From the first quarter of 2006 to the first quarter of 2008 Davis Langdon’s tender price index rose 6.7%. In revisiting the cost models, rates of individual work items have been reviewed using Davis Langdon’s national cost database, to take into account price changes to design and specification standards and the effect of changes to Building Regulations, as well as market-driven price fluctuations.

Figure 1 compares the overall change in cost, calculated through a re-rating of the models against the change predicted by the tender price index.Variations reflect the mix of materials used in each building and the time elapsed since the models were originally produced. In all cases, inflation is above that predicted by the index.There is also a clear pattern whereby the cost of the primary school model, which is characterised by traditional construction, has experienced a lower rate of inflation than buildings using more modern materials. Small industrial unit costs have surged by almost 5% above the rate of the tender price index over 15 months.

Figure 2 provides an explanation of these results, presenting price changes as annual average percentage increases, so they can be compared side by side, and analysing inflation on an element-by-element basis.The chart shows major increases were for substructure, frames, roofs and, in the case of industrial units, external walls.

The chart shows where the inflation drivers have been most significant, but to appreciate the full impact of this variation these trends need to be reviewed in conjunction with the spread of expenditure across the building elements. For example, the overall cost of industrial units has increased disproportionately as a result of most cost being focused in the substructures, frame, roof and external wall elements, which have been affected by increases in the cost of steel, concrete, aluminium and glass.

This pattern is illustrated most markedly in connection with external walls, where the aluminium wall cladding and doors to the industrial unit have risen in price faster than any other elements, while the costs of masonry external walls and conventional double-glazed windows on the school and health centre have increased broadly in line with general tender inflation, even though performance will have improved in line with the revised Part L of the Building Regulations.

Building services installations have been subject to increases in the price of raw materials, but overall services installations have increased in cost at a rate only marginally higher than the tender price index. Cost increases in hot and cold water systems, space heating, and power and communications systems have, in part, been offset by savings elsewhere. Security installation costs have not significantly increased over the period.

There has also been movement in levels of preliminaries, to 16% in 2008, and the primary school and healthcentre cost models have been repriced to reflect this.

In April 2006 Part L2A of the Building Regulations came into effect, requiring a cut in carbon emissions compared with the 2002 regulations, together with improvements to the building fabric.To meet these, design changes have included:

• Improved thermal performance, often achieved by using thicker insulation, high-performance double glazing and so on
• Greater use of solar shading
• Improved airtightness
• Greater plant efficiency
• More energy-efficient lighting.

Part F of the Building Regulations was also introduced in April 2006, requiring ventilation systems to be controllable.The approved documents require that:

• Ventilation rates are met
• Moisture and potential pollutants are removed
• A minimum amount of fresh air is provided over long periods.

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