluctuation clause in the contract specific to materials, the average fluctuation rates can be used as the minimum
rate of fluctuation (lower / upper limit) for which fluctuation clause may not be
applicable for that material and anything beyond these average rates may be
considered for fluctuation (subject to finance policies on application of fluctuation
clauses).
 Application of MPIs for fluctuation clauses (in future if required) may require the
price details to be obtained direct from source of manufacture and may involve
regulatory requirements in collating such details directly.
TPI vs MPI
Year
TPI (Bldg) %
TPI (Civil) %
Conc. G30
Timber
Bricks
Cement
Rebar
1996
-
-
-
-
-
-
-
1997
-2.01
-14.68
-3.41
0.00
-5.47
-9.68
0.00
1998
-6.11
4.31
-5.08
0.58
-13.68
-14.29
-1.67
1999
-3.26
0.57
-7.58
-3.36
-2.44
0.00
1.69
2000
-1.72
0.91
-7.72
0.60
-10.00
0.00
8.33
2001
-12.62
-2.63
-5.57
0.60
0.00
0.00
-11.92
2002
9.90
-4.35
-4.43
-2.84
-2.78
0.00
23.82
2003
13.39
4.62
-1.54
0.00
-4.29
0.00
1.37
2004
-7.67
2.27
-1.30
-2.80
1.49
0.00
14.46
2005
-2.34
4.29
5.46
0.00
10.30
25.00
8.04
2006
-0.17
1.21
-1.88
3.26
8.80
0.00
-11.70
2007
9.52
7.56
3.10
7.29
7.85
13.33
16.69
2008
17.17
25.07
7.87
9.29
7.38
-2.94
74.12
2009
-11.21
-8.15
3.37
8.29
5.56
7.27
-46.62
2010
3.27
2.38
-2.51
5.07
3.26
0.00
5.20
2011
0.54
0.69
9.92
8.64
6.73
3.39
7.51
2012
-3.13
-2.97
-2.59
7.54
-7.22
-1.64
-3.38
TPI vs MPI
TPI vs MPI
 Increase in the MPI of a particular material doesn’t necessarily result in the
overall increase in the TPI as TPI is a composite index.
 MPI of a particular material may increase due to regional demand. If the source
is regional, the TPI may even have a downward trend as there are other factors
that contribute for TPI such as the local construction industry output and
demand.
 Moreover fluctuation of a MPI may only have an impact on the TPI by its
proportion to the material’s consumption composition in the Industry.
Construction Cost Data
Sampling, General Specification and Preambles: Floor area measured to establish the cost / m2 are measured to the outside face of
the external walls / external perimeter including lift shafts, stairwells, plant
rooms (within building), water tanks and the like.
 General assumption is that the buildings are built on flat ground, with normal soil
conditions with minimal external works and piling.
 Costs exclude land cost, professional fees, finance charges, legal expenses,
authorities’ charges, site inspectorate, demolition of any existing facilities, loose
furniture and fittings, operating equipment other than the basic services, cost
escalation, etc.
 Cost / m2 are established from RKN projects under the Ministry of Development
based on similar developments
 Costs exclude any adjustments for prices between Brunei-Muara and other
districts.
 Certain developments does not fall under RKN projects as such cost factor for the
respective quarter / period has been applied over cost data for such developments
in the past to arrive at the latest development cost.
Construction Cost Data
Construction Floor Area (CFA) :
Area measured to outside face of the external walls /
external perimeter including lift shafts, stairwells, plant
rooms, water tanks and the like.
Gross Floor Area (GFA):
Area measured inside the building envelope, including
external walls and excluding the roof.
Construction Cost Data
Construction Cost Data
Construction Cost Data - Regional
Ref
Development
Cost / m2
Brunei
(B$)
Singapore (L&S)
(B$)
Malaysia (L&S)
(B$)
Residential (2Q 2012)
1
Terraced houses
557.00
2,550.00
495.00
2
Average Std. Condominiums
931.00
2,098.00
725.00
3
Luxury condominiums
1,009.00
3,452.00
1,418.00
850.00
2,598.00
1,000.00
1,159.00
2,903.00
1,467.00
1,054.00
2,806.00
1,218.00
Office (2Q 2012)
4
Average Standard Offices
5
Prestige Offices
Commercial (2Q 2012)
6
High Quality Shopping
Centres
Construction Cost Data - Regional
Ref
Development
Cost / m2
Brunei
(B$)
Singapore (L&S)
(B$)
Malaysia (L&S)
(B$)
Industrial (2Q 2012)
7
Flatted Light Industrial
545.00
1,403.00
582.00
8
Single Storey Industrial
Building
580.00
1,196.00
582.00
593.00
951.00
382.00
Carparks (2Q 2012)
9
Multi-Storey Carparks
Hotel (2Q 2012)
10
3-Star Hotels
1,521.00
3,196.00
1,600.00
11
5-Star Hotels
2,110.00
4,295.00
2,966.00
12
Resort Hotels
1,688.00
3,098.00
1,768.00
Factors Affecting Construction Cost Data
Note:
The below factors are need not necessarily be specific to Brunei instead they are from general global
construction industry perspective.
Some of the other factors affecting construction costs on project to project basis are: Costs of resources such as Labour, materials and Equipment
 Import duties such as customs and excise on construction equipment and
materials
 Corporate income tax, With-holding tax
 Construction Output
 Project specialty
 Percentage of local, regional and international resources required for the project
execution
 Site constraints
 Conditions of Contract (Risk Apportionment / Balance) / Type of Procurement
 Health and Safety Requirements
 Environmental Impact Assessment and Environmental Management and
Monitoring Plan (EMMP) requirements
 Project duration (reasonableness of construction duration)
 Payment terms and conditions / Retention terms and conditions
 Special requirements such as Bid bond, Indemnities etc.
 Rate of Liquidated Damages
Factors Affecting Construction Cost Data
Other factors that also may have an impact on the Construction Costs are: Delay in payment honouring
 Overheads such as administrative, management costs, legal costs etc.
 Quality of Design
 Reputation of Project Team
 Profit Margin
 Quantum / necessities of non-construction items included in the project
 Tender validity period
 Currency fluctuation
 Availability of sub-contractors in the local market
 Past dispute history
 Project auctioning (winning bidder’s commission / large scale sub-contracting)
 Country’s Transparency Index
Future Editions
 To include green building costs / factors
 Additional sampling from Projects from other ministries and private
sector
 Construction industry labour statistics including details of wages for
various categories from Labour Department
 Land pricing and rental rates from Land Department
 Simplified version as Apps for tablets
Feedbacks and suggestions are welcome from the audience for review
and consideration on future publications
Q&A