scaf challenge 2013 challenge 2013... · • as number of bathrooms increases so does price ... 60%...

© Copyright QinetiQ Limited 2013 QinetiQ Proprietary 1

SCAF Challenge 2013 Team QinetiQ

23rd April 2013

Presented by:

Sarah Beasley, Lloyd Merrick, & Richard O’Neill

© Copyright QinetiQ Limited 2013 QinetiQ Proprietary

The Solution

2

Move House


Overview

3

The Problem

The Options

Cost Analysis

Benefit Analysis

COEIA & TLC

Further Analysis


The Problem

The Problem

The Options

Cost Analysis

Benefit Analysis

COEIA & TLC

Further Analysis


The Situation

Currently…

• A cost engineer at the start of a career

• Stable income

• 3 years into a 25 year mortgage on a 2 bedroom house

• Located in Bristol

Soon…

…Twins!

5


Dissecting the Problem

6


Single Statement of Need

‘A financially viable property for all four members of the family to reside in, whilst retaining practicality and comfort.’

7


Approach

8

Option

Acquisition

Build

Rent

Buy

Operating & Support

Maintenance

Utilities

Disposal

Sell


Internal Competition

9

Team A

Sarah Beasley

Lloyd Merrick

Richard O’Neill

Nicholas Hibbert

Team B

Deepesh Mistry

Rebecca Ayling

Dika Thapa Magar

Shannon-Mari Du Plessis

Team C

Jason Elliott

Daniel Cousins

Jack Castle

Godwin Rosie


Schedule

10


The Options

The Problem

The Options

Cost Analysis

Benefit Analysis

COEIA & TLC

Further Analysis


Possible Options

1. Move house

2. Build an extension

3. Narrow boat

4. Rent

5. Loft conversion

6. Do nothing

7. Airship

8. RV

12


Discounted Options - Narrow Boat

13

“There is a long waiting list for residential moorings. The residential berths are currently fully allocated and rarely become available. No other residential use of vessels is permitted.” (Bristol.gov.uk, 2013)


Discounted Options – Loft Conversion

14

• Extensions can add up to 25% to original property value.

• Basement or loft conversions typically only boost property value by 10% - 15%.


Discounted Options – Airship

15

• QinetiQ’s Family of Advanced Cost Engineering Tools (FACET) estimates a total acquisition cost of £42.2m.


Discounted Options – RV

16

• Estimated cost of £250k

• Requires specialist labour to maintain

• Need to purchase land or licence to park

• Rapidly depreciates in value


Shortlist

1. Move house

2. Build an extension

3. Narrow boat

4. Rent

5. Loft conversion

6. Do nothing

7. Airship

8. RV

17


Cost Analysis

The Problem

The Options

Cost Analysis

Benefit Analysis

COEIA & TLC

Further Analysis


Assumptions

• Base estimates at 2012 economics

• There will be no more children

• The location will remain as Bristol

• Flat VAT rate of 20%

• New properties will be 3-bed

• Inflation rates as seen in the Green Book

• Whole life costing will be over 22 years

• Not in negative equity

19


Data Sources

20

Primary Sources

• Recent mover

• Architect

• Builder quotes

Internet Research

• Zoopla

• Rightmove

• Forums

• Government websites

• BBC

• Supplier websites

Written Materials

• Newspapers

• Reports


Data Maturity

Maturity

class

Assessment criteria

Estimating method

Class 5 ROM or judgement from

SME

Class 4 Analogy

Class 3 Parametric

Class 2

Activity based estimating

based on agreed schedule

of work or bill of material

Class 1 Supplier bid or actual cost

21

Incr

easi

ng

mat

uri

ty


Extension Data

22

Contacted various Bristol builders and architects for quotes

Assigned maturity scores to data and included uncertainty

Averaged planning and building costs and considered extra costs

3m x 4m room

Into back garden

Made of stone


‘Do Nothing’ Data

23

Calculated current mortgage

Found extra costs eg. Home insurance


Renting Data

24

Researched 25 houses for rent in Bristol

Found the average rental price

Researched extra costs for renting, e.g. deposit

3 bedroom with

garden


Moving House Data

25

Researched 100 houses for sale in Bristol

Found the average house price

Researched extra costs for moving, e.g. removal van

3 bedroom with

garden


Regression Estimates

26

Regression Statistics

Multiple R 0.950868713

R Square 0.90415131

Adjusted R Square 0.901813537

Standard Error 12433.00523

Observations 253

df SS MS F Significance F

Regression 6 3.58709E+11 59784833487 386.7575422 3.4485E-122

Residual 246 38026586256 154579618.9

Total 252 3.96736E+11

Coefficients

Intercept 79385.99906

House Type 27443.02395

No of Rooms 21412.76765

Garden Size 29.89504795

No of Bathrooms 1388.029554

Garage 2715.216212

Conservatory 1183.117349

Constants

Unlikely

Excellent

Does a linear relationship exist?

Has it occurred by chance?


Regression Model

27

House Price = 79,385 + 27,433 (House Type) + 21,412 (No of Rooms) + 29.8 (Garden Size) + 1,388 (No of Bathrooms) + 2,715 (Garage) + 1,183 (Conservatory)

Does it make sense? • As number of rooms increases so does price • As number of Bathrooms increases so does price • As House type changes so does price • A garage costs extra • A conservatory costs extra • As Garden size increases so does price

Hypothesis

Confirmed


Benefit Analysis

The Problem

The Options

Cost Analysis

Benefit Analysis

COEIA & TLC

Further Analysis


Scoring

• Do Nothing option base-lined at 5.

• *Key requirement so given more weighting

Benefit Moving House

Extension Rent Do Nothing

Time commitment by family 2 3 3 5

Storage space* 20 20 20 10

Area knowledge 3 5 3 5

Effort expended by family 2 3 2 5

Personal space for children* 20 20 20 10

Other stakeholder disruption 3 2 3 5

Garden space 5 3 5 5

Adjustment to lifestyle 2 4 2 5

Stress 2 3 2 5

TOTAL Benefit Score 59 63 60 55


COEIA & Through Life Cost

The Problem

The Options

Cost Analysis

Benefit Analysis

COEIA & TLC

Further Analysis


COEIA

31

Benefit

NPV

Minimum

Level

required

100

Move House

143,707

Extension

175,511

Do Nothing

(Bunk Beds)

167,496

Rent

252,466

55


Through Life Cost

32

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22

£'s

Time in Years

Move Extension Do Nothing Rent Affordability


Further Analysis

The Problem

The Options

Cost Analysis

Benefit Analysis

COEIA & TLC

Further Analysis


Stakeholders

34


External Impact Categories

Political Impacts

Economic Impacts

Social Impacts

Technological Impacts

Legislative Impacts

Environmental Impacts


Political Impacts

• Government change – political policy change/legislative change • Local council leadership – change to planning regulations • Local electorate – views of local area and voters • Funding, grants and initiatives – investment in area development


• Economic growth - GDP

• Interest rates – saving rate and cost of borrowing impacted

• Exchange rates – if using imported materials/labour

• Inflation rate – overall cost of capital, materials and labour: linked to change in interest rates

• Housing Market Prices – trends effecting property prices and

property demand.

Economic Impacts


• Population change – cost of labour change, demand for property in area • Local area – culture, location, aesthetics, facilities, demographics • Requirements of occupants – what do our family need? e.g. children

going to nursery/ school • Neighbours– what are the local residents like?

Social Impacts


• Barriers to entry – low in building industry • Moving made easier by internet • Technological shifts to reduce cost through innovative methods –

online access to house prices/local area info • Communication technologies

Technological Impacts


• Planning law • Employment legislation – labour used • H&S policies – safety when building • Building regulations

Legislative Impacts


• Weather/climate – ability to build in certain times of year (seasonality) • Building laws – planning regulations, green areas • Pollution – building work may damage local environment • Natural habitats - building work may damage local environment

Environmental Impacts


Level of Impact & Uncertainty

Level of Impact Level of Uncertainty

5 Very High level of impact Very High level of uncertainty

4 High level of impact High level of uncertainty

3 Medium level of impact Medium level of uncertainty

2 Low level of impact Low level of uncertainty

1 Minimal impact Certain

Impact could be positive or negative impact.

Certainty assesses likeliness of occurrence.


Impact vs. Uncertainty Matrix

Impact

Un

cert

ain

ty

Very Low

Very High

Very High

Social: Requirements of Occupants

Economic: Housing Market Prices

Very Low

Low

Low

Medium

Medium

High

High

Legal: Planning Law


Scenario Mapping

Planning Permission

Rejected

House Prices Low

House Prices High

Planning Permission Approved

SPOILT FOR CHOICE

LAY THE FOUNDATIONS STUCK IN THE MUD

PACK YOUR BAGS

1st = Do Nothing

2nd = Rent

3rd = Move

1st = Move

2nd = Rent

3rd = Do Nothing

1st = Extend

2nd = Rent

3rd = Move

1st = Move

1st = Extend

3rd = Rent


Risks

45


Risks

46

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0% £0 £5000 £10000 £15000 £0 £5,000 £10,000 £15,000

Cost

0% £0

10% £1,479

20% £2,380

30% £3,218

40% £4,117

50% £5,015

60% £5,931

70% £7,010

80% £8,256

90% £10,029

100% £16,425

Entire Plan : Cost

Move House 80% = £8,256

Extend 80% = £10,924

£0 £10000 £20000 £30000 £0 £5,000 £10,000 £15,000 £20,000 £25,000 £30,000

Entire Plan : Cost

£0 £2,000 £4,000 £6,000 £8,000

Distribution (start of interval)

0

500

1000

1500

2000

2500

3000

Hit

s

0% £0

5% £228

10% £716

15% £965

20% £1,112

25% £1,272

30% £1,481

35% £1,685

40% £1,863

45% £2,026

50% £2,197

55% £2,403

60% £2,625

65% £2,857

70% £3,065

75% £3,291

80% £3,525

85% £3,795

90% £4,118

95% £4,526

100% £6,476

Cu

mu

lati

ve F

req

uen

cy

Entire Plan : Cost

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0% £0 £2000 £4000 £6000

£10,000 £20,000 £30,000

Distribution (start of interval)

0

200

400

600

800

1000

1200

Hit

s

0% £495

10% £6,039

20% £6,907

30% £8,616

40% £10,671

50% £11,564

60% £12,388

70% £13,650

80% £16,112

90% £17,759

100% £30,890

Cu

mu

lati

ve F

req

uen

cy

Entire Plan : Cost

£0 £10000 £20000 £30000

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

Do Nothing 80% = £11,564

Rent 80% = £3,525


Conclusions

The Problem

The Options

Cost Analysis

Benefit Analysis

COEIA & TLC

Further Analysis


Conclusion

48

Reasons to Move House

• Lowest NPV

• 2nd lowest TLC

• 2nd lowest risk

• Offers best cost/benefit trade-off

• Chance to increase wealth as house prices rise

• Opportunity to move to nicer area

• Pride of ownership

• Flexible in future scenarios

Solution NPV Benefit

Move 143,707 59

Extension 175,511 63

Do Nothing 167,496 55

Rent 252,466 60


Lessons Learned

49

• Team members across different sites is difficult for communication.

• Groups of 4 maybe a little large.

• Working around full-time projects was difficult.

• Task could have been better incorporated as part of graduate cost training.

• Scope of work could have been defined more clearly as a team from the initial discussion.

• It is essential to utilise team members’ specialisms and backgrounds.

scaf challenge 2013 challenge 2013... · • as number of bathrooms increases so does price ... 60%...

Documents