performing a cost estimate at the end of CD phase?

Site Zoning Vignette and Multiple Choice

performing a cost estimate at the end of CD phase?

Postby bladeyoon » Sat Nov 04, 2017 2:53 pm

Hello!

There is a practice question about
'the architect typically performs a cost estimate at the end of which phases?
And the answers were 'at the end of SD and DD'.
It explains that 'the project goes to bid at the end of CD set, so architect does not need to do cost estimate'.

But, based on B101 3.4.4, "the architect shall update the estimate for the cost of the work." so I believe the architect still need to do cost estimate at the end of CD phase.

Can someone explain this for me?

Thank you!
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Re: performing a cost estimate at the end of CD phase?

Postby thd7t » Mon Nov 06, 2017 6:52 am

The architect should have a cost estimate at the end of DD that they are working to. The estimate of the architect would be redundant at the end of CD, because a bid is binding and is therefore inherently more accurate than an estimate.

Generally, the architect's contract will have a "design-to" clause. At that time, they may have to perform some redesign to bring the cost of the project down to budget if bids come in too high.
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Re: performing a cost estimate at the end of CD phase?

Postby wws341234 » Mon Nov 06, 2017 5:42 pm

bladeyoon wrote:Hello!

There is a practice question about
'the architect typically performs a cost estimate at the end of which phases?
And the answers were 'at the end of SD and DD'.
It explains that 'the project goes to bid at the end of CD set, so architect does not need to do cost estimate'.

But, based on B101 3.4.4, "the architect shall update the estimate for the cost of the work." so I believe the architect still need to do cost estimate at the end of CD phase.

Can someone explain this for me?

Thank you!


I agree with you that the correct answer should be what is specified in the B101. For one, it is specifically spelled out in section 3.4.4 as you have noted, but also, in every phase of the design process the architect is supposed to update the estimate of the Cost of the Work along with the design for the Owner's approval up to Bidding or Negotiation Phase Services, so why wouldn't the architect do it before the Owner approves it for bidding? A key provision to consider is in section 6.7, and it states that when the estimate of the work comes in too high, "[and] the Owner chooses to proceed under section 6.6.4 (which is to VE), the Architect, without additional compensation, shall modify the Construction Documents as necessary to comply with the Owner's budget for the Cost of the Work at the conclusion of the Construction Documents Phase Services, or the budget as adjusted under Section 6.6.1..." This section puts the risk of over budget to the Architect, and therefore it is in the Architect's interest to update that estimate for Owner's approval before it goes out to bid to minimize risk to unpaid work.

Now, I'm not sure what is the source of your practice question, but I would put my money down on the B101, since that is referenced in the NCARB study guide as part of the study material recommended for preparation of this exam.
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Re: performing a cost estimate at the end of CD phase?

Postby thd7t » Wed Nov 08, 2017 8:28 am

wws341234 wrote:
bladeyoon wrote:Hello!

There is a practice question about
'the architect typically performs a cost estimate at the end of which phases?
And the answers were 'at the end of SD and DD'.
It explains that 'the project goes to bid at the end of CD set, so architect does not need to do cost estimate'.

But, based on B101 3.4.4, "the architect shall update the estimate for the cost of the work." so I believe the architect still need to do cost estimate at the end of CD phase.

Can someone explain this for me?

Thank you!


I agree with you that the correct answer should be what is specified in the B101. For one, it is specifically spelled out in section 3.4.4 as you have noted, but also, in every phase of the design process the architect is supposed to update the estimate of the Cost of the Work along with the design for the Owner's approval up to Bidding or Negotiation Phase Services, so why wouldn't the architect do it before the Owner approves it for bidding? A key provision to consider is in section 6.7, and it states that when the estimate of the work comes in too high, "[and] the Owner chooses to proceed under section 6.6.4 (which is to VE), the Architect, without additional compensation, shall modify the Construction Documents as necessary to comply with the Owner's budget for the Cost of the Work at the conclusion of the Construction Documents Phase Services, or the budget as adjusted under Section 6.6.1..." This section puts the risk of over budget to the Architect, and therefore it is in the Architect's interest to update that estimate for Owner's approval before it goes out to bid to minimize risk to unpaid work.

Now, I'm not sure what is the source of your practice question, but I would put my money down on the B101, since that is referenced in the NCARB study guide as part of the study material recommended for preparation of this exam.


I think the italicized portion of this is the critical point. It's in the Architect's interest, but it is not a contractual obligation. Architects are not estimators and even the "updated estimate" may yield a bid that is over budget.
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Re: performing a cost estimate at the end of CD phase?

Postby nickedemus » Thu Nov 09, 2017 8:54 am

thd7t wrote:
wws341234 wrote:
bladeyoon wrote:Hello!

There is a practice question about
'the architect typically performs a cost estimate at the end of which phases?
And the answers were 'at the end of SD and DD'.
It explains that 'the project goes to bid at the end of CD set, so architect does not need to do cost estimate'.

But, based on B101 3.4.4, "the architect shall update the estimate for the cost of the work." so I believe the architect still need to do cost estimate at the end of CD phase.

Can someone explain this for me?

Thank you!


I agree with you that the correct answer should be what is specified in the B101. For one, it is specifically spelled out in section 3.4.4 as you have noted, but also, in every phase of the design process the architect is supposed to update the estimate of the Cost of the Work along with the design for the Owner's approval up to Bidding or Negotiation Phase Services, so why wouldn't the architect do it before the Owner approves it for bidding? A key provision to consider is in section 6.7, and it states that when the estimate of the work comes in too high, "[and] the Owner chooses to proceed under section 6.6.4 (which is to VE), the Architect, without additional compensation, shall modify the Construction Documents as necessary to comply with the Owner's budget for the Cost of the Work at the conclusion of the Construction Documents Phase Services, or the budget as adjusted under Section 6.6.1..." This section puts the risk of over budget to the Architect, and therefore it is in the Architect's interest to update that estimate for Owner's approval before it goes out to bid to minimize risk to unpaid work.

Now, I'm not sure what is the source of your practice question, but I would put my money down on the B101, since that is referenced in the NCARB study guide as part of the study material recommended for preparation of this exam.


I think the italicized portion of this is the critical point. It's in the Architect's interest, but it is not a contractual obligation. Architects are not estimators and even the "updated estimate" may yield a bid that is over budget.


Architects are not estimators, but yes it is a contractual obligation to redesign--without additional compensation--if our cost estimate is not within a certain threshold (10%) of the bid or bids.
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Re: performing a cost estimate at the end of CD phase?

Postby thd7t » Thu Nov 09, 2017 9:41 am

nickedemus wrote:
thd7t wrote:
wws341234 wrote:
bladeyoon wrote:Hello!

There is a practice question about
'the architect typically performs a cost estimate at the end of which phases?
And the answers were 'at the end of SD and DD'.
It explains that 'the project goes to bid at the end of CD set, so architect does not need to do cost estimate'.

But, based on B101 3.4.4, "the architect shall update the estimate for the cost of the work." so I believe the architect still need to do cost estimate at the end of CD phase.

Can someone explain this for me?

Thank you!


I agree with you that the correct answer should be what is specified in the B101. For one, it is specifically spelled out in section 3.4.4 as you have noted, but also, in every phase of the design process the architect is supposed to update the estimate of the Cost of the Work along with the design for the Owner's approval up to Bidding or Negotiation Phase Services, so why wouldn't the architect do it before the Owner approves it for bidding? A key provision to consider is in section 6.7, and it states that when the estimate of the work comes in too high, "[and] the Owner chooses to proceed under section 6.6.4 (which is to VE), the Architect, without additional compensation, shall modify the Construction Documents as necessary to comply with the Owner's budget for the Cost of the Work at the conclusion of the Construction Documents Phase Services, or the budget as adjusted under Section 6.6.1..." This section puts the risk of over budget to the Architect, and therefore it is in the Architect's interest to update that estimate for Owner's approval before it goes out to bid to minimize risk to unpaid work.

Now, I'm not sure what is the source of your practice question, but I would put my money down on the B101, since that is referenced in the NCARB study guide as part of the study material recommended for preparation of this exam.


I think the italicized portion of this is the critical point. It's in the Architect's interest, but it is not a contractual obligation. Architects are not estimators and even the "updated estimate" may yield a bid that is over budget.


Architects are not estimators, but yes it is a contractual obligation to redesign--without additional compensation--if our cost estimate is not within a certain threshold (10%) of the bid or bids.

It's a contractual obligation to redesign if our design is not within 10% of the bid or bids. Our estimate doesn't matter.
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Re: performing a cost estimate at the end of CD phase?

Postby nickedemus » Thu Nov 09, 2017 8:57 pm

thd7t wrote:
nickedemus wrote:
thd7t wrote:
wws341234 wrote:
bladeyoon wrote:Hello!

There is a practice question about
'the architect typically performs a cost estimate at the end of which phases?
And the answers were 'at the end of SD and DD'.
It explains that 'the project goes to bid at the end of CD set, so architect does not need to do cost estimate'.

But, based on B101 3.4.4, "the architect shall update the estimate for the cost of the work." so I believe the architect still need to do cost estimate at the end of CD phase.

Can someone explain this for me?

Thank you!


I agree with you that the correct answer should be what is specified in the B101. For one, it is specifically spelled out in section 3.4.4 as you have noted, but also, in every phase of the design process the architect is supposed to update the estimate of the Cost of the Work along with the design for the Owner's approval up to Bidding or Negotiation Phase Services, so why wouldn't the architect do it before the Owner approves it for bidding? A key provision to consider is in section 6.7, and it states that when the estimate of the work comes in too high, "[and] the Owner chooses to proceed under section 6.6.4 (which is to VE), the Architect, without additional compensation, shall modify the Construction Documents as necessary to comply with the Owner's budget for the Cost of the Work at the conclusion of the Construction Documents Phase Services, or the budget as adjusted under Section 6.6.1..." This section puts the risk of over budget to the Architect, and therefore it is in the Architect's interest to update that estimate for Owner's approval before it goes out to bid to minimize risk to unpaid work.

Now, I'm not sure what is the source of your practice question, but I would put my money down on the B101, since that is referenced in the NCARB study guide as part of the study material recommended for preparation of this exam.


I think the italicized portion of this is the critical point. It's in the Architect's interest, but it is not a contractual obligation. Architects are not estimators and even the "updated estimate" may yield a bid that is over budget.


Architects are not estimators, but yes it is a contractual obligation to redesign--without additional compensation--if our cost estimate is not within a certain threshold (10%) of the bid or bids.

It's a contractual obligation to redesign if our design is not within 10% of the bid or bids. Our estimate doesn't matter.


The estimate is for the cost to build the project as designed. If contractors come in a bid higher than our estimate, we must value engineer the project until it conforms to the owner's budget, at no additional cost to the owner. This can be limited to changes in the CDs, but elements of the design may also have to be altered or eliminated.
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Re: performing a cost estimate at the end of CD phase?

Postby thd7t » Fri Nov 10, 2017 6:12 am

nickedemus wrote:
thd7t wrote:
nickedemus wrote:
thd7t wrote:
wws341234 wrote:
bladeyoon wrote:Hello!

There is a practice question about
'the architect typically performs a cost estimate at the end of which phases?
And the answers were 'at the end of SD and DD'.
It explains that 'the project goes to bid at the end of CD set, so architect does not need to do cost estimate'.

But, based on B101 3.4.4, "the architect shall update the estimate for the cost of the work." so I believe the architect still need to do cost estimate at the end of CD phase.

Can someone explain this for me?

Thank you!


I agree with you that the correct answer should be what is specified in the B101. For one, it is specifically spelled out in section 3.4.4 as you have noted, but also, in every phase of the design process the architect is supposed to update the estimate of the Cost of the Work along with the design for the Owner's approval up to Bidding or Negotiation Phase Services, so why wouldn't the architect do it before the Owner approves it for bidding? A key provision to consider is in section 6.7, and it states that when the estimate of the work comes in too high, "[and] the Owner chooses to proceed under section 6.6.4 (which is to VE), the Architect, without additional compensation, shall modify the Construction Documents as necessary to comply with the Owner's budget for the Cost of the Work at the conclusion of the Construction Documents Phase Services, or the budget as adjusted under Section 6.6.1..." This section puts the risk of over budget to the Architect, and therefore it is in the Architect's interest to update that estimate for Owner's approval before it goes out to bid to minimize risk to unpaid work.

Now, I'm not sure what is the source of your practice question, but I would put my money down on the B101, since that is referenced in the NCARB study guide as part of the study material recommended for preparation of this exam.


I think the italicized portion of this is the critical point. It's in the Architect's interest, but it is not a contractual obligation. Architects are not estimators and even the "updated estimate" may yield a bid that is over budget.


Architects are not estimators, but yes it is a contractual obligation to redesign--without additional compensation--if our cost estimate is not within a certain threshold (10%) of the bid or bids.

It's a contractual obligation to redesign if our design is not within 10% of the bid or bids. Our estimate doesn't matter.


The estimate is for the cost to build the project as designed. If contractors come in a bid higher than our estimate, we must value engineer the project until it conforms to the owner's budget, at no additional cost to the owner. This can be limited to changes in the CDs, but elements of the design may also have to be altered or eliminated.


We are saying the same thing, but getting caught on details. What I was saying is that if an owner has a budget of $5M and I design a building and estimate it will cost $3M that meets the owner's needs, but the bids come in at $5M, there's no contractual obligation to redesign (although the owner will not like it!). We design to owner's budget, not to Architect's estimate.

Side question, though, (because I'm in a related situation on a project): If four bidders come in all between 2-4% over budget and a negotiation takes place necessitating redesign, am I entitled to additional services?
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Re: performing a cost estimate at the end of CD phase?

Postby nickedemus » Fri Nov 10, 2017 7:31 am

thd7t wrote:We are saying the same thing, but getting caught on details. What I was saying is that if an owner has a budget of $5M and I design a building and estimate it will cost $3M that meets the owner's needs, but the bids come in at $5M, there's no contractual obligation to redesign (although the owner will not like it!). We design to owner's budget, not to Architect's estimate.


I'm not so sure about that bolded part. I believe the owner is entitled to modify her budget. If she wants to spend more or less, it's up to her. And also, once the owner has an expectation, it may be hard to say, "Hey, remember that 60% savings that I got you? Well, you don't get that anymore." I don't think owner's budget is the criterion. It's owner's expectation of cost based upon on the estimate that you provide.
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Re: performing a cost estimate at the end of CD phase?

Postby thd7t » Fri Nov 10, 2017 7:37 am

nickedemus wrote:
thd7t wrote:We are saying the same thing, but getting caught on details. What I was saying is that if an owner has a budget of $5M and I design a building and estimate it will cost $3M that meets the owner's needs, but the bids come in at $5M, there's no contractual obligation to redesign (although the owner will not like it!). We design to owner's budget, not to Architect's estimate.


I'm not so sure about that bolded part. I believe the owner is entitled to modify her budget. If she wants to spend more or less, it's up to her. And also, once the owner has an expectation, it may be hard to say, "Hey, remember that 60% savings that I got you? Well, you don't get that anymore." I don't think owner's budget is the criterion. It's owner's expectation of cost based upon on the estimate that you provide.

That's a tricky situation. Owners often start with unrealistic expectations. I went with a really dramatic example ($3M out of $5M) to exaggerate a little, but generally, budget for a project is codified in proposals and contracts. I will say that I exclusively do work for public institutions, though, so things are pretty specific for these cases.
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Re: performing a cost estimate at the end of CD phase?

Postby nickedemus » Fri Nov 10, 2017 9:23 am

thd7t wrote:
nickedemus wrote:
thd7t wrote:We are saying the same thing, but getting caught on details. What I was saying is that if an owner has a budget of $5M and I design a building and estimate it will cost $3M that meets the owner's needs, but the bids come in at $5M, there's no contractual obligation to redesign (although the owner will not like it!). We design to owner's budget, not to Architect's estimate.


I'm not so sure about that bolded part. I believe the owner is entitled to modify her budget. If she wants to spend more or less, it's up to her. And also, once the owner has an expectation, it may be hard to say, "Hey, remember that 60% savings that I got you? Well, you don't get that anymore." I don't think owner's budget is the criterion. It's owner's expectation of cost based upon on the estimate that you provide.

That's a tricky situation. Owners often start with unrealistic expectations. I went with a really dramatic example ($3M out of $5M) to exaggerate a little, but generally, budget for a project is codified in proposals and contracts. I will say that I exclusively do work for public institutions, though, so things are pretty specific for these cases.


Yes, and the CDs are part of the contract. So if the budget is set and then the CDs blow it during the bid-phase reality-check, they have to be revised at no cost to the owner.
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Re: performing a cost estimate at the end of CD phase?

Postby thd7t » Fri Nov 10, 2017 10:42 am

nickedemus wrote:
thd7t wrote:
nickedemus wrote:
thd7t wrote:We are saying the same thing, but getting caught on details. What I was saying is that if an owner has a budget of $5M and I design a building and estimate it will cost $3M that meets the owner's needs, but the bids come in at $5M, there's no contractual obligation to redesign (although the owner will not like it!). We design to owner's budget, not to Architect's estimate.


I'm not so sure about that bolded part. I believe the owner is entitled to modify her budget. If she wants to spend more or less, it's up to her. And also, once the owner has an expectation, it may be hard to say, "Hey, remember that 60% savings that I got you? Well, you don't get that anymore." I don't think owner's budget is the criterion. It's owner's expectation of cost based upon on the estimate that you provide.

That's a tricky situation. Owners often start with unrealistic expectations. I went with a really dramatic example ($3M out of $5M) to exaggerate a little, but generally, budget for a project is codified in proposals and contracts. I will say that I exclusively do work for public institutions, though, so things are pretty specific for these cases.


Yes, and the CDs are part of the contract. So if the budget is set and then the CDs blow it during the bid-phase reality-check, they have to be revised at no cost to the owner.

I still agree, because we've both said that every time. I was saying that the budget is generally written into the contract. This is because if the owner modifies the scope or the budget after the project starts, changes to meet that budget are not performed at the cost of the architect. This is the case if budgets are increased or decreased.
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Re: performing a cost estimate at the end of CD phase?

Postby nickedemus » Fri Nov 10, 2017 11:58 am

thd7t wrote:I still agree, because we've both said that every time. I was saying that the budget is generally written into the contract. This is because if the owner modifies the scope or the budget after the project starts, changes to meet that budget are not performed at the cost of the architect. This is the case if budgets are increased or decreased.


The bold/underlined portion is correct, but it misses the point.

Changes are performed by the architect if the architect's cost estimate is inaccurate.

I can take any more time to explain this to you.

I'm sorry.
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Re: performing a cost estimate at the end of CD phase?

Postby nickedemus » Fri Nov 10, 2017 1:37 pm

Here, take a look at this article, particularly the fourth paragraph and the subsequent numbered list:

https://www.constructionrisk.com/2011/0 ... ion-costs/
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Re: performing a cost estimate at the end of CD phase?

Postby thd7t » Fri Nov 10, 2017 2:03 pm

nickedemus wrote:Here, take a look at this article, particularly the fourth paragraph and the subsequent numbered list:

https://www.constructionrisk.com/2011/0 ... ion-costs/

Excellent reference! It does make it clear that the architect should maintain the estimate through CDs! I personally question the value of the estimate right before the bid (as this could also force redesign at cost to the architect, regardless of the estimate), but you are definitely correct on this. I took the exam a while back and am rustier than I realized. I appreciate your patience.
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Re: performing a cost estimate at the end of CD phase?

Postby nickedemus » Sat Nov 11, 2017 7:02 am

thd7t wrote:
nickedemus wrote:Excellent reference! It does make it clear that the architect should maintain the estimate through CDs! I personally question the value of the estimate right before the bid (as this could also force redesign at cost to the architect, regardless of the estimate), but you are definitely correct on this. I took the exam a while back and am rustier than I realized. I appreciate your patience.


I'm glad you see it now, because I'd hate for you or anyone else to get caught in this pitfall. I think a lot of people feel the same way that you do about it, including me. Cost estimating isn't technically a service that the architect provides, so why should we be responsible for it??? Unfortunately, even if it wasn't the AIA's intention to make us liable, the ambiguity is there. Until they (hopefully) revise the language, architects need to tread carefully.
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