Capital Development Guidelines

Definition of Capital Costs

The scope of work covered by the Capital cost of a project generally includes:

1. Building works (New and/or alterations)
2. Building services including central plant and related infrastructure
3. Built in equipment
4. Siteworks and site preparation
5. Loose furniture, furnishings and equipment
6. Project Management, Design and other consultancies
7. Associated authority charges
8. Contingencies and other risk provisions.
   
   In some cases, the capital cost may also include:
9. Decanting of staff and facilities from an existing building and later removal of temporary facilities
10. Client associated administration costs (such as additional management time, insurances and the like).

Delineation of Building and Other Components

The building, furniture and equipment items are generally procured separately, under different contracts. Problems sometimes arise as a result of differences in interpretation of what each contract covers.

For planning and budgeting purposes, fittings and equipment are normally classified as: 

⁵ For budgeting through to Schematic Design phase, the classification should be simplified, as either Group 1 or 3.

Cost Variations

The Hospital Benchmarking Guideline Study found that a number of factors could result in significant variations in the cost of hospital projects. These include:

1. Role Delineation
2. Building Type
3. Works Type
4. Procurement Method
5. Regional Market Price

These factors must therefore be allowed for in the planning and development of budgets for hospital capital projects.

Elements of Cost Benchmarks

The rates and allowances quoted in this Guideline are intended as a guide only and do not represent mandatory limits.

The rates and allowances presented are current at June 2002 and assume competitive lump sum tender conditions. 

Costs are separated into five sections:

1. Building Cost Rates
2. Project Specific Allowances
3. Siteworks and External Services Allowances
4. Loose Furniture, Equipment & IT
5. Other Project Costs.

Building Cost Rates
A building cost rate has been developed for each Planning/Functional unit within each Hospital Role Classification (Refer to Role Delineation of Victorian Public Hospital).

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These rates are made up of the various elemental components but broadly include: 

• Shell – including substructure, superstructure, roof, external walls, windows and external doors.
• Fit Out – including internal partitions/walls, internal screens and shutters, internal doors, wall finishes, floor finishes, ceiling finishes, fitments, special equipment, sanitary fixtures and fittings, sanitary plumbing.
• Engineering Services – including hot water supply, gas supply, space heating, ventilation, evaporative cooling, air-conditioning, fire protection, electric light and power, communications, special services.
• Builder’s Preliminaries.

Building cost rates are expressed as a cost per gross department floor area basis ($/m2).

Project Specific Allowances

Project Specifics enable adjustments to be made to the building cost for any non-standard items or specification not common to all projects. These items include, but are not limited to, central energy, lifts, kitchen and cafeteria equipment, sterilizing equipment, theatre lights and support, PABX including handsets, specific footing requirements, earthquake requirements, mine subsidence requirements, increased standards (client request), heritage constraints, feature façade, abnormal planning constraints, temporary works and any other similar items.  Adjustments for such items are treated as allowances over and above the base building cost and include an allowance for a proportion of builder’s preliminaries (Refer Appendix I—Table 4).

Siteworks Allowances

Siteworks consist of all work beyond the perimeter of the building including site preparation, bulk excavation, special foundation requirements, roads, footpaths, covered ways, drop-off points, soft landscaping, fencing, parking, linemarking, road signs and any other similar items.  Allowances are added over and above the base building cost and include an allowance for a proportion of builder’s preliminaries.

External Services Allowances

External Services consist of all services work beyond the perimeter of the building including sewer, stormwater, water, fire, gas, electrical supply, external lighting, telephone, security, amplification of main supplies and any other similar items. Allowances are added over and above the base building cost and include an allowance for a proportion of builder’s preliminaries.

Loose Furniture, Equipment & IT

Rates for costing of loose furniture, furnishings  & IT equipment in the calculation of cost for projects are provided for each Functional Unit.

The rates include allowances for telephones, pagers, cleaning equipment, EDP workstations and some relevant specialist EDP software.

The rates exclude super-specialities (eg cardiothoracic surgery) or unusual specialities (eg apheresis, hyperbaric and reproductive biology).

Constraints in respect of specific Functional Units include:

• Library rates assume a manual card index system. Add costs are applicable for computerised indexing and book security systems.
• Information Technology rates are based on general furniture and equipment. Central IT and communications hardware and software are project specific items.
• Medical Records rates are based on traditional manual paper storage. Optical disk based technology increases the m2 rate considerably but may eliminate archiving and most storage floor areas.
• Medical Imaging rates are based on traditional film and do not include digital imaging (PACS) except where associated with specific modalities.
• Security rates do not include CCTV 
• Stores and Supply rates assume minimal mechanical materials handling equipment.

Where specific major or unusual equipment is proposed for a project:

• The major item(s) should be identified and costed as project specific item/s.
• The relevant Functional Unit furniture and equipment rate(s) should be reduced to an appropriate administrative or clinical rate (to allow for general items).

The furniture, fittings and equipment guideline rates assume greenfield projects where equipment is not transferred from existing facilities.

The impact of transferred items is can have a significant impact on project FF&E costs, varying from less than 10% of total value where little is transferred to about 80% where most existing furniture and equipment is transferred. The opportunity for transfer of existing equipment (including refurbishment and re-installation costs) should be evaluated at the preliminary planning stage.

It is recommended that the following be regarded as project specific items:

• Window furnishings
• Artwork
• Information technology
• Communications (PABX, paging, etc)
• Furniture and equipment commissioning - tendering, receiving, storing, distributing cleaning, testing and pre-occupancy security.

Other Project Costs Allowances

Other Project Costs include all other costs associated with the project including contingencies (planning and contract), furniture, fitting and equipment, consultant fees, authority charges, client direct costs, property purchases and future cost escalation allowances.

Allowances are added over and above the base building cost.

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