#034 Quantification and Costing of Construction Works (PART 3) 📐🧮
Hello folks 👋
This week we are covering Level 3 of the Quantification and Costing of Construction Works competency.
For some reason, my Level 1 post for this competency is the most popular article on this website! Here are the links for Level 1 and Level 2.
I would highly advise you to go through the candidate guide and the QS pathway guide to understand the basic requirements.
DISCLAIMER: The following is not an exhaustive set of notes, but it's an attempt to help those who, like me at the beginning, did not know where to start! Please feel free to let me know if I have said anything incorrect or out of date!
So what is Level 3 Quantification and Costing all about?
The RICS note that to demonstrate competence at Level 3, you need to demonstrate your ability to:
Advise on appropriate methods of quantification and costing for specific projects. Take responsibility for the preparing and issuing pricing documents. Price or analyse such documents. Give advice on and/or supervise the valuation of construction works throughout a project.
Advising on appropriate methods of measurement and costing
This bullet point refers to your ability to advise the client on the available methods of measurement and costing during the project lifecycle.
It’s important that you have an understanding of how the process works otherwise you may look silly in front of the client. For example, let’s say your client has gone to the effort of producing a full design for the purpose of measurement. It would be incredibly unwise for you to suggest that you will just do a floor area measurement and estimate (unless the client has specifically instructed you to do so). The client has produced a full design, therefore it may be appropriate to suggest that we produce a Bill of Quantities. If the client does not want a BQ then a Schedule of Work may be appropriate.
In terms of costing a similar approach should be taken. The detail and depth of your cost information will be dictated by the level of information/design detail provided by the client. For example, if the client has provided you with the full design, it would be unwise to provide a functional estimate and vice versa!
Selecting of appropriate pricing documents
The selection of pricing documents can be quite tricky because of how it relates to fees! As you know Bills of Quantities are few and far between these days with most pricing documents being Schedules of Work. If you don’t know the difference between the two please check my previous posts. One key reason why BQs are no longer prominent is because of the time required by QSs to prepare them. Time = money and clients are opting to utilise Schedules of Work instead to save money at the front end. Obviously, this has risks but clearly, it seems to benefit the client market as the use of Schedules of Work are on the rise.
The key question for this bullet point is: do you know when you should use the different pricing documents?
Bills of Quantities: This is a comprehensive pricing document that provides the greatest certainty of cost to the client. These require full design drawings and specifications in order to be prepared. BQs are prepared in accordance with the proposed standard Method of Measurement e.g. NRM 2, SMM7 or industry-specific e.g. Highways Method of Measurement of CESMm (Civil Engineering Standard Method of Measurement).
Schedules of Work: identify the work activities entailed in a project. In my view, they should be used for small building projects or alteration works, however, they seem to be the preferred option for most projects I come across. These documents provide high-level data, and more in-depth info needs to be obtained from the spec.
Schedules of Rates: These documents are generally used for repetitive works where rates of known items can be quickly applied to given quantities. They are generally used for framework contracts where the client has identified all the conceivable works required and the contractor, in turn, provides the costs for labour and in some cases material. It provides cost certainty to the client however it may not be the cheapest way to do it as the contractors would have built-in risk to their rate.
Negotiating and agreeing the valuation of construction works at various stages of the project such as the contract sum, construction and final account.
This bullet point is about how we value the works at different points in time, before the works start (contract sum), during the work (valuations) and the end (Final account).
Negotiation of the Contract Sum: Generally speaking, there should be minimal negotiation of the contract sum post-tender. Negotiations here will generally be about some of the contractor’s qualifications that need to be accepted or removed. There may also be a situation where the additional scope is inserted into the contract sum. This will generally be treated like a variation i.e. known rates from the contract will be used.
Valuation during Construction: This one is quite straightforward. As a QS, you will be responsible for valuing the works as the project proceeds. Your valuations should be based on the works the contractor has undertaken on-site plus the value of any materials. For this you know to follow the principles of Materials On-Site / Off-Site. Negotiations with the contractor will generally be about whether works have actually been undertaken or not. They occur more often than not for Schedules of Work where works are valued on a % basis. We may suggest one percentage and the contractor may suggest another. It all depends on the sequence of construction and where we believe the contractor’s progress sits in that percentage.
Valuation during Final Account: The negotiations regarding final accounts generally relate to the cost and acceptance of variations. The main contract cost is settled generally quite easily but often variations are undertaken with the mantra ‘we’ll deal with it at the end’. This becomes problematic as it involves trying to work out what was done, what was agreed and how much the contractor is entitled to. I would always advise trying and getting an upfront quotation for variations from the contractor and doing the negotiations at that point whilst it’s fresh. This is easy for NEC contracts but under JCT it’s quite a long process. Where you have situations like this, the best course of action is to deal with each variation one by one, undertake your assessment of what the works should cost based on works previously undertaken during the project and present it for review. There will be objections made by the contractor but being fair and reasonable is key, hopefully, you have a contractor on board who is also fair and reasonable!
That’s it for this post folks, as always if you have any questions please drop me a line!