Target price method and building element cost

estimation

Robert Ven, Joona Hannonen, Mimmi Sjöblom, Alexander Åkerlund, Joachim Björnström, Tomi Blom

Origins

- Development started after World War 2 in Britain

- In Finland in the 80’s (Nora software 1982)

- Haahtela-index and Haahtela-nomenclature 1998

- Index updated every year, latest version according to price level of

January 2015

- Current nomenclature according to Talo 2000

Target price method- Way to calculate the price of a construction project or an existing

building

- For the calculation spaces need to be assigned a specific purpose- bathroom, bedroom, living room etc.

- The spaces are given an area to meet the demand of that purpose

- In value calculation / repair calculation, the condition of each space must also be measured

- no repair needed, some repair needed or even total renewal

- Used to define

- the cost of a new construction

- the cost of a repairing construction

- the value of a current building

Target price method

- Target costing has been used for decades in manufacturing

- Adapted the benefit the construction industry

- The target price is set by the characteristics of the end product

- The target price is calculated in the beginning of a project and can be used as a base for more detailed planning

- Target price method can be used to e.g.

- set a budget for a construction project

- assess the value of an existing building

Target price method

Process:

1.Define customer needs

2.Calculate maximum project cost

3.Calculate maximum project cost with current methods

4.Step 3 - Step 2 = cost-reduction required

5.Design the product

6.Monitor process

7.Cost improvements

Target price method

- Several different systems available

- In Finland the most widely used software is Taku - Haahtela

- Customer language instead of developer language

- Initial data required

- Inputs regarding soil and urban environments important

Target price method

The following is a target pricing example done with the Taku software

- Location: Lappeenranta

- Wholesale-central

- Net floor space of 4460 m2

- Plot area of 21000 m2

Target price method: example4460 m2 inside21000 m2 plotwholesale terminal

Target price method: example4460 m2 inside21000 m2 plotwholesale terminal

Building element cost estimation

- Trade name of Haahtela-kehitys Oy

- Estimating the price of the building according to nomenclature or with modeling software

Building element cost estimationMain objectives:

1.To reveal the distribution of costs in construction projects

2.To compare the cost of the same element in different projects

3.To obtain and use cost data for future projects

Building element cost estimation

Can be used for new construction projects or repair projects as:

- Budgeting the construction project

- Estimating the cost changes according to specific design

- Controlling the economy of construction projects

- Base for construction procurement

- Estimating the total price of the building

Building element cost estimation

Includes calculation of:

- Dimensions of structures

- Price of structures

- Price of construction services

- Price of property expenditure

- Operational costs

- Financing costs

- Construction procurement reservation

Building element cost estimation

- Haahtela / Talo 2000 nomenclature includes three different pricing categories: Low price, normal price, high price.

- All the prices are presented without tax, so the value-added tax 24% should be added to price calculations

- Reference level is a trade name of Haahtela and it is used as an example to compare costs or for early design to help estimate costs

Building element cost estimation

Plans

Measurement

Pricing

Comparing

http://site.timewiseconsultants.com/CADD.html

Building element cost estimation

Building Information Modeling

http://www.amvicsystem.com/bim

http://www.cadserviceslondon.com/architecture-bim-services.php

“Building Cost Information System”, Istanbul Technical University, Turkey

Taku, Haahtela Corporation, Finland

http://www.az.itu.edu.tr/downloads/papers/vol04-01/pdf/08yaman-%2004n1.pdf

Jeh

kon

en, V

ille.

Ta

lonr

ake

nnu

ksen

kus

tann

ustie

to 2

014

- O

hje

lma

n

hyö

dyn

täm

inen

kus

tann

usla

ske

nnas

sa.

201

4. K

are

lia-a

mm

atti

kork

eako

ulu

UNIFORMAT II Classification for Building Elements, USA

Talo-2000 nomenclature, Finland

http

://a

rc-s

olut

ions

.org

/wp-

cont

ent/u

ploa

ds/2

012

/03

/Cha

rett

e-M

ars

hal

l-19

99-U

NIF

OR

MA

T-I

I-E

lem

enta

l-C

lass

ifica

tion

....p

df

http

s://w

ww

.yum

pu.

com

/fi/d

ocum

ent

/vie

w/3

536

8877

/talo

-20

00-r

ake

nnus

tuo

ten

imik

keis

ta-p

df-

rake

nnus

tieto

-oy