Cost model: Supermarkets

<B><FONT SIZE=”+2”>Procurement</FONT></B>The most common type of supermarket being built these days are the out-of-town units. Single-storey units have generally superseded all other, except where there are severe site restraints. This refelects the need to reduce the additional costs of fitting storage / office space at first floor level and the extra loading on foundations which often required piling.

With reduced turnover and tighter margins, retailers are concentrating on developing schemes that maximise retail floor space at the expense of administration and bulk storage areas. Retailers are also rethinking items auch as the structural form and the types of finishes used in a store in an effort to reduce overall building costs.

The traditional vernacular facade - facing brick and a pitched tile roof - is still in vogue. But in future, retailers might be tempted to develop shed / warehouse supermarkets in an effort to further cut costs. Running contrary to these economies is the definite trend for providing a totally controlled “pressurised” internal environment and “air curtain” entrances instead of four-leaf or revolving doors. This move requires greater care during construction to ensure that buildings are fully sealed, particularly around the loading bay areas. But there is little indication that the requrement for a fully sealed building is reflected by and increase in price for the extra labour content.

The cost model is based on a hypothetical scheme with a gross area of 4900 m2 and a retailing area of 2800 m2 (57% of gross). The internal ceiling height is 4.5m. A food supermarket has been chosen because it is one of the few retail types being developed in the current economic climate. The building shell costs about £300/m2, but typically this falls in the range of £250-350/m2.

Fitting out costs, including shop fittings, are usually direct contracts dealt with by the retailer. For this scheme, they amount to £800/m2 but can vary considerably from £500-1200/m2 depending on the sophistication of the store, type of refregeration units, quality of shop fittings and level of servicing.

Both the shell and fitting-out costs reflect additional costs encountered in this type of food retail, such as underground service ducts or undercrofts, refrigeration units and preparation rooms. More traditional multi-purpose superstores are unlikely to incur such a high cost for services and refrigeration. Representative specifications and costs have been included with this model.

There are a variety of different procurement routes for the construction of supermarkets, the most frequently used involving traditional bills of quantities, construction management, developer’s turnkey or retailer design and build. However, all work is generally let on the basis of selective competition rather than negotiation. This example assumes the currently most popular route, retailer design and build. Again there is no indication that there is any significant cost differential between the various forms of contract.

When following the design and build route, retailers often use an in-house contract for tendering. Retailers also adhere to a strict set of in-house procedures and almost complete the pre-design of their buildings before passing the whole package to a contractor to price. Once the contractor is selected, the professional teams’ contracts are novated to the contractor. The contractor is then made responsible for completing the design and preparing working drawings.

Competitive tenders are usually sought for fitting-out, but clients sometimes negotiate a contract with the shell contractor when it can be shown to be likely to save time and money.

<B><FONT SIZE=”+2”>Planning and programming</FONT></B>Modern supermarket design has focused vernacular solutions - brick, tile and the near obligatory feature tower - because they provide the easy route through the local planning process. Today’s one-stop household shopping also includes refuelling the family car - 15% of all petrol sales in the UK arise from supermarket filling stations. The associated infrastructure, access roads and as much car parking as possible create additional planning pressures.

Speed through the planning process followed by a short design and construction period are critical factors. But an overriding consideration for retailers is the desire for an assured end cost against which they can gauge the scheme’s viability. This leads many retailers to opt for the lump-sum, design and build route even though it does not give the quickest development.

The three programmes for the cost model have been prepared on the basis that procurement will be by design and build.

<B>Programme 1</b> outlines the design lead-in times necessary to obtain tenders. It shows that the consultants’ briefing should start approximately one year before start on site. The consultants’ full involvement is used for the period up to tender documents being sent out to the design and build contractors. After this point their services are either much reduced or novated to the successful contractor. In their tender submissions, contractors are required to provide competitive designs as well as programmes detailing procurement and construction timetables. These are used to identify when key decisions are required and the lead-in periods for specialist packages.

<B>Programme 2</b> shows a typical site programme, from which the duration of the key on-site subcontract packages can be measured. The 40-week overall constructino period is fairly standard. Speed of construction can only be sustained by combining design requirements and information with an efficient sequence of constructino that allows the trade contractors to perform. Common methods used to improve speed include: separating the foundations from the ground slab to enable a quick start on the steel frame, and enclosing the frame in a quick-fit roof decking system to give an early watertight envelope.

Once the weather is excluded, starts can be made on the ground slab and to the subfloor mechanical and electrical services to the sales area. Because the areas involved are so vast, trades can overlap in different parts of the building. The brickwork and windows then become critical in order to complete the enclosure of the building, thus enabling a start to be made on the finishes to the sales area. Once the fabric, services installations and main finishes to the sales areas are in place, fitting-out the supermarket with the necessary special equipment becomes the priority. This work is integrated into the master programme and is expected to be accommodated within the overall contract period. Testing and commissioning of all installations must be proven prior to handover; however, balancing the systems often continues well after occupation.

The programme for the back-up areas can be used to balance the resources and manpower levels of the trade contractors. This allows trade contractors to switch to the back-up areas if their work starts to overlap with other contractors in the sales areas. The back-up areas are not as critical as the sales areas. But in such a short programme, any float in the master programme between the two areas can soon be used up. External works are always a contract in themselves due to their size and require a separate detailed programme to ensure their completion on time. Inclusion of a petrol filling station adds to the pressure on the programme. Also is is not unusual for retailers to demand handover of the filling station up to 10 weeks before the supermaket so that the local community gets accustomed to using the petrol station and then gets pulled into the store when it opens.

<B>Programme 3</b> shows the lead-in periods for the major works packages and is broken down into critical categories, starting with tender documentation and running through to manufacture. The procurement programmes for some of the more complex and work-intensive packages are itemised under these categories, while other more routine activities can be dealt with by a simple lead-in time. The summary results of these are interpolated and transferred on to Programme 1 to demonstrate their effect on the design programme. The combination of Programmes 1 and 3 represents the major design programme and shows how extensive the overlapping of design and on-site activity can become.